LOCAL GOVERNMENT BILL

HL Deb 31 October 1966 vol 277 cc456-88

4.13 p.m.

Order of the Day for the Second Reading read.

THE PARLIAMENTARY SECRETARY, MINISTRY OF HOUSING AND LOCAL GOVERNMENT (LORD KENNET)

My Lords, I beg to move that this Bill be now read a second time. There is no need for me to give the House a long account of the problems of local government finance. The point is that local expenditure has been rising fast during the past decade, and since the proportion met by Exchequer grants has stayed roughly the same, a great strain has been put upon the rates, which are the only major source of local revenue. This strain has shown up defects in the rating system, which we on this side of the House have long recognised, and which were underlined in the report of the Allen Committee.

The Committee confirmed that household rates are regressive that is, they take a higher proportion of low incomes. Of the income left after the deduction of income tax, surtax and National Insurance contributions, rates took in 1963–64, on average, 2.9 per cent. of household incomes, but for households with more than£30 a week the proportion was only 2.2 per cent. while for those with less than£10 a week it was 6.2 per cent. For those with less than£6 a week—and there are some—it was as much as 8.2 per cent. The Committee also drew attention to the inconvenient arrangements for paying rates, compared, for example, with P.A.Y.E., and thought that the prospect of annual increases in rates gave rise to as much anxiety as their present high level.

The Government have already reduced the regressiveness of rates by giving substantial relief to ratepayers with low incomes through the rate rebates provisions of the Rating Act 1966. I cannot give the House firm figures about the scheme, because administration is entirely in the hands of the rating authorities, but this year—the first year of operation—it appears likely that well over 1 million ratepayers will get relief, with an average reduction of about£15. The 1966 Act also entitled domestic ratepayers to pay their rates in ten instalments.

But this measure was only the first part of the Government's attack on the problem. Householders with incomes above the rebate limits have also been feeling the impact of rising rates. The Government believe that they needed some relief, too. The best solution would be a new local tax, easy to collect and fair in its incidence. But we have so far failed to find one suited to the present structure of local government. The obstacles in the way of devising a new and genuinely local tax are inherent in the present anachronistic system of local government, with its multiplicity of local authorities serving a population of which large numbers no longer live, work and shop all within the same local government area. So the Government concluded that a radical reform of local government finance would have to await the changes in structure which are expected to result from the work of the Royal Commission. Only when the new structure emerges will it be possible to decide how rates can best be supplemented. But we shall start fresh studies of local taxation in parallel with the work of the Royal Commission so as to be able to come to decisions in this field when the Commission conclude their work.

Rates could be kept down, and even reduced, by transferring responsibility for particular services from local to central Government. In the Government's view, that should not be done merely to relieve the rates; the test should be how the service may best be provided, and by that test, it seems to me, there is little indication for such transfers. The Government do not believe that it would be wise to transfer financial responsibility to the centre, while leaving local authorities to administer the services: divided responsibility of that sort does not work.

So, in the short term, relief must come by increasing the proportion of local expenditure met from the Exchequer, and the Government have decided upon a gradual but steady shift in the burden from rates to taxes, so as to slow down the annual increase of the former. Most of the additional Exchequer aid will be channelled directly to the relief of the domestic ratepayer, by a means I will describe shortly, because he has to pay his rates out of taxed income and cannot pass on any of the burden. He is therefore more affected by rising rates than other ratepayers.

Although the Bill is essentially an interim measure, Part I introduces a new relationship between central and local finance. Instead of the various Exchequer grants being considered separately, and their general effect on the rates being left more or less to chance, my right honourable friend the Minister of Housing and Local Government will, once the Bill is passed, determine for each grant year a total Exchequer contribution by reference to estimates of virtually all of the expenditure that would otherwise fall upon the rates. From this total contribution will be deducted the expected total of grants in aid of specific services, such as the police grant. The remainder, which is over 85 per cent. of the total, will be distributed by the three parts of the new rate support grant.

The Bill does not lay down how the total Exchequer contribution is to be derived from the estimated totals of relevant expenditure, but the aggregate amounts of the rate support grants have to be fixed by an Order which will be subject to approval in the House of Commons. These Orders will be accompanied by reports explaining how my right honourable friend has determined the amounts. The intention is for the proportion of total relevant expenditure met by the Exchequer to increase by about 1 per cent. each year. Under the new system, the Exchequer's contribution will be consciously related to the whole range of local expenditure. Another advantage of determining the total Exchequer contribution as a first step, is that the creation or abolition of specific grants will not affect the total of the Exchequer's liability; it will simply alter the way it is distributed. It follows that when the question whether a particular service should be aided by a specific grant or by means of the rate support grant is being considered, neither the departments nor the associations of local authorities will be swayed by the prospect of getting more money out of the Exchequer!

The largest part of the rate support grant—the needs element—will be distributed in a similar manner to the present general grant, but with changes to which I will return presently. The second part of the grant—the resources element—is virtually the old rate-deficiency grant under a different name. Although the aggregate of this grant will be predetermined, instead of being "open-ended", as at present, the intention is to allocate enough money for it to meet the same proportion of estimated expenditure as it has since the 1963 general revaluation.

The third part of the grant—the domestic element—is an innovation. This is the device to which I referred just now for ensuring that most of the extra money which the Exchequer will be putting into local government goes directly to the reduction of the rates of the domestic ratepayer. My right honourable friend will prescribe, for each year, an amount by which the poundage of the general rate levied by each authority is to be reduced in respect of dwelling-houses. The reduction will be uniform throughout England and Wales: it is expected to be 5d. in the first year, 10d. in the second year and so on. If in the first year, 1967–68, the poundage of the general rate in area A is 10s. 6d. and in area B 12s. 6d., the reduced poundages applicable to dwelling-houses will be 10s. 1d. and 12s. ld. respectively. There is provision for partial relief for properties which are used partly as dwellings and partly for other purposes, provided that the ratable value attributable to the dwelling use is greater than that attributable to the other use.

The Bill also introduces specific grants for certain services where the incidence of expenditure among authorities is too uneven for distribution based on population to be fair. The amounts of money involved will be small compared with the rate support grants, but these new grants will be very helpful to individual authorities facing exceptional expenditure on, for instance, comprehensive redevelopment, the acquisition of land for public open space, the restoration of derelict land, or on special provision on account of large numbers of Commonwealth immigrants. These grants will be 50 per cent. of approved expenditure.

The creation of these new specific grants is outweighed in size by a reduction in existing specific grants, namely those for school meals, for the improvement of Class II and Class III roads, and for the maintenance of all classified roads. The money previously distributed by those grants will be absorbed into the needs element of the rate support grant, which will therefore be even more important than the general grant which it replaces. The Government were impressed by the support among local authorities for the principles of a grant distributed on objective factors, and have therefore concluded that specific grants were justified only where a service needed specially close control—such as the police, or where the incidence of expenditure was very unevenly spread—of which coast protection is an obvious example. The changes I have mentioned in specific grants result from this reappraisal; the new grants have been introduced in order to improve distribution and the former grants have been discontinued in order to simplify administration and reduce central control. The change in respect of school meals, I should emphasise, affects only the method of paying grant. Authorities will have exactly the same duty to provide adequate meals, and my right honourable friend the Secretary of State for Education and Science has reserve powers to enable him to see that they do so. I will say more about roads in a moment.

As compared with the general grant formula, the needs element will have a new factor in respect of highways, and the supplementary grant for education is to be completely changed. The present supplementary grant is based on the numbers of primary and secondary school pupils on the school register. Thus a primary school child attracts exactly the same grant as a secondary school pupil aged 16 or over, although the annual cost of educating the latter is about three and a half times as high. And at the moment awards to students are not counted at all. Crude numbers of school pupils are therefore to be replaced by education units. The Bill does not specify how these units are to to be calculated for each area: that will be prescribed by regulations. The intention is that a different number of units will be credited to an authority in respect of pupils and students at various levels, the numbers being in proportion to the national average cost of education at that level. Units will also be credited in respect of each one thousand meals supplied in a year. I am glad to say that complete agreement has been reached with the associations of local authorities about the various stages—that is, the levels of education to be taken into account—and the number of units appropriate to them.

Before leaving the subject of grants, I will refer to Part III of the Bill, which does two things. First, it provides the legislative framework for the new system of highway grants, and secondly it brings up to date the administrative arrangements for street lighting. At present, specific grants are paid for both the improvement and the maintenance of roads classified in Classes I, II and III: over 70,000 miles in England and Wales. Under the new system, specific grants, at 75 per cent., will be payable only for the improvement of a new category of roads, to be called principal roads, which will be roughly equivalent in mileage to existing Class I roads; namely, about 15,000 miles. All other expenditure on highways by local authorities will be assisted through the rate support grant. At the same time county boroughs will become eligible for the first time since 1929 for highway grants on the same basis as other authorities.

The payment of specific grants inevitably means a degree of detailed control by the central Government. This may have been acceptable when the classified road programme was relatively small, but its expansion in recent years calls for a new approach. By the limitation of specific grants to the improvement of the most important local authority roads both central and local Government will be saved a great deal of paper work, and local authorities will have more power of independent decision over the greater part of their highway responsibilities. My right honourable friend the Minister of Transport, is now undertaking a comprehensive review of the highway system, so that the network of principal roads can be designated when the new grant system comes into effect on April 1 next year. The Ministry's initial proposals for the new network were sent to local authorities in June, and my right honourable friend hopes to let them know the results of the review before the end of the year.

The present organisation of street lighting dates from the age before the motor car, and the authorities responsible range from parish councils to county boroughs. Many are not the highway authority for the roads they light, and even where they are, their highways and lighting powers are separate. The Bill modernises these arrangements by transferring responsibility for road lighting—that is to say, lighting the primary purpose of which is to assist the safe movement of motor traffic—from local lighting authorities to highway authorities, including the Minister of Transport as highway authority for trunk roads. By asserting that the provision of lighting is an improvement to the highway, it also brings it within the grant-making powers of my right honourable friend, the Minister of Transport, and the installation of road lighting on principal roads will be eligible for 75 per cent. specific grant, like any other highway improvement.

We are concerned not only that the efficiency of road lighting should be improved but also that it should fit in æsthetically with its surroundings. In making grants for road lighting, therefore, my right honourable friend, the Minister of Transport, intends to make it a condition where amenity is likely to be an important issue that the Royal Fine Art Commission should be consulted, and that due regard should be had to their advice. The provision of lighting for other purposes, such as the lighting of footways for the benefit of pedestrians, will remain the responsibility of the present lighting authorities.

Part II of the Bill makes four major changes in the field of rating and valuation, of which one has been universally deplored, and the others have been generally welcomed. It is the postponement of the general revaluation from 1968 to 1973 which has been deplored. My right honourable friend, the Minister of Housing and Local Government, regrets that the postponement should be necessary, and so did his predecessor, who acknowledged that postponement both aggravated the lack of buoyancy of rates and increased anomalies as between one ratepayer and another. His decision to postpone was not due to any liking he may have felt for the rating system as it now is; it was a matter of sheer necessity resulting from the shortage of valuers.

Some of the difficulties of the Valuation Office arise from an increase of existing work on redevelopment schemes, housing, and slum clearance, trunk roads and motorways, and there are also new duties in connection with capital gains tax and the Land Commission. The Government make no apology for these additional commitments, which arise from measures that are central to our whole programme of social reform. But the effect of them is that, despite the efforts of the Inland Revenue to recruit and train more staff, there is no hope of the next revaluation being done properly before 1973. The only honest course is therefore to recognise this and make provision accordingly, which the Bill does.

Postponement made it essential to provide a statutory foundation for the long-established practice of valuing properties between general revaluation by reference to the tone of the existing list instead of on current values as the law at present strictly requires. This is a matter that has been discussed in this House on more than one occasion. This Government has braved the difficulties that daunted its predecessors. I am glad to say that the clause has in the main stood up to close scrutiny by the professional bodies concerned and by other interested parties. It has been amended in another place to meet points they made.

The proposed rating of unoccupied property is new in England and Wales, except in the City of London, which noble Lords opposite will no doubt accept as a highly respectable precedent. The Government consider that there should be some deterrent to those who leave property vacant in times of scarcity in the hope of getting a higher price or rent. It is also the case that owners benefit from local services, such as police and fire and drainage, even when their properties are empty. But the proposal is not designed simply to be a revenue raiser; its primary purpose is to reduce waste of accommodation. Since the withholding of property from occupation is a more serious problem in some areas than others, the provisions have not been made mandatory. They will apply only if adopted for their area by the rating authority, and those rating authorities who do adopt them will be able to get rid of them later if circumstances change.

Where the provisions are in force, there will be no liability until a property has been unoccupied for three months. After that, the owner will have to pay half the rates that would have been payable if it were occupied. So as not to discourage house building for private ownership, the free period for newly erected dwellings is to be six months. Certain classes of buildings are exempted entirely: those which it would be unlawful to occupy because, for example, of a clearance order; those which are vacant because a public authority is taking action to acquire them; and buildings of historic or architectural interest—listed buildings—for which it is often difficult to find a suitable new occupier. My right honourable friend has power to make further exemptions and intends to use this power to provide for cases where there is no one immediately in a position to dispose of property—for example, where the owner has died and no will has been proved.

The remaining major change in the rating field concerns the rating of offices occupied by Gas Boards, Electricity Boards and Transport Boards outside their operational land. Most of the property of these industries presents the fundamental difficulty of finding a rental value for things which are never let, and are not generally comparable with property that is let. Even the somewhat artificial method approved by the courts for the valuation of public utility undertakings breaks down in application to undertakings of the size and nature of the nationalised industries. So formulae for assessing and distributing a total value, or total rate payment, for each Board have been devised. Not surprisingly, the results produced by these formulae are not accepted as satisfactory by all the parties concerned. It would be odd if they were. At present local authorities as a whole believe that nationalised industries do not contribute enough to local revenues, and some authorities also believe that the distribution among recipient authorities is wrong. The nationalised industries, on the other hand, tend to believe that they are paying too much in rates already.

A general review of this problem was started under the last Government. Unfortunately considerable differences remain between the parties, and the Government are not yet ready to propose fundamental changes. But there is one particular grievance which we consider should be remedied now. This is that where blocks of offices are rented by these industries they produce neither rates direct to the local authority, nor any increase in the area's share of the industry's total rate payments. This grievance has been recognised for many years. The previous Government did not deal with it. We are doing so. The Bill provides that offices away from operational land, such as the offices in town centres, and not those forming part of railway stations or at generating stations for example, are to be separately rated as from April 1, 1967. The rates payable on such offices will be additional to the amounts due from the industries under the existing formulae. So no local authority will suffer from this change, and a number of towns will benefit.

Part IV of the Bill abolishes a number of local licences and registrations which are considered to serve no useful control purpose and which are not worth keeping as revenue raisers. Some of these are fascinating enough as social history—agricultural gang masters and emigrant runners—but I will say only that they are now archaic. The gun licence is to go because it is an inefficient revenue raiser. It was never designed to serve a control purpose, and does not do so now. As the House will know, anyone, however irresponsible, can get a gun licence from a post office without any inquiry. Control over guns has been much increased in recent years under other legislation—the Air Guns and Shot Guns Act 1962 and the Firearms Act 1965. My right honourable friend the Home Secretary has announced that he is working on plans to end the present unrestricted sale and possession of shotguns. Urgent discussions with interested organisations are being held. There is every hope that provision for better control over shotguns will he incorporated in the Criminal Justice Bill which is to be introduced this Session.

The fees for most of the large number of remaining local licences or registrations are at present fixed by Statute. Naturally the amounts in some instances have become very much out of date. The fee for the licensing of theatres, for example, was fixed in 1843; those for taking and dealing in game in 1860; and that for the dog licence in 1878. Power is therefore being taken for the appropriate Minister to vary the amount of the fees for these and other licences and registrations by order, subject to annulment by Resolution of either House. The arrangements for the exemption from licence duty of working dogs are being simplified. This Part of the Bill also makes many minor amendments to the law of rating and valuation in preparation for a Consolidation Bill which the Government hope to introduce later this Session. This Bill and the Rating Act 1966 comprise the Government's short-term rescue operation for the rating system. In the long run there will have to be a new permanent system. The two Bills make a number of valuable improvements to the rating system itself; they soften the regressive character of rates; they provide a mechanism for a progressive shifting of the increasing burden of local expenditure from rates to taxes; they improve the distribution of grants and they concentrate relief where it is most needed, for the domestic ratepayer. All this is done without reducing the responsibilities of local authorities and without impairing their independence. I commend the Bill to the House.

Moved, That the Bill be now read 2^a.—(Lord Kennet.)

4.38 p.m.

LORD BROOKE OF CUMNOR

My Lords, the noble Lord, Lord Kennet, has moved the Second Reading of this Bill with an attractive, quick-fire clarity. I think that the whole House would wish me to thank him for his clarity, and if the rapidity of the fire was a little too fast for some of us to be able to see where all the shots landed, and whether they hit the target, at any rate we have a full record that we shall be able to read in the OFFICIAL REPORT. I thought I detected him saying that all the new specific grants would be at the rate of 50 per cent. That does not seem to be what the Bill says. As I read Clause 11, it appears that the Minister has discretion, subject to the consent of the Treasury, to fix the rate of grant, in the case of grants to local authorities where there are large numbers of immigrants. Perhaps that is a point which the noble Lord, Lord Sorensen, would clear up when he comes to reply.

I should also like to thank the Government for coming round, though belatedly, to the view which I put before Parliament in 1958, as the noble Lord, Lord Mitchison, will recollect, but which the Party opposite decried and derided continually from that time forth until a few months ago. I refer to the superiority of general grants over percentage grants. I spent a good many years of my life in local government and recollect so often hearing my colleagues in committee, where a service at that time attracted a percentage grant, arguing that it would be better to go forward with a rather expensive scheme because we should have to pay only 50 per cent. of it and could make the rest of the country pay the other 50 per cent. That cannot in the normal case be a sound basis for good, responsible, economic administration. I am quite certain that the good of local government, which we must constantly consider behind all these financial arrangements, demands that, so far as possible, those who are reaching decisions involving substantial amounts of discretionary expenditure shall know that the expenditure for which they vote will be expenditure for which they will have to account to their electors.

The present Government have not always taken the view about the superiority of general grant to percentage grant which is embodied in this Bill. In 1963, the present Prime Minister used these words: The block grant encourages those backward local authorities who are only too glad of an excuse to lag behind in their provision of educational facilities; it penalises the forward-looking and imaginative. So we shall return progressively to a system of specific grants with first priority for education. This Bill does not return progressively to a system of specific grants. On the contrary, as the noble Lord, Lord Kennet, frankly informed us, though there are four new specific grants in this Bill they are, in amount, quite outweighed by the existing specific grants which the Bill proposes to abolish. I say nothing against that: I think it is right. Let me add that I think these four new specific grants are sensible ones, but I welcome the further movement in the Bill towards the substitution of general grants for specific grants. I think it was the 1964 Election Manifesto of the Labour Party, a document entitled The New Britain, which said that Labour will restore the percentage grant for education. Well, this Bill certainly does not restore the percentage grant for education. Indeed, this is not the only current evidence that the new Britain the Government is producing is a very different new Britain from the one which the electors were led to expect. In that Labour Party tract, The New Britain, the larger part of the cost of teachers' salaries was to be transferred from the rates to the Exchequer. There is nothing about that in this Bill.

Last year the then Minister of Housing and Local Government, Mr. Crossman (who is now Lord President of the Council), said that what we face now is a situation in respect of rates which is so serious that the Government must introduce reform and a radical change in the shortest possible time. That sounded, and was intended to sound, like real hope for the heavily burdened ratepayers. They had already been promised "early relief" in The New Britain. Most people who are promised relief from their burdens would assume it meant that their burdens would grow lighter, but this Bill is not going to result in that. If this Bill becomes law, householders will still find themselves paying more rates next year, and more the year after; and so on, ad infinitum. It may be that they will pay only 6 or 7 per cent. more each year, but that is poor comfort to those who had been promised that they could expect "relief".

Even the Government's own intentions for this Bill, announced in their White Paper published to help win the Election this spring are being falisified already by their own mismanagement. For the White Paper of February said that the Government's aim in the grant proposals of this forthcoming Bill would be to keep the average increase in rate poundages more nearly in line with the growth of the economy. The economy has ceased to grow. All the high hopes in the so-called National Plan have been dashed already. But rate poundages are going to continue to grow, and the Government know it—which makes their pride in the contents of this Bill seem, if I may respectfully say so, a little sick.

The Bill is like a dwarf: what there is of it is all right, but there is not enough. In the main, it builds on the foundations which the Conservative Government well and truly laid in the 1958 Act. The general grant and the rate-deficiency grant get merged, quite sensibly, in a new rate support grant. The concept of the new "domestic element" is designed to ensure that some extra money provided by the Exchequer will go for the benefit of householders, who pay their rates out of net income after tax, and not for industry or commerce who pay their rates out of gross profit before tax. The help thus given to the householder-ratepayer is not nearly enough:£30 million a year increasing cumulatively, as against our Conservative proposal of£100 million a year straight away by transfer of the cost of certain services direct to the Exchequer. My own judgment is that that would be only the beginning. There must be much more transferred as years go on.

I wish the Government had thought this out in relation to the established principles of local government finance, instead of simply as a cash exercise. I would have reviewed all local services, and transferred to the Exchequer the whole cost of those services where the element of local discretion is, in practice, minimal. That is the rational next step to take, even though the noble Lord, Lord Kennet, disparaged it. When decisions by councils can substantially alter the amounts spent, it would, of course, be contrary to sound finance for the central Government to bear the whole cost. But the corollary of this is equally important: that where the total cost of a service depends on factors which the local authority has virtually no power to vary, there is no argument of good administration why part of the cost should be borne locally. That is the principle underlying our Conservative policy. The Government have not yet recognised the force of the argument. Fortunately, I feel fairly sure the Royal Commission will.

It is the very heart of sound Government that elected councillors should feel a responsibility to their electors for the calls they make on their ratepayers' pockets. I am not certain how much store the Government set on preserving that essential link. In the earlier days of modern local government councillors who voted away the ratepayers' money needlessly were likely to get turned out of office by angry electors at the next election. The spread of Party politics throughout local government, for which I am afraid the Party opposite are principally responsible, has now brought it about that at council elections good or bad administration has little effect compared with the national standing at the moment of the political Party to which each councillor seeking re-election belongs. This is—and we must recognise it—a serious loss.

LORD MITCHISON

My Lords, if the noble Lord will allow me to interrupt for one minute, am I to understand from him that this is one of the matters which the Royal Commission are considering at the moment and upon which he hopes for a favourable verdict from them?

LORD BROOKE of CUMNOR

My Lords, I am not a member of the Royal Commission, and I cannot say what the Royal Commission are considering. But what I said I hoped the Royal Commission would consider, and would recognise, was that where the total cost of a service depends on factors which local authorities have practically no power to vary, there is no strong case for part of the cost being borne locally. As I say, I cannot speak for the Royal Commission. I think that they have a very wise and understanding membership, and I am quite sure that they will give thorough consideration to every aspect of this important matter.

What I was seeking to argue was that this was not simply a matter of cash and figures. One has to probe through them, as I am quite sure the noble Lord, Lord Kennet, recognises, to the realities of local government administration behind. I was about to say that I also detect in Government thinking, as reflected both in the White Paper and in debates in another place on this Bill, a nave belief that we shall get better local government, as well as simplify the problems of local government finance, if we make local authorities bigger and bigger. That does not follow, and I very much doubt whether it is automatically true.

I have served on a very large local authority—the London County Council—but I started my local government career in connection with a very small one. Indeed, the first time I was ever induced to seek public office was in the village of Cumnor, where some 37 years ago it was suggested that I should stand for the parish council. I can certainly assure your Lordships that that election was not fought on Party lines; it was not fought at all. There were about 800 people entitled to vote, but there was no need to postpone the counting of the votes until the next morning. The counting took place in the village schoolroom, and when the count was completed it was announced that I had received 7 votes. It is all very well for noble Lords to smile, but I was triumphantly elected; and I am not in the least ashamed that I began to learn my local government on the lowest rung.

LORD KENNET

My Lords, might I ask the noble Lord this question? I am delighted that it was he who was elected in a poll which, as I understand it, was 7 out of 800. But is that part of his case for avoiding larger local government units?

LORD BROOKE OF CUMNOR

No, my Lords. Perhaps I was only reminiscing, but I thought it was not wholly irrelevant. I did not want your Lordships to suppose that all my local government experience, from which I can speak, was gained in bodies as large as the London County Council.

One difficulty with very large local authorities is that, besides the problem of persuading good enough people to come forward as candidates and be willing to serve on authorities which cover enormous areas, the link between councillor and ratepayer gets more and more tenuous, as the authority becomes bigger and the area becomes larger. The sad truth is that such councils—these very large ones—can be extravagant almost with impunity. Yet if we are to succeed in raising all our local services to the standards we require—and many of them need to be substantially improved further—the one thing we cannot afford is any waste or extravagance, because that would be a misdirection of scarce resources. What I am hoping is that the Royal Commission's Report will show an understand- ing of these sound principles of financial responsibility, even though it seems to me that this Bill does not.

There is another and quite different principle which the Bill breaches, and this is that the householder pays rates for services rendered. That has always been accepted hitherto, but under Clause 21 owners may in future be made to pay rates at 50 per cent. on houses that have been empty for more than three months. The history of the rating of unoccupied houses in Scotland has not been a particularly happy one, and it may not be the fault of the owner at all that a house is empty; it may be the fault of the Government in ruining the mortgage market that prevents a man from selling his house as quickly as he would wish.

LORD MITCHISON

My Lords, does the noble Lord recollect that the rating of empty houses in Scotland was introduced by a Conservative Government, at the instance of an ex-Chief Whip?

LORD BROOKE OF CUMNOR

My Lords, I realise that the noble Lord is very well versed in the Party politics behind this subject, but I was not seeking to make any Party political point. I was just saying, whoever introduced the rating of empty properties in Scotland, that it had not been an unqualified success. But I do not think the noble Lord will disagree fundamentally with what I am about to say on this clause. I know the offensiveness of houses standing empty in cities where there is still a severe housing shortage, and I am not strongly opposed to trying an experiment with the rating of unoccupied houses where it is at the option of each local authority, as it is made to be in this Bill. But I doubt whether the experiment will come up to the expectations of its authors, and I suspect that in practice three months will be found to be too short a period to he a fair one before the 50 per cent, rating starts.

I like the idea behind Part I of the Bill, that the total amount of all grants to local authorities shall be defined in advance. That gets rid, as the noble Lord, Lord Kennet, said, of the open-ended character of the rate-deficiency grant, which was a valid criticism against what was otherwise a valuable instrument. What I cannot find is any provision in this Bill for transitional relief to those authorities that will lose by it, as a number of country authorities surely will. If we had not introduced any transitional relief in what became the 1958 Act, I am quite sure that the noble Lord, Lord Mitchison, who was quick, though always most courteous, to attack me on every point where I might be vulnerable in connection with that Bill, would certainly have drawn critical attention to it. That 1958 Act, as it seems to me quite rightly, provided for transitional relief to losing authorities on a tapering scale. Perhaps the Government will explain to us why this Bill sets a lower standard of fairness in that respect.

After all, what matters to each individual local authority is what it itself stands to gain or to lose. All treasurers and chairmen of finance committees—in fact, every person holding responsible office in a local authority—will want to know how their own authority will fare. When I was taking the 1958 Bill through I was very strongly pressed by the Party opposite, including the noble Lord, Lord Mitchison, to publish a table showing in detail the estimated effect of the Bill on each grant-receiving authority. Like so many of his suggestions, it seemed a reasonable one, and I acceded to it. I am not at all sure why the Government have not been willing to extend a similar helpful courtesy to Parliament in respect of this Local Government Bill. I cannot help wondering whether they are afraid that it might show up too clearly the need for transitional relief to losing authorities, for which the Bill has not provided at all.

The necessity for this Bill and for something far more far-reaching than this Bill stems from the lack of buoyancy in the rating system as an instrument for financing the present very high rate of growth of expenditure on local services—outstandingly, of course, education. The national tax basis can equitably bear a rate of growth of expenditure which the local rate system cannot. I think that by now that is common ground among us. I am not saying there is any easy substitute for local rates; there is not. I wish well to the Working Party, which the noble Lord, Lord Kennet, mentioned, that is going to study once again further alternatives or supplements to local rates. But none of us who has had much connection with local government finance is full of high hopes that a secret solution will suddenly be discovered. I searched hard in 1957–58, but I confess it was difficult to make progress.

However, under the present law the rate system does get a fresh injection of buoyancy every five years, when there is a general revaluation. It is all the more lamentable that the Government now feel compelled to cancel the revaluation which, under the law, is due in 1968, and to delay the next injection of new buoyancy into the rating system until 1973. We all know—and the noble Lord, Lord Kennet, was frank to admit—that this is due to the acute shortage of valuers. This is a shortage for which the Government's capital gains tax and the Government's Land Commission Bill are principally responsible, and I am sorry to say that here the interests of sound local government are being sacrificed to the implementation of unsound Socialist theory.

In one respect after another this is a makeshift Bill. It is coloured by the quite unsupported view of the then Minister of Housing and Local Government who introduced it in another place that, somewhere just around the corner, there exists a substitute for rates waiting to be discovered, and that therefore the rate system can be decried and damned because before long, at any rate by the time the Royal Commission report, a substitute will have come to light. He reminds me of the little boy who, after incessant quarrels with his rather troublesome brother, said, "Mummy, we shall have to get rid of George". Mummy said, "Darling, we can't do that. You know, Dick, he is not like a dog or a cat; he can't just be put down". Dick said, "Well, Mummy, there is only one thing for it, then—I shall have to go and live elsewhere". That is just what, in this case, Dick has done, and he has left this Bill as his rather inadequate legacy—not to be rejected, but to he received with faint praise.

5.5 p.m.

LORD C1TRINE

My Lords, any Bill that comes to this House from another place having been passed by that other place is pretty well assured of a Second Reading. It may be damned with faint praise, and it may even be amended, but assuredly it will not be thrown out neck and crop. This Bill seeks to remove certain anomalies which exist in the present rating law and practice, and it seeks to put at the disposal of the local authorities rather more money than they are at present receiving.

I want to speak, in particular, in relation to the effect that the Bill will have upon the nationalised industries. My interest in the matter is, I think, generally known. I was for ten years the chairman of the British Electricity Authority and its successor, the Central Electricity Authority, and I was for five years a part-time member of the Electricity Council. I was also for a time a member of the National Coal Board, and for five years was a part-time member of the Atomic Energy Authority. Now all those bodies are in one form or another nationalised undertakings, and while not all of them are dealt with under this Bill, precedents can be set which are easily extended on subsequent occasions. Therefore, it is incumbent upon those who, like myself, are closely interested in the affairs of the nationalised industries to examine fairly closely what is proposed in respect of them in any legislation that comes before this House.

I suppose that as an ex-chairman of the Electricity Authority I read the Annual Reports of that body with rather more care than perhaps is the case of the individual Member either of this House or of the other place. It is natural it should be so; and I was rather struck, on reading the Annual Report for the year which ended on March 31, 1966, to read these words: Local rates weigh heavily on the industry; in 1965–66 its rates bill reached nearly£30 million, costing the consumer 7d. in every£of his electricity bill. In their Report for 1963–64 the Council referred to the increase in rateable values determined in 1962 by the Government in the light of the general revaluation at that time. This settlement was accepted with reluctance, mainly because it failed to eliminate anomalies stemming from earlier years in which the rateable values of electricity undertakings—unlike those of the majority of ratepayers—had been maintained at up-to-date levels. The rating arrangements of nationalised industries are now under review and the Electricity Council consider that the only satisfactory way of assessing the contribution of the electricity supply industry is by comparison with the contributions of other ratepayers. By any reasonable standard of comparison with private industry, or with other industries in the public sector, electricity is, in their view, already heavily over-burdened. They will certainly regard as completely unjustified any additional impost beyond the increases that can be expected to flow from rising rate poundages. There may be other noble Lords who, like me, have had enough experience of the relationship between the Government of the day and the separate nationalised industries to know the reluctance with which any Board makes a statement of that kind for public consideration. It is most unusual; it is the sort of thing that I myself did from time to time, though perhaps in a less direct fashion, but it means that it represents a deep sense of injustice on the part of those entrusted with supplying electricity to the public of this country. I stress the reference to "fair and reasonable comparison". That seems to me to lie at the heart of this subject. Surely, because an industry like the electricity supply industry has raised itself to a high state of efficiency, that is no reason why it should be unjustly treated. After all, electricity is supplied to the ordinary consumer. Whatever the category may be, at some point he or she is a citizen of the country and a ratepayer of the country as well as a taxpayer. It is surely unfair to put upon the electricity consumer burdens in the way of rates which are not justified by any of the ordinary canons that can be applied in matters of this kind.

As we all know, this Bill proposes that offices and other premises not situated on operational land should be separately rated. There is no provision at all in the Bill, as it stands, for any subsequent adjustment in the total rates that are paid by an industry. Therefore, we must assume that what is proposed here will add to the cost of that particular industry. I think that is unfortunate because some years ago when rating was being reviewed a precedent was set in respect of electricity showrooms. There are many of them and they were separately rated. The amount was deducted from the overall amount of rates which the electricity industry had to pay. I know of no other industry—I was almost tempted to say "any combination of industries" paying over or up to£30 million a year in rates. It is a very great sum and its consequences on the industry itself are very considerable.

Of course, troubles never come singly and the trouble in this Bill, as regards the rating of the electricity supply industry, comes in addition to a number of other things that have happened. I should like to draw the attention of the House to some of them. Paragraph 12 of the Report says: …the industry has throughout the quinquennium—had to bear the burden of fuel oil duty, which cost nearly£12 million in 1965–66; over and above the fuel oil tax, it has also borne the extra cost involved in affording a degree of preference to coal over other fuels. In addition it has, in common with industry generally, had to face rising costs of labour and materials and recently a sharp increase in the cost of coal has been announced. This latter increase does not become operative until 1966–67"— the same period in which the rates will also come into operation— but the gross cost in that year is expected to be about£33 million. So between these two sources, rates and other costs, the electricity supply industry has to raise somehow something like£63 million.

I think that is very considerable having regard to the history of this addition to costs. When I was Chairman of the Electricity Supply Industry it was feared that there would be a shortage of coal—it was rather an anomalous assumption—and the proposal was made by the Government, and not by the engineers and technicians of the electricity supply industry, that we should use oil in as many power stations as possible instead of coal, our normal fuel. We said that we should infinitely prefer to import coal in spite of the fact that it would be at a higher price than we were then paying; but on the insistence of the Government we converted a number of our power stations, some of which were on the point of completion and some in the course of construction. I use the word "insistence", but I am not implying any bullying on the part of any Minister; there are ways in which Governments can make their views pretty emphatic.

I have no time to check these figures, but if my memory serves me aright£16 million was needed to cover the capital costs of conversion. I remember signing a contract with Esso for two and a half million tons of oil. As I was told at the time, it was the biggest single contract that they had ever signed or had had in their possession. I signed another agreement with B.P. which was for a slightly smaller amount. I would ask the House to remember this was at the insistence—I repeat, the insistence—of the Government; though, if it is a more acceptable term, I could say "strong representations".

So this industry switched over from its former fuel (with which it was perfectly satisfied) and at the urgent representation of the Government used oil, imported oil. I say this lest there should be any argument over the difference between imported coal and imported oil; for the same principle applies exactly. And the fuel tax imposed by the Government increased the industry's costs last year, the year ending March 31, by£12 million, which I think is a very substantial amount indeed. So if one takes only that last year, something like£28 million has been added to the industry's costs: £16 million capital costs plus the£12 million that I spoke of as being incurred last year.

Now, so far as I can estimate, this change in rating is likely to cost the industry another£3 million. I may be wrong about that, but I have tried to do what checking I could and that presumably is the amount. Therefore, I say that it is quite unreasonable to expect a striving industry that has raised its prices several times, because of circumstances largely emanating from legislation and Governmental and Administrational influence, to go on paying merely because year by year it is showing a large what I used to call "surplus". Incidentally, this is now referred to as "balance of revenue". To look at the balance sheet and to say that the industry has a balance of revenue of, say, £84 million or£85 million of course gives some people the impression that there are unlimited resources there upon which they can draw possibly for other governmental and taxation purposes. But I think it is quite unreasonable.

I wish, finally, to read paragraph 14 of the Annual Report: The Boards have succeeded in absorbing a substantial part of the cost increases that have fallen on them, but they could not absorb them all and tariff increases have been necessary. Since these tariff increases were made, the problems associated with bringing new plant into commission have continued, and so too has the rising trend in costs; in particular, there will be the sharp rise in coal prices just referred to. As a result it is now expected that the Balance of Revenue in 1966–67 will be below the 1965–66 level and that, although the out-turn will vary as between individual Boards, the industry as a whole will fall short of its objective for the five years, albeit by a small margin in relation to the scale of its activities. Those objectives were set for the industry by the Government. They were not set by the industry. The Boards have to pay, or earn, 12½per cent., I think it is, of their net assets. They have come very close to doing that, but never quite succeeded in doing it in the years since the system was establishedunder—I am not now talking politics—a Conservative Government.

I wish to wind up by saying that I think this is an unjust imposition and I hope that when we get to the Committee stage we shall be able to deal with it. I should like to make clear that so far as the actual change is concerned the electricity industry has no objection to the concept of rating offices separately, but it is strongly of the view that this change need not, and should not, be made in such a manner as to add to the burden of local rates borne by electricity consumers.

5.22 p.m.

VISCOUNT MERSEY

My Lords, the noble Lord, Lord Brooke of Cumnor, raised so many pertinent points in his speech that if we are to get an adequate reply from the noble Lord who is to answer for the Government, we shall listen to a fairly long speech. I do not wish to make his speech longer, but I would ask him whether he can refer to one point in the Bill which I do not think has been mentioned this afternoon. In Part III, Clauses 26 and 27, the question of the lighting of highways is dealt with. It seems to me that if we are to deal with this subject, some compulsion, some power, should be taken to make the local authorities in any one area light their streets, certainly the main streets, by the same system and with the same sort of density. Even in the London area, or the Greater London Council area as it is now, you will find that you move suddenly from a road which is lit by orange lights into another strip of road which has are lamps, or sometimes a blue type of lamp. This adds to the hazards and dangers of driving. Surely by now the authorities—I do not know; it may be the Ministry of Transport, or the lighting authorities—must have come to some conclusion about which type of lighting is the safest. The most economical, no doubt, has to be considered; but I think that safety should be the main factor. I wonder whether the noble Lord, in his reply, can say something about this question.

5.25 p.m.

LORD MITCHISON

My Lords, if I may be allowed a minute or two, I shall not be long. I think this a good Bill, and not just because I am sitting on these Benches; but one has to remember what kind of Bill it is. At the moment a Royal Commission is sitting considering on very broad terms of reference the structure of local government. I think that the noble Lord, Lord Brooke of Cumnor, was right to mention that a number of the points which he was raising were really matters to be considered by the Royal Commission, and that in what is in a sense an interim Bill, as it has been described, one would not expect to find them, or expect decisions to be founded on any particular view of them.

This is a Bill, as I see it, introduced because of the urgency for some relief over rates. Relief has rightly been given in the first instance to the poorer group of domestic ratepayers. That has been done by one Bill and now relief is also being given to local authorities in respect of the burdens that fall on them out of rates which, as has been pointed out, rise year by year. The reason they rise is perfectly simple. It is twofold. Under thirteen years of Tory Government we have seen consistently rising prices. I am not saying whether this was inevitable or not; that is not a matter which we are discussing now; but it has happened and has, of course, told on local expenditure.

Secondly, we come to Parliament—the Tory Party has done it just as much as my own Party—and we put new responsibilities and new duties on local authorities and these have to be paid for. A great many of them arise out of the increasing complexity of the life we live in a modern society. When people say that rates ought to be reduced, I remember first of all that when Joseph Chamberlain was the radical Mayor of Birmingham his motto was: Higher rates and a healthy city. That was a long time ago, and the administration of Birmingham at that time had been particularly scandalous, nearly as bad as that of Edinburgh in Cockburn's time. Without going back as far as that, it is true to say that if you really want to cut rates, cut the total burden on the local authorities, inevitably you have to reconcile that somehow or other with the increasing cost of their duties; and it just cannot be done.

The other question is, how do you distribute the burden as between the central Government and the local authority? Both Lord Brooke of Cumnor, to-day, and the Minister speaking in another place gave their own views as to the kind of criterion which ought to be applied. Like most of these matters of distribution between the central and local responsibility, it is a question of degree. It is quite easy to find some things which at the end of the scale are undoubtedly capable of being put more on the shoulders of central Government, and others where perhaps the share of the local authority is too small. When we have a Bill of this kind dealing with the broad financial burden I do not think we can do very much about that.

I do not consider that the question of the proportion in which teachers' salaries should be paid is a matter for this Bill. I should have thought it a matter for an Education Bill, and it would need to have regard to the partnership existing in education, as we all know, between the central Government and local authorities. The trouble about the general grant was not so much that it aroused any comments from the Opposition as that it aroused comments from all the education authorities and people interested in education all over the country. Rightly or wrongly, they felt that the Ministry of Education under a Tory Government had shifted its ground and was no longer keen on an arrangement which did allow local education authorities to make advances and ventures on their own, advances and ventures which this grant made impossible or at any rate unlikely.

One must never forget that rates are not a good tax. I do not feel quite so hopeless as the noble Lord, Lord Brooke of Cumnor, does about alternatives. There may be something to be done. I do not think that we can hope to find a 100 per cent. alternative, but partial alternatives have been considered. Perhaps the best answer to a too pessimistic view about this is to look at other countries which have a structure of local government not dissimilar from ours and finance it under quite different arrangements. They use indirect local taxes on a much larger scale than we do. I am not saying too much about it, but I think that it is right and proper that it should be investigated, as it is being investigated at this moment, and I am no more prepared to dismiss the work of that working party as likely to be useless than I am prepared to do so in the case of the Royal Commission which is considering the structure of local government.

What happened about empty properties was very simple. The Scottish Grand Committee gave the noble Viscount, Lord Stuart of Find horn, when he was Scottish Secretary, a good hauling over the coals on this matter, and he, being an ex-Chief Whip, persuaded the Government that Scotland should be allowed to do it; and they have been doing it ever since. I agree with the noble Lord, Lord Brooke of Cumnor, that we must not expect too much, and I also agree with the Minister who said exactly the same thing. That is why he left it to the discretion of local authorities. Glasgow, which has about the worst housing problem in the whole country, tried it on a large scale, and it has only a limited use. What use it has is very much as a deterrent against the kind of landlord who keeps his house deliberately empty in the hope of being able to sell it at a higher price than he can get at present. That is the kind of think it serves to prevent or discourage.

Finally, this is a Bill which is not putting any more on the backs of the local authority. So far as it does so, the effect is quite incidental. It does two main things, as I see it. One is to give them a relief at the rate of 1 per cent. of estimated expenditure. That is what is intended, though of course it is not in the Bill. It does so at a time when we all recognise that the burden on local authorities as well as the burden on the domestic ratepayer is becoming very heavy, and that seems to be a right and proper and sensible thing to do.

It is very strange to hear a former Tory Minister of Housing raising objections to deferring valuations. It is exactly what they did, and for the same reason—shortage of valuers. There is no foundation for attributing that to anything in the past year or two: it has been the position for years and years past. I hope that some Government or other, some day, is going to do something a little more useful about this by way of training future valuers; but that is not the question to-day.

The second main thing this Bill does is make a distinct improvement in the rating system by the rate support grant. It is not the old general grant. It is something much wider than that. It is left to the Minister and it is based on a new formula including relief for the domestic ratepayer; and those two big changes seem to me to be well worth making. They are made in a Bill, which can last only so long as the structure of local government remains fundamentally unaltered and while that matter is under consideration by the Royal Commission. For what it is, I suggest to the House that this is a thoroughly good Bill. It was accepted without a Division in another place, and it would be strange indeed if, on a Bill which is not a Money Bill, in the technical sense, but still is nothing but a Financial Bill, this House were to differ from the place below.

5.35 p.m.

LORD SORENSEN

My Lords, one noble Lord has feared that if I attempted to answer all the questions that have been directed to this Bench this afternoon, it would take a long time. I thoroughly appreciate his calculation, but I assure him that it will not take a long time, because I do not propose exhaustively to answer the questions directed to me or to my noble friend; for many of the points, valuable as they are, can best be brought up on the Committee stage of the Bill. There are, however, one or two points raised by the noble Lord, Lord Brooke of Cumnor, which I will endeavour, if not fully at least partially, to answer. Though it would perhaps be better for us all if we discussed contrary proposals on the Committee stage, this discussion will help us then. Members of another place predigested this measure in thirteen stages of mastication, but I do not suppose that we shall require that amount of time when we reach the Committee stage.

We all recognise that rates are becoming an increasing burden on large numbers of people. Some of us feel that they are becoming like the last straw on the camel's back. George Orwell, in his enchanting and mordant satire and parable, Animal Farm, refers to a number of zoological specimens, but not to the camel. I do not know why he should not have done so, because the camel is a good synonym for the ratepayer. The ratepayer is always complaining, quite justifiably, that he is bearing too heavy a burden, which should be transferred elsewhere. The noble Lord will agree that one of the means by which the ratepayer could be relieved is by transferring the burden in some measure from the ratepayer to the taxpayer. I understand that in the latter part of the political campaign in which he and others engaged in the last Election, the figure of£100 million was advanced as the amount by which his Party proposed to transfer the burden from the ratepayer to the taxpayer. I would remind him that in his Party's political guide there was the statement, on page 301: It is all too easy to talk airily about transferring the cost of the whole of the services to the taxpayer, but are they prepared to face higher taxes in this connection? I would remind your Lordships that many of these matters are contentious and controversial, and certainly fall within the orbit of consideration by the Royal Commission. That is why, as has been emphasised once or twice to-day, this Bill is by nature an interim measure. It does not pretend to solve this very substantial problem. We must await the Royal Commission's Report. I agree that the Commission's Report will take time, and that it will take more time before it is implemented. On the other hand, I do not suppose that it will take thirteen years—which is a period of time that is familiar to noble Lords opposite.

Another proposal for relieving the taxpayer and the ratepayer of their burden is to decrease substantially the amount spent on social services. No one has suggested that this afternoon; nor did they do so in another place. For good or ill, we bear this burden of the social services; and we are glad to do so. It is one thing to have a burden to bear, but it is something else to appreciate the nature of the burden. It represents a comprehensive and vast expansion of our social services generally. Their cost has to be borne in one way or another, but it is agreed that the ratepayer should be relieved in some measure. I would remind the noble Lord that he has said that this Bill, when it becomes law (I think these are his exact words) "will still leave the ratepayer to face increase in rates in the future instead of relief." Though that may be true, certainly this Bill will decrease the rate of increase.

And this applies not only to this Bill. Another measure which the Government have taken has already decreased the rate of increase for a large number of people in the country, and here I refer to the poorer ratepayer. They, at least, know by actual experience that, through the facilities provided for them by the Government, they have been able quite substantially to earn a relief of their burden. It is estimated that something like£15 a year has been the average relief to something like 900,000 people or more, who have applied for refund under the facilities which the Government have provided for them. I understand that the figure at the moment is 900,000, but that there are a number of late applicants, and the final figure for the first period may well be over one million. The amount of these rebates runs into something like £7½million. No one can argue that this is not a relief to some people, and although, through the general Incidence of the social services and other services, it is likely that rates will continue to rise, our task, of course, is to try to minimise the rise as much as possible. What we have done, and what we propose here, I submit, goes some way towards not only minimising that rise, but also towards making its incidence more equitable.

I now turn to one or two of the remarks made and the questions put. The noble Lord, Lord Brooke of Cumnor, asked about immigrants. He stated that the Bill does not fix the rate of grant at 50 per cent. for a high proportion of Commonwealth immigrants. This is quite true. But the intention of the Government is to calculate grant at the rate of 50 per cent. of approved expediture in employing identifiable staff to deal with the special problems arising from the presence of Commonwealth immigrants in this country. Details of the scheme are still being worked out with the associations of local authorities.

The noble Lord not only argued that the Bill does not envisage a substantial decrease in the burden of rates, but also asked a number of questions, including one with regard to local authority services. He argued that where it could be shown that financial responsibility of local authorities was diminishing it would be just as well for the central authority to take complete charge of those services. This was a point that weighed in their minds. But there are serious dangers in that, because one of the great needs of this country is to preserve, so far as we can, the responsibility of local government. If, therefore, there is a continuous transference by virtue of the financial changes from local government to central Government, there is a danger of the whole structure of local government being eroded.

LORD BROOKE OF CUMNOR

Perhaps I may explain to the noble Lord what I meant. I was not suggesting that these services should all be taken over entirely by the central Government. What I was saying was that there was no strong reason against the central Government paying for the whole of certain local services where all the vital decisions are taken centrally and the amount of discretion left to the individual local authority is minimal. It is rather a different point.

LORD SORENSEN

I appreciate that, and I do not want to misrepresent the noble Lord. But I still feel that my suggestion holds good. A strong case can be made out for certain services being paid for entirely by the central Government. In certain cases, we know now of the large portion of expenditure that is met by central Government. With that there follows the logical sequence that, the more the central Government accept as their financial responsibility, so correspondingly less should be the responsibility of the local authority. All I am pointing out is that there is a great danger here. I would suggest that, even if the central Government do come to the aid of local authorities substantially, and even though, logically, they might say that correspondingly there should be a diminution of the responsibility of local government, nevertheless, the central Government would be wise to say, even though it may be entirely illogical: "In spite of our bearing a greater proportion of the expenditure, we will still leave with the local authority considerable discretionary powers."

To turn now to the speech of my noble friend Lord Citrine, I may say that after the great experience he has had in national industries his observations weigh very heavily with all of us, as I am sure they will with the Government. But he must appreciate that there are arguments on both sides. There has been a great deal of discussion taking place behind the scenes. There are local authorities who can produce just as strong a case against the nationalised industries bearing what they contend to be too low a burden of the rates as, on the other hand, the noble Lord, Lord Citrine, advanced in exactly the opposite direction. All I can say is that this is being seriously considered, and if the noble Lord feels that it can be considered still more by his putting down an exploratory Amendment, there is nothing to prevent him from doing so. Meanwhile, I can assure him that the Government are exercised on this matter. They realise that it is unsatisfactory from every point of view, and they are hoping to conduct a drastic review into the whole incidence of this matter so that later on they can come to a more constructive conclusion.

Coming to the speech of the noble Viscount, Lord Mersey, he mentioned the diversity of lighting systems. Some of his remarks were of course irrelevant to this Bill. I would say, however, that the provisions of the Bill by reducing the present large number of authorities responsible for road lighting, and by making lighting the principal responsibility of the road authorities, reduce the serious difficulty and danger to which he referred. To that extent it is good. But I would remind the noble Viscount that the powers of the Bill possibly do not go as far as he wants them to. As one who has been driving for many years, I share with him the difficulty, embarrassment and sometimes danger of a sudden change in lighting. Sometimes the illumination is of a different type; sometimes it is poor in quality; and I therefore share with many others the desire for something to be done along these lines. I should have thought that reducing the number of authorities would go some way towards securing continuity of policy over a long stretch of motoring highway.

VISCOUNT MERSEY

My Lords, if I may interrupt the noble Lord, I knew when I spoke that what I said was not entirely relevant to the Bill, but I was hopeful that, as we were discussing this, there might be an opportunity—it is doing no harm, and it may help—when we come to the Committee stage, to get something into the Bill by means of an Amendment which might go further than the Bill goes at present on this point, which I think is important.

LORD SORENSEN

I appreciate that. If the noble Lord cares to put down an Amendment, there is nothing to prevent him from doing so. We can then argue the question, and having seen the terms of the Amendment we can possibly give him a more considered reply than I can give now. I am entirely sympathetic with the noble Lord in what he has said.

The House will not mind my saying that I do not propose to continue very much longer in reply to the remarks made by noble Lords. I think that I have covered some of them at least. I have referred to the noble Viscount, Lord Mersey, and to my noble friend Lord Citrine. My noble friend Lord Mitchison intervened at the last minute, and we are most grateful to him, as we are to all noble Lords who have intervened, for the contribution made out of his great experience particularly with regard to Scotland. I would say again, as I began, that we appreciate that millions of ratepayers in this country have a great burden. Something has to be done to try to ease that burden, even though it can never be reduced as much as the ratepayers themselves desire. Nevertheless, something in particular should be done to ease the burden of those who can least afford it, and something has been done in that direction already.

This Bill will go a little way towards making the system equitable. Even for that reason, I trust earnestly that, though there may be Amendments which will improve the Bill, the substance of it will be acceptable to the whole House in due course.

On Question, Bill read 2^a, and committed to a Committee of the Whole House.