Local Rates.

Orders of the Day — Emergency Powers Act, 1920 (Regulations). – in the House of Commons on 6 April 1921.

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Photo of Colonel Henry Bowles Colonel Henry Bowles , Enfield

I beg to move, That a Select Committee of this House be appointed to inquire into the incidence of local rating by public authorities and to make a Report. I make no apology for bringing this question to the notice of the House. For many years I have been interested in the work of local authorities. From the early days when the county councils were first elected we have always had this difficulty about the burdens that fall upon local rates. I think it was in 1896 that we had the appointment of a Royal Commission under Lord Balfour of Burleigh. That Commission inquired into the subject for a very long time, and issued two or three Reports. Therefore I feel that we have got a great deal of evidence already on this subject in these Reports and in the evidence which was given before the Commission, and also in the evidence given before a Departmental Committee appointed by the present Prime Minister, who was then Chanceller of the Exchequer, under the chairmanship, I think, of Sir John Kempe. As a result of the Report of that Commission, I believe in the Budget of 1914 certain measures were taken in order that local rates might be relieved by Exchequer grants but were dropped owing to war. There does exist in the country to-day a sort of grievance because the Commission presided over by Lord Balfour pointed out clearly that there were certain services which were national services as to which greater assistance should be given from the Exchequer and less money taken from local rates. From that time onwards local authorities have felt that they have been suffering hardship through not having these grants enlarged. The last Report of the Royal Commission says: Complaint is made on behalf of the ratepayers that there is thrown on the rates too much of the cost of certain national services, and that those who have got no rateable property are placed in too favourable a position. That brings us to the crux of the whole thing. For instance, a bachelor who makes money by financial arrangements and has not to keep up an expensive establishment contributes very little towards these national services. But there are cases even stronger than that. There is the case, which I had before me a short time ago, of a jeweller from another country bringing over a large quantity of gems and jewelry from that other country and, by taking a room for a short time at a hotel, being able to compete against the large jewellers' shops in the West End which have to contribute so largely to our rates. I only mention that to show that there is a well-founded grievance and that the rates do press too heavily upon certain parts of the community. I would remind the House of what are the national services to which I refer. In the first place the Commission set out that asylums for pauper lunatics are a distinctly national service, as also registration expenses, police and criminal prosecutions, maintenance of public roads and county bridges, and diseases of animals. The last report I think was made in 1904.

Since that time this House has seen fit from time to time to place further burdens upon local rating authorities, and not only are there what I may call burdens that are enforced by legislation passed by this assembly, but this assembly has encouraged and incited local authorities to dip very heavily into the purse of the ratepayers. It was to meet that that the present Prime Minister, when Chancellor of the Exchequer in 1911, set up a Departmental Committee on local taxation, and that Committee reported that since the time of the Royal Commission the following expenses were placed upon the rates:—National Insurance for Tuberculosis Sanatoria, provision of meals for scholars, provision for medical inspection in schools, asylum officers superannuation, and the Police Weekly Rest Day Act. Each of those made fresh inroads on the rates of our country. Since 1911 we know that there have been a great many further demands upon our local authorities for things which have to come out of the rates. For instance, the building of cottages, the Mental Deficiency Act, and the Venereal Disease Act. The result is that the ratepayers of the country, not unjustly, have become alarmed. Thanks to a Committee which sat last Session, if any legislation now comes before this House notice has to be given and special action taken before the rates can be devoted to the purpose mentioned in the legislation. I may read from the Report of the Committee an important paragraph: Your Committee feel that at the present time in the existing condition of national finance more weight should be given to the protection of the ratepayer even at the risk of legislation being thereby checked and reduced. A few schemes for which the finance has been critically studied by Parliament would be of more value than a number of measures put forth with hastily formed ideas of the ultimate cost. There is A measure which we are to consider shortly in which due recognition has been taken of the wish of the Committee, and the attention of the House is called to the burden that it will place upon the rates. Perhaps it is best that I should take an instance which is known to me better than any other. It is that of own own county of Middlesex, where for the last 32 years I have been closely connected with the finance of the county council. In 1900 the county had a surplus on what was then called the "Exchequer Allowances, Criminal Prosecutions and Main Roads," of £20,000. Now, owing to the increased deductions made by the Local Government Board for the charges of the Metropolitan Police Force, that sum has been entirely swept away, and in 1904 we had a deficit. There is no county I could give as a better example in support of the argument that the police should be paid for by the Imperial Exchequer rather than by local authorities. In our county we have practically no control over the police force. Unfortunately, I live in a suburb of this great city, and I know that if there is, say, a great fete in the precincts of the metropolis or there is likely to be a disturbance of the peace, innumerable men are drafted from our division and the outer suburbs are left in an almost unprotected state. That happens in days when there is a great deal of crime, especially in the way of housebreaking In 1904 we started with a very small deficit of £1,911. Year by year, with leaps and bounds, that deficit was increased. In 1918, over and above what we received by Exchequer grants, the deficit had reached no less a sum than £56,798. When the Royal Commission sat the grievance of the ratepayers was not as acute as it is to-day. It is not surprising that, with taxes that are almost unbearable, we sometimes feel, when our local rates demands come in, that they are more than the ordinary ratepayer can be called upon to pay. I know there are many in this House who are much more conversant than I am with this question of rating, but when I was fortunate in the ballot I felt I could truly forward no motion of more importance. I am merely voicing the opinions of many ratepayers, to whom this is a burning question which they want to have investigated, not only by the rating authorities, but by the Government. I realise that it is rather hopeless for me to indicate exactly what line of action the Government should take. I understand the question is already receiving the attention of the Government. I hope the matter may be dealt with promptly.

Photo of Sir Alfred Warren Sir Alfred Warren , Edmonton

I beg to second the Motion.

For two days the House has been engaged in a long discussion regarding the protection of the rights of certain sections of the community, and their advocates with eloquence and with force have been asserting their claims. As I have listened to them and thought of this Motion I have remembered the plight of the ordinary ratepayer who, unless the House is prepared to come in some reasonable way to his or her assistance, is in a most hopeless position. There is not an hon. Member of any political party or any one associated with any type of enterprise who is not cognizant that in the area he represents there is a great and growing feeling of reasonable revolt at having to bear a burden that is almost insuperable. In November of last year, upon the Second Reading of the Ministry of Health (Miscellaneous Provisions) Bill, the then Leader of the House stated that the attention of the Government had been called to this question, and if it was the desire of the House a Select Committee would be appointed to inquire as to alterations in procedure with a view, if possible, of relieving the ratepayer. The Mover of the Motion has referred to part of the recommendations made by that Committee. If I know anything of the feelings outside it is that local authorities have a great burden placed upon them, and that they have no voice or control in respect of the greater portion of the expenditure they are called upon to incur.

I was examining some figures yesterday of a Metropolitan borough whose rate at the moment approximates 22s. 10d. in the £. I find that of that 22s. 10d. no less than 16s. 4d. is raised for matters over which they have no voice and can exercise no authority whatever, and the local authorities throughout the country are beginning more and more to realise that after all local taxation can only be justified where there is local control, and that to be called upon to raise large sums for outside authorities and to bear the odium—for that is what they are smarting under—of raising huge sums in respect of matters that they cannot control, is a most unfair thing. They are the bodies who are anathematised by the ratepayers on account of the huge rates which they have to impose, and there is a growing feeling of resentment on the part of these local authorities. Hon. Members may have seen that the local authority of a Metropolitan borough not unknown to fame—Poplar—are taking or purporting to take a very drastic and unconstitutional action. They are saying to-day, "We propose only to make a rate in respect of that which is our own expenditure, namely, for the Borough Council and for the Board of Guardians." To-day there was an answer in this House to a question put by an hon. Member as to what action was likely to result from the withholding, for instance, of the Metropolitan Police rate. I am not going to justify the action of Poplar, because in my judgment it is an unconstitutional action, and if carried out throughout the country one which would reduce us to a system comparable to Bedlam, with chaos and confusion beyond all words, but, after all, it is symptomatic of what is in the minds of many who are having to deal with local affairs throughout the country. They strongly resent it and look to this House for some measure of relief.

Had the business of this House taken the course set down, there would have been a discussion yesterday on the Second Reading of the Public Health (Tuberculosis) Bill. The institutional treatment of tuberculosis is to pass from the National Health Insurance Commissioners to the local authorities of the country, and the portion of the contributions falling into that fund from the insured persons is to be paid over to local public health authorities, but Parliament realises that the sum passing is not sufficient, and in the White Paper presented to this House with the Bill they estimate the cost of additional services under the Bill at £40,000, of which £20,000 is to be met by the Exchequer and £20,000 from the rates. Why from the rates? Surely if there is one matter that could be regarded as eminently national, as not being peculiar to any one area or any few areas, it is this question of the white plague, tuberculosis, yet the local authorities are to be expected to find one-half of the additional cost imposed by this transfer from the National Health Insurance Commission to the local authorities. A large number of intelligent persons in the country are resenting this system of doles that for the past 20 or 30 years have been perpetrated by this House of Commons saying to local authorities, "Here is a measure of social reform which is eminently necessary; Parliament will find part of the money if you will find part." It has rather thrown dust in their eyes and lulled them to sleep, and they have not been so active because the promise has been held out that, after all, this is a measure of great importance and they will only have to bear half the cost. I want to say with great deliberation that, in my judgment, and, I believe, in the judgment of a large number, the time has come when the question of rates has got to be seriously considered and when some measure of protection has to be set up for the unfortunate ratepayers throughout the country. Therefore I am wholeheartedly in support of the Motion. I think this House would be wanting in its duty and in its proper regard for these unfortunate persons if it did not take every step in its power to make such inquiry as can bring about a reasonable alteration that will satisfy, at any rate, the individual ratepayer and the borough, urban district, and county councils, who have to impose these precepts, that everything reasonable was being done to place the burdens on the right shoulders.

Photo of Mr Thomas Myers Mr Thomas Myers , Spen Valley

The Labour party will support the Motion before the House, but for perhaps quite different reasons from some of those that have already been advanced. There are many phases of this question of local rating which are exceedingly interesting, and I will call attention to just one or two and endeavour to present our point of view in relation thereto. The present method of assessment in respect of local rates we believe to be very largely antiquated and out of date. The method of levying rates on houses and similar properties operates in the direction of levying the rate upon the rent of the property, with certain reductions of about 15 or 20 per cent, to balance the upkeep, insurance and depreciation of the properties concerned, but there are now so many properties available to which that principle cannot very well be applied that it is necessary that some change should be effected. It is also inequitable in other directions. Take a professional man—a medical man, solicitor, architect or a man of that kind. He occupies, perhaps, very small premises in a side street, and makes, let us say, £1,000 a year. An ordinary business man with a shop in an average thoroughfare, fairly commodious in extent, is rated upon the premises he occupies just the same as the professional man, but while each may be making £1,000 a year, the business man is mulcted in rates out of all proportion to what the professional man has to pay, and there is no equity in an arrangement of that character.

The one striking fact with which we are confronted when we realise the rise in rates during the last three or four years is the comparatively small increase that has taken place in the assessable value. We are informed that the local rates are likely to be raised in England and Wales during the coming year to practically double the amount they were in 1914—double, both in the total amount of rates likely to be raised, and double so far as the rates in the £l are concerned. But we are confronted with this fact, that the assessable value in 1913 was £211,000,000, and in 1920 £223,000,000, or an increase only of 5¾ per cent. Now many people who are complaining of high rates, particularly those who have heavily-rented premises, seem to me to be complaining to a very large extent unnecessarily, for the simple reason that if normal conditions had prevailed, the assessment would have increased very largely, and, while a lower rate in the £ would have been prevailing, that lower poundage would have been paid on a much higher assessment, and while a heavier rate in the £ is being paid at present, it is being paid upon a much lower assessment than would have been the case if the War had not taken place and normal conditions had prevailed. It balances very largely the extra calls that are being made in existing circumstances.

9.0 P.M.

In respect of premises where we have been unable to assess upon the recognised principle of rent paid, another principle has been adopted, and when we are tackling a factory or business premises of that sort owned by the person who pays no rent, and who works the undertaking, we endeavour to find the assessable value of the property by taking round about the profits made per year. That seems to me to be altogether, under present conditions, an undesirable proceeding. There are Members in this House much better acquainted than I am with the means that are available for getting round the declaration of real profits, and the rates now levied upon many business premises have little or no relation to the profits that are being earned by the undertaking in question. That is an evidence that another system of rating assessment is necessary. We are at another disadvantage. There are many Government properties in the country that have no rates at all, and I find by the return which was published in 1915 that in that year properties amounting to £2,000,000 in rateable value paid no rates whatever, and while grants were made to local authorities in respect of some of those properties, it would be better, and we should understand exactly what we were entitled to, and what we were receiving, if those properties were rated on similar lines to other properties in the same area. It is common knowledge that in different parts of the country where Government properties are rated, they are rated upon an exceedingly low assessment, and are a burden upon the particular local authority in the area in which those properties are situated. Another anomaly comes in at this point, and that is the question of tramways and light railways. Many Members of this House will be acquainted with tramway undertakings in different parts of the country. If those undertakings receive their powers under the Light Railways Act, they make a contribution to the local district rate on a quarter of their assessment, but if they get their powers for constructing a tramway under the Tramways Act, they have to pay on the full amount of their assessment. I am myself acquainted with a tramway company running through a particular district, the same men working the trams, and the same trams being utilised, and in one part of the district it is a light railway and in another part of the district it is a tramway, and they have two different rates on a different basis. If it is a tramway it is a tramway, and they ought not to be able to relieve themselves of the obligation to the locality because they are able to secure their powers under what is understood as a light railway. All along the line the community is being robbed of what is its just due in this connection.

Then there is the question of railways, canals, and the like, which, under the Public Health Act, have to make a contribution to the district rate on one-fourth of their assessable value, and the poor rate on one-half. So far as railways are concerned, whatever justification there may have been 50 years ago for introducing a principle of that sort, the day has long gone by when it should prevail, and we are entitled to ask that the railways should have to pay on their full assessable value to the local authorities through whose district the railway runs. I agree that this is one of the things that is bound to be amended. It is exceedingly difficult to assess railways piecemeal, and it would be better if there were a national assessment on the railways of the country, and the payment of one lump sum, and then the receipts be apportioned to the respective local authorities in the country. At the same time, I suggest their rates ought to be levied on their full assessments and paid at that rate. We have come up against another difficulty of assessment in respect of these new houses that are being erected, and I think the time has come when we are entitled to ask the Minister of Health to introduce a settled principle of assessment in this direction. Under some of the new housing schemes houses are being assessed on the same basis as houses in the same locality giving similar accommodation that were erected in pre-War days. There are other authorities assessing their houses on the rental that is being received at the present time—a rental out of all proportion to the value of the houses when compared with other houses in the neighbourhood. Some settled principle of assessment in these directions ought to be instituted. One great evil in connection with our rating system is the fact that there are too many calls and two many rates. We have a poor rate, a district rate, a county rate, in some areas, an education rate, and all the rest of it. There ought to be some measure of uniformity to secure one rate and one call for the local rates; some uniform plan and system.

The question of national services has been referred to. It is common knowledge to all the local authorities in this country that what are now really national services are being put on to the local rates to a far greater extent than should be the case. I have here by me the Report of the Royal Commission on Local Taxation which sat in 1901. I have the Departmental Committee's Report for 1914. The Royal Commission in 1901 specified as national services poor relief, police, education, and main roads. While they hesitated to make any recommendation as to whether these ought to come upon the National Exchequer, their declaration was undoubtedly in that direction. While something has been done during the past twenty years for a larger contribution towards these services from the National Exchequer there is yet considerable leeway to be made up in this direction for the benefit of local authorities.

Not only in respect of the services that have been named is what I have said the case, but in every Act of Parliament which comes by way of the Ministry of Health and those Departments which deal with local government matters more and more calls are being made on the local authorities of the country. I will give just a fact or two to indicate the neglect of the National Exchequer to keep pace with these demands. In 1914 the average rate paid per head of the population in England and Wales was £1 18s. 11d.; in 1919 it was £2 5s. 1d.—an increase in the five years of 6s. 2d. per head. In that same period Government grants were: in 1914, an average per head of the population of 12s. 4d.; and in 1919, 15s. 1d., or an increase of 2s. 9d. The rates increased 6s. 2d. per head and Government grants 2s. 9d. only per head of the population. That proves, I think, quite clearly, that these national obligations imposed upon local authorities were not met to the extent they ought to have been met by contributions from the National Exchequer. This can be shown with equal force under another head. In 1914 the total rates raised in England and Wales were £148,000,000; in 1919, £194,000,000, an increase in the five years of £46,000,000. In 1914 Government grants amounted to £22,000,000, and in 1919 to £28,000,000, an increase of £6,000,000. So far as I know, replying to my hon. Friend beside me, the reports include all Government grants to local authorities. I want to suggest that the £46,000,000 increase in rates and contrasted increase in Government grants indicate that much leeway has to be made up, and the local authorities continue to urge that the increased responsibilities which are being put upon them should be accompanied by extra financial backing.

This is not by any means the most important part of this question of rating. If we set the local authorities against the national exchequer, after all, it all comes out of the same pocket. It is not so much a question of playing off the local authorities against the national exchequer as endeavouring to find new sources of revenue. I have gone through these two reports and many points of view are expressed, and many opinions are discussed in this direction. I would suggest that at the present time local rates have nearly reached breaking point in so far as they are imposed upon houses and similar property. Even if they have not yet reached breaking point the principle has been carried as far as either necessary or desirable. When we look for alternative sources of revenue for the benefit of local authorities we touch upon very controversial ground. We have need to venture even if we do encroach into the realms of controversy and difference of opinion. I am one of those who hold the view that one of the sources of revenue that we have got to tap is the taxation of land values. The whole value that accrues from land—I do not want to enter upon any discussion of this matter—at any time and in any place is due to its proximity to the public services. If there are no public services such as water, trams, gas, schools, and the rest of it, land is of no value. It increases in its value just in proportion as the public services are brought to bear upon it. Any value that accrues from these public services being applied ought to come back to the community to help to develop and further to continue these public services.

Such a principle as that ought to be recognised. We understood the Manchester Corporation were likely to promote an Act of Parliament, introducing this principle, and applying it to their own city. We should possibly have heard much more about it if that had been done. In any case, it would give us a new and an additional fund and a source of local revenue; and the new system could be inaugurated to provide financial assistance to those local authorities so much in need. In addition, if this system were inaugurated and new sources of revenue provided, we could move in the direction of relieving local authorities of some of the burdens of the present time.

One great burden on the local authorities—one likely to be a great burden, in my judgment, in the future under the present system—is that of the interest which local authorities have to pay on the loans they require. In March, 1914, the outstanding debt of the local authorities in England and Wales was £570,000,000. The whole of the rates raised in England and Wales that year was £71,000,000. Out of this latter figure just under £20,000,000 had to be paid in interest on loans held at a rate of interest approximately round about 3 per cent. Even that 3 per cent. absorbed £1 out of every 70s. raised in rates. The outstanding debt of local authorities to-day is something like £550,000,000. The total rates raised, according to the returns furnished to us a week or two ago, ending with the period 31st March of the present year, was £103,000,000—an increase of about 33 per cent. over 1914. The rates to be raised in the forthcoming year are expected to be about £149,000,000, or an increase of 109 per cent. I ask any hon. Member, what can he find in these days which has not increased 109 per cent.? The point is, how much of that is now having to be paid in interest on loans. If we assume the public debt of this country, so far as local authorities are concerned, has been transferred from a 3 per cent. debt to a 6 per cent. debt during the last six years, the amount of interest now payable upon our outstanding debt cannot be less than from between £30,000,000 to £35,000,000.

We have at the present time the large local authorities advertising for money, and they are willing to borrow on twenty years' terms and pay 6 and 6½ per cent. for the money they so borrow. In some instances we understand that 7 per cent. is being paid at the present time. Speaking as one with some little municipal experience and looking forward to prospective municipal development, frankly I say that I do not see that municipal development which there ought to be if local authorities are to finance municipal undertakings at 6 or 7 per cent., let alone carry the burden of interest on the great municipal debt at the present time. We are paying more to-day in interest than the whole cost of the public health services of the country. If we could reduce this great burden of interest, then we could set the activities of our local authorities free and move in the direction of that new municipal development which we are entitled to expect.

One thing I do say is that if we are to reduce the great burden of local rates we shall have to consider the responsibility of the Government in this matter. The Public Loans Commissioners ought to take hold of this question, local authorities ought to be furnished with cheap money, and should even be given preferential treatment for the purpose of developing these public services. They should be cleared of the tremendous financial burden involved by the heavy interest to be paid at the present time, and the increased burden that will come with the further borrowings which are necessary on the lines I have indicated. All these difficulties compel the local authorities of the country to move on uneconomic lines and adopt artificial methods. The principle or policy of local authorities seeking rate relief from public under takings ought to be discouraged. It is not fair to charge one section of the community for the financial benefit of the rates of another section, and to devote the municipal profits of gas, water and electricity undertakings to the relief of the rates is unsound policy so far as municipal development is concerned and ought to be discouraged. The result of this is that local authorities are compelled to adopt artificial methods in order to reduce the rates of the districts, just in the same way as the Government has moved in the direction of selling £500,000,000 worth of war stores and putting the money to the revenue in order to reduce taxation. This is like the ordinary working man selling his furniture in order to pay his rent.

Even the Government themselves have reached the point when they are endeavouring to impose upon local authorities for the purpose of reducing the rates, a very undesirable policy which in the long run will operate against both the local authorities and the community as a whole. The two circulars which have reached the local authorities from the Ministry of Health and the Board of Education, to my mind, are nothing less than a public scandal, and they move in the direction of national suicide. To attempt to economise upon education and public health for the purpose of keeping down the rates in my judgment borders on national imbecility, and no House of Commons ought to countenance or encourage the general principles which underlie those two circulars. If economies are required, and they are required, and can be effected, they cannot be achieved judiciously by economies in regard to public health services and the educational requirements of the country. Even when everything is said that can be said for the application of what is contained in those two circulars, the sum is insignificant that can be raised in proportion to the economies than can be effected in other directions where there is a greater amount of money and where greater sums might be secured.

I do not want to enter into the controversial aspect of that matter, although it directly affects the question of rating. In my judgment the general position is that to tackle our rating system we should look at our method of assessment and we should endeavour to have wider rating areas. We should reduce the number of separate calls which the people are called upon to meet, and we should relieve the burden of the financial strain upon local authorities and ask the Government to extend the system of grants in proportion to their calls upon local authorities. While these things are being done we should endeavour to find new sources of revenue on the lines I have indicated in order that local authorities may be enabled to meet their greater responsibilities in the future, which must be met if the social, intellectual, and health conditions of the people are going to be maintained.

Photo of Mr Ernest Gray Mr Ernest Gray , Accrington

The question which has been raised by my hon. and gallant Friend (Colonel Bowles) is one of great magnitude and supreme importance. There can be no doubt whatever that the ratepayers throughout the country, whether in urban or rural districts, are bitterly complaining of the incidence of the local rates, not merely in regard to its amount but also in reference to its unequal distribution. There is a very widespread feeling that local burdens are not being equally distributed. The subject is so vast and so complex that it appears, to me to be profitless to attempt to follow the hon. Member for Spen Valley (Mr. Myers) in an examination of the details, but I should like to supplement his list of possible and desirable reforms. With the reforms that he did sketch, generally, I agree, but there is one which he omitted, and that is to create a more intelligent and active interest on the part of the ratepayers themselves in the work of local government. When one tries to realise the large responsibilities, both social and financial, thrown upon local authorities, the lack of interest by the local ratepayer becomes absolutely appalling. It is useless for the local ratepayer to expect much sympathy from this House when he will not make the least effort himself when elections come about to see that fitting persons are returned to take part in the work of local government. I have a very strong impression that the ratepayer has a very large part of the remedy in his own hands if he would but recognise it. It was interesting to hear the hon. Member for the Spen Valley descant on the expenditure of local authorities and the high rate which has been reached in certain areas—I may say particularly where Members of a certain party predominate—but I will not enter into that, it would be a very debatable question at the present time.

I have risen mainly for the purpose of indicating something of the magnitude of the question in very general terms, and of reminding the House that this subject has been before us for many and many a year. I recollect sitting up all one night, and I believe going through the Division Lobby some thirty-five times, in support of a Bill introduced by Mr. Chaplin, as he then was, the President of the Board of Agriculture, on the question of agricultural rates. Many of us were induced to go through the lobby that night on the repeated assertion that the Government intended to deal with the whole question of local rates at a very early date. I think that is twenty odd years ago, and the early date has not yet arrived. We are still waiting for the Government to deal with this very great and difficult and important question of local rates, and I am afraid we shall have to wait for some years before it can be dealt with. Long before you touch the question of the actual incidence of rating, the question of assessment has to be settled. The principles of assessment ought to be determined for the whole country, and like principles should apply in like areas. I am afraid that when you come to deal with the question of assessment you will have to reform assessing bodies and to find, if you can, some greater perception of justice and wider knowledge of finance than is often possessed by assessing Committees in different parts of the country. As an illustration I may say that only a day or two ago I happened to be discussing the question of rates with the clerk of one of our great rural authorities. He told me that a farmer went before the Committee. The farmer said that times were hard; could his rates be reduced? They agreed to reduce his assessment by 15 per cent. The farmer, well satisfied, left the room, and a member of the Committee remarked that as times were hard for all of them he thought it would be very wise to reduce the assessment by 15 per cent, all round. To that they readily agreed, and all went away very well satisfied Sé non è vero, ben trovato. If that is anything of the attitude of the assessing authorities it is pretty clear that one must find an assessing authority of wider knowledge and keener perception of duty than exists, particularly in some rural portions of the country. The very foundation of the reform of rating is the reform of assessment. I believe that a Government some few years ago introduced a Bill to deal with this subject which came to grief, owing to its very complexity and to certain difficulties with regard to time. There it has been left, apparently.

There is the relation of the local rates to Imperial contributions. That is an old and vexed question. It is one which is painfully familiar, and which has done a very large amount of harm, because there is some truth in the saying, although it is not entirely true, that that which is a national service should be a. national charge. That has misled a great many people and has led to a large amount of waste of energy. It would be true if the national services were entirely under national control, but it is a principle which cannot be applied as long as you have national services partly under local control. You may regard such services as, for example, asylums, poor law, and education as national services. Therefore, in a very large part, they would be a national charge. You must, if you are to justify local control, throw a considerable proportion on the local rates and under the responsibility of those exercising local control. The exact relationship of one to the other has always been a very difficult problem. There was no more painful illustration than that connected with popular education. The Education Act of 1918 did go some way towards removing that grievance. It has not, however, gone far enough. I almost fear to say this, if there be any representative of the Treasury here, but there are still rated areas which years ago we used to know as necessitous school board districts where the education rate is now of such a character as to be a serious hindrance to the progress of all education. For ten years I had the privilege of representing in this House one of those areas, where I believe they will be called upon this year to spend the produce of a 4s. rate on education alone before they become entitled to the supplementary grant which is paid to heavily rated districts. A burden of that kind becomes intolerable. One must bear in mind that in districts where rates of that kind prevail the class of property is such that you cannot impose on them a very heavy rate. They are very often the dormitories of large towns, and any reform of rating should bring about such an extension of area that rich and poor districts may be brought under one control and brought to contribute through the rates to the one local service. It is very unfair to have a great county borough like West Ham, with its poor population and very high rate, on the very outskirts of London. It contributes very largely to the welfare of London, but London pays no part of the burden in the shape of the local rates.

Even here we have not exhausted the problem before us. I am perfectly certain, apart altogether from the relation of the local rate to the Imperial Exchequer and the relation of the local rate to areas differently situated, poor and rich, and so forth, that you are brought up against the question of local government. I am afraid that the reform of the Poor Law is absolutely essential if you are to get a reform of local rating. There, again, is another question which is long overdue. The existence of a number of local authorities attempting to deal with the same phase of local life leads to extravagance, overlapping, and wasteful expenditure, and ought to be removed without delay. It is most unfortunate. On the London County Council, I was most familiar with it, where for some years I had the privilege of serving as Chairman, of the Local Government Committee. It seems to me a shame, and almost a scandal, that the poor law authorities should be running a school, for example, when there is a local education authority which ought to have the control of those children. You have two authorities levying a rate for different portions of the same service, maintaining staffs and, obviously, incurring large expenditure.

I said, on rising, it seems to be futile to attempt to go into the details of this very complex question at this moment, and I desired mainly to emphasise once more my opinion that this is a subject which ought to be dealt with comprehensively by the Government at no distant date. It is one of our most pressing troubles, and nothing would give greater satisfaction to the ratepayers throughout the country than the knowledge that this question will be grappled with at an early date by the Government. My hon. and gallant Friend suggested the establishment of a Select Committee. If there were any prospect of a Division I would go into the Lobby with him, but not because I realise that a Select Committee is the best method of dealing with this question. It is not; it is simply playing with it. We have had Royal Commissions and Departmental Committees, the materials are available, and the one Committee to deal with the question sits on the Front Treasury Bench. That is where it ought to be grappled with. They are the people who ought to take it in hand. But I do feel that even on this Motion for a Select Committee it would be desirable to record a vote in its favour, as an expression of opinion that the whole question should be dealt with without further delay, although I think the Select Committee can do but little good. I am not voting for setting up one, I am voting for the principle that underlies the Resolution, and that is that this is a question upon which the ratepayers urgently seek the assistance of the House of Commons, led by the Government, and I do most earnestly hope that when this House is freed from the settlement of industrial warfare it may turn its attention to the material and financial prosperity of our people.

Photo of Sir Alfred Mond Sir Alfred Mond , Swansea West

It may perhaps afford some guidance and be of advantage to the House if, after the very interesting Debate we have had so far, I contribute a few words on behalf of the Government. The hon. and gallant Member who spoke last made a very valuable contribution to the Debate. He pointed out that the subject which we have been discussing to-night is so large and has so many aspects that it is very difficult to concentrate in any one speech in one evening all the different points which require consideration, and there are as well different problems that will necessitate legislation. The Motion which has been moved by the hon. and gallant Member for Enfield (Colonel Bowles) deals more with the question of the increase of rates, but his speech dealt more with the allocation of rates between the Imperial and local Exchequers than with the questions that have to be dealt with at great length, the questions of valuation and assessment, which, of course, lie in some respects at the bottom of our difficulties. It may be of some importance for us for a. moment to glance at what is the actual position regarding the increase of rates, and then perhaps see what is the main cause of the present increase and the size and volume of it, because that might cause more attention to be given to the question of local taxation than even in the past. There has been a publication by my Department which dealt with this question in considerable detail, and as it is available in the shape of a Command Paper I do not propose to do more than to quote a few very salient figures out of it. The totals are in themselves sufficient.

Take the year 1913–14, and the financial year just ended. The total rates increased from £71,000,000 to £149,000,000. The rate in the pound increased from 6s. 8d. to 13s. 1d., and the rate per head of population rose from £1 18s. 11d. to £3 19s. 1d. When first looked at in cold blood these figures are apt to stagger one, but, of course, we have to consider the fact that the value of money has very much diminished, or, if you like to put it the other way, the value of commodities has very largely increased. Why I desire to emphasise that point is this. There seems to be an impression abroad, more perhaps outside the House than in it, that the real reason for the increase in the rates is to be found in the number of large and heavy burdens which have recently been imposed on local authorities by new legislation. That is really not the case. The real cause of the increase is of a much more normal and automatic character. We all find in our daily life that everything we have to buy costs A great deal more money. The local authorities, of course, are in exactly the same position. From the year 1919, wages and salaries paid by local authorities have increased from £6,407,000 to £11,119,000 in the financial year 1920–21, an increase of 73.6 per cent. Materials have increased from £2,400,000 to £4,800,000, an increase of 99.4 per cent. If anyone would like to get fuller details they will be found in Command Paper 1016 on this subject, and they will there see that the real reason of the increase is the very great rise in wages and material. Then of course much work was deferred during the War, when we suffered from the cessation of public undertakings. A number of these works have had to be re-started. There have been reduced profits on trade undertakings, new works have had to be begun, increased working balances have had to be found, and, as the hon. Member for Spen Valley (Mr. Myers) truly pointed out, interest has risen.

The hon. Member made a suggestion which does not quite fit in with his usual acuteness in financial matters. He suggested that the Government in some mysterious way, or the Public Works Loan Commissioners, could find cheap money for public authorities. As far as I am able to judge, the public authorities to-day have, on the whole, quite as good credit as the Government, and I am afraid that nothing is to be gained from that method of finance. I should like to point out in this connection, because so much is made of it outside the House, that the new work which has been imposed upon local authorities by health developments—in regard to tuberculosis, venereal disease, maternity, and child welfare—does not amount to more than a 2½d. rate through the country. I do not wish to, indicate that I feel that new services, even of small amounts, should lightly be thrust upon local authorities at the present time. I have only very recently had the honour of taking up this very difficult and responsible position, but I should like to take the first opportunity of stating to the House that it is my firm intention to endeavour to avoid all unnecessary expenditure in the very difficult financial conditions in which we now are. While, however, it is important not to incur unnecessary new expenditure, it is quite as important, and even more important, to see that we get full value for our old expenditure. The fact that you are spending money on a service is by no means necessarily evidence that the best result is being obtained. Some people may think that the spending of large sums of money on public services shows great zeal and activity, but that is by no means necessarily the case-; you can very often get even better results by careful administration, and seeing that the money is efficiently spent. I certainly intend to devote my attention very strictly to this side of my work. Only the other day I was asked in this House to introduce fresh legislation for the superannuation of local government officials, which, again, would throw an increased burden on the rates.

Photo of Major Sir William Prescott Major Sir William Prescott , Tottenham North

Is the right hon. Gentleman aware that the recommendations of the Departmental Committee on that matter, if carried out, would not involve any charge on the rates?

Photo of Sir Alfred Mond Sir Alfred Mond , Swansea West

I have gone into that question, and am informed that that is not the case.

Photo of Major Sir William Prescott Major Sir William Prescott , Tottenham North

Has the right hon. Gentleman read the Report of the Departmental Committee?

Photo of Sir Alfred Mond Sir Alfred Mond , Swansea West

I am informed by those who have read it that that will not be the result, and that it will be impossible to carry through the proposals without an increased charge falling upon the rates.

Photo of Major Sir William Prescott Major Sir William Prescott , Tottenham North

The Report recommends a contributory scheme. If the right hon. Gentleman will make himself familiar with it, he will find that what I have stated is the fact, namely, that it will not involve any charge whatever upon the local rates.

Photo of Sir Alfred Mond Sir Alfred Mond , Swansea West

A contributory scheme means a contribution from the State, and, therefore, an extra charge upon the State, so that, although my hon. and gallant Friend's statement may be accurate as far as the rates are concerned, the Exchequer will have to pay a contribution. Really, the ratepayer and the taxpayer are often only themselves to blame if their rates and taxes go up, because proposals are continually being made and legislation is being passed which will have this result. It is no use asking that the stable door may be locked after the horse has gone. With regard to the question of the limitation of the relative areas and boundaries of the regions of local expense and national expense, that, as hon. Members know, has been established by endless discussion and inquiry for many years. Although that is important, and, undoubtedly, in many ways affords a possibility of relief in certain localities, if you regard the matter from the point of view of national income and national wealth you are not going to obtain really any national advantage by a mere transference of burden. It has been rather overlooked by some hon. Members who have spoken that, since the Report of Lord Balfour of Burleigh's Commission, steps have been taken to transfer to the Exchequer portions of certain charges which used to be borne entirely by the local rates. For instance, education, registration, and police have had larger amounts from the Exchequer than was formerly the case, and with regard to police, I should like to point out to the hon. and gallant Member for Enfield (Colonel Bowles) that there has been a large increase in the Treasury contribution in the metropolitan area. In the year 1918–19 the amount falling on the rates for the Metropolitan police was £2,230,000, and the Treasury contribution was £1,400,000. In 1920–21 the amount falling on the rates was £3,300,000, while the Treasury contribution had been increased to £3,400,000. Therefore my hon. and gallant Friend must agree that one of his grievances has been met to a very considerable extent.

A considerable move has been made in regard to the relative position of local and imperial taxation, and the Report of Lord Balfour of Burleigh's Commission cannot now be taken as a standard. In the case of police and education, the State now bears a full half of the expense incurred by local authorities. In the case of roads, the increased duties upon motor vehicles proposed by the Finance Act of last year are to be applied to the maintenance of roads. As regards poor relief, of which some mention has been made, but which is too large a subject for me now to enter into, the Government have for some time been trying to amalgamate these services with those of the public health. I think that the hon. Member for Spen Valley has fallen into some error in the figures that he quoted in connection with the question of increase of rates and increased Exchequer contributions. In 1913–14 the amount of the subvention from the Exchequer to local rates was £22,500,000, while for the present financial year the Estimate is £70,000,000, or three times the amount of the subvention in 1913–14. The rates, however, have only doubled—they have gone up from £71,000,000 to £149,000,000. It is very important to take that into account at this juncture. I want the House very fully to bear that in mind. There are already very large increases in the contributions from the Exchequer towards local taxation. It would be too much to assume that we shall ever reach finality in this respect, but I think more attention ought to be given to the point made by the hon. and gallant Gentleman who spoke last. In the case of expenditure which is controlled very largely by local authorities it becomes more and more dangerous to increase the grants from the Exchequer and to diminish the amount paid by the ratepayers. To transform local authorities into mere agents for spending other taxpayers' money throws on them a great temptation to incur popularity in their own areas at the expense of other people. I recently had a case of that kind brought to my attention in connection with Infant Welfare Centres. That temptation can only be safeguarded if the people of the locality know that any money that is improperly or extravagantly expended is going to come very directly home to them. If local authorities are placed in this position of spending other people's money either they will tend to become practically independent units exercising their own authority, a most disastrous thing, I consider, for this country, because on good administration by local authorities depends so much, not merely economically, but in sound local government, or you will get an orgy of expenditure which will lead finally to a cutting down right and left of useful services and a great reaction.

10.0 P.M.

I should like to say a word on the subject of assessment and valuation. Of course these are two of the most difficult questions which have occupied the wit of men and lawyers since time immemorial. A lawyer, of course, is a superman. We all know how difficult that problem is. We can all point out endless absurdities in our present assessment system. The question of railways is an old and burning question. A whole number of similar cases can no doubt be easily produced. I could produce quite a large number myself from my own experience. Anyone who tries to make any improvement or alteration in this very inadequate system is usually met with a storm of criticism, hostility, and opposition, which discourages any further effort being made for another generation. I hope some progress will be made in the system of valuation and in the system of assessment. We all know it is overdue. The problem has been studied a great deal, and it is time something was done. But there is one salient fact which comes up in looking at these figures, and that is the lack of elasticity in the revenue-raising capacity of local authorities. There is no real comparison between the relative increases in the rates and in Imperial taxation, and yet our present system, particularly with the Rent Restriction Act, produces such a want of elasticity that you get figures of shillings in the pound in rates which of course are fantastic and absurd. Of course, they really do not mean so much for the simple reason that, your assessments having remained the same and your rates having increased, the amount in the nominal pound is very much higher than it would have been if reassessment had taken place or the Rent Restriction Act had not existed. There- fore, the figure is not in that way so alarming as it appears. But there is no doubt to anyone who has thought over the question that new avenues of raising income for municipal purposes will have to be explored. It would take me too far to-night, even if I were prepared to do so, to go into the various suggestions which have been made. I will only say that they all require very careful consideration, and they will be very carefully considered.

There is one further aspect of this question which I do not think has been sufficiently dwelt upon. When your expenditure is very high and your income is very limited, there is a method of reducing your burden, and that is by saving money. We have all got to face the fact that we are very much poorer as a nation than we were before the War. We have to face that fact as a State, as local authorities and as private individuals, and the sooner we s face it the sooner we shall get to a better condition of things and not continue in a vicious circle. It is always difficult to say in what way we should save money, but I am certain that money can be saved if people make up their minds that it has to be done. I would strongly urge on the finance committees of local authorities not only seriously, but boldly to go into this question. I had many problems to deal with of a similar character a short time ago in my old Department, the Office of Works, when I was framing my last Estimates. We had to deal with questions like the standard of maintenance of buildings the question of construction and the type of construction of buildings. Although they may be informed by their technical officers that it is quite impossible not to do this and to do without that, if they insist they will be astonished to find how many things can be done without. It may be uneconomical to take certain steps now which if you had plenty of money it might yet be wise finance to do. It is a difficult question when you are dealing with repairs to buildings or roads or other things to resist the appeal that if you spend some money now you will save money in the long run, but the position may be that you have not got the money now and you may have more in the long run. From the point of view of finance it may be a better thing to spend more money when the country is more pros- perous and can more easily bear heavier burdens than to spend it now. Also you may look forward to such a reduction in wages and commodities in time to come that what may seem an economical thing to do now may become a wasteful thing and may become more economical hereafter. After all I do not look gloomily to the future. I look upon ourselves as passing from the highest point of the curve to the lowest tip, and I am looking forward to a reduction in the cost of living, in wages and in material. I do not say you may hope to look forward to a decrease to pre-War figures, but certainly I think some decrease on the present high figures is to be expected. Therefore I have a word of encouragement to local authorities and ratepayers. They ought to keep this in mind because they never seemed to look forward to any decrease in cost. When that decrease takes place, as I hope it will, they will be able either to spend their money on other and more fruitful purposes or they will be able to decrease rates, whichever they wish to do. This, I think; will bring some comfort to the hon. Member for Spen Valley. I think also it is possible that the rate now being charged for money may diminish and that the burden of interest on the municipalities will go down.

I therefore wish to conclude on a note of hope. Good strict administration, the application of the best intelligences in localities to their own local affairs will do more in the long run for increased efficiency and lower rating than any juggling with local taxation. My hon. and gallant Friend asks in his Motion for a Select Committee. I would respectfully suggest that we have already had a large number of Committees, Royal Commissions, Departmental and other Commissions, and that it is time action should be taken by the Government. I would prefer myself to go more fully into the various aspects of this question. As hon. Members are aware, I have not yet had time to go fully into the matter, but a strong Cabinet Committee has been appointed by the Prime Minister which is going to take up the question with the purpose and the intention of being in a position by next Session to introduce some legislation. I think we should proceed more quickly on those lines than by appointing a Select Committee. Enough material has been gathered to enable legis- lation to be passed to meet a very large number of these points, and I hope, in view of this statement of mine, my right hon. Friend will see his way not to press for the appointment of a Select Committee.

Photo of Mr Peter Raffan Mr Peter Raffan , Leigh

I am sure the House desires to congratulate my right hon. Friend upon the first speech he has delivered since his accession to his present office. I desire to voice my own congratulations, and, as I think, the congratulations of the whole House. May I say to my right hon. Friend that while I have listened with pleasure to his speech, I hope he will allow me to ask him not to forget that the position which he now occupies is that of Minister of Health, and not President of the Local Government Board. I think it would indeed be unworthy of his distinguished career so far—if he will allow me to say so—if he forgets that that change was made because it was thought desirable that the Minister in charge of local government should more and more keep in mind, not merely these financial questions which are of great importance, but the great question of public health and how best to promote it. My right hon. Friend says quite truly that great as the increase in rates has been, it is not comparable with the increase of national expenditure. There are, however, two methods by which they may be compared, because the whole cost of war services has fallen on the National Exchequer. Might I remind my right hon. Friend that the Government of which he is such a distinguished member has increased the charges upon the taxpayers of this country for other matters altogether outside war services in a much greater degree than local authorities have increased the charges upon the rates. According to the figures he has given us, the increase in rates is just about double. If he will take off war charges, interest on sinking funds, pensions, and other such matters and then compare Government expenditure to-day with the Government expenditure of 1913–14, he will find the increase for national expenditure is very much higher than the increase in local expenditure. We all wish for efforts to secure economy, but we should never forget that the securing and promotion of national health is the best and truest economy. If the result of the policy which has been indicated to-night be the discouragement of-expenditure resulting in increased public health, then it is a policy which is to be deplored. I am sure my right hon. Friend when he looks at the figures as to the rates in the pound paid by ratepayers will not forget to look also at what is infinitely more important, the death rate in our cities and more especially among little children. Mrs. H. B. Irving, a social worker with whose name my right hon. Friend is well acquainted, said in her somewhat dramatic way while the War was in progress—referring to the difference in the death rate among children born in overcrowded slum areas compared with those born in districts where their parents were fairly well to do and where they had fresh air and exercise—that it was more dangerous to be born a baby in Great Britain than to be a soldier facing the foe in France and Flanders. The preventable death rate amongst children under 5 years was greater when the havoc of war was at its height than was the death rate among our soldiers at the front. I hope my right hon. Friend in his zeal for economy will not forget that it is desirable that everything should be done which can be done to promote the health of the people, and more particularly to secure better conditions for the rising generation.

There is just one other fact in that connection I should like to bring to his notice. There is a great deal of complaint just now that discipline seems to have lost its hold on the rising generation and about the growth of hooliganism among young boys. I have seen it stated, and I think the right hon. Gentleman can get it verified, that wherever you have playing grounds for growing boys and girls hooliganism does not exist. Hooliganism exists in districts where the people are pressed together so closely that there is not room for playing-fields for the boys, and, of course, their high spirits have to have an outlet in some directions.

You cannot solve this problem by saying that you will stabilise the present rates and have no further expenditure. You cannot starve local expenditure upon services which are essential for the well-being of the rising generation. Just as you cannot do it with regard to public health. You cannot do it with regard to education. The whole future of the country depends inevitably upon the provision that we are making for the generation that is coming after us in regard to health and the development of education. It has been well and truly said that the race marches forward on the feet of little children, and I urge my right hon. Friend not to forget these facts. What we need is not merely to exercise wise vigilance in regard to expenditure—in that I agree with the right hon. Gentleman; he cannot condemn extravagance in any direction more strongly than I do—but that remedy is not in itself sufficient. What is needed is that we should face the whole question of our rating system; whether it is a wise, a sensible rating system, and whether we cannot put in its place something better. You cannot go on increasing the rates on the present system. The present system has obviously and utterly broken down and you are bound to find some new method of raising them.

My hon. and gallant Friend the Member for Accrington (Major Gray) referred to a discussion which took place in this House many years ago when endeavours were made to deal with the question. I do not propose to go back as far as that. I should like to remind the House and my right hon. Friend of the position in which this question stood when the War broke out and the attitude which the Prime Minister took up in regard to this question immediately before the War broke out. As my right hon. Friend well knows, a Government Department was engaged investigating this matter in the autumn of 1913–14. The Prime Minister declared in this House in April, 1914, that we required to substitute for the present rating system a system by which instead of rates falling upon houses, buildings and improvements, they should fall upon land values in the great cities and towns. I hope that on the Cabinet Committee which is considering this matter the Prime Minister will be able to sit and to act as President. I should have great confidence if my right hon. Friend was a member of it also. I should like a little more definite assurance than we have had so far on this point. Will my right hon. Friend assure me that amongst the matters which the Cabinet Committee is considering is the question of new sources of revenue? Is that one of the matters to be dealt with or is the Committee just peddling about outside the problem and merely thinking about a fresh method of improving valuation and letting the present system to continue as it is? Is the Prime Minister prepared to allow this Cabinet Committee to investigate the proposals which he made in this House and in the country in 1913–14? My right hon. Friend might give me an answer, yes or no.

Photo of Sir Alfred Mond Sir Alfred Mond , Swansea West

The Cabinet Committee has not yet begun its labours. The inquiries upon which its labours are based have not been completed, and it would be premature for me to give any answer to my hon. Friend, but I see no reason why the Cabinet Committee should not consider that method or any other method of raising new revenue.

Photo of Mr Peter Raffan Mr Peter Raffan , Leigh

It is very important, if this discussion is to serve a useful purpose, that we should know where we are. May I ask why my right hon. Friend resists the proposal made by the hon. and gallant Member who moved the Resolution? The right hon. Gentleman (Mr. Munro) has set up a similar Committee for Scotland. Is the Cabinet going to consider this question for England and Wales alone? Is it right that there should be a Committee to consider this for Scotland alone and not for England and Wales?

Photo of Mr Robert Munro Mr Robert Munro , Roxburghshire and Selkirkshire

May I interpose to say that the Committee which was first set up was interrupted in its proceedings by the War? It had completed its deliberations with regard to England and had presented its Report, but had not touched Scotland, and the justification of the Committee for Scotland is to complete the labours of the Committee which had reported in the case of England, but had made no investigation whatever with regard to Scotland.

Photo of Mr Peter Raffan Mr Peter Raffan , Leigh

I am much obliged to the right hon. Gentleman, but it seems to me that if you are to deal with such matters as the matters which the Prime Minister thought most important of all in 1913–14, this is a question of policy which must be considered by the Cabinet, and my right hon. Friend, in appointing this committee, has already indicated a complete change in the rating system of Scotland on the lines which I have sug- gested. I submit that these are the lines on which we ought to proceed. The right hon. Gentleman (Sir A. Mond) himself has pointed out that the present difficulty arises, not because expenditure has increased so enormously compared with expenditure in any other direction. Though the rate in the £ has increased very much, the expenditure of local authorities has not increased in anything like the same proportion as that of the Government on their services which have nothing to do with the War, and it has not increased very much more than the expenditure of private individuals, but of course if a rate jumps from 7s. 6d. to 15s. or, as in a district in which I have to pay, from 15s. to 27s. 6d., a system of that kind cannot possibly go on. What you want is a basis of valuation. The right hon. Gentleman in all his figures has not ventured to tell us the position with regard to valuation. Whether the valuation has increased or not the percentage has been kept down because of the Rent Restrictions Act and other things, but if you go to the source to which the Prime Minister said we should go in 1913£14, you will find that as the legitimate demands of the community increase so the value increases, because as the community grows and energy and enterprise develop in a community, so the community itself creates community value which expresses itself in land value. If the local authority were able to appropriate for the purposes of the community the value which the community itself has created your whole problem would be solved immediately.

This no new remedy. Wherever this system has been adopted the problem has been solved. In a great many of our British Colonies there has already been this transfer. In the great city of Sidney for some years past the whole of the rates with the exception of the water rate and the sewage rate, for special reasons, have been placed on land values and every need of the city has been met by a rate of 4¼d. in the £ on the capital value of the land. What has been done there can be done in London, Manchester, and Glasgow, and what I hope that the Cabinet Committee will carefully consider is that all these great cities have again and again asked for this power. Liverpool, Manchester, Glasgow, Belfast and Dublin, all the great municipalities, have asked for this power. Last year Cardiff, Glasgow and Man- chester Corporations passed resolutions in favour of powers for the taxation of land values. There would be this advantage in the appointment of a Select Committee—that we would have the opportunity of bringing forward evidence and seeing that it was tested. In view of-the fact that this Debate was to take place, I think we might have had a more definite assurance from the right hon. Gentleman that this matter would be carefully considered by the Cabinet. I agree that the method suggested for considering the question would be more expeditious. The time has gone by when any mere tinkering with the problem will avail. I hope the Cabinet Committee will consider the problem from the point of view of the experience of our great colonies and will bring into assessment in all our great cities the land values created by the communities, and thus give us a new and efficient system of rating which will enable improvements to be carried out and the health of the people to be safeguarded in a way that is not now possible.

Photo of Sir Robert Lynn Sir Robert Lynn , Belfast Woodvale

I quite agree with the last speaker, at any rate in congratulating the Minister of Health on his appointment. As to at least three-quarters of my right hon. Friend's speech I was reminded of the old French saying that he who excuses accuses. The right hon. Gentleman seemed to be anxious to point out that the Government did not impose extraordinary burdens on the local ratepayers I am not charging the right hon. Gentleman with any particular sin in the matter, whatever I may think of his predecessor; but this House and the Government have been responsible for placing unnecessary burdens on local authorities. Local authorities all over the country are protesting that these burdens are in connection with things which, if the authorities had been left to their own common sense, would not have been carried out. My right hon. Friend, instead of apologising for the fact that the Government had contributed £70,000,00 as against £22,000,000 within a certain period, should rather be appearing in a white sheet because of the fact that the Government had contributed so much. I think the Government has set a very bad example to local authorities. It has sinned in two ways. By Act of Parliament it has forced the local authorities to spend more money than they ought to have spent, and it certainly has created a feeling throughout the country that is most unfortunate. I hope my right hon. Friend will try to correct that feeling as soon as possible. I was struck by the figures given by the hon. Member for Spen Valley (Mr. Myers). According to those figures, if we take the interest upon the loans by local authorities, the amount at 6 per cent. is £33,600,000. I remember reading one of Mr. Gladstone's speeches in introducing a Budget in this House, and he said that if we ever reached the period in British history when the Budget of this country reached £100,000,000 the country would be in a state of bankruptcy. With all his genius, of course, he did not perceive the capabilities of financial expansion of the country, but I do say—and I think most Members will agree with me—that we have gone too far with regard to taxation; not only taxation as carried by this House, which is a serious matter, but local taxation, which is much more serious still. When my hon. Friend opposite was speaking I felt sure that, like the case of Mr. Dick and King Charles' head, we should hear from him that the remedy for this grievance was the taxation of land values. That question was thoroughly threshed out in 1909–10, and we have had a long experience of it in this country, and the result has been that the cost of collecting the tax has been something like £500,000 more that the entire tax itself.

Photo of Mr Peter Raffan Mr Peter Raffan , Leigh

There was no real tax on land values in 1909–10.

Photo of Sir Robert Lynn Sir Robert Lynn , Belfast Woodvale

I am not going into the details. My hon. Friend had the Government then in the hollow of his hand, and it was he and his friends who had the whole thing at their disposal. They carried out the scheme, and the thing has had a very fair opportunity of being tested. It has proved an unmitigated failure, and I am sure that a shrewd business man like the Minister of Health will have nothing to do with any of these gimcrack things.

Photo of Mr Peter Raffan Mr Peter Raffan , Leigh

It has not been a failure in the British Colonies, where it has really been tried.

Photo of Sir Robert Lynn Sir Robert Lynn , Belfast Woodvale

I do not know. I do not want to say anything with regard to the British Colonies. I am an Imperialist, and I have a great regard for Australia, whose loyalty is equal to that of any part of the Empire, even of the home part of the Empire, but I have no desire to go to the Colonies or to that part of the British Dominions to which the hon. Gentleman has just referred for financial advice. As a matter of fact, Australia has done magnificently in the War, and is a great country. It has done many things of which every Britisher ought to feel proud, but in the matter of finance Australia is simply a child, and has not made the most of that great country itself, simply because its finance has been run by a handful of faddists. I hope Australia will grow up from being a child to being a man, and will pursue a manly policy, even in matters of finance, rather than dallying with fads.

There is one point I want to emphasise with regard to this question, and it is that the Government must refrain from putting burdens on local bodies that those local bodies do not want to bear. It is very easy for us here—40 of us, the rest not being in the House—to put an enormous tax on municipalities, but I do not think it is right. They are far too heavily burdened already. I agree with all that has been said with regard to the value of education and of health, but do not let us waste money. I think we are wasting a great deal of money, and we are throwing undue burdens on the unfortunate ratepayers. Let us remember that you may rob Peter to pay Paul, and, after all, in the end we have all got to pay. We are all citizens of this country, and if we go on spending money foolishly in one way or another we have got to pay for it, and therefore I was greatly pleased with the speech of the Minister of Health, which was one of the most refreshing speeches I have listened to for a long time past. I hope he will insist on getting 19s. 6d. at least for a pound, and that is more than the Government have been getting in the past.


I cannot say that I can congratulate the right hon. Gentleman on the matter of his speech, although I may be able to congratulate him on the form of it. As far as some of us are concerned who represent constituencies in the London area, particularly in the working-class parts of the East End, I think we have a right to complain about the methods in which the Minister has dealt with this particular subject. There seems to be a desire to place the respon- sibility for the very high rates—the necessarily high rates—that local authorities have to levy in these peculiarly situated districts, upon the men and the women who administer the affairs of those districts, and I venture to suggest that the slightest experience on the part of any Member of this House as to the problems of administration in these great working-class areas would convince him that such an attempt ought not to be made. People talk about rates from the standpoint of the number of shillings in the £ that the people in the localities have to levy. I will only take one comparison, and that comparison will justify my general case. West Ham is a poor area with a population of about 300,000 people. A penny rate there realises the sum of £5,000. Westminster is a rich district with a population almost similar. A 1d. rate in Westminster realises £32,000. We in West Ham, therefore, have to levy a rate of about 6½d. for the purpose of raising as much money as Westminster can raise by a penny rate. Yet Westminster is administered by people who call themselves economists, and are opposed to extravagance, and we are supposed to be squander-maniacs. As a matter of fact, they spend about twice as much money in administering public affairs as we do, so that economy does not consist in having a small rate. What it does consist of is getting the best possible value for the money you have to spend, and in that comparison we in the poorer districts of London are prepared to stand the test of criticism.

Might I point out also that our responsibilities are increasing, while the other people's responsibilities are decreasing, through circumstances over which we have no control. Our child population keeps on increasing year by year, and, owing to the exigencies of the growth of London, the population tends to increase on the other side in two directions. We have more children and increasing Poor Law responsibility. Our poor people are increasing, and, as a consequence, our Poor Law guardians are at their wits' end to find means to carry out their responsibility. This year our rates for Poor Law purposes have gone up to 8d. in the £. We cannot help ourselves. The Minister of Health instructs us that we have to meet the local situation through, unemployment and other circumstances, while, at the same time, the rich areas in London are able to get rid of their responsibilities by selling off the institutions for which they have no inmates available and we in the poor districts have to buy buildings to accommodate the overflow of our institutions. Therefore, I suggest that, instead of being lectured in the way we are by people who know little about it, we ought to be commiserated with because of the unfortunate position in which we find ourselves. We get no assistance at all in this great responsibility, and what are we to do? Are we to leave the thousands of men and women no longer qualified to receive unemployment pay to starve? Our workhouses and infirmaries are overcrowded, and are we to say to these people that we can do nothing for them? We have got to relieve them, and I say poor have to keep the poor. We are asking for the incidence of taxation to be taken into consideration from the local point of view, so that we may be given that opportunity of doing our work in the most effective and economic manner possible.

It is said that it does not matter out of which pocket the money comes—but it does. For if the system was altered the richer districts would have a fairer share of the responsibility than to-day and that would enable the poorer districts to do better and be more equitable to them; and they would be the better able to deal with such questions as, for instance, to-day the unemployed problem. We get a certain amount of assistance in the matter of arterial roads. But when we asked for further assistance we were told that arterial roads are main roads leading out into the highways of the country. Some of us represent dock divisions of this great city and we find that the roads leading to China, Africa, and other places lead only to the docks, and are not arterial, while roads that lead to Romford Market are. Thus we have to shoulder in our localities responsibilities in this matter which we ought not to shoulder, and we should like in this matter to help the unemployed more, for we would wish them to give value for the money that we expend upon them. We are, I say, face to face with these great responsibilities. I do not care how it is done but we want these matters gone into. We want to see taxation, either local or national, based upon the capacity of the people to pay. Take the matter of the police so far as control is concerned. In London we have no control over the police rate. It is levied upon us and we are not allowed even to ask questions about it. That rate has gone up proportionately more than any of our local services compared to the services rendered. Poplar, we are told, has refused to levy the rate for the next period—for any service that is not under its control.

Photo of Mr Edward Shortt Mr Edward Shortt , Newcastle upon Tyne West

They have levied the rate, but have not paid the money over to the authorities.


Well, that may be, but I understand that they are not going to levy the next rate at all, However that may be, it shows that one place in London, Poplar, revolts against the present system. In consequence of all this, we are asking that a new method should be adopted, I am speaking to the Resolution not because I think any further inquiry is necessary, but in order to discover if something can be done to bring about an alteration.

A Cabinet Committee, we are told by the right hon. Gentleman, has been appointed. If that Cabinet Committee is going to do what is reported in some quarters—merely to prevent public bodies spending money, or limiting expenditure on public services—then, in so far as we are concerned, it will afford no solution to the problem; but if the Committee is going to inquire into the whole system of local taxation, and subsequently to adopt methods whereby local authorities will be placed on a similar footing and an equal basis in the matter of raising and spending money, then we shall welcome the work of that Committee. If, however, it is simply to curb democratic bodies—we are told that working people cannot govern—they were not born that way — to curb their activities, then so far as we in West Ham are concerned we are not going to prevent our children getting the best possible education we can give them. If any attempt is made to cut down the expenditure on education then you will have to face the music. The right hon. Gentleman says that the Government have no responsibility in this matter in regard to the increased expenditure. Who is responsible for the Burnham Report dealing with the increase of the teachers' salaries? We did not object to paying those salaries, but the Government cannot say that they are not responsible. We have paid out on the scale of the Burnham Report and where are we this year? We find that we are getting £20,000 less in regard to our grant because we have carried out the recommendations of a Committee appointed by this House, and that represents in my district a 4d. rate in regard to which we do not know that we are going to get any further assistance. Because we have done what the Government told us to do we have been penalised to the extent of a 4d. rate. This is the kind of thing that is getting up the noses of our local administrators. The people who have told us. that we are not business-like now turn round and tell us after we have done what they told us to do that we are to be punished in this way. If the Government place this responsibility upon us then they ought to meet us. We object to being taxed in this way while other districts get off much more lightly. That is not fair and that is the reason why I shall support this Resolution if it is pressed to a Division.

Photo of Mr Austin Hopkinson Mr Austin Hopkinson , Mossley

Speaking as a member of one of those numerous local authorities which have suffered very severely from the policy of the right hon. Gentleman's predecessor, I listened to the speech of the Minister of Health to-night with unmitigated delight, because I now see some possibility that my own district may escape that bankruptcy which was so imminent a few weeks ago. The right hon. Gentleman has announced that in the future local authorities are not to be pressed to any of those gross extravagances or crazy socialistic schemes. In the case of my own local authority the majority of the members regard themselves as the trustees of the people in their district, and therefore, taking their public lives, as it were, in their hands, they took upon themselves to defy the demands of the Ministry of Health that they should that they should plunge their district into a scheme of building houses at an expenditure of probably three or four times what will be the cost in another twelve months, or even sooner. We took that risk, possibly, anticipating some such change in the government of this country as has so fortunately come about in the last few days. I would ask the attention of the right hon. Gentleman to one particular matter where I hope we may have his sympathy, not only in regard to the custom that has grown up in his Department of throwing upon local authorities expenditure which is completely unjustified, but that he will not throw upon us the necessity of allowing speculative builders to erect buildings in our area which will eventually become a great expense to the local authority. We have lately had a case in which, despite every effort of the local authority, permanent buildings, unsuitable for human habitation, will be erected. The right hon. Gentleman's Department has overriden all our protests and allowed the erection of a building which will cause detriment to the health of the people and involve us in expenditure in the future. I appeal to him to have the speech he delivered to-night printed in pamphlet form and issued to every member of the staff of his Department, and in particular to those members of the Fabian Society who find there a haven of rest and sympathy which hitherto they have not found anywhere else.

Photo of Mr James Kidd Mr James Kidd , Linlithgowshire

There never was a time when it was more desirable that every occupier of a house should be his own proprietor. One of the obstacles that lies in his way of realising this ambition is the high rates. We got rid of one obstacle, and I was surprised to hear its reintroduction advocated to-night. I was a member of the Select Committee along with the hon. Member who to-night favours land values. I was rather surprised to hear him advocate the reintroduction of that particular form of tax. If the Cabinet Committee has to reconsider it at all, their labours should be very short. They have only to refer to the expert evidence offered by the officials who had that taxation under their charge to realise what an enormous imposture the whole system was. With regard to the remarks of the hon. Member for Silvertown, it seems to me that his speech gives a hint of a possible and desirable reform in our local rating system. All these rates are related to heritage. If any man to-day asks himself why local rates are related to heritage only, I question if he could give himself a satis- factory answer. He would trot out the old heresy that it was because of the services rendered. That may have been the beginning of the idea of levying rates on heritage, but it had its origin in the time when land was the only substantial form of property. As property began to develop there came the increased imposition of rates on heritage, which, it was claimed, received the local service. I think the Cabinet will do well to take into account some complete revolution with regard to this basis of rating. Why should not the local rate be directly related to the man's ability to pay, as in the case of Imperial taxation? Take the Education rate. A man occupies a house. He has no children, or it may be his children are over school age. Why should that man, whether owner or tenant, be called upon alone to pay the Education rate? I say all local services, whether for education or anything else, should be related to the individual or person, and in this way the young man with an ample margin beyond personal expenditure would be called upon to bear his proportion of the Education rate, just as a married man would be called upon to pay his share. I think, if local rating as well as Imperial expenditure is made to bear some proportion to the man's ability to pay, we shall have discovered an equitable basis for local rating. I think that even bachelors, who think patriotically, will agree with me that all our services to day are services, not to property, but to the individual, whether they be health, police, education, water, or anything else, and the old heresy that heritage alone should bear the burden of rates is based upon a misconception as to the part which heritage now plays in the realm of wealth. That old heresy should be abandoned and a new system started on the lines I have indicated.

Photo of Mr Walter Elliot Mr Walter Elliot , Lanark

I wish to urge the Minister of Health to beware of the flattering remarks of the hon. Member for Mossley, who is one of the most dangerous counsellors that he or any other Minister could listen to. This Tarzan of the Apes leaps on to the floor of the House giving out the cry of the bull ape, and declares that the Audenshaw District Council is the source of all wisdom, and he is a member of it. He also claims credit for the District Council for not having built houses, because he, in his paternal generosity, took on the building of them, and subsidised them out of his own pocket, instead of the burden falling on the public rates. He also suggested that there is a similar man in every district council in the Kingdom, prepared to perform the same public duty; but that is one of the most dangerous delusions for any Minister to believe in. No doubt in the business world there may be such people, but surely, in the experience of the Minister of Health, these people will be found to be as rare as they are to be desired. When the hon. Member for Mossley speaks of the crazy schemes of the late Minister of Health, I think it worth while to put it on record that in the realm