Orders of the Day — Local Government (Scotland) [Money].

– in the House of Commons on 5th December 1928.

Alert me about debates like this

Considered in Committee, under Standing Order No. 71A.

[Mr. JAMES HOPE in the Chair.]

Motion made, and Question proposed, That, for the purposes of any Act of the present Session to transfer to county councils and to the town councils of certain burghs in Scotland functions of existing local authorities relating to poor relief, lunacy, and mental deficiency, education, public health, and other matters; to amend the law relating to local government in Scotland; to grant relief from rates in the case of the lands and heritages in Scotland to which the Rating and Valuation (Apportionment) Act, 1928, applies; to discontinue grants from the Exchequer for certain purposes in Scotland, and to provide other grants in lieu thereof; and for purposes consequential on the matters aforesaid, it is expedient—

(1) To authorise the payment, out of moneys provided by Parliament, of such grants and other expenses as are by or by virtue of the said Act made so payable:

  1. (a) for the purpose of paying to the Education (Scotland) Fund a sum equal to the amount of the sums payable thereto out of the Local Taxation (Scotland) Account in the year ending the thirty-first day of March, nineteen hundred and twenty-nine;
  2. (b) for the purpose of paying to the Agriculture (Scotland) Fund the sum of fifteen thousand pounds;
  3. (c) for the purpose of paying a sum of thirty thousand pounds for distribution among the universities of Scotland;
  4. (d) for the purpose of making contributions towards local government expenses in counties and large burghs, so however that the amount of the General Exchequer Contribution by reference to which the amount of any of the said grants is under the said Act to be calculated shall not in respect of any year exceed the sum of the following amounts:
  1. (i) an amount equal to the total losses on account of rates of all counties and large burghs in Scotland calculated in accordance with the said Act;
  2. (ii) an amount equal to the total losses on account of discontinued grants of all counties and large burghs in Scotland calculated in accordance with the said Act;
  3. 1238
  4. (iii) as respects any year in the first period for which the general exchequer contribution is fixed the sum of seven hundred and fifty thousand pounds, and as respects any year in any subsequent period such sum (not being less than is provided in the said Act) as Parliament may determine;

(2) To authorise the payment out of the Consolidated Fund or the growing produce thereof of such sums as are by the said Act made chargeable thereon for the purpose of paying to the Road Fund in respect of each of the years beginning on the first day of April, nineteen hundred and twenty-eight and nineteen hundred and twenty-nine, the sum of sixty-four thinsand and one pounds seventeen shillings;

(3) To remit the interest on, and in certain cases part of the principal of, so much of any loan made before the twelfth day of November, nineteen hundred and twenty-eight, by the Scottish Board of Health to a parish council under section two of the Poor Law (Emergency Provisions) (Scotland) Act, 1921, as amended by any subsequent enactment, as shall not have been required by the said Board to be repaid before the fifteenth day of May, nineteen hundred and thirty."—(King's Reconmendation signified.)—[Major Ellict.]

Photo of Lieut-General Edward Fitzroy Lieut-General Edward Fitzroy , Daventry

I ought to repeat on this Resolution the short statement I made on the corresponding English one. This Resolution, of course, is not in any sense mandatory. It is a Resolution which enables those parts of the relative Bill which are printed in italics to be discussed. Those parts are, of course, concerned with the grant of money in various forms from Government funds, and the result of this, as a matter of order, is that the finance of the Bill dependent on Government funds may be discussed, and that the purely administrative parts of the Bill cannot be discussed. There can be a fall discussion on the financial side of the Bill, but there can be no repetition of the general Debate upon the Bill from its administrative side.

Photo of Captain William Benn Captain William Benn , Aberdeen North

May I repeat to you, Mr. Hope, the question I put on the same Resolution in regard to the English Bill? As you have stated quite clearly, it is impossible for this Committee to issue a mandate to the House that a certain sum, and not less than a certain sum, can be voted. All that this Committee can do is to issue to the House an authority for the payment of certain sums of money. May I ask you whether there has ever been a Money Resolution brought before a Committee of this House stating that a sum, not being less than a certain sum, should be voted? My experience, of course, is very limited, but I do not think there has ever been a Resolution of that kind, and I would like to know what authority the Government have to invite this Committee to issue a mandate to the House.

Photo of Lieut-General Edward Fitzroy Lieut-General Edward Fitzroy , Daventry

May I ask to what line in the Resolution the hon. Member refers?

Photo of Captain William Benn Captain William Benn , Aberdeen North

I am referring to paragraph (1, d), where it starts: shall not in respect of any year exceed the sum of the following amounts. and further in paragraph (1, d, iii), where are the words: not being less than is provided in the said Act. It is not for me, under the guise of a point of order, to suggest a motive in these words—that would be improper—but is there any precedent for putting into a Money Resolution, words which cannot have any possible significance, which are without the competence of this Committee, and which purport to direct the House of Commons to do a certain thing which we have no power whatever to direct them to do? While we may authorise, we may not direct. Therefore, I would submit to your judgment the words to which I have drawn attention as being without precedent, and outside the powers of this Committee.

Photo of Lieut-General Edward Fitzroy Lieut-General Edward Fitzroy , Daventry

Do I understand that the hon. Member suggests that the Resolution ought not to be put with these words? Otherwise, I cannot see what his purpose is.

Photo of Captain William Benn Captain William Benn , Aberdeen North

Of course, I am merely submitting a point to you in the Chair. My point is that, while we have power as a Committee to authorise the House to do certain things, we have no power to order them to do certain things, and this Resolution orders the House of Commons to spend not less than a certain sum. Therefore, I submit that, in its present form, these words have no right to be put in a Money Resolution.

Photo of Lieut-General Edward Fitzroy Lieut-General Edward Fitzroy , Daventry

I cannot follow that at all. As I pointed out last time, a Resolution of this kind comes with the Recommendation of His Majesty. The Recommendation may be made in wide terms or in narrow terms. The Committee can cut down the amount so recommended and attach conditions to it, but cannot extend it. I take it that the object of these words is to give greater elasticity to the Committee of the Whole House, when it comes to discuss the Bill. I cannot say whether there is a precedent for this form, but such precedent would be superfluous. The Recommendation of His Majesty may be general or precise, but there can be no objection on a point of order to its being indefinite.

Photo of Mr Walter Elliot Mr Walter Elliot , Glasgow Kelvingrove

This is, perhaps, the most important part of the whole of the proceedings on the Bill. The hon. Member for Bridgeton (Mr. Maxton), yesterday, in addressing himself to the whole Bill, the Second Reading of which was then under discussion, laid it down that any system could be run if there were sufficient money behind it, that the essential thing was that there should be a driving-power behind proposals which were being brought forward, and that if the driving-power was sufficient, it was possible to work even a bad system better than a good system without the necessary driving-power. We are now discussing the providing of the money to make the Bill operative. The enormous fiscal engine of the modern State is being turned, I think, to remedy some of the grievances and difficulties of the modern State. The weight of post-War taxation is such that the State has become, so to speak, a sleeping-partner in every industry, and, of course, local taxation and Imperial taxation have both to be taken into account when determining the weight of that burden upon the industries of the country. One of the major problems of the 20th century is how to ensure that the sleeping-partner does not crush out the life of the businesses, the active partners with which it has entered into relation. This is one of the problems which, I think, will become more frequent in future, where we shall need to deal with this enormous weight of taxation which, as I say, brings the State, to some extent, into partnership with industry, and Measures of this kind will, I am sure, be in the future more frequent than they have been in the past.

The sums with which we have to deal to-day are very great sums. In Scotland, our total local government expenditure is £33,000,000, and at present is something in the ratio of £13,000,000 from grants and £20,500,000 from rates. The sums with which we are dealing to-day reach to over £6,000,000 for Scotland, and after this Measure has gone through the proportion between rates and grants will be something like £16,000,000 from grants and £17,000,000 from rates The points of the financial aspects of the scheme which we have to discuss to-day are five in number. First, it is proposed to sweep away the assigned revenues, and so on, and create a general Exchequer contribution, which will be fed annually by such grants, of course, as Parliament may determine. Secondly, this grant will be further fed by a sum to compensate for the de-rating grants and for discontinued grants. The third point is that this grant will be revised quinquennially. The fourth point is that the grant will be to maintain a given ratio permanently to the total rate and the grant-borne expenditure. That is to say, there will be a ratio preserved in the future between the money coming from the Exchequer and the rate-borne expenditure, which is a variable one. Therefore, the Exchequer contribution is also variable upwards. There is a guarantee against varying downwards, and it is worth while for the Committee to devote some attention to this point at a later stage.

Photo of Mr Campbell Stephen Mr Campbell Stephen , Glasgow Camlachie

Is the hon. and gallant Gentleman saying that the ratio is as between the grant and the total rate of expenditure; or is it not between the grant and the total rate-borne expenditure plus the grant?

Photo of Mr Walter Elliot Mr Walter Elliot , Glasgow Kelvingrove

Yes. Of course, I am dealing with it at the moment in the widest possible terms. There will be a ratio in future between the rate-borne expenditure and the grant-borne expenditure, there is a ratio for the contribution we are making, but there will be a ratio in future, as there has not been in the past, between the expenditure which falls upon the Exchequer and the expenditure which falls upon the rates.

Photo of Mr Walter Elliot Mr Walter Elliot , Glasgow Kelvingrove

It is very difficult to go into all these points in detail, and I am sure the hon. Member will allow me to make my speech in my own way. The fifth point is that the grant shall deal with what are called necessitous areas by being distributed according to needs and abilities, and it deals with the question of necessitous areas in the widest possible sense. Every area may claim, to some extent, to be a necessitous area, and, if its needs and abilities warrant it, it will be able to draw an increased sum of money from the general Exchequer contribution. The provision dealing with the general Exchequer contribution is to be found in paragraph (d, iii) of the Resolution now before the Committee. The first quinquennial revision is provided for in Clause 38, Sub-section (1), paragraph (c) of the Bill, and that Clause also covers the general guarantee, which is to maintain the proportion of the Exchequer contribution to the expenditure from rates plus grants.

I think it is worth while devoting a minute or two to that guarantee from the Treasury. May I give this as an illustration? If a similar guarantee had regulated the arrangement made between the local authorities and the central authority when certain revenues were handed over to the local authorities in Scotland in 1889 and 1890, it would have operated as follows: You had then assigned revenues amounting to 2730,000, and rate and grant-borne expenditure, £4,389,000. The assigned revenue was thus exactly one-sixth of the rate and grant-borne expenditure. If one-sixth of the total corresponding expenditure, namely, £22,30,000, had been paid in 1927–28, the assigned revenues would have been £3,725,000 instead of £1,125,000, which was the amount actually paid out. If the proposal which is now being made had been in operation for previous assigned revenues, it is easy to see what a great. advantage would have accrued to the ratepayers as compared with what they are enjoying at the present time.

Photo of Captain William Benn Captain William Benn , Aberdeen North

How would the guarantee work in the case of the Road Fund?

Photo of Mr Walter Elliot Mr Walter Elliot , Glasgow Kelvingrove

It is impossible for me to go into those details. The hon. and gallant Member will realise that we are not at the present time discussing those matters, but the assigned revenues and a proportion of one-sixth, and I am pointing out that owing to the lack of the quinquennial revision, the one-sixth granted in 1890 is so much lower than what it would have been under these proposals. The sum is £3,725,000 and we are drawing £1,125,000. The quinquennial revision would have obviated all that, and a permanent ratio would have been secured for the ratepayers of this country, as against any bargain struck between then and the Treasury in the past. That is a point of considerable importance when we are dealing with de-rating scheanes, which I admit do not bind the House now and do not bind successive Parliaments, but they lay down a programme to be followed for many years to come which will regulate the relations between the local and the central authority. The Treasury guarantee is one of the most important provisions and this has not received sufficient emphasis.

There are other minor matters. There is the voting of money to certain funds where they still remain ad hoc grants. Contributions in this respect are made to the Education Fund and the Agriculture Fund, as is the payment of £30,000 a year for the Universities. In view of the sweeping away of the local taxation account, it has been thought proper specifically to make this grant to the Universities. There is also the assumption by the central authority of responsibility for a considerable proportion of the loans made to cover the cost of able-bodied relief, known as the "Goschen" loans although in our country a considerable amount of this money was obtained on loan from the bank overdrafts and so on. In the ease of the "Goschen" loans and the bank loans, the Treasury is now shouldering a considerable proportion of those loans which were incurred to maintain able-bodied relief during the period of serious unemployment through which the country has been passing.

Then there are the payments which have to be made in view of the amalgamation of parishes. These are similar to the ordinary provisions which would apply in the case of a local authority carrying through an amalgamation. In such cases it is generally agreed that there has to be no violent change in the rates. When an area with a low rate is taken over by an authority with a high rate, it is agreed that the transitory payment must be made to cover the cost of the difference during the transition period. That is the practice of every local authority whether Conservative, Liberal or Labour. The difference in the amount of the money has to be found by the ratepayer but in this case we get substantial assistance from the Exchequer. I was asked questions last night about the transition period, and I do not wish to shirk them. I was asked a question about the buildings and commitments which had been entered into and which do not come in course of payment during the standard year. There are no special provisions dealing with that point. We consider that the substantial sums of new money which have been provided for every authority will be sufficient to cover all these outstanding commitments. I am not burking the questions which have been put to me and I say that special provision has not been made for dealing with those paints.

Photo of Sir Robert Hamilton Sir Robert Hamilton , Orkney and Shetland

Is it intended to make special provision to deal with those things?

Photo of Mr Walter Elliot Mr Walter Elliot , Glasgow Kelvingrove

No, we have made no provision save the general provision of the large sums of new money which have been found for the local authorities in every case. The new money provided ought to be sufficient to meet the special cases which have been referrd to.

Photo of Mr George Hardie Mr George Hardie , Glasgow Springburn

Does that refer to housing as well?

Photo of Mr Walter Elliot Mr Walter Elliot , Glasgow Kelvingrove

The hon. Member must know that there is no suggestion whatever of reducing by one penny piece any of the subsidies now being paid for housing. It is within the power of Parliament to strike any new bargain for the future, but the sums now being paid for housing will remain until the liability of the Treasury has been completely wiped out.

Now I come to the Resolution in detail. Firstly, it makes provision for a payment to the Education (Scotland) Fund! in order to secure to that Fund the equivalent of the Local Taxation moneys, the payment of which is being abolished by Clause 37, Sub-section (1, a) and the Third Schedule. The equivalent money is to be fixed on the basis of the 1928–1929 payment, the total being estimated at £546,000. This sum, along with the moneys voted under Section 21 (1) of the Education (Scotland) Act, 1918, will, in future, form the Exchequer contribution to the Education (Scotland) Fund. Clause 37 Sub-section (4) of the Bill directs that the proposed equivalent of the English Local Taxation moneys hitherto applied to higher education shall be excluded from the calculation under Section 21, Sub-section (1) of the 1918 Act and, accordingly, unless the provision in the Fourth Schedule is made, the Education (Scotland) Fund will suffer substantial loss.

There will be a payment to the Agricultural (Scotland) Fund of a sum of £15,000 which is at present payable to that Fund out of the Local Taxation (Scotland) Account. Under Section a of the Small Landowners (Scotland) Act, 1911, a sum not exceeding £200,000 is payable each year to the Agriculture (Scotland) Fund made up of the above £15,000 from the Local Taxation (Scotland) Account and a sum not exceeding £185,000 provided out of the moneys voted by Parliament. Without a specific provision of this £15,000 as in the Bill the Agriculture (Scotland) Fund would lose that money.

Photo of Sir Archibald Sinclair Sir Archibald Sinclair , Caithness and Sutherland

Will that enable the Board of Agriculture to continue its grants for local bridges and roads?

Photo of Mr Walter Elliot Mr Walter Elliot , Glasgow Kelvingrove

The powers of the Board of Agriculture over its funds will remain unaltered. There will be as I said a payment of £30,000 a year for distribution amongst the Universities. A sum of £30,000 is at present payable for this purpose out of the Local Taxation (Scotland) Account, and in view of the repeal of the Local Taxation Account provisions it has been thought proper specifically to make provision in the Bill for this money for the Universities instead of depending entirely upon annual votes for the purpose. The sums paid out of the Local Taxation (Scotland) Account for which specific provision is not included in the Bill are: Police, £220, 000; Marine Superintendence, £15,000; and Burgh Land Tax Relief, £8,000. The first two will in future be included in the annual Votes by Parliament for these purposes. The question in what manner the grant for Burgh Land Tax Relief will be continued is under consideration. In any case, the burghs will not be asked to pay Land Tax and those who have redeemed the Land Tax will get an annual credit in respect thereof.

Up to this point, the provision proposed to be made deals only with the replacement of existing grants, and does not throw any new burden on the Exchequer. The next item in the Resolution is the one which makes provision for the various grants payable towards local government expenses in counties and large burghs in accordance with the provisions contained in Part III of the Bill. The most important of these are: An amount equal to the total losses of rate revenue due to de-rating in all counties and large burghs in Scotland calculated in accordance with the rules laid down in Part I of the Fifth Schedule of the Bill. The amount of these losses is estimated at £3,200,000. There is an amount equal to the total losses to all counties and large burghs in respect of discontinued grants. As is obvious, this is not a new charge on the Exchequer, but merely a replacement of existing grants, and the amount is estimated at £2,050,000. These figures are, of course, in the Financial Memorandum, on page vi, and I am merely recapitulating them. Then there is a sum of new money amounting to £750,000 per annum for the first quinquennium, and as respects subsequent quinquennia, such a sum as Parliament may determine, being a sum not less than will be sufficient to preserve the original ratio between the General Exchequer Contribution and the total of the rate and grant-borne expenditure as laid down in Clause 38 (1, c) of the Bill. It was mentioned during the Debate on the English Resolution that a certain proportion of this sum was coming from the Road Fund, and, therefore, could not strictly be termed new money; but in any case, even allowing for that proportion, there is a very substantial sum of new money which is going to be provided for the first quinquennium and subsequent quinquennia, and which is to be used for the feeding of this General Exchequer contribution and allocation to the general purposes of the local authorities in Scotland. [Interruption.] The money coming from the Road Fund is only in so far as the proportion of new money in general is found from the Road Fund. It was brought out in the Debate on the English Resolution. There is no specific pro proportion here, but a part of the general new money comes from the Road Fund.

Photo of Reverend James Barr Reverend James Barr , Motherwell

Can the hon. and gallant Gentleman give any idea of what proportion will be new money?

Photo of Mr Walter Elliot Mr Walter Elliot , Glasgow Kelvingrove

The proportion is given in the general terms of the White Paper which has been laid, and in this case it would amount to something of the order of one-third.

Photo of Mr Archibald Skelton Mr Archibald Skelton , Perth

For this purpose it is all new money?

Photo of Mr Walter Elliot Mr Walter Elliot , Glasgow Kelvingrove

For this purpose it is all new money. I do not desire to try to mislead the Committee in any way, and I wish to make it quite clear, in view of the fact that the question was raised in the previous Debate, that. this is not. all completely new money; certain amount of it comes from the Road Fund: but for the purposes of the local authorities it is completely new money.

The losses above referred to are to be based on the expenditure and grants in respect of the standard year, that is to say, the year ending on the I5th May, 1929, which is the last complete year prior to the scheme coming into operation. The Resolution also covers the additional grants and the supplementary grants which are payable in accordance with the scheme of the Bill. For the first year of the first quinquennium the total net cost of the scheme to the Exchequer is estimated at £4,125,000, as the Committee will see from page xiv of the Financial Memorandum, and this is made of up a General Exchequer Contribution of £6,000,000, with £1,000 of additional grants and £171,000 of supplementary grants—these, as I have said, are for the various transitory provisions of one kind or another, and will diminish by one-fifteenth each year—less the amount of the discontinued grants, namely, £2,050.000. The total may be taken as £4,122,000, or, in round figures, £4,125,000.

The Resolution also includes payments to rating authorities in respect of their loss of rates on account of de-rating during the transitory period from the 1st October, 1929, to the 15th May, 1930. These are estimated at £2,000,000, that is to say, five-eighths of £3,200,000. It is too intricate to work out the exact proportion of the de-rating which would be necessary to cover the transitional period, and, therefore, an estimate has been made of the sum required to cover that transitional period. [Interruption.] That is for a portion of the year only, namely, 7½ months. Then the Resolution includes, as I have said, a mitigation of the liabilities which will be taken over by county councils and by town councils of large burghs in respect of the loans raised by parish" councils under the Poor Law Emergency Provisions (Scotland) Act, 1921, in connection with the relief of the able-bodied poor. So far as these loans have been obtained from the Goschen Committee it is proposed to remit the interest on the certified balance outstanding on the 15th May, 1930—

Photo of Mr Thomas Johnston Mr Thomas Johnston , Dundee

Does the hon. and gallant Gentleman allege that. £18,000 is the total of that interest? Is he not aware that Glasgow alone is spending £56,000 in interest?

Photo of Mr Walter Elliot Mr Walter Elliot , Glasgow Kelvingrove

In the case of Glasgow, I think a large proportion represents loans from the bank, and not Goschen loans.

Photo of Mr Walter Elliot Mr Walter Elliot , Glasgow Kelvingrove

As I have said, a sum of £32,000 in all is provided for this purpose. It is not £14,000, but is much more than that.

Photo of Mr Thomas Johnston Mr Thomas Johnston , Dundee

This is very important. On page xvi of the Financial Memorandum it is stated that the annual grant to those authorities whose loans are owing to persons other than the Scottish Board of Health, that is to say, where those loans have been borrowed from private individuals, only £18,000 is to be allowed by the Government, whereas Glasgow alone is spending £56,000 a year.

Photo of Mr Walter Elliot Mr Walter Elliot , Glasgow Kelvingrove

Yes, but in the case of the Goschen loans it is not necessary for Parliament to find money; it is possible simply to remit, and it is not necessary to find money with which to pay it off. For the Goschen loans there is no provision of new money; the £18,000 is in respect of money lent by the banks. It must be remembered that that is the interest on the certified balance outstanding on the 15th May, 1930, which is estimated at £760,000. This provision comes into operation along with the merging of this burden in the general accounts of the city, and obviously that is the time when it is necessary to make provision for the shouldering of a proportion of this burden by the Exchequer. It is when we are compulsorily merging this debt that the debt of the city comes into account, and by that time it is estimated that the balance outstanding will be £700,000.

Photo of Mr Thomas Johnston Mr Thomas Johnston , Dundee

Has the hon. and gallant Gentleman had no representations from the Glasgow Parish Council in regard to this matter?

Photo of Mr Walter Elliot Mr Walter Elliot , Glasgow Kelvingrove

I have discussed this matter with the Clerk of the Glasgow Parish Council, and it has, of course, been gone into at considerable length actuarially. This is an estimate of the certified balance which will be outstanding on the lath May, 1930, and the repayment of that balance for the purposes of the grant is to be regarded as having to be spread over a period of 15 years. The value of the interest so remitted is estimated to amount to a sum of £14,000 a year for 15 years, while the money which will be paid in grants on account of interest on the loans to the banks is estimated at £18,000 a year for 15 years. Further, if it should happen in any case that the amount that would be payable by a council in any year in respect of these outstanding loans—Goschen and others—if spread over a period of 15 years, exceeds the produce of a rate of 9 3/5d. per £, the excess will be made good by the Exchequer. The figure of 9 3/5d. per £ is taken as the equivalent of the rate laid down in the English Bill, namely, 1s. per £. I think it is unlikely that in the case of any such loans the repayments will amount to anything of the order of 9 3/5d. per £, but the guarantee has been given under the English Bill, and my right hon. Friend the Secretary of State for Scotland made quite sure that any guarantees which were given in the case of England would be extended also to our country North of the Border. Lastly, the Resolution makes provision for the payment out of the Consolidated Fund of a sum of £64,000 which, under present arrangements, is diverted from the Road Fund to the Local Taxation (Scotland) Account. It is proposed that the diversion of that sum should cease as from the 1st April, 1928.

As regards the distribution of the General Exchequer Contribution, the principles of the scheme are the same in both England and Scotland. The money will be distributed among counties and burghs according to their weighted population, the weighting being arrived at by the application of a formula which is designed to secure a distribution of the money according to the needs of each area and its ability to meet those needs. In the formula the population, the number of children under five years of age, and low density of population are the leading features, and there is also, of course, weighting for unemployment. The four factors contained in the forinula are the same as for England, with the single exception that the datum line for loading in respect of low rateable valuation is 10s. for Scotland, instead of £10 as in the case of England. The reason for the difference, as was explained by the Lord Advocate yesterday, is that the assessed rentals of property in Scotland are higher than they are correspondingly in England. The excess is taken as being roughly 25 per cent. During the first quinquennium, approximately one-third only of the General Exchequer Contribution will be distributed according to weighted population, the remaining two-thirds being allocated in proportion to the revenues to be withdrawn. On each quinquennial revision one-third of the latter share is to be transferred to the basis of the formula, and in 1945 the whole of the money will be distributed on that basis. It is true to say that it is not possible in this Parliament to lay down rules which will bind its successors for a period of 15 years, but that is the arrangement which has been worked out, and it is on that basis that the calculations in the Bill are made. Of course, the reason for gradually bringing the scheme into operation is obvious, namely, to avoid too sudden a change in the distribution of local revenues—

Photo of Mr George Hardie Mr George Hardie , Glasgow Springburn

Does the hon. and gallant Gentleman claim that there is any permanent basis to carry the structure of the formula?

Photo of Mr Walter Elliot Mr Walter Elliot , Glasgow Kelvingrove

The permanent basis of everything that is done in this House is the will of Parliament.

Mr. HARDIE rose

Photo of Lieut-General Edward Fitzroy Lieut-General Edward Fitzroy , Daventry

I must remind the Committee that the hon. and gallant Gentleman and other hon. Members can speak more than once, and, if the hon. and gallant Gentleman says anything that is not clear, questions can be put to him about it afterwards. We must not allow the Debate to become too conversational.

Photo of Mr Walter Elliot Mr Walter Elliot , Glasgow Kelvingrove

I bow to your ruling, Mr. Hope. I am afraid it is one of the vices of Scots that, when we are in Committee of the Whole House, our Debates are apt to become too conversational.

The general Exchequer contribution having been allocated among the several counties and large burghs according to their weighted population, it is necessary in the case of each county to secure to the small burghs within the county, and to the landward area of the county, a share of the county apportionment. In the case of each small burgh, its share will be a sum per head of its estimated non-weighted population. Questions 'have been asked as to why the apportionment in the case of the small burghs should be. simply on the population, while in the case of counties it is on the basis of the weighted population. The answer is quite simple. The weighting formula is for the purpose of the five quasi-national services. For local services weighting is not required, and the object is to get these as far as possible on a flat-rate basis. The weighting is in respect of the five great expensive services of the Poor Law, police, roads. health and education. In the case of these quasi-national services, weighting does take place, but for the purpose of local services the popula- tion of the area is taken simply at what may be called its face value. In the case of landward areas the grant will be ascertained in the same manner as the grant to the small burghs, and will be at the rate of two-thirds of the rate per head payable to the small burghs. In this case again the estimated n on-weighted population will be used for the purposes of the calculations. If it be asked why the unweighted population has been adopted in the calculation of grants to small burghs and landward areas, and why the landward grant is only two-thirds of the small burgh grant, that is because the expenses in regard to these local services are greater in the small burghs than in the landward portion of the counties.

Photo of Sir James Macpherson Sir James Macpherson , Ross and Cromarty

Is it to be two-thirds of the small burgh grant?

Photo of Mr Walter Elliot Mr Walter Elliot , Glasgow Kelvingrove

Yes, per head; this is the allocation within the county. As to the financial results of the scheme, the relief in the case of agriculture is estimated at £950,000. That is equivalent to a rate of 6s. 8d. per £ on the present rateable value of agriculture land, and it is a very substantial relief indeed. The average reduction in the rates on agricultural land by 6s. 8d. in the £ is really a substantial contribution to the prosperity of the industry of agriculture taken as a whole. I may point out that it is much greater than the corresponding relief in England. My right hon. Friend the Minister of Health has stated that the figure for England is only 3s. 5d. in the C. The difference is mainly due to the fact that agricultural land in Scotland at present is much more highly rated than are agricultural subjects in England. That is because of the unwisdom of our forefathers in declining to allow any relief to the landlord of agricultural land, and thereby penalising the industry as a whole. The industry as a whole is penalised by a high rate, and the industry as a whole benefits by a low rate.

The bringing down of the rates by this very large amount will undoubtedly be of considerable advantage to agriculture in Scotland in the difficult times through which it is passing just now. The relief to industry and freight transport is estimated at £2,250,000, and that is equal to a rate of Ss. 4d. in the £ on the present rateable value. That, again, is a most, substantial contribution to the difficulties through which productive heavy industry in particular is passing at present. Eight and fourpence in the £ is a very substantial cut in rates which any local authority would be proud if it were able to make. The corresponding relief in England has been stated to be 10s. 5d. in the £. That is due to the higher rentals of subjects in Scotland than in England. If you add 25 9er cent. to 8s. 4d. it gives a rate of exactly 10s. 5d., which is a, very remarkable coincidence. We are told by hon. Members above and below the Gangway that this relief is not sufficient to effect any great improvement in the state of industry. That may be, but I know what would happen if we proposed to increase the rates by this amount instead of lowering them. If we propose to increase the rates on agriculture by 5s. in the £, or on industrial subjects by 8s. in the £, a cry of indignation would go up from the whole House and we should be told we were stifling industry. A similar cry will go up if anyone attempts in future to increase the rate by this amount. The relief that is being given here is one of the most. substantial contributions which have been made by the State towards the revival of industry certain in recent years. [Interruption.] I do not know whether the hon. Member for Linlithgow (Mr. Shinwell) think 5s. in the £ is hypothetical.

Photo of Mr Emanuel Shinwell Mr Emanuel Shinwell , Linlithgowshire

The hypothetical point is this: If the rates increased, they would add to the burden of agriculture. My point is that it is purely hypothetical, because the hon. and gallant Gentleman does not take into account that if the rates go up some services are provided.

Photo of Mr Walter Elliot Mr Walter Elliot , Glasgow Kelvingrove

I have known rates that went up and no service was provided except the feeding of a lot of hungry men, and it was not considered by anyone in the district that that was really an advantage to industry in that district. [Interruption.] The hon. Member cannot have it both ways. If a substantial increase in rates would be regarded as a handicap to industry, a substantial decrease must be regarded as an advantage.

Finally, as to the distribution of the money according to needs and ability to pay, we have given many examples of that in the White Papers which have been circulated and we have published and brought out the figures for every area. Therefore, it is possible for any Member to find out exactly how his constituency is affected thereby, and the fact that no serious challenge has been made of the formula of distribution is a sufficient proof that it is working out well and satisfactorily in Scotland. Members in any part of the House are not seriously challenging the benefits that are about to be given to their constituencies under the formula of distribution. The average value of the unemployment loading factor for all Scotland is 10.9 per cent. and in cash this represents, out of a general Exchequer contribution of £6,000,000, a sum of £650,000 which is going to the assistance of areas which have been heavily hit by unemployment An annual grant of £650,000 is in itself a substantial contribution towards the relief of areas which are hit by the present abnormal unemployment. The loading for the various areas should bring out figures which, particularly in the industrial areas, represent a very substantial reduction in the rates of the ordinary householder, in the case of Edinburgh a valuation of 56d. per head, 59d. in Perth, and 78d. in Aberdeen. In Hamilton it goes up to 136d., in Coat-bridge 148d., and in Airdrie 156d. The industrial areas are getting the largest grants on the formula basis.

Photo of Mr George Hardie Mr George Hardie , Glasgow Springburn

What is the Glasgow figure?

Photo of Mr Walter Elliot Mr Walter Elliot , Glasgow Kelvingrove

The sum going into Glasg3w is £150,000 of new money every year, which amounts to some 3d. per head for every single ratepayer. I have done my best to explain in non-technical language the financial proposals of the Bill. I cannot hope to claim that I have made it completely clear, because the proposals are intricate and require a good deal of thought and investigation, but I have done my best, and I hope that 1 have been of some assistance to the Committee.

Photo of Mr William Graham Mr William Graham , Edinburgh Central

The hon. and gallant Gentleman has done his best to make as clear as possible the difficulties and intricacies of our Scottish rating scheme, and the manner in which the Resolution and the Bill will bear upon them. The average spectator of local finance would agree that, whatever may be the problems of that subject at present, they are aggravated beyond description by the plan of this Bill, and, as many of us on this side believe, by the undeniable confusion that it will introduce. Of even more difficulty in discussing the Scottish scheme is the fact that we have already had three days of Debate on the English Bill. We have had an analysis of the English financial Resolution, and the Government will contend that it must take the conditions in the two countries in broadly similar terms and apply similar remedies. But I want to stake out a claim for separate treatment for Scotland on the ground that method of our Scottish rating in different, that the industrial conditions show very considerable variety, and that there are alternatives which can be offered to the programme which the Government have in view.

Throughout all these Debates we have been constantly asked to provide our alternative to the Government's programme, and I think, in the case of Scotland, that programme might be quite easily stated by noticing, first of all, the position of the Poor Law and the treatment of the necessitous areas anti this formula in the Bill, in the second place by an analysis of the de-rating proposals applied to industry on the financial side, and, thirdly, by noting the exact position of Scotland in presence of the system of percentage grants in so far as it applies north of the Tweed. I will address myself therefore to the three aspects of the problem which I have summarised.

5.0 p.m.

What is the alternative that we have constantly suggested regarding the enormous burden which has descended upon Scottish ratepayers in the industrial depression since 1921 7 We have said, first of all, that the industrial depression fell with most weight on the industrial belt between the Forth and the Clyde, but was also felt on the east coast and in other parts of the country, due to causes over which the localities have little or no control and upon which they could exercise only the very slightest influence. Accordingly, we have pleaded that it was altogether unjust that the structure of the Poor Law, which was never designed to carry a load of this description, should suddenly find that it had to obtain in the aggregate from ratepayers in all parts of the country millions of money since that industrial depression began. In Edinburgh, since 1921 we have spent in the relief of able-bodied poor alone nearly £1,000,000. The sum in Glasgow is very much larger. In the industrial areas, it is very heavy indeed, and so there is every reason in the world for the plea advanced from these benches that that should be regarded as a national charge. What is happening at present is that in my opinion in these districts you have a transition from the Unemployment Insurance Fund, thanks to the Government's regulations under that Act, and from the Employment Exchanges to the local Poor Law authorities. The people so denied further in surance benefit become definite charges upon the Poor Law and local ratepayers, and the total Government contribution to Poor Law assistance in Scotland is to-day not more than 6 per cent. A great burden falls upon the locality, in our view with complete injustice, in a matter of that kind.

In these Debates, the Government have indicated that it is a wasteful suggestion that this should become a national charge. I fail to understand that argument. The Scottish Board of Health or the Government have power to lay down the conditions of relief. For all practical purposes, they can regulate the scale which is to be applied at all events, they; an fix its maximum. They have complete control, or very nearly complete control, over the situation, and the economic choice in Scotland, not less than in other parts of the country, is between the benefit which would flow from making this a national charge on the one side and such benefits as may come from the de-rating proposals of the Government, limited to a class of industry, plus a limping formula for the areas which only comes into full force after 15 years. If I had time this afternoon to go into the strict finance of the scheme, it would not be difficult to show that there would be an immediate, greater, and far more impressive benefit from such a transfer to national funds, especially when under this scheme we are moving so far along that road. In the last year of the Government's existence we have succeeded in persuading them that some contribution should be made by the national Exchequer towards bearing this burden. That is recognised to some limited extent in this Bill. If we relate this Financial Resolution to the rest of our national finance in this matter, I believe the transition would have two very beneficial results.

Take the position of the Unemployment Insurance Fund at the present time. In strict analysis, it is true that from the beginning the scheme never had a chance. Its basis was hardly broad enough. But, in any event, long before the fund became actuarially sound the great weight of unemployment descended upon it. It has been depleted and replenished, and the borrowing powers have been extended, with interest, to £40,000,000. If the duty of providing for unemployment had been more completely a national charge, the incentive to put that fund upon a proper basis in the public interest and in the financial interest would have been strengthened. In the second place—and this is by far the more important consideration—the pressure upon this Government and on other Governments to provide work rather than this mere relief would have been very greatly intensified. We are reminded this afternoon that in the years of industrial depression since the War we have poured out between £500,000,000 and £600,000,000 in this country in mere relief for which we have no capital asset to show. In fact, we have barely maintained large numbers of men and women and their families in the process. It has been wasteful expenditure, which we have always attacked, and which we have said should have been replaced by grants and the giving of powers to the local authorities and to others to undertake work and to provide employment rather than relief. In the long run you would have had far greater benefit to national finance than you will get under this complicated scheme of introducing de-rating for only part of the distress and the formula to recognise the necessitous areas after 15 years, that is, as regards its full force, have intervened.

Let us pass, in the next place, to the de-rating scheme as applied to Scotland. Yesterday afternoon the right hon. Gentleman the Member for Hillhead (Sir R. Horne) suggested that here at last was a plan which went to the root of the rating problem—as I understood his speech—and also of industrial disease. How the right hon. Gentleman or anyone familiar with industry can advance an argument of that kind passes my understanding. It has very little reference to the fundamentals of industrial difficulty in this country. It does not touch ownership or control. It has little direct relation to foreign markets and overseas trade or even to the domestic industrial structure, very little relation indeed. It is, as applied to Scotland, a mere extension of the principle of differential rating which was embodied in Schedules to the Scottish Rating Act, 1926.

But, before I pass to that alternative and that aspect of the problem, do let us place in proper proportions what exactly is involved in the Scottish part of the scheme. The Government have criticised us en the ground that we were desirous of extending the benefit of de-rating indiscriminately over a wide field of industry. Very well, that is capable of a quite convincing and emphatic reply. In all the Debates hon. Members on the other side have never quite decided whether they seek relief of productive industry or the reform of the rating system. The Lord Advocate, in one of the passages in his speech, spoke of it mainly from the point of view of a reform in local rating. That claim can hardly be maintained because it touches only a corner of the rating field. Our case is, 'as I have already indicated, that you can do more by a transfer of Poor Law service and Poor Law work to the Exchequer and by other devices of the State to which I will refer. But in any case let us appreciate the limited character of the scheme.

The Government themselves, or some of their supporters, have recognised the inherent difficulties of giving assistance where assistance in industry is not strictly required. The hon. Member for Ayr Burghs (Lieut.-Colonel Moore) yesterday afternoon propounded a proposal under which this relief in de-rating was not to be given where the company had paid dividends of 20 per cent. or more. Taking a line through recent industrial profits, his basis was generous and even exaggerated. But there is not the slightest indication that the Government will seek to step into industry and ascertain the people who are paying 20 per cent, and less and give them a concession and exclude the others who are earning dividends or profits above that rate at the present time. But the fact that a Conservative Member was driven to make that suggestion and that other Conservative Members proposed to exempt the breweries from this plan has proved that that weakness of the scheme has been appreciated even among our opponents in this House.

Apply the proposal to the industrial belt in Scotland and to certain parts of Scottish productive industries. What is the real problem? In coal, iron and steel and shipbuilding there was the collapse of overseas markets, exchanges, and domestic weakness in the structure of these industries in Scotland. If we take these grave external and domestic factors, we must agree, whatever our party, that they have a great problem to solve. It is common sense that any relief which is to be given in de-rating should be concentrated, I imagine, on the industries which urgently require it. What is the volume of this relief as applied to Scotland in de-rating? The aggregate sum raised from all rates in Scotland in 1927–28 was rather more than £22,000,000. The de-rating part of this plan covers only £3,200,000, and that de-rating is spread over the prosperous and the non-prosperous indsutries so that the fraction going to Scottish heavy industries is some part of £3.200,000.

Photo of Mr Archibald Skelton Mr Archibald Skelton , Perth

Surely that is hardly a fair comparison. Should not the right hon. Gentleman put against the £3,000,000 relief the total rates payable by the industries to be relieved?

Photo of Mr William Graham Mr William Graham , Edinburgh Central

Certainly; I am here dealing with the argument used by the, right hon. Gentleman that you are trying to cover rating reform in Scotland and also doing something to help Scottish industries. But, if you make allowance for that, the fact remains that you do not concentrate this relief on the people who actually require it. The Government contention is that you cannot discriminate and that if you sought to discriminate you would penalise the efficient undertakings at the present time. But that proceeds upon this fallacy, that the prosperous are necessarily efficient concerns. That does not at all follow. If we make an analysis of industrial profits at the present time, we shall find that many of these industries doing remarkably well are doing well because they have a market at their feet. They have built up great trusts and other organisations. They have got rid of effective competition. It does not follow that they have more genius or skill or possess more ability than the people who are struggling against enormous losses. In the next place, it is idle for the Government to suggest that they have not the material for differentiation. In fact the Inland Revenue Authorities in the Income Tax practice of this country are differentiating in these matters every day. It has been part of our contention from these benches at least that this scheme should be based on the ability of industry to pay and should have regard to the undeniable facts and information which the Inland Revenue authorities possess.

I suggest that in the case of Scotland you might have made your de-rating far more effective, plus these proposals which I have made for the transfer of the Poor Law services by an extension, if that was desired, of the Schedule of the Scottish Rating Act of 1926. When we were debating that in Committee we pressed for wider areas, or, at all events, for the recognition of the areas which were necessitous and for which some special provision should be made. The Lord Advocate objected at the time. He said, in effect, it was a purely rating Bill. But this differential rating, which is all that the Government now suggest, was included in that Schedule. Moreover that Schedule was much better from some points of view than the existing scheme because it had regard to certain basic services in Scotland. Again it would not be difficult to prove that it would be better to de-rate some of these great basic industries than at least to give this concession to the prosperous concerns; I exclude from this part of the Debate the undertakings which are in difficulty at the present time. There, so far, are two alternatives to what the Government have included. In the case of Scotland, although one cannot take the time to work them out, it would be easy to prove that they are both simple alternatives and better than the plan which the Government recommend.

Let us come now to the percentage and the block grants as applied to Scotland. T have not the slightest hesitation in saying that this Financial Resolution and the Bill, complete the economic bondage in these matters in which our country is placed. We must recognise this afternoon that Scotland is in a different position from England in the matter of block grants. In Scotland, for all practical purposes, we have now substantially a block form in the education fund and the assigned revenues. Those are two great block services. Let us understand clearly the position in regard to education. When the Act of 1918 was passed the Scottish Education Fund was built up in terms of certain revenues which had been in force prior to that time, especially in 1913–14, plus 11/80ths of the Exchequer contributions to corresponding fund or allocation to England. That became the material of the Scottish Education Fund. The variable part of that Fund in Scotland has been the 11/80ths of the excess in England above the 1913–14 basis. We have marched thus far in keeping with English expenditure in education, but plainly Scotland has been at this disadvantage that she has had a right which was contingent upon an English percentage. Therefore, we have had an example of a form of block grant for education in Scotland. We have had that form of block grant in connection with the Scottish Education Fund, regulated by what was determined in regard to educational finance south of the Tweed. Many of us have always felt that that placed Scotland at some disadvantage, over which perhaps English Members will forgive me if I say, our national ability and genius have done something to triumph!

Then we have the assigned revenues. No one regrets their disappearance. Now we come to what is apparently a free element, namely, the cost of police in Scotland. By far the greater part of police expenditure at the present time is traceable to the wages and remuneration of police and staff, and that remuneration is fixed for all practical purposes by the Desborough scale. When evidence was given before the Meston Committee, it was part of the plea of certain witnesses that the localities should be given certain freedom in that respect, evidence with which some of us did not particularly agree. There is a regulated expenditure or regulated contribution, so to speak, even in this part that remains of Scottish freedom in finance within the block and percentage grants. The one really free element, although it is contingent to some extent, upon English expenditure, is the contribution to health services, and it is precisely that part which in the Scottish Bill and the English Bill the Government have attacked. It means that we have a pool in Scotland, made up of this £6,000,000 fund, which includes an item in regard to these transferred contributions of rather more than £2,000,000, including health services, which are more urgent in many parts of Scotland than in certain parts of England which come now under this form of block regulation.

The question for Scotland, as for England, is whether there is any merit in the introduction of the block as opposed to the percentage grant. North of the. Tweed, this problem lends itself to even easier and more acute analysis than in England. What has been the great burden of attack upon the percentage grants? It has always been said that it is of the utmost importance that we should enable the Chancellor of the Exchequer to know exactly what he has to contribute to these local services year by year. It was suggested in 1924 to the Meston Committee that under the existing financial system there were about £84,000,000 of expenditure over which the Exchequer had no real control. There is no genuine foundation for that argument. There is all the financial machinery of this House. There is the review of the Treasury. There is the pre-determination of the Estimates, and in Scotland there has been the peculiar position of a very large part, of a so-called percentage, although it was really controlled expenditure, regulated or controlled in advance. Therefore, in regard to Scotland that argument hardly applies.

No one has suggested what has been suggested in some parts of England, that in certain areas there was waste of resources by the Scottish authorities under the percentage grant scheme, in so far as they were free to operate. That has not been alleged. On the contrary, reference has been made to the fact that the aggregate -burdens of our local rates in Scotland have bounded up post-War to nearly £22,000,000 or more, and the proportion of burden that remains with the local authorities was always sufficiently heavy to ensure a comparatively high or increased local rate and, therefore, to give them every encouragement to economise in their services or, at least, to get the most valuable return for the money they spent. The burden remaining was always sufficient for that purpose. It was recognised before the Meston Committee that if you had such a state of affairs, the case for a block grant was appreciably weakened. We have that state of affairs in Scotland, and yet the Government proceed with this scheme. It is no use meeting this plan with a blind negative. We cannot do that. So far we have admitted that to the extent to which the Government make some transfer of financial burdens to the National Exchequer, the scheme is sound, but we consider that the price is altogether too heavy to pay for the very limited concession which has been made in that direction. How can we meet the situation? I have tried to show that north of the Tweed we have a predetermination in effect, by the Government, as our finances are linked up with the English system. In the next place, in the evidence tendered to the Meston Committee it was plainly indicated that we could quite easily mark off areas or arrange areas which could be treated specially from the point of view of necessity. The Government have tried to do that in this Bill by taking the counties and the large burghs as the units, but it does not follow that those counties or large burghs are an accurate measurement of that situation. I believe that as the scheme will work nut in practice the fresh anomalies which will arise will lead to new problems, revised versions of the necessitous areas.

Let us understand exactly what we are doing under this scheme. The pool of the general Exchequer contribution is £6,000,000 and a very large element of the pool, £200,000, refers to derating. In addition to that, £2,000,000 is earmarked for the transferred grants or allowances. The free or movable element amounts to 750,000. It is here that the Government have not been able to trust their scheme because, in popular language, they have had to dope it with additional grants. Only in its final stages do they propose the full formula. They only apply it in its full effect in Scotland, although I should have thought that the necessitous areas required it now apart from de-rating, after 15 years. The Under-Secretary of State for Scotland has reminded us to-day that that has been done in order not to make the dislocation too severe in the first stages of the scheme in Scotland. What an extraordinary proposition. We have said that areas can be quite easily marked off and, in fact, a scheme of this kind was emerging as part of the evidence tendered to the Meston Committee. They took the urban and the semi-urban areas and the purely rural or country districts and they took districts of various mixtures, and there was very little difficulty in showing that in a reasonable period you could mark off for contribution to local rates a system of graded areas. If that had been done, plus the transfer of Poor Law burdens to the national funds, you would have had a practically immediate contribution in place of this deferred or limping formula. But you must supplement this device.

If this was being run as a business proposition, I imagine that most hon. Members would agree that they would deal with it by way of costing. Of course, there are costing schemes and costing schemes, and many of them are nothing but paper declarations. I agree that we cannot have a unitary basis for this problem, because we have not the necessary statistical material in Great Britain. Until those statistics are obtained it is idle to suggest that you could have a unitary contribution for a service of this kind. We could supplement the Exchequer percentage grant system in a perfectly healthy way by working out as far as possible units of cost within the areas. We could find out very easily which districts are efficient and which districts show need, and could pay the contribution from national funds largely upon that basis.

The Parliamentary Secretary to the English Ministry of Health complained that we propounded no alternative to present scheme. I have tried to summarise one alternative after another which have been suggested by some of the highest experts in local rating in this country. Taken together, those alternatives would be infinitely better than the plan which the Government. is now inflicting upon the country. There is one last consideration in a matter of this kind. What we have to look at is the broad transfer from national funds and the extent to which that will operate in the next 10 or 15 years. At the very heart of that problem there is the question of providing for a necessary expansion in all these services. If new duties are imposed upon the local authorities of Scotland, there is no real provision in this plan for full Exchequer recognition of the change. The grave danger is that a fair part or a large part of the cost of these necessarily expanding services will fall upon the ratepayers in Scotland, and, therefore, we must set that against the suggested relief which the Government seeks to introduce this in the way in which the formula works, and the way in which these additional contributions operate. My hon. and gallant Friend pointed out that at the end of the period under this scheme the broad allocation in Scotland was £16,000,000 from national funds and£17,000,000 from local funds. That is how the £33,000,000 which is to come to Scotland is made up. I put it to hon. Members, if these are the broad facts of the situation, what have you gained by a process of this kind In my view you have gained little or nothing at all. You have opened the door to fresh hardships, which may be a penalty for many localities, under the guise of trying to assist them. Speaking with all moderation and restraint, I have no hesitation in describing this Financial Resolution, and the Bill which accompanies it, in its economic aspect, as an imposition on the Scottish people.

Photo of Sir James Macpherson Sir James Macpherson , Ross and Cromarty

I think the Committee is very grateful to the Under-Secretary of State for the care and pains he took to attempt to explain these rather complicated financial proposals under this Resolution. I agree with the right hon. Member for Central Edinburgh (Mr. W. Graham) when he said that he was not at all certain that these financial proposals would in the long run be beneficial to Scotland as a whole. In his last sentence the right hon. Gentleman said that he was very much afraid they would open the door to penalties being inflicted upon many districts throughout Scotland. The situation, as I understand it, is this. The formula is very difficult to under- stand. It is very complex and very complicated, but I gather from the Under-Secretary that it consists of two parts, a major and a minor. The major formula applies to the counties and larger burghs and is estimated on a weighted population, based on four factors, children, rateable value, multiplied or increased by unemployment, and density. The reason why it is called the major formula is, I understand, because it deals with the larger burghs and counties. It is the formula which provides the cash for the payment of the quasi-national services of the poor, police, roads, health and education. Am I right so far The Under-Secretary will believe me when I say that many of us are only desirous of understanding clearly what these financial proposals really mean, and I am endeavouring to put it in my own way. I hope the hon. and gallant Member will correct me if I am wrong. I say that the major part of the formula only applies to the large burghs and counties, and that the money which is payable under the major part of the formula is for quasi-national services, namely, poor, police, roads, health and education.

Photo of Mr Walter Elliot Mr Walter Elliot , Glasgow Kelvingrove

Perhaps, inadvertently, I may have given the impression that the main Government grants for education were included in the formula grant. If so that is my mistake.

Photo of Sir James Macpherson Sir James Macpherson , Ross and Cromarty

The Committee will now appreciate exactly what is included in the major formula. I am more directly concerned with what is called the minor part of the formula, and If am sure the Under-Secretary will assist me in trying to understand it. The minor part of the formula refers to the small burghs and the landward parishes. I am afraid the word "parish" will cease to be a word when this Bill is passed. So far I believe I am correct. The right hon. Member for Central Edinburgh was correct in saying that these proposals would introduce penalties in various parts of the country. If my reading of the financial proposals is right, I think it will introduce a penalty in the small burghs and the landward parts of counties, because the Under-Secretary made it perfectly plain that while under the major part of the formula, a very large grant is to be given, under the minor formula, where the dis- tribution is to be made to the smaller burghs and landward parts, the contribution is by no means to be so great or in fair proportion.

The case put by the Under-Secretary, as I understand it, is that, inasmuch as these smaller burghs, that is burghs under 20,000, and landward parts of counties, are dealing only with what are called local services the contribution under the formula must be much smaller. He said that only 50 per cent. of the money, over and above the amount expended under the major formula, would be available for the smaller burghs and landward parts. He went even further, and here I think the penalty referred to by the right hon. Member for Central Edinburgh comes in. He said that the landward parts are only to receive two-thirds of the amount which will be available for the small burghs. That seems to me to be a grossly unfair proportion. We know the difficulties of these wide areas, these landward parts. They are scattered districts, have a great difficulty in keeping up local services, and I do not understand by what method or reasoning the Under-Secretary arrives at the conclusion that these landward parts are not to get anything under the major part of the formula and only to get two-thirds of what is coming under the minor part of the formula to the smaller burghs.

Photo of Mr Walter Elliot Mr Walter Elliot , Glasgow Kelvingrove

I thank the right hon. Gentleman for giving way. Points which arise in this way can only be settled by occasional conversations, if you, Mr. Hope, will allow me the privilege. First of all, the money distributed under the formula goes to the county, where there is a redistribution within the county. It is not a minor or major formula; it is a national formula and a county formula. No money whatever goes from the Exchequer to the smaller burghs or landward parts under any formula, either major or minor. It goes to the larger areas. That is the first point I wish to make clear. The larger authority is the one which deals with quasi-national services. The second point is that there is a redistribution within the counties on the basis of population only, not a weighted population—an actual population. Let me read Clause 42 of the Bill: The sum to be set aside out of the county apportionment for payments to the councils of small burghs and to the county council for behoof of the landward area shall be such sum as is required to provide for each burgh within the county, and for the landward area a sum calculated for each quinquennium in accordance with the rules set out in Part IV. of the Fifth Schedule. It makes it clear that the money is redistributed within the county, after having been sent down from the Exchequer to the major authority, according to the weighted formula.

The right hon. Gentleman asks a question with regard to the apportionment. of the money: Why is it that the landward parts are to receive only two-thirds of the amount allocated to the smaller burghs? It is estimated that the services remaining to be administered in the smaller burghs and landward areas will impose a higher charge on the smaller burghs than on the landward areas. There will, for the first time, fall on the small burghs in each county the duty of contributing towards the classified roads. These factors justify the giving of a grant of an amount per head to the small burghs which is higher than the amount for the landward area.

Photo of Sir James Macpherson Sir James Macpherson , Ross and Cromarty

What becomes of the scheme of the unclassified roads? Under the proposals of the Government there is an item called "discontinued grants," and one of the discontinued grants is the grant for unclassified roads —about £280,000 a year. The unclassified roads in the main exist in the rural parishes. Few of them are within the burghs. The Under-Secretary by this proposal is discontinuing the grant for unclassified roads in the rural parishes, and, at the same time, under the formula, is only giving two-thirds, a very small proportion, of the grant which is going to the smaller burghs out of the money which is available after it comes to the county authority for distribution, having come direct to them from the Exchequer. There is something radically wrong here. Believe me, I am not alone in finding a difficulty in understanding these proposals. I have done my level best to try to understand them, and I hope the hon. and gallant Member will believe that it is in that spirit that I am speaking now. I have a cutting here from the "Scotsman." It relates to a meeting held in Dumfriesshire. It is not in my constituency, but I do not think I am trespassing on the ground of the hon. and gallant Member for Dumfries (Brigadier-General Charteris). It was sent to me this morning by a distinguished constituent of mine who is interested in educational matters, and raises the point which I am developing now. What is going to happen so far as rates are concerned under this new scheme? Whether they go up or down, the fact remains that there is dubiety in the mind of local authorities as to how the rates will be affected. I am dealing with the case of the burghs. The cutting which has been sent to me is the report of a meeting of the education authority of Dumfriesshire, when Mr. John Henderson produced a report on the Local Government (Scotland) Bill. This is what he said: There was one difficulty, and that was as to what II as to be the result with regard to the allocation of the deficiency in the education rate; the amount of education expenditure not met by the Government grants as between the burgh and the county. Burghs would have a greatly diminished rateable value due to the fact that the valuation of agricultural land was to be reduced to one-eighth. That deficit, unless there was some provision to meet the subject, which he must say he did not see in the Bill, would obviously mean that the burghs would have to pay a very much higher share of the education rate than at present. That is only one of the many difficulties which no doubt are put to other hon. Members by local authorities in Scotland. In the course of the discussion to-day some further explanation should be given as to what the permanent obligations of the local authorities will be so far as rating is concerned. We hear a great deal about the quinquennia, that is in plain English the periods of five years. I often wonder why the expression "five years" is not used instead of "quinquennium." It is an obligation on the Treasury Bench to explain for the benefit of the local authorities what their obligations are to be, first of all as a county authority, and, secondly, as between the various rating authorities—the small burghs, the county, the large burghs, and the landward parishes. It is a very important point, and I hope that some further pains will be taken by the Government Front Bench to explain not only to me, but to all Members, what exactly these proposals will mean to the various local authorities.

There are many hon. Members who wish to speak and I shall deal with one or two further points in short compass. The Under-Secretary made it quite plain that he was satisfied that the proposals would mean a great advantage to agriculture in Scotland. That is not the view of the agricultural authorities in Scotland. I do not think that the hon. and gallant Gentleman can bring forward a single agricultural authority of eminence who has definitely asserted that these proposals will in the long run be beneficial to agriculture in Scotland. On the contrary, I and my colleagues get by almost every post resolutions and cuttings from articles and statements by right hon. Gentlemen opposite criticising and contradicting. The general conclusion which we are forced to come to is that there is not a single agriculturist of standing in Scotland who says that the proposals as a whole will be beneficial to agriculture in Scotland. I see opposite the hon. Baronet the Member for Forfar (Sir H. Hope), who probably knows more about Scottish agriculture than anyone on the Government side. I ask him to substantiate what I have been saying.

Photo of Sir Harry Hope Sir Harry Hope , Forfarshire

I have been asked a definite question as to whether there is any authoritative body representing the agricultural interests of Scotland that has approved of this financial arrangement. Undoubtedly there is. The Scottish Chamber of Agriculture has approved of the settlement which the Secretary of State has now made and is satisfied that with an assessment of one-eighth, agriculture in Scotland will gain substantially.

Photo of Sir James Macpherson Sir James Macpherson , Ross and Cromarty

I am glad I invited the intervention of my hon. Friend, who sits for an agricultural county. The facts are that the Scottish Chamber of Agriculture all along, till within a week or so of the present time, has taken the view that one-sixth or even one-eighth was not a right proportion, but that one-twelfth was the right proportion of the gross value. This is what the "Scottish Farmer" of 3rd November said on the subject: The alteration from the one-sixth to one-eighth may be of substantial assistance to the 11,000 occupying owners in Scotland, but it will not do much for the agricultural interests in general. The same publication on 17th November went further. Dealing with the very point which the hon. Baronet has just made, it said: Mr. Batchelor made it perfectly plain that in his criticisms he spoke for himself alone, but it is useless to deny that his views are shared by a large body of his fellow-countrymen, and if they have not yet been formally so declared there can be no doubt that they will represent the considered findings of the National Farmers' Union. It is not at all necessary to endorse Captain M'Dougal's views to be thoroughly satisfied that Mr. Batchelor's views are sound, and it is, in our view, unfortunate that the Scottish Chamber should already have committed itself to an endorsation of the one-eighth deduction. Doubtless the most will be made of this by the Government spokesmen. The fact remains that up to the very last moment the Scottish Chamber of Agriculture and every single individual agriculturist of note in Scotland maintained that the proper fraction was not one-sixth nor one-eighth, but one-twelfth. That is the view of every man interested in agriculture in every part of Scotland. The hon. Baronet shakes his head. Surely he must be in agreement. with the Farmers' Union? Surely he must agree with the considered view of the organ I have quoted? The Under-Secretary of State told us that he was going to bring forward facts and figures to show that he was justified in making this fraction one-eighth. He held out for a long time and maintained that the proper fraction was one-sixth, but ultimately he conceded one-eighth. He promised to-day that he would produce facts and figures to show that that was a proper fraction. The hon. and gallant Gentleman did not produce these figures. I think the Committee will be glad to know upon what facts and figures the Government in the long run base their so-called concession of a fraction of one-eighth.

Let me put some questions which were raised in the Debate on Monday and not then answerd. They are of great interest to the agricultural population of Scotland, and incidentally to the urban population, who are also affected. Why should the relief that is being given to agriculture, namely the relief of one-eighth, be a divided relief? Why should it be handed over to the landlord and then half handed by the landlord to the tenant? Why should not the relief be given to each direct? I know what the answer is likely to be. But I go a step further. The relief applies only to existing tenants. Does the right hon. Gentleman quite realise the unfairness which is thereby created There may be some tenancies which have only a year to run and other which have 17 or even 18 years to run. Yet they are all to be treated in the same way. The tenancy that has only a year to run is to get relief for this year but no further. The tenancy which has 17 or 18 years to run is to get relief during the whole of that time. When the tenancy is ended, probably the whole question will be reconsidered. But the fact remains that there is gross unfairness and inequity in the proposal of the Government.

I put another question which is also a very burning question. Why should the relief which is to be given during the existing tenancy be continued to the landlord and be taken away from the tenant at the end of the lease? Upon what ground do the Government justify a proposal of that kind? It is an unfair and inequitable and iniquitous proposal. My hon. and learned Friend the Lord Advocate attempted, in replying to an interruption, to justify' it, but I can assure him that his justification did not appear to find favour with the House, nor does it find favour in agricultural circles in Scotland. There is no justification that any sane or reasonable man can think of for giving to one class, as is claimed, great benefit for all time, and giving to another class that same benefit only for a short time, and even that short time varies in extent, for it may he one year or 18 years. I shall await with interest the reply of the Government.

6.0 p.m.

My hon. Friend the Member for Orkney and Shetland (Sir IL Hamilton), who takes a great interest in the subject, made a calculation and mentioned it yesterday. He stated that at the end of an existing tenancy the capitalised value of the amount which will go to the landlord in Scotland will amount to £15,000,000. There has been no attempt to contradict that statement. I appeal to the Front Bench to attempt to contradict it, or if they cannot contradict it, to justify it. The Government's intention surely is to benefit everyone—the agricultural labourer, the farmer and the landlord if they like. But there ought. not to be a specialised benefit of this kind given to one class. The statement made by my hon. Friend has been made time and again, ever since the first apportionment Bill was introduced, and there has not been a single attempt in any corner of the House to contradict it. Nor can the Government to-day justify their proposal. There is no doubt at all that if you relieve a farm of its rates you increase the capital value of that farm. The moment you relieve in any way an industry or a farm or a commodity, you thereby increase the capital value of that commodity or industry. That is quite clear. When you relieve the farms of Scotland of their rates, what happens? We were told by the Secretary of State for Scotland, time and again in the course of his speech—and the same thing has been said by other Members on the opposite, side of the House—that if you relieved a farm of rates, yon did not thereby increase the rent. But I do not know of a single ease where that has not taken place. The moment you take away a burden, obviously, the rental value of the farm goes up. It stands to reason. So reasonable is it, that even the Ministry of Agriculture in England admitted it in a communication to a prospective tenant. The Government themselves have already disclosed their hand—not the Scottish Board of Agriculture but the English Ministry of Agriculture. They intimated quite recently an increase in the rental of certain land leased by them and they justified that, increase of rental on certain grounds. I heard an attempted explanation by the Minister of Agriculture the other day but no explanation could alter these words: In fixing this rate the Ministry have taken into consideration the fact that next year no rates will be payable in respect of agricultural land.

Photo of Mr Walter Elliot Mr Walter Elliot , Glasgow Kelvingrove

My right hon. Friend says he heard the explanation of the Minister of Agriculture. To us on this side it was perfectly clear. The Minister said he brought in these words to show not that he was raising the rent on account of the remission of rates, but that he had taken the remission into account. That was the perfectly definite statement of the Minister and, after all, the right hon. Gentleman is bound to take the word of my right hon. colleague.

Photo of Sir James Macpherson Sir James Macpherson , Ross and Cromarty

It is only what one would expect from my hon. and gallant Friend that he should go to the rescue of the Minister of Agriculture, but the fact remains that these words must mean what they say. The words are perfectly clear. There is no ambiguity about them. They distinctly say that in view of the Government proposals, in view of the fact that there will be no rates chargeable on agricultural land, a higher rent can be charged and that they are going to charge it.

Photo of Sir Robert Horne Sir Robert Horne , Glasgow Hillhead

Is there an increase of rent in that case?

Photo of Sir James Macpherson Sir James Macpherson , Ross and Cromarty

I shall read the extract again for the benefit of the right hon. Gentleman the Member for Hillhead (Sir R. Horne). [Interruption.] Whether he is a frequent attender here or not, we are always glad to see him.

Photo of Sir Robert Horne Sir Robert Horne , Glasgow Hillhead

All I can say is that I have been here oftener in the last two years than my hon. Friend the Member for North Aberdeen (Mr. Benn).

Photo of Sir James Macpherson Sir James Macpherson , Ross and Cromarty

The Minister of Agriculture, as I say, intimated that there would be an increase in the rental of certain lands leased by them. Let me repeat the sentence, and if there is any ambiguity left in the mind of my right hon. Friend the Member for Hillhead I shall be greatly surprised. In fixing this rent"— which is an increased rent— the Ministry have taken into consideration the fact that next year no rates will be payable in respect of agricultural land. What does that mean? No exegesis of that passage could ever alter the surface meaning, and, if that is what a Government Department says before the Measure has been introduced, what will a Government Department do when the Measure has become an Act? As an hon. Member near me remarks, it is an invitation to all other Government Departments, and to landlords all over the country, to do likewise. I think these are all questions relating to agriculture which call for an answer. I am not going into the question of the block grant or the percentage grant. Like other hon. Members, I have had many communications from various authorities and, on the whole, I think opinion in Scotland is in favour of the old percentage basis. I have gone into the matter carefully, and I tell the Committee frankly that I cannot make up my own mind. The argument for the percentage basis is that you will stimulate local authorities to go on with good public services, and that, if you abandon the system of the pound for pound grant, you will thereby stifle their endeavours and the public interest will not be so well served. There is a good deal to be said for that argument, but the Government are determined to introduce the block grant.

In many cases I do not think the block grant is sufficiently high. I have seen it stated, and I agree with the statement, that not only does the block grant not expand, but that it is a sort of dead thing which is handed over and which will stifle the endeavours of local authorities to continue good public work and good public services. I have had only this morning from a well-known local authority a desire that it should he made known to the Government that, if a block grant is to be insisted upon, it should be a block grant coupled with an amount of new money other than the amount available under the scheme. The country as a whole, and particularly the landward parts, are perturbed at these proposals. I do not know what their ultimate effect will be, but I am convinced that a great deal of explanation will be required by the people of this country, and it will the a bad day for Scotland if, by the introduction of these proposals, the Government are going to stifle the endeavours of local authorities to continue doing as they have done in the past—their level best for their fellow-countrymen.

Photo of Brigadier-General John Charteris Brigadier-General John Charteris , Dumfriesshire

Before dealing with the first part of the Bill I should like to refer to whet the right hon. Gentleman the Member for Ross and Cromarty (Mr. Macpherson) has just been saying. I do not desire to go into what he calls an exegesis of the words which he quoted, but I gather that the circumstances of that case are not as he placed them before the Committee. In that particular case land in the same area was being let by agencies, other than the Government, at a higher rent than the rent fixed by the Government for the land which was let by the Government. The Government, in fixing their rent, simply made the remark that they had taken this matter into account, not as an explanation of any increase of rent at all, but merely to show that the matter had not been overlooked. [HON. MEMBERS: "Oh!"] Even if the right hon. Gentleman is not prepared to accept the explanation which has been given of the circumstances of that particular case, surely there is nothing in it to justify some of his other statements about the probable effect of these proposals in Scotland. I understood him to make the remark that the relief afforded to agriculture would terminate, as far as the tenant was concerned, at the end of the present lease, but would continue as far as the landlord was concerned.

Mr. MACPHEPSON:

The tenants' share of the landlords relief.

Photo of Brigadier-General John Charteris Brigadier-General John Charteris , Dumfriesshire

I think that is rather different from what the right hon. Gentleman said. I do not think he made it quite clear in his remarks.

Photo of Brigadier-General John Charteris Brigadier-General John Charteris , Dumfriesshire

As I understood the right hon. Gentleman, he asked why should the landlord get more relief than the tenant? Surely the answer is that the tenant is already re-receiving a far larger measure of relief than the landlord. The position already is that the landlord is paying, on the rating, roughly three times what the tenant pays. It is because of that that the relief afforded to the landlord now is greater per pound of rental than that afforded to the tenant. I understood the right hon. Gentleman to carry his argument further and to say that, on the conclusion of the existing leases, rents would undoubtedly be raised, and it was in connection with that point that he quoted the instance to which I have already referred.

Photo of Brigadier-General John Charteris Brigadier-General John Charteris , Dumfriesshire

It that were so, then there would be no advantage in continuing when a new lease is made the benefit which it is now proposed should be handed over by the landlord to the tenant because, on the right hon. Gentleman's own showing, any such further concession by the landlord would only result in a higher rent.

Photo of Sir James Macpherson Sir James Macpherson , Ross and Cromarty

I was not blaming the landlord.

Photo of Brigadier-General John Charteris Brigadier-General John Charteris , Dumfriesshire

That is not the point. However the right hon. Gentleman would apportion the blame, the point is, would this benefit the tenant? If the tenant's rent is going to be raised in proportion to any remissions which he gets from rates, surely, according to the right hon. Gentleman's argument, the continuance of this concession would make no difference to the tenant. Surely it would be all the same to him as between receiving a remission in rates and paying a higher rent, or, on the other hand, receiving a lesser remission and paying a lower rent.

Photo of Sir James Macpherson Sir James Macpherson , Ross and Cromarty

I think my hon. and gallant Friend has misunderstood me. I did not blame the landlord; I blamed the Government.

Photo of Brigadier-General John Charteris Brigadier-General John Charteris , Dumfriesshire

The right hon. Gentleman will forgive me if I say that I was not asking whom he blamed. I am trying to look at the matter from the position of the tenant. The right hon. Gentleman's argument appeared to be that agriculture was not going to benefit because rents were going up on the termination of the present leases. It is quite immaterial whether he blames the landlord or the Government. My point is that if his argument were correct—I do not admit that it is correct—and if a remission of rates were followed at once by a corresponding rise in the rent, then a continuation of the handing over by the landlord to the tenant of one half of the remission which he receives, would, on the right hon. Gentleman's own showing, only result in a corresponding addition to the rent. Therefore, the right hon. Gentleman's arguments on that point appear to be mutually destructive.

As a matter of fact, I hear in Scotland a considerable amount of criticism with regard to the termination of the arrangement whereby the landlord hands over one half of the remission to the tenant, and to this extent I agree with the right hon. Gentleman—that to me and to many other hon. Members the method appears a clumsy one of arriving at the final result. There may be reasons for it of which I am not aware. My experience has been—and I have discussed this matter with agriculturists in my own constituency, both owner-occupiers, owner-tenants, tenants and landlords—that there is no real objection to the present arrangement. The right hon. Gentleman also mentioned the case of leases which would fall in during the next year, and he made out that there would be inequalities between land let on a new lease at the end of one year, and land let on a new lease at the end of a number of years.

Photo of Sir James Macpherson Sir James Macpherson , Ross and Cromarty

I was referring just now to the case of two leases. One may terminate at the end of this year and the other may terminate at the end of 19 years, because we know that in Scotland there are long leases. I was taking the case of the lease of a farm which would run only for one year, and the lease of the Farm which had perhaps 78 years remaining to run; and I said that there was unfairness and inequality in that matter.

Photo of Brigadier-General John Charteris Brigadier-General John Charteris , Dumfriesshire

That is what I understood the right hon. Gentleman to say, but I cannot follow his argument that there is any inequality or unfairness. When the new lease is made, if it is made with the existing tenant, all the circumstances are taken into account and there would not appear to be any material difference to that particular man whether the lease is up at the end of one year or at the end of 10 years—always providing that the new lease is made with due good will on both sides. Hon. Members opposite seem to imagine that landlords are going to take advantage of this provision and deal unfairly with their tenants. The right hon. Gentleman the Member for Ross and Cromarty would, I am sure, make no such charge. I believe it will be found that the great majority of the landlords in Scotland will deal exceedingly fairly with their tenants in this matter when the new leases come to be made.

The right hon. Gentleman, earlier in his speech, said, as I understood, that he did not agree that this remission of rates was going to be ultimately for the benefit of agriculture. He quoted some authorities with whom we may not all agree, but he also gave it as his own opinion, so I understood, that he agreed with those who said that the remission of rates would not benefit agriculture. Does he think the present remission of rates is going to benefit agriculture, or does he not? If he says that it is not going to do so, I find it difficult to follow. How can any remission of a load which is weighing on any industry, whether agricultural or not, fail to benefit that industry? If the right hon. Gentleman says that this particular remission will not benefit agriculture, I can only say that in my experience he would not find a single agriculturist who does not welcome, and rightly welcome, the remission of the rates which he is getting, and who does not believe that that remission will tend very materially to the assistance of agriculture.

A little bit earlier the right hon. Gentleman quoted from the report of a meeting of the Education Committee in my own constituency, presided over by Mr. John Henderson, a name very well known to all Scottish Members, particularly in connection with agriculture and with education. I had a full report of that, meeting, and I follow the right hon. Gentleman in saying that there is, in the minds of the small burghs in Dumfriesshire and of some of the rate-'payers in the county, a very considerable doubt about how this change in the financing of the educational requirements will ultimately bear upon the small burghs and on the ratepayers outside the big burghs in the country districts; and I hope that, during the subsequent Debate or in the Committee stage we shall get a clearer definition. One thing we can be sure of, and that is that there is sufficient money being given to the local authorities to meet all the requirements of the situation, and that it is only a question of distribution, as I understand it, and the method of distribution, that is in doubt. It is highly desirable before the Bill is put on the Statute Book that we should be assured that the ratepayers in the small burghs and in the rural districts generally are not going to suffer by some miscalculation or by some non-recognition of a factor which has not yet been brought to light.

Then I would ask the right hon. Gentleman who makes the criticism to assist the Government by giving us facts and figures as to how this thing will work Out in his own area, just as other hon. Members have been able to work them out for their areas. I think I may say that if there is a certain amount of anxiety, still it is in no sense a foreboding, and I do not think the education authorities in Dumfriesshire seriously believe that either education or the ratepayer is going to suffer in the end. The point brought to notice requires further investigation, and in that I am entirely at one with the right hon. Gentleman. The right hon. Gentleman also referred to the very difficult question of the one-sixth and the one-eighth. Again he quoted the Chamber of Agriculture, of which Mr. John Henderson is, I think, the secretary, and he said that the Chamber pressed for one-twelfth. I am sure that all loyal Scotsmen would press for more if they thought. they could get it, but it is certainly impossible when you go into the figures to justify the one-twelfth, which was the original calculation of the Chamber of Agriculture. I have gone into that calculation with certain agriculturists in my own area very carefully, and I am bound to say that, while in some cases the figure is a little more favourable than one-eighth, generally speaking and having regard to the point of view of the whole country, and not of one county only, I think it may be accepted that on the whole the figure of one-eighth is fair and is at least as good as, and probably much better than, the assistance which is given to the agriculturists South of the Tweed.

I heard a speech last night criticising the relief given to the coal industry. The hon. Member for Peebles (Mr. Westwood). cavilled at the statement made by my right hon. Friend the Member for Hill-head (Sir B. Horne), and pointed out that the relief of rating, in his opinion, would not benefit the coal industry to any material extent, and I think he said it would be about 1d. or 1½d. a ton. But the main circumstance where coal will be benefited under the new Bill is not by the direct remission of rates on coal, or even on royalties, but by the stimulus which sip e all hope will be given to the industry of this country by the general conditions of this Bill. You will find that by the remission of railway freights and rates and by the other assistance given, coal will be able to compete in the markets going abroad at a reduced cost of 7d. a ton, and not 1½d., as quoted by the hon. Member for Peebles, and in the home market it will have a reduction of 10d. a ton. That is a very material figure, as anyone knows who has dealt with coal at all in getting a contract, and I think that that question of assistance to the coal industry has to be considered in regard to the general situation of trade. All Scottish Members know that there are in Scotland an enormous number of blast furnaces idle, each one of which, if it were in operation, would require coal, and if this de-rating of industry does anything to put even one-quarter of those blast furnaces in operation again, we shall have done far more to assist the unemployed in the coal mining areas than by any other Measure which has been brought into Parliament for many years past.

In regard to the financial provisions of this Measure, I think they are difficult to understand, not only by us Members of the House of Commons, but much more by those people in the country who have not got the advantage of the lucid explanations which come from the Government Bench and also from some of the critics of the Bill. But I am convinced of this, that the more the Bill has been studied during the last few weeks, the stronger is the movement of opinion in favour of it in Scotland. I am convinced also that that movement will continue as the financial provisions become known, and as the reports of these Debates in the House and in Committee are studied in Scotland.

Originally the Opposition charge against the Bill was one of principle and was voiced, not only by the Press, but in public speeches in Scotland, from the platforms of both the parties opposite. We have now, however, got to a situation in which the criticism both here and in the country is in the main only on points of detail. That is undoubtedly borne out by all that one reads in the Scottish newspapers and most certainly by what one hears here in the House in the speeches of hon. Members opposite. The speeches of the right hon. Gentleman who has just spoken, both yesterday and to-day, can quite fairly be criticised on those lines, and that is not remarkable, because, if rumour is correct, the right hon. Gentleman had at least a say—I may be wrong, and I shall be glad to be corrected—in the preparation of that book called the Yellow Book which has been so much referred to in these Debates, and which certainly agrees entirely with the general principles which this Bill seeks to put on the Statute Book and make the law of the country in Scotland.

If Scottish Members, both on this side and on other sides of the House, will go into these financial provisions and the details as to how they will affect their own individual constituencies, we shall have some very valuable information when we corns to the Committee stage, and we might undoubtedly be able to make some improvements in the Bill. In my own constituency I have, as far as possible, worked out the effect of these provisions, both on agriculture and on the burghs, and while I agree that there is great difficulty in seeing how they will entirely work out in the burghs, in agriculture it works out generally in this way: Taking an ordinary tenant and landlord, I estimate that on every £100 of total rental or valuation, the benefit, generally speaking, in Dumfriesshire, works out at something during the present leases like £6 10s. to the landlord, £8 10s. to the tenant, and £15 to the owner-occupier. That is a general average for my own constituency though there are, of course, variations for particular parishes.

In the burghs we have had the advantage of the Government's calculations as set cut in the White Paper, and they will no doubt now have to be changed owing to slight alterations in the Bill, but it is reasonably clear that there is a material advantage, on the face of it, to all the small burghs in my own constituency. If I may say so, I think the Bill, as a result of the discussions so far, is undoubtedly implanted more firmly in the confidence of the House of Commons, and we shall await, as the Debate goes on, to hear whether there are any further criticisms, based not so much on newspaper articles by authorities who cannot be altogether accepted as the last word in the matter, but based more on personal' investigation and figures on the Bill as it stands.

Photo of Mr Campbell Stephen Mr Campbell Stephen , Glasgow Camlachie

I am interested with regard to the financial arrangements connected with this Bill. The hon. and gallant Gentleman who opened the Debate to-day was scarcely as happy as he was last night, when he was replying to the Debate on the Second Reading of the Bill, and I am afraid he left me somewhat uncertain on some points. He began by telling us that there were five things involved in the Financial Resolution, and when he got to the fourth point, about the ratio that is always going to remain between the grants and the total rate-borne expenditure, I interrupted him, and it was not convenient for him to tell me, in reply to my question, just where in the Bill this ratio found a place. He did not tell us, and I do not understand what is the purpose of this ratio between the grant and rate-borne expenditure, because I find that there has been a change made since the White Paper was issued. I do not know whether the hon. and gallant Gentleman was unaware that his Government had made this difference since he expounded it to some of the meetings of local councils and authorities in the country.

Photo of Mr Walter Elliot Mr Walter Elliot , Glasgow Kelvingrove

The hon. Member asked me for the reference. It is in Clause 38, Section (1, c), where he will find a guarantee. As to the ratio, it is a much more favourable ratio than was previously introduced.

Photo of Mr Campbell Stephen Mr Campbell Stephen , Glasgow Camlachie

The reference which the hon. and gallant Gentleman has given to me is a reference to the proportion which the general Exchequer contribution bears to the total amount of rate and grant-borne expenditure. In his statement, however, he gave us the ratio, not to the total amount of the rate and grant-borne expenditure, but simply to the rate-borne expenditure, and I wondered when he was making that statement whether that ratio was in the Bill, and he said that it was.

Photo of Mr Walter Elliot Mr Walter Elliot , Glasgow Kelvingrove

I was speaking in general terms of central and local contributions, but when I came to particulars, I pointed out that the ratio was to rate and grant borne expenditure, as in the Bill.

Photo of Mr William Cove Mr William Cove , Wellingborough

It means an increase of rates to get an increase of grant.

Photo of Mr Walter Elliot Mr Walter Elliot , Glasgow Kelvingrove

This habit of interjection seems to be spreading—

Photo of Mr William Cove Mr William Cove , Wellingborough

We want to understand the matter, that is all.

Photo of Mr Walter Elliot Mr Walter Elliot , Glasgow Kelvingrove

Surely, the hon. Member is stating what is being asked for. Naturally, in so far as local expenditure increases, the central contribution increases. That is what the local authorities want to be reassured about. This reassures them.

Photo of Mr William Cove Mr William Cove , Wellingborough

But must not the expenditure go on before there is any adjustment? Must not there be rate expenditure in the first year, the second, third, fourth and fifth years, and when the new quinquennium is begun the new grant of money will depend upon the rate expenditure during the whole of that period?

Photo of Mr Walter Elliot Mr Walter Elliot , Glasgow Kelvingrove

It is as broad as it is long. If there be a lag in compensation, it goes on for the first year, the second, third, fourth and fifth years after it has been ascertained, although local expenditure has been falling off.

Photo of Mr Campbell Stephen Mr Campbell Stephen , Glasgow Camlachie

I do not want to pursue the point unduly. The hon. and gallant Gentleman says that this will Continue, even though local expenditure is falling, but is there any likelihood, with the constantly increasing need of development, for local expenditure to fall? Is not the general tendency in normal times for local expenditure to be a continually increasing charge, and therefore does it not mean that the lag in this connection is going to be a very real burden to the local authorities? With regard to the financial arrangements, I want to raise the question of the total amount that will be paid in Scotland, and to compare it with the amount that will be paid in England. There is a ratio between expenditure in Scotland and that in England, so far as the Exchequer is concerned. The Committee has heard time and again about the 11/80ths, and I want to draw attention to the way this ratio will work out in connection with the whole scheme as between the two countries. Towards the de-rating loss in England there is to be a contribution estimated at £24,000,000. One looks for a similar payment to Scot land, and one takes 11/80ths of £24,000,000, and the amount is £3,500,000. When I look to see if our representatives in the Government have secured for Scotland its adequate proportion on the 11/80ths basis, I find that the amount set aside for Scotland is £3,200,000, a loss of £300,000.

Major ELLIOT indicated dissent.

Photo of Mr Campbell Stephen Mr Campbell Stephen , Glasgow Camlachie

The hon. and gallant Gentleman shakes his head, but, if I have made a mistake in my arithmetic, I shall be delighted to be corrected by him. One may take other figures, such for instance, as the total net expenditure of the Exchequer in respect of the two schemes. I find that in the English Bill the net additional cost to the Exchequer in England and Wales amounts to £31,330,000. Eleven eightieths of that amounts to £4,307,875. When I look at the figures in the Scottish Bill to see if we have got our due proportion on the 11/80ths basis, I find that the net additional cost from the Exchequer for Scotland amounts to 24,125,060, involving a loss to Scotland of 2182,875. I would like an explanation from the Government why we are not getting the amount that we ought to get on the 11/80ths basis. That may be a wrong basis, but it has been the basis for apportionment, generally speaking, and the Scottish Members will want to know why Scotland is not to get this amount. I am surprised that during the discussion on the Bill and the discussion to-day no member has raised this point. It may be due to the fact that I am admitting ignorance of something about which everybody else has knowledge, but, until I get an explanation, I am going on the basis that there will be a substantial financial loss to Scotland.

I want next to refer to the argument of the hon. and gallant Gentleman with regard to the benefit which he told us would accrue to agriculture through this scheme. He pointed out that there would be this benefit, and then commented on the fact that rent in Scotland was higher than rent in England, and said that that was probably due to the fact that our farmers had not been sufficiently considerate in dealing with the landlords and in refusing to allow the relief to landlords that had been allowed in England. I cannot see how he can have it both ways. The hon. and gallant Member for Dumfries (Brigadier-General Charteris) tried to answer the right hon. Member for Ross and Cromarty (Mr. Macpherson) on the question whether the benefit would go to agriculture or to the landlords. The right hon. Member for Ross and Cromarty suggested that ultimately the benefit would go to the landlords, and the hon. and gallant Member for Dumfries said that he could not have it both ways. I think that possibly you can. In the first place there is a pretence of it going to the tenant, but ultimately it does go to the landlord, and the theft is more barefaced at the end than at the beginning. The hon. and gallant Gentleman, the Under-Secretary of State for Scotland, smiles at that, but I believe that there is a large volume of opinion in Scotland in agreement with that view. Many people believe that rent is robbery, and the the handing out of these benefits, which are ultimately going to the landlords, will only give an opportunity for a, larger robbery. Evidently the Government believes that by allowing relief to the landlord we shall benefit agriculture.

Another point which I want to raise concerns the supposed benefits to industry through this scheme. On this point the hon. and gallant Gentleman was interrupted by the hon. Member for Linlithgow (Mr. Shinwell), and he made the extraordinary statement, with regard to the payments to the able-bodied unemployed, that it was no service to a locality to feed hungry men.

Photo of Mr Walter Elliot Mr Walter Elliot , Glasgow Kelvingrove

I am sure the hon. Member does not wish to misrepresent me, and I do not think I made that statement. I think that it will be found from the OFFICIAL REPORT that what I said was that it was not considered as a service to industry. An hon. Member had been contending that rates are a direct service to industry, and I said that the expenditure on the unemployed is, as we all know, a dead loss—it is a loss to every member of the community. I was agreeing with the contentions of hon. Members opposite that unemployment relief is a loss, that is, it is not a reproductive service, such as are the water, lighting and housing services.

Photo of Mr Campbell Stephen Mr Campbell Stephen , Glasgow Camlachie

I am indebted to the hon. and gallant Member for his explanation. because I do not want to misrepresent him, and it seemed to me at the time that his statement was a rather extraordinary one. I do not know that my colleagues on these benches would be willing to accept the view that making provision for hungry men is not a service to industry in a district. After all, according to ordinary capitalist economics you would be maintaining there a reservoir of labour which is necessary for the working of capitalism; therefore, on the basis of ordinary capitalist economics, a certain amount of service is rendered in that way. But, to my mind, the main question is whether the money which is provided for in this Financial Resolution will really give any impetus to industry and provide increased employment and better conditions. I look at it from the point of view of the country as a whole, and also from the point of view of the Division which I represent. I cannot see that the majority of the people whom I represent, who are in a very poor district of Glasgow, are really going to gain anything at all from this scheme. I do not believe it will provide any additional employment for them. A speaker for the Government referred to the main services in connection with it as quasi-national services. I think that if they be national services they ought to be provided for in larger measure by the nation, and be less of a burden upon the localities. I do not believe in handing this reduction of rates to one section in the community, a section which will not use the relief which is given to it to increase employment at all.

I believe the former Financial Secretary to the Treasury, who spoke from our Front Bench, said one had to put forward an alternative scheme. If I am asked for that, I should say that the money would have been far more profitably spent, and have given a far greater impetus to industry if it had been spent, say, on giving coal to the unemployed people every week during the winter, That would give an impetus to the mining industry, and this in turn would give an impetus to industry as a whole. The money would be far more profitably spent if it were going into the pockets of working people, when it would increase their consumption of goods. What we are doing now, on the contrary, is arranging for another endowment of the possessing classes, adding to their wealth in a way which will not increase the well- being of our people. But if there is money going, I hope that Scotland is going to have its fair share of it, because some time in the future we may have local government in Scotland, and we shall then be able to deal with the arrears which have accrued during the period while we have been subject in those matters to this Parliament. Therefore, I would like to know why we are not getting the 11/80ths. If the Government scheme be a good scheme, Scotland ought to have that proportion, according to use and wont, and I shall be glad to hear why we are not receiving that full proportion.

Major-General Sir ROBERT HUTCHISON:

We have maintained that in this Financial Resolution the question of de-rating could perfectly well have been separated from the question of the reorganisation of local government, but the reply from the Government Benches has always been that the two things are so interlocked that it is impossible to deal with one without dealing with the other. Yet to-day we are asked to avoid consideration of the question of local government when dealing with this Financial Resolution. If the two things are interlocked when the Government are dealing with them, surely they are interlocked as far as criticisms of them are concerned. I have yet to meet any opinion, either in this House or in Scotland, which is much in favour of this Bill, or of the Money Resolution. The whole Bill is unwanted by Scotland. It is being foisted on Scotland simply because of the English Measure. Everyone knows perfectly well that if there had been no such Measure for England there would never have been this Bill for Scotland. Further than that, I venture to say that there is no volume of opinion in Scotland asking for any reorganisation of our local government. Paragraph (1, d) of the Financial Resolution says: for the purpose of making contribution towards local government expenses in counties and large burghs. What is a large burgh? By whose authority was the figure of population fixed at 20,000? A burgh of 20,000 and over is called a large burgh. By whose authority was that done? Was it by the authority of the Convention of Royal Burghs? They suggest the figure of 10,000. Was it the suggestion of the burghs themselves, or was it the suggestion of the county councils, who have to deal with these burghs? I say there is no reasonable foundation for fixing on 20,000 as the figure of the population. There are burghs on the borderline which are complete units, the most complete units we have in the whole country, not only economical but efficient, and not overlapping anywhere in their administration.

Take Arbroath, a, Royal Burgh. The figures of population under this Bill are based arbitrarily on the census returns of 1921. In that census the population of Arbroath was returned at 19,499. That census was taken in the month of June, 1921, after the burgh had lost 700 killed in the War, and at time when, as everyone knows, the fishermen are all away at sea. The Government fix this arbitrary figure of 20,000 and say that because Arbroath is just below 20,000 it is to be classed as a small burgh. They have overlooked the fact that in the census of 1891 the population was 22,821, in the census of 1901 22,393, arid in the census of 1911 20,647. Only in 1921, after the War, in which they lost 700 men, and after the great slump of 1920, did the population fall below 20,000, and yet that burgh is now to be classed as a small burgh, though everyone knows that it is the most efficient and best administered in the whole of Scotland. [Laughter.] I will prove it. The burgh has practically no debt on its rate account. It has discharged its duties with regard to public services. There has been an expenditure of £100,000 on water, and the debt on that is being reduced in 30 years instead of in the 50 years which is the period which the Act allows. I am glad to think the Government have had the sense now to allow water supply to be a reserved service for those burghs.

The point is that there is no reason at all for regarding this particular burgh among the royal burghs as a small burgh. It has its own complete health services, it has its own medical officer, it has its own trained lady medical attendant to examine into the welfare of the children. There is a hospital there which they shared recently with the county, but that arrangement proved to be unsatisfactory and the burgh took it over and ran it itself. Also it has its own infirmary. It is an entirely self-contained unit. If there is one burgh in the whole of Scotland which deserves to be considered as a complete and economical and efficient unit, it is this burgh, and I want to know from the Government why they arbitrarily fix on their figure of population and call this a small burgh. The county council, which, if this scheme be carried through—which I doubt—will absorb this burgh of Arbroath, has stated that it does not want it. The county council would fix a figure of 12,000. I venture to say that a unit of 5,000, if efficiently administered, is a complete unit, or some say 10,000, but to take a burgh such as Arbroath, with a gross valuation of £127,000—which is about £6 per head of the population—where a penny on the rates brings in £500, and which has no debt on its rate fund, and to bring that under the county council is something which calls for explanation on the part of the Government.

7.0 p.m.

The money which is being voted to the county councils is to be distributed by them to the various burghs inside their areas, but the members of the county councils appointed by the town councils of those burghs to sit on the county councils are not to be allowed to vote on all questions affecting that money. Why those members should be made limited members of the county councils beats all comprehension. I cannot imagine any better scheme for stirring up irritation, bad feeling, and every kind of strife inside that body. I have received a letter this morning from a strong supporter of the Government, who is a Provost of one of our burghs, and he says he cannot conceive any finer scheme for causing irritation, bad feeling and ultimate chaos in these bodies than that provision. The Under-Secretary, who tried to answer my hon. Friend the Member for Orkney and Shetland (Sir R. Hamilton) yesterday, made an extremely poor reply—

Photo of Mr Dennis Herbert Mr Dennis Herbert , Watford

The hon. and gallant Gentleman is getting back to that part of yesterday's Debate which does not come under this Resolution.

Photo of Major-General Sir Robert Hutchison Major-General Sir Robert Hutchison , Montrose District of Burghs

The two parts are so interlocked that it, is difficult to talk upon one without the other. We are now talking of the money which is to be allocated to the county councils for distribution to the various burghs. Surely we are entitled to discuss on this the representatives of the burgh who are going to sit upon that body to deal with this matter. I hope we shall get some explanation and, if necessary, some amendment of this provision, as it is a matter of very great moment. The next thing I would touch upon is the block grant. This money seems to be given purely with a view to pegging the Government liability. Instead of giving it on a percentage basis, as in the past, they are now pegging down for all time the liability of the Government. They decline to give a definite guarantee to the various burghs that they will not be losers, and that the rates will not have to be increased. The various paragraphs in the White Paper prove that for the first five years in many cases there will be a small gain. Nothing will satisfy these burghs, if this scheme is to go through, except a Government guarantee that they will not be losers by this transaction. I trust that for Scotland the same promise, which was made by the Minister of Health, will be made by the Secretary for Scotland, that maternity and child welfare services will be continued on a percentage basis, or at least be so safeguarded that they will not suffer.

My next point is this: Is there any guarantee that the money taken from the Road Fund will, in fact, be spent upon roads? Is it not another raid on the Road Fund to help the Treasury? I would like some statement whether the money will actually be spent upon roads. The taking over by county authorities of the first-class roads in burghs will undoubtedly cause them to lose, owing to the fact that they will be made responsible for a much larger mileage of first-class roads. It is the general opinion that this taking over of the small stretch, about three miles, of first-class roads in these burghs will involve them in rating for the upkeep of the main roads which are outside the burghs, but inside the area in which they are included. They want some guarantee that they will not suffer in that respect.

As regards the amount of money which has been allocated towards the de-rating of agricultural land, the case made by my right hon. Friend the Member for Ross and Cromarty (Mr. Macpherson) is overpowering. The actual amount the farmer is going to get will be very small. He gets one quarter but, instead of getting a whole quarter, his buildings are rated to the extent of an eighth of the gross value. In many cases the actual saving is infinitesimal, and will not help the farmer to any great extent. In some cases you will find that, when in due course the rents are raised, as they are bound to be when the lease falls in in order to get the economic value of the farm as it stands, that eighth on the buildings will be an increasing figure, and that in the future the tenant farmer will be worse off than at present. If you had a referendum of the various interests concerned, you would find very little admiration for what the Government are doing in this matter. I have talked to several large farmers on the matter, and they have always told me that the amount of gain is precious little.

I cannot sit down without saying that, of all the Bills it has ever been my experience to come across, there is no Bill that has done more to undermine Scotland's security in this Parliament. The whole consensus of opinion in Scotland to-day is that they are simply being used as a pawn in the game. Because England needs a dose of medicine they, though an entirely efficient unit in administration, have had to take that dose of medicine as an example for England. I am indeed sorry for many Conservative Members who will have to stand as candidates in Scotland, because they will have to defend this Measure to the people of Scotland, and will find it very difficult indeed to justify what has been done.

Photo of Sir Harry Hope Sir Harry Hope , Forfarshire

I had not intended to intervene in this Debate, but I have been tempted to do so because of the assertion made by the right hon. Member for Ross and Cromarty (Mr. Macpherson) that no representative agricultural authority has stated that it was in favour of the Government's proposal to assess land on the eighth of the gross value of the holding. Before saying a word on that subject, I would, first of all, congratulate the hon. Member who has voiced so ably the case of Arbroath. Arbroath is not in the constituency which I represent, but it is one of the burghs in Forfarshire and I have had the ease of Arbroath put before me and have been asked to take an interest in it. I quite agree that Arbroath, being now just slightly under the border line, is a hard case. The hon. Gentleman is perfectly right in saying that a burgh with a population of 19,500, desolated recently through its great services in the War, should get some consideration, especially when the Census was taken at a time when so many of their men were away fishing. I hope that my right hon. Friend may give a little flexible consideration to a case of this kind.

As regards the statement made by the right hon. Member for Ross and Cromarty that no representative agricultural authority in Scotland had approved of the figure of one-eighth, let me tell him the exact facts. When the White Paper first came out, the two principal representative authorities in Scotland, namely, the Scottish Chamber of Agriculture and the Scottish Farmers' Union, asked that the buildings, that is, the farmhouses, the farm cottages and the steadings, should be assessed upon their value where they existed in the same way as these buildings are assessed in England. I supported them in that view and, along with the hon. Member for North Lanarkshire (Sir A. Sprot), whose absence the Committee deplores to-night, we put down an Amendment. We pressed it to a division and were defeated. Those representative bodies then asked that the assessment ought to be one-twelfth of the gross value of the holding. I supported them in that view. The Scottish Chamber of Agriculture after that considered the question and, recognising that the twelfth would not be easily got, and that the eighth was quite a good result, they have now approved of the eighth being considered the assessable value.

Photo of Sir James Macpherson Sir James Macpherson , Ross and Cromarty

I do not think my hon. Friend is quite accurate in what he is saying. Is it not the fact that, after the Secretary of State for Scotland had made this so-called concession, the Chamber of Agriculture, who up to that time had demanded a twelfth, reluctantly agreed to it?

Photo of Sir Harry Hope Sir Harry Hope , Forfarshire

Of course, as I have said, they asked to be assessed on a twelfth and I supported them in that, but after they had got the eighth, they acquiesced. We all know that people often have to ask a biggish price in order to get what is called a fair price. Though, I think, the twelfth was justified, yet I am perfectly sure, knowing the agricultural opinion in Scotland, that they do now consider that the eighth is a great substantial benefit to them. While they will certainly—and I shall join them—still ask for the twelfth, we shall not, like my right hon. Friend, refuse to take an eighth. The right hon. Gentleman yesterday voted against anything. I always think, when we see those crocodile tears being shed, that they cannot be reconciled very well with his action yesterday when, had his party succeeded in defeating this Bill, the farmers would have got nothing at all.

We have been told that all these concessions which have been made to agriculture in the past have resulted in higher rents to the tenant. What does experience tell us on that point? In 1896, the Conservative Government gave a very large concession by assisting farmers to the extent of one-third of their rates, and the Liberal party opposed that proposal. When that change was made in 1896 the rent of land in England and Scotland was £39,000,000 per annum, and the following year, in 1897, after that concession, when according to a right hon. Gentleman opposite rents should have gone up, the total of the rents for that year fell to £38,400,000. In 1898, the total went down to £37,500,000, and in 1899 the total again fell to £37,300,000, and there. has been a continued decline ever since.

That shows that the assertion made that when you reduce assessments you automatically raise rents is quite untrue. On this question, I will give some figures prepared by Sir Josiah Stamp, whom I think the Committee will recognise as an authority worthy of consideration. According to the Report of the Committee of 1925 on the Stabilisation of Agricultural Properties, if the average rent of agricultural land in the years 1911–13 is put at 100, the corresponding level in 1923–24 was 115. Since then the level of rents has fallen slightly, and it will be seen that, notwithstanding the great increase of 46 per cent. in the level of agricultural prices for 1911 and the concession in regard to the rates made to the farmers in 1923, the level of rents is only about 10 to 15 per cent. above the pre-War level. Therefore, we have definite proof that the lowering of the assessments has not resulted in any increase of rent.

Photo of Mr Thomas Johnston Mr Thomas Johnston , Dundee

Will the hon. Gentleman explain how it was that under the operation of the Corn Production Act rents went up most alarmingly.

Photo of Sir Harry Hope Sir Harry Hope , Forfarshire

All I can say is that I opposed the Corn Production Act, because I regarded it simply as an artificial means of raising prices. No doubt when prices were raised rents tended upwards, but that has nothing to do with the statement I have made. The hon. and gallant Member for Montrose (Sir R. Hutchison) said that the benefit to farmers under this Bill would be infinitesimal because their rents would be increased, with the result that the tenants would be worse off than they are at the present time. Let us consider for a moment what the farmers will actually gain. Take a farm rented at £400, and assume that the rates are 5s. in the £. At the present time, the farmer is assessed on one-fourth of the rent, and that amounts to £25 a year. Under this Bill, the farmer will pay only half of that amount and therefore he will gain £12 10s. In addition to that the farmer gets half of what the owner gains. At the present time, the owner is assessed at three-fourths, which makes the amount £75, and under this Bill he will be assessed at one-eighth, which will be £50. If you subtract £12 10s. from £75, it leaves £62 10s., of which the tenant gets half. Therefore, you get £12 10s. for the tenant and £31 5s. paid over by the landowner which is a net clear gain of £43 15s. to the tenant. That is how this Bill works out in practice on a farm of that character. It has been argued that the effect of this Measure would he that rates would be raised and the farmer would be worse off, but the case I have quoted shows that such a statement cannot be borne out by the facts.

I would like to have seen tenants in Scotland assessed as they are in England on houses and buildings wherever they exist, and I think it would have been better to have placed them on the same footing as a butcher, a baker, a doctor, and other ratepayers. I do not like to give any one class of the community exceptional treatment, because, if you do that, you are rendering yourself liable to the charge of favouritism. While the proposal put forward by the Secretary of State for Scotland does not give the farmers all that I would like to see them get, nevertheless it constitutes a really good and valuable concession.

Photo of Captain William Benn Captain William Benn , Aberdeen North

It is very confusing for a plain observer of these Debates to make out what the economic truth may be. We have had a great many economists explaining what happens in regard to de-rating, and they all explain the matter in an opposite sense. The hon. Member for Forfar (Sir H. Hope) tells us that this de-rating of farms does not mean a gain to the landlords, but the Chancellor of the Exchequer only last night said that there was no doubt that this Bill would put money into the pockets of the landlords. The Under-Secretary of State for Scotland has told us that giving assistance to our industries will have the effect of lowering prices. The Minister of Health has also told us that if you reduce the housing subsidy the effect will be to cheapen houses. In view of these conflicting opinions, it is difficult to see where hon. Members opposite stand.

Photo of Mr Walter Elliot Mr Walter Elliot , Glasgow Kelvingrove

Does the hon. Gentleman contend that there is any great import of houses into this country?

Photo of Captain William Benn Captain William Benn , Aberdeen North

That has no bearing on my point. In any case, if the reduction of overhead charges is going to produce a cheaper price, then the subsidy to the builder should result in cheaper houses, and to bring in the question of exports and imports has nothing to do with the question. We have also been told that the giving of a subsidy of rates to the shipbuilders is going to reduce the price of shipbuilding, but Lord Invernairn declares that from now onwards we must look to an increase in the price of ships. The Solicitor-General has already explained to us that by the reduction of rates and freights the price of a ton of steel is going to be materially reduced. At the same moment, the Secretary of State for the Dominions, at a dinner in connection with the iron and steel trade, said: It was impossible to suppose that some magic or formula could enable us to hold our own against the heavy handicap under which we competed…The burden of in- creased rates and taxes since the War constituted a veiled excise upon production…Surely it was contrary to common sense and even to Free Trade theories that they should have an excise duty without a countervailing customs duty. As far as the Secretary of State for the Dominions is concerned, the whole purpose of the proposal which was intended to heal the schisms in the Tory party on the question of tariffs has absolutely failed. Therefore, when the hon. and gallant Member for Montrose (Sir R. Hutchison) says that Scotland is being dragged at the tail of England in this matter he is stating less than the truth. I know that the Chancellor of the Exchequer has been endeavouring to bridge over the differences between the safeguarders and the non-safeguarders. The Minister of Health brought in the Local Government Bill for England, and then the Secretary of State for Scotland had to bring in a similar Measure for Scotland, and the Scottish Members come third in the queue on these matters.

This Motion to-day is dealing with finance. It is a Money Resolution connected with a Bill which only last night, if my information is correct, was actually defeated in this House if only Scottish votes were counted, because 30 Scottish Members voted for the Measure and 32 against it. The Secretary of State for Scotland knows perfectly well that, in defiance of a scheme intended to be some sort of a measure of devolution, they are afraid to submit this Bill to the Standing Committee on Scottish Bills, although the Government have a majority of their own supporters on that Committee. The finance of the Bill is, of course, its most important side, and to that I shall devote my attention exclusively. The full finance of the Bill is to come into operation in the year 1945, and it is a very fine historical coincidence that the Secretary of State for Scotland is dating the full blast of his Bill to come in on the occasion of the bi-centenary of the last rising n Scotland. The Minister of Health, no doubt, will say that he has the approval of all the town councils and local authorities of that kind for the Bill. Has he? He certainly has the opposition of all the parish councils, he has the unanimous opposition of all the education authorities, and will he say that he really has the support even of the great town councils? Certainly, in the case of the town council of the city a part of which I had the honour to represent, although they have given their approval in general terms, it is subject to so many conditions that, if the Minister attempted to fulfil them, the Bill would fall to the ground. I suppose it is the same with Glasgow; I do not know.

Photo of Mr Walter Elliot Mr Walter Elliot , Glasgow Kelvingrove

I think the hon. Gentleman will find that he is wrong in the case of Glasgow.

Photo of Captain William Benn Captain William Benn , Aberdeen North

One of my hon. Friends has informed me that it is the same, but I will not take up the hon. and gallant Gentleman's challenge about Glasgow, because I do not know. I will speak for Aberdeen. The Aberdeen conditions are these: Firstly, that the loss of rates shall be repaid year by year; secondly, that no other ratepayer shall be damnified by the action of the de-rating or partial de-rating of industry; thirdly, that in the Government grant provision shall be made for new burdens imposed by fresh legislation; fourthly, that commitments already entered into with the approval of the Board of Health shall be provided for; and, fifthly, that an adequate margin shall be left for contingencies. Not one of these conditions is fulfilled in the Bill. Why is it that the local authorities attempt to make conditions? The Minister will say, let them look at Clause 38 of the Bill, which says that in any quinquennium—I suppose he means a lustrum, which is the correct term— the proportion which the General Exchequer Contribution bears to the total amount of rate and grant-borne expenditure in the fourth year of the preceding quinquennium shall never he less than the proportion which the General Exchequer Contribution for the first quinquennium bore to the total amount of rates and grant-borne expenditure in the first year of that quinquennium. That is the great guarantee, and that was the thing upon which the Minister of Health laid so much stress. Let us see what is the value of it. In the first place, as a piece of camouflage which I say is: an insult to this Committee, the Resolution provides for the expenditure of "not less than" a certain amount. I have already raised the question with the Chairman of Committees that we have no power in this Committee to bind Parliament to spend not less than a certain amount. It is perfectly true that we are asked to authorise the House to spend money, but I venture to say that there has never been an occasion on which a Resolution has been introduced into the House of Commons authorising Parliament to spend not less than a certain amount. It is not only without a precedent, but it is in fact putting us in a, ridiculous position vis-à-vis the House of Commons. Suppose that we pass this Resolution, as no doubt we shall to-night, and send it to the House of Commons, and it is reduced by the House of Commons. [Interruption.] We are now a Committee. Supposing that it is reduced, that would be a rebuke to us. What is the reason for putting in these ridiculous words? They have absolutely no meaning whatever. If we said in this Resolution that it was expedient to spend a sum not exceeding the requirements of the Bill, that would be all that we need do. These words are put in because they are part of an elaborate system of camouflage in order to make the local authorities imagine that they have a guarantee which I am going to proceed to show does not exist at all.

What sort of guarantee is it? The Secretary of State met the local authorities and altered the terms of the ratio, and he pointed out to them that this guarantee was a substantial safeguard against the evils which they foresaw in the year 1945. In the first place, as the Minister himself has said, and as we all know, it is quite impossible for this House of Commons to bind future Houses. That we all recognise to be true. Moreover, the Chancellor of the Exchequer, when he raided the Road Fund, expressed the constitutional doctrine quite accurately when he said: A question of contract between the State and any body of its citizens would be manifestly improper. The hands of Parliament must be free to deal with all matters of taxation from time to time in the general interest of the whole community. Therefore, it is common ground, at any rate, that nothing that we can put into an Act of Parliament will prevent future Parliaments from making alterations in the law. We all realise that, and it is quite obvious. What sort of safeguard, then, can local authorities look for who want to be sure of getting a certain sum of money later on? They remember the case of the Insurance Fund; they remember the case of the Road Fund. At any rate, however, they have this amount of safeguard, that, if the present Chancellor of the Exchequer, who was a Member of the same Government that made the contract about the Road Fund, and was a Member of the same Government—he has been a member of most Governments—that made the contract about the Insurance Fund, comes along and takes away what he has given, which, of course, any House of Commons can do, it is some sort of guarantee for the local authority if elaborate legislation is required to deprive them of what they have been promised. For example, they are asked at the present moment to give up rating powers. It is a complicated and difficult thing for any Government to take away rating powers from the local authorities, as has been indicated by the spirited and, I hope, successful defence of Montrose which was made by my hon. and gallant Friend the Member for that Division this afternoon. It is some guarantee to a local authority if they are protected by a mass of existing legislation, or if they have assigned revenue, or if they have a Local Taxation Account through which money has to pass; and it would, of course, be a guarantee if the State were performing the functions and responsibilities as well as providing the money. But this particular form of guarantee—and this is the point that I want to make—is the most slender guarantee that could possibly be given.

Let me illustrate my point. This Bill says that a certain proportion shall be maintained, and for this purpose an Estimate will be introduced year by year, because, of course, we are speaking of moneys provided by Parliament. I say, and I shall be very glad if the Secretary of State will answer the point when he makes his reply, that any subsequent Chancellor of the Exchequer can destroy this guarantee by the alteration of one figure in an Estimate. No repeal is required; it will not be necessary to repeal this Measure at all. When the Chancellor is hard up, as Chancellors very often are, and the time comes to put in the figure for this General Exchequer Contribution, he may simply alter the figure and make it £1,000,000, or whatever the amount may be, less, as was done in the case of the Road Fund and of the Insurance Fund. He can do that merely by altering a figure in an Estimate, and without any necessity for reapealing one word of this Statute as it will be by then, of 1928. The guarantee, therefore, which is provided here amounts to no more than a resolution which might be passed at a public meeting. No doubt the Government are acting in good faith; I do not deny that; but would they promise this even for themselves or their Chancellor of the Exchequer should they be in power 10 or 12 years hence? Far less can they promise it for another Government. The only real guarantee for the local authorities is to have a Government that is sympathetic with the growth of local effort. The next best guarantee is, as I have said, a hedge-work of legislation that requires repeal; but the weakest guarantee is a Measure of this kind, which may be repealed simply by the alteration of an Estimate.

I want to substantiate that. In 1907, as many hon. Members will recollect who were in the House at the time, a very acute education controversy was proceeding, and Mr. McKenna, who was then President of the Board of Education, was engaged in attempting to fortify his position in the dispute on the question of Church schools. When the Act of 1870 was passed, it was specifically laid down in one Section of the Act, and it was no doubt part of the compromise that was arrived at when the Act was passed, that it should not be lawful for money to be voted by Parliament for the building of public elementary schools. I presume that the intention was that the Church should build the schools, and in that way secure their position, just as in this Measure it is laid down that a certain ratio shall be preserved. To that extent the two cases are on absolutely the same footing. Mr. McKenna produced his Estimates for 1908, and, if anyone will look at them, they will find not a word about the repeal of the Act of 1870, but simply this item: Moneys for the building of public elementary schools, so much. Of course, this breach of what people regarded as a legislative guarantee to the Church created a good deal of stir, and I remember Mr. Balfour, who was then sitting here, putting a question to Mr. Speaker Lowther, and asking him whether it was possible for Minister merely to introduce an Estimate and thereby nullify and render nugatory what everyone had previously regarded as a legislative guarantee of the rights of a certain body of citizens. Mr. Lowther said it was nothing to do with him, that an Estimate was an Estimate. It became, however, the Consolidated Fund (Appropriation) Act, and that Act was just as much an Act of Parliament as the Education Act or any other Act.

Therefore, my contention is that this so-called guarantee which was given to the local authorities, and upon which so many hopes have been based and by which so many fears have been allayed, is, in effect, although I do not doubt that it was giver in good faith, no guarantee at all, and no more than a letter which might be written by the Secretary of State for Scotland in answer to a deputation or anything of that kind. It is subject to repeal at any moment by any Minister who, in the financial necessities of the time, sees fit to introduce an Estimate which doss not conform to its provisions.

Photo of Mr James Couper Mr James Couper , Glasgow Maryhill

I feel that, in following such a speech as that which we have just heard from the hon. Member for North Aberdeen (Mr. Benn), I am at a disadvantage, but I am encouraged by the fact that the hon. Member himself explained at the beginning of his speech that he was somewhat in a maze owing to the different explanations that have been given in regard to the Bill, both inside this Chamber and outside. I feel that I am very much in the same position, and that, therefore, it is well that one should take a line of one's own and make up one's own opinion. This being a money question, I desire to look at it particularly from the commercial standpoint and from the point of view of the commercial community. The speeches that we have heard during the discussion on this Bill have, so far as I can see, emanated almost entirely from those whose life has been spent in either the Army, the Navy, journalism, or some of the more learned professions, and, with the exception, I think, of the hon. Member for St. Rollox (Mr. J. Stewart), I do not know that any one of the speakers has been closely connected with business or commercial firms. It is, there fore, from the point of view of the commercial community that I should like to speak.

This matter is naturally very closely allied to the trade, commerce and industry of the country, which are all directly connected with employment and, unfortunately, with the unemployment from which industry is suffering so badly and which we are all directing our attention to removing at the earliest possible moment. I was much interested in the speech of the hon. Member for St. Rollox, but I rather regretted the reference he made to one of the important industries in his own constituency when he admitted that, as the result of de-rating, it would benefit to the extent of some thousands of pounds and would be able to employ so many more workers. I do not think he would make the explanation he did to his own constituents that he objected to them getting this additional sum when he admitted that employment would be given to a large number of workers, because in Glasgow we have, according to the latest returns, 57,000 unemployed on our register, and it is with the object of finding work as early as possible for this huge army that the Bill is brought forward.

The perspective of the whole question of the Bill has been clouded because to a large extent it turned upon what was called able-bodied relief, whether it should be on the State or should be dealt with locally. This is not a question of relief. It is not relief, but work that we want, and the very object of the Bill is to provide a means of giving work to the workers and removing the causes of unemployment. Glasgow represents a fourth of the whole population of Scotland, and, when Glasgow gives its word of approval, the rest of Scotland is very much inclined to follow the lead. The town council of Glasgow, the largest in Scotland, has approved of this Bill. The Glasgow Chamber of Commerce comprises not only members resident in Glasgow but represents a large area outside, covering the coal, iron and steel industries, and the late President is now President of the Chamber of Commerce of the United Kingdom. This area has been described as one of the black spots of industry, and it is with the object of removing that stigma that the Chamber of Commerce, by resolution, unanimously supported the terms of the Bill in toto. The hon. Member for Peebles (Mr. West- wood) yesterday spoke as if the 4d. per ton by which the coal trade will benefit was not worth while speaking about. If he had been as ably informed on commercial matters as he admitted he was in educational matters—which I do not for a moment dispute—he would have known that 4d. or 3d. a ton makes all the difference in the world, when you are dealing with lots of 10,000 or 20,000 tons, whether you get a contract or lose it. It is not only the selling price of the coal but it enables shipowners to accept lower freights and thus assists in capturing foreign markets.

I do not wish to take advantage of the absence of the hon. Member for Dundee (Mr. Johnston), but he was both un generous and made statements calculated to deceive, and not according to the facts, when he pilloried gentlemen by name who were not present and had no opportunity of replying and said they were benefiting personally by being friends of the Government and having sums of money handed over to them. The facts are quite the contrary. These gentlemen never asked for any of this money that goes to their firms. They are men of the highest reputation and are most liberal contributors to philanthropic funds. No name is better known than the Reids of Springburn and Mr. Macfarlane who with his brother has built an addition to the Royal Infirmary, and Sir Henry Meehan, the Chairman of the Conservative Association of Scotland, who in the last few weeks, in addition to a large sum to endow a chair in the University, with his wife has given a very large sum to one of the leading hospitals in Glasgow, which is entirely for the benefit and the service of those who are not able to pay the necessary fees to alleviate their sufferings. Over and above these statements one of the most ghastly was the reference to a man who is said to have received money, and who for five years has been dead and in his grave. It is clear that the hon. Member is not a, Glasgow man or he would have known the merits of those on whom he put a stigma.

The people who are connected with the industry and commerce of Glasgow look upon the Measure as not only one beneficial to trade and to the country, but as a courageous one, and we believe the Scottish workers are whole-heartedly in support of it. It will not only give work to the people, but will bring back independence to the Scottish men and women and give them work at full pay instead of enforced idleness and a dismal and dejected life. I believe we are doing right, and I can hardly believe that any on the other side who are desirous to assist in removing the causes of unemployment can do other than support the Bill.

Photo of Sir Archibald Sinclair Sir Archibald Sinclair , Caithness and Sutherland

The hon. Member has addressed the House with his usual eloquence and persuasiveness, but I could not help feeling that he found the task he had assumed rather a heavy one, and he fell into the mistake we nearly all do in these unfortunate circumstances of putting his case rather high. He said everyone who had the interests of Scotland at heart, everyone who wanted to help the people of Scotland was in favour of the Bill, wiping out all the Members on this side of the House and implying that they are only anxious to lower the standard of living of their fellow countrymen. In every county and burgh of Scotland there are men with a long record of devoted service to their fellow Scotsmen who have expressed themselves as diametrically opposed to the proposals of the Bill. Of course, it is possible to realise the necessity of lowering the rates without being in the least in favour of this Bill. One may have seen in war a general trying to beat the enemy but going in the wrong direction, with his plans badly thought out, with his forces discouraged by his own inefficiency and incompetence, and, when you see a general or a Government in that position, you feel that their proposals are not in the best interests of the country.

There has been a great deal of talk about the Yellow Book, and I am very glad indeed to see that so many Members opposite have taken the trouble to read it. We have in that book, and in other ways, tried, and have succeeded, in bringing home to the country the importance of this question of lowering the rates. The hon. Member for Forfar (Sir H. Hope) turned on my right hon. Friend the Member for Ross and Cromarty (Mr. Macpherson) and said that those who, like him and myself, voted against the Measure last night, voted against anything for the farmer, and that if we had been successful in the Division Lobby the farmers would have got nothing. The farmers would have got the best, thing they could have got if we had carried the day. It would have brought about the fall of this Government, under whose administration and on account of whose policy in a large measure, agriculture has been brought into a worse plight and a lower condition than it has been for the last 50 years.

8.0 p.m.

The farmers would not have lost the prospect of rating relief. Hon. Members on this side are as determined that agriculture should obtain, and all country dwellers, not only farmers, but dwellers in the countryside generally, and in the towns too, should obtain relief from this crushing burden of rates. I would remind hon. Members on that side who speak in that way that no less an authority than the Minister of Health, in introducing his Measure, declared openly and quite honestly and frankly that the need of bringing in the national taxpayer to help to carry the burden of the local ratepayer was common ground between men and women of all parties in this House. But, as I understand it, the Government's objective in this Measure is to stimulate productive industry. They are going about it in the wrong way. There is this false distinction between productive and distributive industries; their methods are ill-conceived, and therefore their plan is bound to fail.

I want, briefly, to take the instance of those two important basic industries upon which the prosperity of my own country—I am talking of the Highlands of Scotland—mainly depends at the present time. First of all, a few words on the fishing industry. Hon. Members opposite say that they are helping the fishing industry by this Measure. Well, a slight, but almost imperceptible, amount of help will trickle through to the fishing industry. Hon. Members must realise how serious the plight of the industry is. They have waited for five years for the Prime Minister's promise of help in 1923 to fructify. I have just received a letter—I will not take up the time of the Committee by quoting it—from a fish curer, stating that the markets in Germany and in Russia are now sealed against the further export of herrings from this country, and that it is likely that there will be no winter or spring herring fishing in Scotland next year. All the help that they will get out of this will be that on their fish-curing yards they will get a few pounds a year. I will not trouble the Committee with figures. I have them, and I will give them on the Committee stage. These few pounds a year will not enable the fish-curer to sell his fish any cheaper or to employ one more man or woman in his fish-curing yard than he does at the present time. They will get some freight-relief out of their transport reliefs on freight from coal, but offset against that will be the higher price which they will have to pay for their petrol. Hon. Members opposite talk about the concession to the fishermen because the fishermen are not going to have the pay the Petrol Duty. Why, all the benefit which they speak about which is going to the fishermen only means that they are not going to pay in future a tax which they have never had to pay in the past—a typical benefit to receive from this Government.

To come to the case of agriculture. The hon. and gallant Gentleman the Member for Dumfries (Brigadier-General Charteris) talked of these proposals giving an immense benefit to agriculture. I have worked out the figures for a farm in my constituency with a rental of £24. I have taken that figure arbitrarily because £24 can easily be divided, both by six and by eight. As a matter of fact, it is a high figure for my constituency. It is about double, or at least half as much again as the average rent paid by farmers and smallholders in Caithness and Sutherland. I have the figures, but again I am not going to trouble the Committee with them to-night. I will ask Members of the Committee to take them on trust to-night, but I will produce them on the Committee stage of the Bill. It works out in this way. Allowing for a 2s. reduction in the rate owing to the new money that is coming in—which is higher, as a matter of fact, than the average in my county—the tenants' relief on £24 rent will amount to 18s. a year. Of course, I shall be reminded, unless I hastily add this, that they will get half the landlord's gain, and the landlord's gain is very much more substantial. A half of that comes to 39s. a year. Therefore, the total gain on this rent of £24 will be 57s. a year, but only during existing leases. The lease may run out next year, in which case they will come back upon the 18s. a year basis. At any rate, at the end of the existing leases they inevitably come back to the 18s. a year basis, less, of course, let us remember, what they have to pay on the Petrol Duty.

The hon. and gallant Member for Dumfries and the hon. Baronet the Member for Forfar assure us that the landlords will not take the tenant's half at the end of the lease. We have listened to very embarrassed attempts to explain away the Ministry of Agriculture's Circular in which it was made clear that the Ministry of Agriculture themselves contemplated raising the rents of their tenants specifically on account of the rating relief which the tenant would enjoy under these plans. They have tried to explain it away, but I will give them another example. I gave it to them last July, but, of course, they have convenienty forgotten. I make no apology for quoting it again because it is so extremely apposite, and so absolutely fortifies and clarifies the lessons that we received from the Ministry of Agriculture's Circular. It is a quotation from a circular which was handed to a member of a deputation from the National Farmers' Union of Scotland when the deputation waited upon the Secretary of State for Scotland in July of last year. This paper was handed over by an official of the Scottish Office in order that it should be explained to them how the agricultural rates relief would work. In the course of this official Circular occur these words—I am quoting from my speech published in the OFFICIAL REPORT of 5th July last: During existing leases one-half of the relief to owners is to be paid over to the occupier. The net amount of relief remaining in an owner's hands will, therefore, be 7/18ths of his present rates. I should explain that this, of course, is based upon the assessment being reduced from one-quarter to one-sixth, whereas we now know that it is going to be reduced to one-eighth, but that makes no difference to the argument. It goes on to say: As leases expire the 7/18ths relief will gradually increase until it reaches the full 7/9ths.''—[OFFICIAL REPORT, 5th July, 1928; col. 1675, Vol. 219.] That is what a Scottish Office official document says—Does the Lord Advocate dispute it? I see that he smiles. This is what a Scottish Office official gave—Does the Lord Advocate really dispute this? He shakes his head.

Photo of Mr William Watson Mr William Watson , Carlisle

We dispute the hon. and gallant Gentleman's interpretation of it.

Photo of Sir Archibald Sinclair Sir Archibald Sinclair , Caithness and Sutherland

I shall be glad to hear any interpretation or gloss which the Lord Advocate may be able to place upon it, but it is fairly and clearly stated that as leases expire the seven-eighteenths relief will gradually be in-creased until it reaches the full seven-ninths. The hon. Baronet the Member for Forfar referred to the absurdity of supposing that the effect of lowering assessments would be to raise rents, but it is true, and it is true over the whole of Scotland. Take a farm of £100 of rent and the rates are, 5s. in the £ owner, and 59. in the £ occupier, 5s. being paid by the owner and 5s. being paid by the occupier. Suppose the occupier goes to the owner and says: "I will pay all the rates." Obviously, you would expect the owner to say: "In that case I will accept 25 per cent. less rent." That would, obviously, be a fair bargain. As a matter of fact, that is what the English tenant who pays all the rates does. It is proved in the Government's White Paper that rents in England are 25 per cent. less than in Scotland, and therefore it proves that the difference in the level of rents exactly represents the difference between the method of paying rates in Scotland and in England—rents being in direct proportion to the different systems of paying rates in Scotland and in England.

Photo of Mr Walter Elliot Mr Walter Elliot , Glasgow Kelvingrove

Is the hon. and gallant Member referring to agricultural land?

Photo of Sir Archibald Sinclair Sir Archibald Sinclair , Caithness and Sutherland

I am referring to rents of land. It is equally true of rents of agricultural land and of land used for industrial purposes. If, on the one hand, the tenant pays rates, the rent will be proportionately lower. If the land-lord pays half the rates the rent will be proportionately higher. It is, in fact, true of Scotand as opposed to England.

Photo of Mr Walter Elliot Mr Walter Elliot , Glasgow Kelvingrove

What then becomes of the hon. and gallant Gentleman's contention that rating relief is an important thing, if in any case it is bound, whatever process you have, to go to the landlord?

Photo of Sir Archibald Sinclair Sir Archibald Sinclair , Caithness and Sutherland

No, not at all, because if the hon. and gallant Gentleman will pursue his researches into the Tartan Book—and we know that the hon. and gallant Gentleman and the Secretary of State for Scotland are so zealous in the public service that no task is too arduous or uncongenial for them to perform in the interests of the public—if the hon. and gallant Gentleman will pursue his researches into the Yellow Book he will find that we do provide means of securing rating relief to the tenant, because we introduce security of tenure, which is the foundation upon which rating relief can be made effective, and upon which almost any valuable agricultural reform must be based.

Photo of Mr Walter Elliot Mr Walter Elliot , Glasgow Kelvingrove

I understood that the hon. Member's proposals were to make it impossible for any man ever to own any land and that he should be always subject to a Land Court to revise rents from time to time. This would before long absorb all the relief, according to the hon. Member's own contention.

Photo of Lieut-General Edward Fitzroy Lieut-General Edward Fitzroy , Daventry

We are now entrenching upon what is perhaps hypothetical legislation.

Photo of Sir Archibald Sinclair Sir Archibald Sinclair , Caithness and Sutherland

I must bow to your ruling, but I should like to reply, as think I could effectively, to the observations which the hon. and gallant Gentleman has made. I shall no doubt have some future opportunity. It has been suggested by hon. Members opposite, and I agree with them, that few landlords would in fact raise their rents against the sitting tenant, but certainly when there was a change of tenancy by the ordinary operation of the competitive rent system the higher rent would inure to the landlord. No blame could be attached to the landlord at all. The landlord has a number of applications for a vacant farm. He probably rules out some of them because he thinks that the applicants are incompetent, perhaps likely to farm to leave and skin the farm, and he will not have anything to do with them. He will gradually bring them down until there are two or three people, roughly, with equal qualifications. How is he to decide between three men of, roughly, equal qualifications?

He gives it to the man who offers the highest rent and who is an equally well-qualified man. It is no blame to him. In that way the effect of rating relief must mean, short of security of tenure, that it will inevitably inure when there is a change of tenancy to the benefit of the landlord. I am speaking now of the ordinary landlord in Scotland. There are, of course, special classes of landlords. There are those men who bought estates, recently, purely for the sake of sport and who have no interest in the tenants or in the countryside. Men who have told us, that they bought these sporting estates at the height of the boom in 1920. I have one man in mind who said: "I paid too much and I am not going to spend any more money on the estate." People of that sort will, naturally, want to get their money back as quickly as they can. Then there are the trustees for bondholders, whose duty and responsibility to the courts of law is to get as much out of the estate as they can in order to repay the bondholders. The tenants desire and require and are entitled to expect from this Government protection against these classes of landlords. The hon. Member for Dumfries and the Lord Advocate, I think, suggested that, however desirable it may be, at the end of the lease we cannot give effective protection to the tenants. I say that we can. We can give them the protection which is given under the Agricultural Rates Act, 1923. In Section 14 of that Act it is decreed that: The relief to occupiers of agricultural lands and heritages …shall not be taken into account by the land court in fixing a fair or equitable rent for a. holding under the Small Landholders (Scotland) Acts, 1886 to 1919, or by an arbiter in determining for the purposes of section twelve of the Agricultural Holdings (Scotland) Act, 1923, what rent is properly payable in respect of the holding. I would ask the Lord Advocate or the hon. and gallant Member if that Section is going to be adopted and inserted in this Act. The total relief to the tenant which he can rely upon is 18s. a year and the freight transport relief, which is more than offset by the Petrol Duty. What is the position in agriculture to-day? The total area under crops and grass is the lowest since 1877. The total area under the plough is the lowest since the return was first made. The agricultural population of horses this year as compared with last year is down by 1,000, cattle by 1,100, pigs by 2,000, sheep by 30,000.

Photo of Lieut-General Edward Fitzroy Lieut-General Edward Fitzroy , Daventry

That argument would be more appropriate to the Vote for the Scottish Board of Agriculture than to the Financial Resolution of this Bill.

Photo of Sir Archibald Sinclair Sir Archibald Sinclair , Caithness and Sutherland

I was arguing that this is the serious plight of agriculture. I hope you will allow me to give one further fact, and that is that there are 2,200 fewer people to-day in the county of Sutherland than in the year 1921.

Photo of Lieut-General Edward Fitzroy Lieut-General Edward Fitzroy , Daventry

That may be a serious fact but it is not relevant to this Financial Resolution.

Photo of Sir Archibald Sinclair Sir Archibald Sinclair , Caithness and Sutherland

This Resolution is put forward by the Government, and we are asked to pass it in order to assist productive industry. The industry of agriculture is the most important productive industry in the country to which I belong, and I am arguing that if this scheme is not going to do anything to help to solve the problems to which I have drawn attention, it is no use voting the money, and that the motive which the Government profess to have is not in fact implemented by the proposal which they are putting forward. This scheme cannot be defended as a stimulus to industry. We are told that it is necessary to lower the burden of rates in the country districts, but we would put it higher than that so far as agriculture is concerned. That is not the principal part of our proposals for agriculture although it is one feature of it. The burden of rates bears upon everybody in the countryside. It bears upon the citizens of the burghs and upon the men and women in the villages who have no hope under these proposals and who will get little or nothing of the money which the Committee is invited to vote this evening. These villagers and the ordinary men and women in the burghs—productive industry is to be relieved of three-fourths of its rates and agriculture of all its rates—will be left within the area of assessment to bear the whole burden of the rates.

Photo of Mr Frederick Montague Mr Frederick Montague , Islington West

The agricultural labourer.

Photo of Sir Archibald Sinclair Sir Archibald Sinclair , Caithness and Sutherland

Yes, the agricultural labourer, the villager, the ordinary citizen of the burgh are left within the area of assessment and they will have to bear the burden of the rates. In my own burgh the rates are up by 1s. 6d. in the pound this year, and we are asked to fall on our knees in gratitude to this Government for a reduction of 9d. in the pound next year. This is only in the first year. When we turn to paragraph 41 of the Financial Memorandum we see that the general Exchequer contribution which is in relation to the grant and rate-borne expenditure of this year, is calculated to increase by £300,000 at the beginning of each quinquennium. Taking the ratio of one to four as between the general Exchequer contribution and the rate-borne and grant expenditure, which is suggested in paragraph 16, and I imagine that it is correct, the total rate-borne expenditure is going to increase by £1,200,000 each quinquennium in Scotland. Of course, it is going up. Take my own county alone. We have a child welfare and maternity scheme in Wick and Thurso. We shall have to have one in the county and we ought to have. We shall have to have a nursing association for the county. We have a water scheme for which only one-half is being paid in the standard year. There is the Housing (Rural Workers) Act, under which no money has been paid. On the other hand, we have incurred an obligation of over £4,000. None of this expenditure will rank for the general Exchequer contribution because it is not being incurred in the standard year. Who is going to pay this additional expenditure? Who is going to pay this £1,200,000 a year in Scotland? Not the Government, at any rate not this year, or next year or the year after that. They do not come in until the first year of the second quinquennium. Not the general body of ratepayers, because so far as productive industry is concerned they are relieved of three-fourths of their rates and agriculture of the whole of their rates. The whole burden of this increased expenditure in the second, third, fourth and fifth year will fall upon those who are left within the area of assessment.

There is another danger. There is the emergency which is referred to in paragraph 15 of the Financial Memorandum, the possibility of industrial trouble. There is also the possibility of an epidemic involving the county in heavy expenditure in protective health services. There is the possibility of a destructive storm destroying valuable county property, which will have to be replaced. In any of these cases, whatever the emergency may be, the whole burden of financing the necessary expenditure arising out of the emergency will fall upon those unfortunate people who are left within the area of assessment. There is not a, local authority, not even the county councils, which hon. Members are fond of quoting and who stand to gain most under this Bill, which is not alarmed by the prospect. The Secretary of State has appealed for helpful and constructive criticism. He has yielded something to the rather formidable criticism which was directed against him on the score of the nomination of councillors for the rural districts of Scotland by co-option, instead of their being elected by the people. It will be interesting to see how he will met the sweet reasonableness of county councils who are asking that the block grant should not include loss of rates; that His Majesty's Government should make good the loss of rates every year. I hope the Under-Secretary will tell us whether the Government proposes to accede to this request, made by those who have been most friendly and most helpful in the criticisms they have put before the Government.

They are also asking that the block grant shall be revised when and as often as additional obligations are imposed on local authorities by Parliament. They demand also that the block grant shall be increased in respect of obligations imposed by Parliament in past years, but which they have not yet had time or opportunity to undertake, obligations such as those under the Housing (Rural Workers) Act, to which I have already referred, very important obligations for authorities in rural districts, but the expenditure upon which will not rank in the standard year. I hope the Under-Secretary will be able to tell me whether the block grant will be increased in respect of such expenditure as that under the Housing (Rural Workers) Act, which is not incurred in the standard year. They are also asking that the period of revision shall be reduced from five years to three.

That is a reasonable request, and I hope the hon. and gallant Member will let us know what he thinks of that suggestion. There are many other things I want to say on this proposal, but other hon. Members are anxious to speak. Let me say this: I do not regard these proposals as very helpful from the point of view of productive industry or the general body of ratepayers in Scotland. I am disappointed that the Government has not adopted some of the amendments which have been suggested and some of the constructive proposals which have been put before them during the last summer and autumn, and, unless I receive some satisfaction on the points I have put before the Committee, I shall have no alternative but to vote against them.

Photo of Mr Archibald Skelton Mr Archibald Skelton , Perth

A variety of points, due to the nature of the Resolution, ranging over a very wide field, have been brought before the Committee during the course of the Debate. A great many are points which it would be most alluring and interesting to follow up, but I want to confine myself to a comparatively small number of subjects. In the first place, an observation was made by the right hon. Member for Central Edinburgh (Mr. W. Graham) which I thought did not bear the stamp of his usual candour. He compared the figure of rating relief, taking that at a sum of £3,000,000, with the total sum exacted from Scotland in rates, and by doing so arrived at the result that out of a total of £22,000,000 Scotland was only going to get £3,000,000. He then argued that it was impossible to say that a relief so small in proportion was any real relief to productive industry. He was not comparing like with like. He should have taken the total rate at present exacted from productive industry in Scotland. That would have been a much smaller figure, something in the nature of £4,000,000, and, therefore, his figures, instead of showing a comparatively small proportion of relief, would have shown the real situation, which is that productive industry is going to be relieved to a very large extent.

I have found it somewhat difficult to follow the argument presented from both Opposition parties. While unwilling to deny that the relief of rates is a relief to industry an attempt has been made to show that this particular method of relieving rates is a poor form of relieving industry. I cannot see the force of that argument. If you look at it in a broad way then the right departments of profit making industries have been selected for relief. We must all agree that in the present condition of industry and trade it is far more important to relieve productive industry than it is to relieve distributive industry. I cannot see how that principle of the Government's method of relief, namely, to concentrate on productive industries, can be quarrelled with, because it is clear that the success of distributive industries largely depends upon the state of productive industry and, therefore, you are striking at the root of the problem if you do something to assess productive industry. On that score, the Government scheme must hold water however closely it is examined. Take the case of agriculture. When I was referring to productive industry I was thinking more of urban industries. But take the case of agriculture. I listened with the greatest interest to the hon. and gallant Member for Caithness and Sutherland (Sir A. Sinclair) on the subject of agriculture, and I am only going to deal with one small point because many of his questions were asked direct of the Government and can only be answered by those responsible for the Bill. But all the criticisms which have been made on the relief to agriculture minimise or neglect, as far as I have heard the Debate, the effect of rating relief upon the owner-occupier. The owner-occupier is a person of great and increasing agricultural importance in Scotland. I think the proportion of land now cultivated by owner-occupiers for agricultural purposes is something like 31 per cent.

Photo of Mr Archibald Skelton Mr Archibald Skelton , Perth

I think I am right in the figure; it is certainly not less than 27 per cent. I thought the figure was 31 per cent., but I have not had an opportunity of confirming it. I will be content with 27 per cent. Nobody denies that one of the most unfortunate results, perhaps the only unfortunate result, of the widespread purchase of land by farmers after the War was that they found themselves burdened with owners rates, and anyone who knows country districts where purchase has taken place to a large extent has heard constant and just complaints on the part of the owner-occupiers of the extremely heavy burdens put upon them by having to shoulder the landlords rates; a thing they had only heard of in theory and never realised until they came to deal with it out of their own chequebooks. Who will deny that to the owner-occupier the relief is most important and is absolutely permanent? There is no room for the elaborate argument as to who is finally going to get the relief in the case of the landlord as against the tenant. There is no room for that argument. The relief is large and is permanent; and speaking for myself I attach the greatest importance to it.

Let me say this one further word, and I will try to keep within the rules of order. I do not think the process of the purchase of farms is by any means at an end. There are many reasons why I think it would be continued. As a Conservative, I have no hesitation in saying that one of the greatest benefits of the Bill will be that it will give a stimulus to the purchase of land and its cultivation by the owners. There is almost universal agreement that if you are to help agriculture, if you are to have put into it a greater degree of energy and hope, you must stimulate occupying ownership of the land. This Bill will stimulate ownership-occupation in the future while it will give relief the extent and importance of which no one will seek to deny. There is a further result which has not been mentioned. This rating relief of the farm will be an extra assistance in the development of land settlement. These are large, permanent and valuable elements in the situation. I cannot understand how one who knows so much about agriculture as my hon. Friend the Member for Caithness and Sutherland and one who cares so much for its future, could bring himself to indulge in the long, elaborate and almost bitter criticism of the method of relief adopted. When he has returned to a perfectly cool state of mind, far removed from the rhetorical ecstacies in which he sometimes indulges, and when he looks at the OFFICIAL REPORT tomorrow, I think he will find that he has rather exaggerated the case.

When one turns to the urban districts, what is the situation? Are the reforms really less valuable? I do not think they are. It is wholly beside the point to say that the relief of the burden of rates is a small matter in productive industry. It is a matter which varies in degree as the rates are small or large in any district, but surely in principle one of the ways in which you can really help productive industry is to reduce in the very large proportion which the Government propose what is a charge upon industry before any profits are earned. It is really worth while to repeat once more how utterly vicious is a system of raising money which goes on irrespective of whether industries are running at a profit or at a loss.

In extreme cases, the degree of viciousness is perfectly clear. In some of the more unfortunate industries in Scotland the rates for a number of years have been paid by bank overdrafts. The degree of burden in such cases can hardly be exaggerated. We know that this reform has long been overdue. Apart from taking a step which should be of real value to the more heavily pressed trades, we are taking what is the right kind of step for a Parliament to take, namely, improving the general system of the raising of money. I think it was the right hon. Member for Central Edinburgh who tried to suggest that there was some dilemma, if not contradiction, in the two main arguments put forward for the Bill, namely, a dilemma as between "Are you doing this to relieve distressed industries, or are you doing it to improve the general system of raising money?"

Photo of Mr Emanuel Shinwell Mr Emanuel Shinwell , Linlithgowshire

What is the purpose in view in reducing rates? Is it to reduce the cost of production, and, if so, will the hon. Member give an instance where the scheme will reduce the cost of production and thus benefit producer and consumer?

Photo of Mr Archibald Skelton Mr Archibald Skelton , Perth

The effect of rates on cost of production has been dealt with again and again, and there is no use in repeating what has been said. It is clear that if you have a heavy burden of rates in a district, to get rid of the greater part of that burden must have a beneficial effect on the cost of production.

Photo of Mr Archibald Skelton Mr Archibald Skelton , Perth

The figure of coal has been stated repeatedly. But you have to consider far more than that; you have to consider the effect on other industries as well, and you cannot take coal in isolation. The total beneficial effect of the whole scheme on industry cannot be judged by considering only the effect on the ton of coal. That is an unfair way of doing it. It is clear that you must take the effect of de-rating upon steel and the other manufactures in which coal is used. Then you get the total benefit to the whole of industry of the scheme.

Photo of Mr Emanuel Shinwell Mr Emanuel Shinwell , Linlithgowshire

If the hon. Member's purpose is to relieve the coal in dustry from many of its existing burdens, how does he propose to do so by reducing the cost of production to the extent of 1½d. a ton?

Photo of Mr Archibald Skelton Mr Archibald Skelton , Perth

It seems obvious that 1½d. a ton is a valuable reduction in the cost of production. It is clear that if you could have given even more, it would have been better, but, because you have only done it to the extent of three-quarters, is it to be argued—

Photo of Mr Archibald Skelton Mr Archibald Skelton , Perth

That is a statement which I should have to verify.

Photo of Mr Joseph Westwood Mr Joseph Westwood , Peebles and Southern

Does the hon. Member dispute it? I have the actual figures here.

Photo of Lieut-General Edward Fitzroy Lieut-General Edward Fitzroy , Daventry

There are still 2¼ hours left for debate. If hon. Members wish to intervene, they will have opportunity of doing so, but they should refrain from interruptions.

Photo of Mr Archibald Skelton Mr Archibald Skelton , Perth

It is impossible to maintain the proposition that in heavily-rated districts such as exist in the West of Scotland the clearing away of three-quarters of the industrial rates will not relieve industry. It is, in my judgment, special pleading of the narrowest sort to try to deal with the effect of the scheme on the coal trade, for instance, by taking the figure of relief to coal alone. That is the narrowest way of looking at a broad scheme and no one who cares for reform would attempt to treat the scheme in such a way. As I was saying, I see no dilemma between the two main principles which have actuated the Government in this matter. There is no dilemma between having, on the one hand, the in- tention of assisting the relief of industry and, on the other hand, the intention of introducing a sound and permanent system for the raising of local money. It has been suggested during the Debate that a great defect of the Government scheme is that it leaves the shopkeeper and the individual householders without direct relief.

Photo of Mr George Hardie Mr George Hardie , Glasgow Springburn

And they pay all the extras.

Photo of Mr Archibald Skelton Mr Archibald Skelton , Perth

I do not believe my hon. Friend thinks that he helps debate by these interjections, but perhaps they give him some sort of gratification. It was said by my hon. and gallant Friend the Member for Caithness and Sutherland that the small burghs did not benefit. That is not the experience in my constituency. Taking the poorest of the five small burghs, I find that the result of the Government scheme is that in Rattray, which is an exceedingly poor burgh the rates, at present 9s. 5d. in the £, will be reduced to an estimated figure of 6s. 10d. Allowing for the fact that that is only an estimate, it is clear that the effect of the formula and, of the allocation arrangements made for the small burghs, has been to assist the poor burgh where rates are extremely high. I may say in passing that the part of the Bill which provides for the amalgamation of Blairgowrie and Rattray has been received without anything in the nature of criticism, for the very reason that the result of the scheme is to reduce the Rattray rates practically to the level of Blairgowrie, and thereby give very good cause for a junction which has been long delayed and often hotly debated in the district.

I will not go into the case of other burghs, but the general effect of the scheme is that those who need relief most are getting it. The main observation, however, which I wish to make on the subject of the relation of the householder to the scheme is this. It must be agreed that there is a distinction between the payment of rates by a householder and the payment of rates by a productive industry. One does not occupy a house for the purpose of profit. Whatever his financial circumstances, a man seeks to adapt his house to his needs. Exacting a certain amount of rates from a householder is totally different from exacting rates from a productive industry before that industry has made a profit. Therefore, it appears to me, quite apart from the necessity of assisting productive industry at this moment, that if you have only a limited amount of money at your disposal, the order of merit for receiving relief from rates is, first, productive industry; then the distributive industries, and then the houses where the people live.

Photo of Mr Archibald Skelton Mr Archibald Skelton , Perth

I am sure the hon. Member will not misunderstand me. Last of all for this reason—that whether it is a big house of a little house, a man lives in a house not for the purpose of conducting an industry and adding to the wealth of the country, but only for the purpose of having a roof over his head. No doubt where rates are very high it is an admirable thing, as in the case of Rattray, that the Government scheme allows for a great reduction in rates to the ordinary householder. The fact remains that if you are seeking to establish an order of merit in which to give relief, apart from the question of depressed industries, it is, to put it in the broadest terms, the productive subject, rather than the residential subject which most clamantly demands the removal of burdens. I have no hesitation here or elsewhere in maintaining that proposition.

I am sure that it is a sound principle and because the de-rating scheme is based upon that principle I am satisfied that it is getting at the matter from the right angle. This scheme goes forward with the legitimate hope of giving real relief to the burdened industries and with the tremendous argument in its favour, that it is substituting a sound method of raising local revenue for an unsound method. It goes forward with the further advantage that, in the rural areas, it gives relief from heavy burdens primarily to one of the most important classes of agriculturists in the country—a class which the tendencies of modern agriculture will make more numerous and important, namely, the owner-occupier class. For all these reasons it appears to me right that in the last year of this Parliament we should bend our energies to this service. The criticism which, no doubt, may quite properly be directed to its details, is a criticism which cannot support any severe or general attack on the main principles of the scheme.

Photo of Mr Edwin Scrymgeour Mr Edwin Scrymgeour , Dundee

In regard to the comparison made by the hon. Member for Perth and Kinross (Mr. Skelton), who has just, sat down, between the rating of industry and the home settlement, he said that these rates in the case of industry have to be paid often through bank overdrafts. On the other hand, we find that people in a residential capacity, when they are burdened, have to resort to the pawnbroker, which is another method of overdrafts; and I should say that the man or woman in charge of a home being obliged to face the exigency of little or nothing coming in is an entirely different situation, and the 3ontrast would strongly appeal to a legal mind in particular as against those who have capital invested in an industry and are making their profits, with the ups and downs of industrial life to face as they go along. I submit that Sir Henry Keith's view in the matter of rating is a far more worthy plan, and that is the basis of income. if we had that system, as he has shown, we should have a reduction of working class rents to the extent of 50 per cent.; and to tell us that industry must have the preference as against the appalling situation which faces the masses of the working people to-day is an evidence of the callousness and the cold-bloodedness of the Government party with which the hon. Member is identified.

With regard to the agricultural situation, I have just had a note to-day from a lawyer, and they are, as we know, expected to have a special capacity for dealing with these difficulties. The letter is from Thomas Thornton, Son, and Company, Solicitors, Dundee, and it says: Please refer to to-day's 'Courier' and see the figures applicable to a farmer paying £100 of rent. Under the scheme he will pay only £3 11s. 11d. and get £5 4s. 2d. from his landlord, putting him in pocket to the extent of £1 12s.:3d. ! Surely that is not meant. If such a difficulty arises among those who are specially qualified, then the ordinary lay mind might have even more difficulty in accepting the official declarations from the Government. Still more directly to this deliverance of the hon. Member, who says that this plan is to provide the necessary impetus to industry, here is a specially good case of a man who is identified with the industrial life of Dundee and Chairman of the Dundee District Board of Control. He says he is also very much interested in the business relations of Dundee, being Commercial Manager in one of the largest jute firms in Dundee outside of Jute Industries, Limited, and have therefore access to the following figures which I am giving you.I have studied this proposal of the Government with very deep concern, and I have gathered, from all the information I can get in business and elsewhere, that it is to be a very serious matter for Scotland should these proposals be carried through. As far as the allowances for rates to the various manufacturing concerns are concerned, the opinions and prophecies given by the Government appear to me to be simply pure guesswork as to the effect on trade, and more likely a will-o'-the-wisp than anything else.For all the benefit businesses are to gain in the allowances to be made in their rating, if other businesses throughout the country are to gain in the same ratio as the Dundee jute trade, the amount is to be so infinitesimal that it will make practically no difference as to whether firms pay or not. I have gone carefully into the figures of the business with which I am connected, and find, as far as it is concerned—and probably it is quite typical of the whole trade—the total saving in rates will amount to less than ½ per cent. of the turnover, or equal to one penny in the £. A saving to this extent, whilst certainly beneficial to the trade, will not make any difference whatever as to whether orders can be got or not. The competition which Dundee has to meet is very much more severe than that which can be made up by this saving. As an indication, I would say that just recently we have been quoting to America for several large lots of goods. One article which we quoted for at 3 9/16d. per yard, we were informed was ½d. dearer than bought at from Calcutta. This is equal to 15 per cent. on the price. Another article we quoted for at 4 7/48d. per yard, and were told that the order had been placed (and it was a large one) with Czechoslovakia at ¼d. per yard less, which is equal to 6 per cent., and this has been going on for a considerable time.The saving that will be effected under the de-rating proposals on the above prices would be 1/48d. per yard or thereabout, whilst, as I have said, we lost the orders by ½d. and ¼d. per yard respectively. For some of the heavier trades the de-rating proposals may mean somewhat more saving, but I am very dubious if it can result in anything much towards giving them more employment, and altogether the whole pro- posals, to my mind, are to result in a very much larger increased expenditure for the whole country than under the present conditions. That is a very important contribution to the issue as concerning the benefit to be derived by industry.

9.0 p.m.

Reference has been made to the question of unemployment. Dundee has had through its parish council to meet as much as £128,000 of expenditure for the able-bodied unemployed since 1921, and I submit, seeing that that money has been expended without any compensatory grant from the Government, that the unemployment question as regards making provision for those people ought certainly to be one debited to the national Exchequer. When you consider that, even with the extension of the area as we have it in these proposals, you can still have, and will probably have, the case of a parish council in one quarter of the country appealing against another parish council in the Law Courts concerning the settlement of a given applicant for relief, and when you consider the case of able-bodied men unable to find the requisite means of living and unable to get the benefit which is said to be available from this scheme, it certainty points to the fact that this is a miserable fiasco of an attempt at what the right hon. Member for Hillhead (Sir R. Horne) described yesterday as getting down to the roots of the question. There are about 75 burghs that are going to lose on this business. The hon. Member for Perth and Kinross was pointing out that two parishes in his constituency will be united, but against that you have 75 burghs that are going to lose, so that altogether it is rather an apologetic position at the very least. Sir Henry Keith says in regard to this new money as appertaining to employment: Clydebank is represented as gaining 3d. per £,equal to £4,784 15s. on underrated valuation, but if it got its share of the new money in proportion to population, it would get £7,751. In the same way, Edinburgh is shown as gaining l¼d. per £, equal to £25,429, but its share of the new money per head of population is £70,044. Similarly, Dundee gets £21,574 instead of £28,053. Thus, the formula in these cases gives less than if the new money were given in respect of unemployment alone, after replacing the lass of rates. After the Government de-rates productive industry, the only fair and honest procedure is to give back to the areas which are denuded of their rating capacity, out of the petrol money, the amount of the loss incurred. One of the hon. Members for Aberdeen stated that the town council of that city made special reservations in their approval of the scheme, and these reservations fit in almost exactly with those mule in the general approval of Dundee Town Council. One of the strong points which they make is that there should be an annual revision of the situation, and any actual loss in the matter of rates should be completely guaranteed. That is the view of the town councils which in a general way are apparently ready to accept the scheme in so far as the undertakings can carry through the additional duties that will fall upon them. Another hon. Member pointed out that the county councils are suggesting a three years' revision, showing that even the county authorities with their larger responsibilities are insisting upon a similar stipulation.

When you have a scheme with no reliability for the future; when you consider the poor attempt to relieve industry of its rates and see that the result is of such a meagre character; when you consider that alongside that we are to have a complete unheaval of local government in Scotland, and the prevention of an advance of democratic representation, I have no hesitation in saying that the Government are doing an injustice to the unemployed and are making a poor attempt to grapple with a mighty issue. They are putting alongside their scheme a complete dissolution of our local government plans, which have worked so satisfactorily in the past, and, in addition, they have delivered one of the greatest insults to Scotland in refusing to have this Bill dealt with in the Standing Committee on Scottish Bills. It shows that the Government have reached the stage when they have no consideration for Scotland at all. They are simply divested of anything in the way of principle. There is not a, scrap of principle in the Government. There is no saying what may happen in the future, and, as for public representation throughout Scotland, it is the day of dool once again for that country.

Mr. COWAN:

With the purpose of the Government in their rating proposals, everyone must be in sympathy, for unemployment and other matters call for sonic remedy, and with certain parts of the Government plan I find myself in agreement. The difference between parishes in the matter of rating has long been obvious to everyone, and there can be no question that the Government in than, part of their scheme have taken the proper course to find a remedy. The larger areas and their rating schemes have been unaltered, and, so far as the parish councils are concerned, the scheme is justified. When, however, we come to the magnitude of the effort whim the Government are making, I am afraid that they have not had the courage to go far enough to ensure anything like success. They have granted money which is to be put to the purpose of stimulating industry, but it will go a small way to that object. Industry can hardly be stimulated by 1s. per head of the population or by 1d. or 2d. on a ton of coal. I am sorry that the Government, once they set out on this path, had not the courage to go much further. There are one or two directions in which they could have gone with general approval. In matters of quasi national services, which are really national without the qualification of quasi, such as education and unemployment, it was the duty of the Government to shoulder a much larger burden of the necessary expenditure than they have done. Education has suffered in many parts of the country because of the insufficiency of the grants. In recent years we have had an even greater problem in the incidence of unemployment. I hope therefore that the Government's scheme is a beginning towards a solution of two very grave problems.

I confess that I share the apprehension which has been expressed in many quarters with regard to two subjects, and I would ask the Secretary of State to give us some assurance, if he can, in regard to them. It may be that for the first year or two there will be no loss in the rating areas, but we can hardly expect things to stand still. There are certain services which have already been begun, and which are bound to expand, and I should like to know if any provision is being made for meeting such extended expenditure on these services. We do not expect a social service to remain as it is. There may be within a period of five years some new service started, and we wish to know what power the Government have taken to assist such services. I had not the opportunity of being present when the Minister of Health spoke on the English scheme, but I believe that he expressed sympathy, and gave a promise to help, so far as he could, necessary new services. If that be so. I should like to know whether, with regard to Scotland, there is any money available which can be used to help expanding or new services, or whether Scotland in this matter is to depend on the question whether England is engaged in any similar services. Those are some matters on which I should like to have an assurance.

In Committee we shall have further opportunity of discussing things in detail, but there is one particular matter I should like to raise now. It has been brought to my notice by persons who are interested, and I should like to have a specific answer to it. It is not a matter in which I am personally concerned, but as it seems to argue an injustice to a body of Scottish citizens, I wish to put it to the Lord Advocate or the Secretary of State. I am told that certain property owners in Scotland are at a disadvantage as compared with similar property owners in England. I refer to the owners of houses occupied, for the most part, by the working classes. In England it is the tenant who pays the rates; in Scotland the tenant pays half and the owner the other half. In Scotland of recent years rates have risen considerably. While the English property owner is entirely relieved from any burden of increased rates, the Scottish property owner has in many cases had his rates increased to such an extent that there is no return at all from his property. The Lord Advocate, if he is to reply, will no doubt know that there have been many letters in the Scottish Press giving concrete examples, with figures, of holders of such property in Scotland being at a disadvantage. I would like to have an answer to the point I am putting, in order to see whether there is any injustice as between the owners of such property in England and those in Scotland.

Photo of Lieut-General Edward Fitzroy Lieut-General Edward Fitzroy , Daventry

The hon. Member appears to be suggesting an alteration in the general law, which is not in the least affected by this Resolution.

Mr. COWAN:

With all deference, I submit that my purpose was to ensure that if there were an injustice here it should be brought to the notice of the Secretary of State, so that he could deal with it within the compass of his Financial Resolution. I take it that all the details of the Bill are not yet determined, and that it may be possible to make some change which will meet that case if it be an injustice. That, at any rate, was my intention, and if I have been out of order, I am sorry; but the case has not taken up the time of the Committee, and it was the last point which I intended to put.

Photo of Dr Thomas Shiels Dr Thomas Shiels , Edinburgh East

I have been very much disappointed to find that both last night and to-day the Under-Secretary of State omitted to make any comment upon or to give any justification for the proposed change in the method of financing public health services by bringing them into the ambit of a block grant instead of allowing them to continue under the percentage grant system. To me this is one of the most important matters in the Bill, and I rise to ask the Lord Advocate, if he is to reply to this discussion, to deal with it. Anything which affects these very important services is of vital interest to the people. The percentage grant system has been criticised on the ground that the more a district spends the more it gets, but I think the Lord Advocate, and certainly the Under-Secretary of State, will agree that in Scotland there is as yet no town or country district which has a really adequate public health system or in which an excessive amount of money has ever been spent. I would draw special attention to the fact, which I have mentioned before, that we are not really abolishing the percentage grant system in Scotland. The portion which is to be included in the block grant is an infinitesimal part of the total sum, the bulk of which is still to be paid under the percentage grant system.

It is a remarkable thing that the health services should he one which has been put under the block grant system. As I have said before, police and education are fairly stabilised services, and within the period of a quinquennium they are not likely to be altered so radically as to inflict any great injustice upon the ratepayers; but the public health services are the most rapidly developing of all our public services. I have already shown that to be the case, and I do not want to repeat my argument in detail, but within the last dozen years more and more subjects have been brought within the scope of the health services, and the expenditure on them has gone up, increasing two or three times in some cases. I wonder whether that is the reason why these services have been selected for the change. We believe that the Minister of Health and the right hon. Gentleman are not unsympathetic to the development of these services, but I strongly suspect the Treasury, and, as we know, the Treasury is a very powerful influence behind this Bill. Because these are rapidly developing services and are likely to develop still more, I suspect the Treasury of having chosen this method of checking that development.

The extension of these services has been in line with public opinion, which is ripe for a still larger development. As those of us who have served on local authorities know, it is not only members of our party who are keen on this subject, because some of the most enthusiastic workers on the public health side of local government are members of the party opposite. It so happens that in many of the large towns in Scotland, this year and the preceding year have been economy years, and yet this year is the one which is to be taken as the standard year. If, therefore, any development of the services now in existence be undertaken within the next five years it will mean that the expense will fall on the ratepayers, and will have to be borne by a much smaller number of ratepayers than at the present time. That is a serious position.

The hon. Baronet the Member for Caithness and Sutherland (Sir A. Sinclair) called attention to the fact, which is of great importance, that in his own county there is no child welfare and maternity service, and we know that a number of other districts in Scotland are in the same position. I would like to ask whoever is to reply for the Government whether it is expected that any district which has no child welfare and maternity service at the present time is likely to establish one within the next five years, seeing that to do so would involve a great increase in the local rates? I would call the Lord Advocate's attention to the figures, which I will not repeat, but which show that in Edinburgh last year, in the case of mothers who had attended for ante-natal treatment, there was a much lower percentage of mortality than in the case of those who had not done so. The figures are very remarkable, showing that there was a large number more deaths among those who had had no ante-natal treatment as compared with those who had been previously attended. The importance of that result is just being realised, and in those cases where the service is not adequate there is need for greater development, while in certain cases it has not been taken up at all. Is it likely that these developments will take place under this system of block grants.

I do ask, especially in view of the sympathetic attitude which the Minister of Health showed on this subject, that, if the whole of the public health services cannot be taken out of this block grant, could not child welfare and maternity, at least, be excluded from its operation and come under the percentage system? I think it is quite obvious there is no likely development of child welfare and maternity service which could be regarded as excessive, and which would be beyond the needs of the community, in view of the fact that this problem of maternity mortality has been receiving special attention and that we have actually two Commissions inquiring into the subject at present. There are many factors about it which are not understood and there are very great difficulties in regard to it. Here we have one factor which is quite obvious and clearly understood, and that is that women attended before confinement have a much greater chance of surviving than if they were not so attended. If these services are inadequate or non-existent, they are very unlikely to be developed or provided for the next five years. For these reasons, it is very desirable that the Government should reconsider these matters, and I should like the Scottish representatives of the Government to show at least as sympathetic an attitude towards that particular Section to which I have referred as the Minister of Health did. If we could prevail upon them to co-operate with him in removing at least this Section of the public health service from what, I am certain would be a stagnating influence, I am sure that the House and the whole country would be grateful.

In my last word, I would like to emphasise what has been said by other speakers in regard to a cognate matter. As we know, for a number of years past this House and the Board of Health have put upon local authorities various new duties. Some of them have not been very large, but others have been fairly extensive. It is likely that during another five years something more of that kind will turn up. Not very long ago we had insulin, which the local authorities now have to supply; they have had a new duty with regard to encephalitis, and we do not know in the least what new duties may turn up. We will be in the position of putting on the communities for five years the whole expense of those services that this House or the Board of Health may call upon them to provide. It is obvious that some arrangement to meet that position should be made. There has been a good deal of anxiety about this whole matter and I would ask the Minister when he comes to reply to make it clear what his position is in regard to these public health services.

Photo of Mr Emanuel Shinwell Mr Emanuel Shinwell , Linlithgowshire

I should not have intervened had it not been for the remarkable speech of the hon. Member for Perth (Mr. Skelton). He said to those on these benches that, so far, there had been no disposition on our part to face up to the fundamental principles underlying this Financial Resolution. That was, as I understood him, that this Financial Resolution proposed to provide moneys which would lead inevitably to the removal of some part of the industrial depression now existing in Scotland. We have been facing up to that proposition from the commencement of this Debate, and I am frankly amazed that any hon. Members on the other side should fail to recognise that in the Amendment which we have presented we clearly discern that there is no substance whatever in the principle underlying this Financial Resolution.

For a few moments I want to state, in a not altogether new form, what is our main objection to this proposal, and to preface it by one observation. No one on these benches objects to a reform of local government. There is much need, as has been said already, for a new orientation in the local government of Scotland. No one denies that, and we frankly concede that a case can be made out for drastic changes. But, clearly, before such changes are brought about, there should have been full and free consultation with all interests in Scotland. The Government, not having a mandate at the last General Election to proceed with these changes, should have set up a Commission by which full inquiry and investigation would have been carried out. We have not sought to retain the parish councils or the small burgh councils—

Photo of Lieut-General Edward Fitzroy Lieut-General Edward Fitzroy , Daventry

The hon. Member is now discussing the administration provisions of the Bill, which are outside the Financial Resolution.

Photo of Mr Emanuel Shinwell Mr Emanuel Shinwell , Linlithgowshire

I have no desire to pursue that, and I will only complete my sentence by saying that we have no desire to retain the existing form of local government administration in Scotland. We see the need for some change, but the change suggested by the Government would not be in our opinion of much value. I leave the matter there, and now I come to the basis of this Financial Resolution. We have here proposals, in effect, for the relief of distress and industrial depression in Scotland. The whole test of these proposals is their capacity so to reduce the cost of production as to stimulate trade. That is the test. I would ask the Lord Advocate if he would deny that—not in an academic or a hypothetical way, but by giving quite specifically a concrete example of how the provision of financial assistance to industries in Scotland arising from the removal of rating burdens is going to remove industrial depression. Let him take any industry he likes. Let him great coal industry of Scotland, or the take the Dundee jute industry, or the shipbuilding industry. In all these staple industries in Scotland how are hon. Members going to prove that the removal of 75 per cent. of local rates will stimulate production, lead to lower prices to the consumer, and remove any portion of our unemployment, because that is the test. What is the use of theorising about it, or talking about principles as if principles mattered at all in this particular case? What we want are concrete examples of how you propose to reach your main objective.

I want to advance the contrary argument, and I will take the case cited by the hon. Member for Perth. It will not be denied that the total amount of reduction in cost of producing a ton of coal in Scotland is only 1½d. That is the Government declaration on this point, and it is not imagination. It is not an hypothetical, academical, or philosophical reason, but it is a categorical statement for which a Member of this Government is responsible. In the course of the speech of the hon. Member for Perth there was an interjection from this side of the House which indicated that we believed that the present loss on each ton of coal produced in Scotland was 1s. 3½d. per ton. The hon. Member for Perth denied that statement and said that he would like to have further evidence on that point. Where did we get that figure? I will tell the Lord Advocate, because it may assist him in making up his mind. We got that figure from the last statistical summary presented by the Mines Department. Surely Government figures never lie, and we are prepared to accept those figures. If the Lord Advocate wishes to deny the accuracy of that statement let him do so, but, if he cannot deny it, then I ask him quite definitely to tell the Committee, and at the same time to tell the coal industry of Scotland and those associated with it, how a reduction of 1½d. per ton in the case of the production of coal is going to meet a loss of 1s. 1½d. per ton. I say that is the crucial and the acid test, and, if the Lord Advocate can respond to my invitation and prove that the provision of financial relief in his Resolution will stimulate the coal industry and lead to further employment, then we shall be only too delighted to have such evidence. In the absence of that evidence, we are bound to repeat what has been said by almost every speaker from these benches, that the basis of this financial Resolution and the local government recommendations is a false one.

There is no real substance in the case presented by the Government. The Lord Advocate—the learned and able Lord Advocate—cannot ride off as he tried to do the other day upon a forensical disquisition on minor points associated with this Measure. What he has to prove is that it is going to be of some fundamental value to the depressed industries of Scotland. If he cannot do that, then the whole structure erected by the Government collapses. That being so, we contend that the Government have no case. I would say to the Government that we on these benches are only too willing to respond to any appeal which would lead eventually to an improvement in Scottish industry. We are naturally anxious to bring about a more desirable state of things, but we cannot see how this scheme will lead in that desirable direction. As for alternative constructive proposals, I repeat that when the Government produce a scheme of this sort it is not for the Opposition to produce alternative proposals, although indeed that has been done by many speakers from these benches. It is not our job to produce alternative constructive proposals, but it is our business to prove, as we have done, that the proposals of the Government are not constructive, but, on the contrary, are destructive of all that is best in Scottish local government. In any event, those proposals cannot possibly lead to any improvement in the industries of Scotland, upon which the people of Scotland depend for their livelihood.

Photo of Sir Robert Hamilton Sir Robert Hamilton , Orkney and Shetland

I wish to raise a matter which so far has not been referred to in this Debate. I was very glad to hear yesterday what the Under-Secretary of State for Scotland had to say with regard to the agricultural colleges. I wish to put a question to the Lord Advocate as to what will be the position of the agricultural colleges in Scotland under these new proposals. I need hardly remind the Committee of the present position of agricultural education in the Scottish counties. Those colleges possess no compulsory powers, and they are largely dependent on voluntary agencies, contributions from the county councils, and their share of the equivalent grant subject to the approval of the Secretary of State. I am anxious that the work of these colleges should not be circumscribed in any way. The College of Agriculture in the North of Scotland is in a very bad way, and will have to cut down its activities in the very near future if it does not receive more support. Whatever provisions are contemplated by the Government the position of the agricultural colleges in Scotland should be borne in mind.

Photo of Mr Thomas Johnston Mr Thomas Johnston , Dundee

In the few moments that now remain before the Lord Advocate replies to the discussion on behalf of the Government I should like to offer one or two brief observations. Not the least interesting part of this Debate has been the frequently expressed belief on the part of some hon. Members opposite that the more valuable the property and the less the rates placed upon it the less rent is the landlord likely to be able to secure. Personally, I cannot conceive how that can be the case. Our belief here is that, if agricultural land is de-rated, sooner or later whatever bounties or subsidies are paid towards the de-rating of that land will find their way into the pocket of the landowner. Similarly, with industrial subjects, whatever grants are made, unless very specific precautions are taken— and none are taken in this Bill—whatever subsidies are given to the owners of industrial properties will find their way into profit or into rent. This is not a heresy held on these benches; it is the firmly expressed opinion of the National Farmers' Union of Scotland, who believe that, under the provisions and terms of this Bill, any moneys that are given for the relief of agriculture will, as the leases fall in—and they will be falling in much more rapidly than before; the landlords will take care of that—accrue sooner or later to the landlords. It is remarkable that, despite the brave words of hon. Members on the other side who supported the Government last night in the Division Lobbies, there was a majority of Scottish Members voting against this Bill, and, so far as Scotland is concerned, this Bill was only carried by the votes of English Members.

Photo of Mr Thomas Johnston Mr Thomas Johnston , Dundee

I hope the hon. Member will not mind if I do not allow myself to be led into side avenues of that kind. I am drawing attention to the fact that the expressed wish of Scotland, so far as its representatives in the House of Commons can give expression to it, is that the Bill should not become law. The hon. Member for Perth has been replied to by the hon. Member for Linlithgow (Mr. Shinwell), but let me put on record one figure more. The hon. Member for Linlithgow said, and truly, that the utmost relief that it is claimed will go to the coal industry as the result of this Bill is 7½d. per ton, including the freight transport reduction. A reduction of 7½d per ton, when the loss is 1s. 3½d. per ton, will not save the coal industry. I would call the attention of the Lord Advocate to the fact that, in the nine months ending in September, 1925, the average price per ton of coal for export was 20s. 4½d. As a result of unfathomable sacrifices on the part of the workers, as a result of the absence of profits—indeed, as a result of losses to the owners—the average price per ton of export coal in the nine months ending September, 1928, had fallen from 20s. 4½d. to 15s. 7½d. Did that reduction of 4s. 9d. per ton of coal save the industry? Did it increase the demand for British coal? Not by a ton. Indeed, it is most remarkable that, in the same period, the demand for British coal fell by almost 500,000 tons.

Money is now going to be poured into the pockets of wealthy shareholders in public companies who do not pretend that they are going to hand over this relief to the public. The agricultural landowner is going to be in pocket. I heard someone speaking to-day about the extraordinary burdens that the poor agricultural landowner in Scotland is bearing. I said on the Second Reading, and I repeat it, that during the last four, five, six or seven years, when prices have been falling, the landlords have been gaining, because they let their land at peak prices when prices were high in 1920 and 1921; and, with the steady fall in prices since, with the steady fall in rates since, the landlords have been in pocket. Now they are to get additional profit. And it is not only the agricultural landlord, but I should like to repeat that the mineral royalty owner, while he is to be compelled during the currency of existing leases to hand back to the colliery company the 75 per cent. of rate relief that he gets, at the expiry of the existing lease the royalty owner will get away free with this relief. I would draw the attention of the Lord Advocate to this further point, that there is a Clause in the Bill which says that for the first year the royalty owner is not to hand back the full amount of his relief but only seven-eighths of it. We see, therefore, that the royalty owners, shareholders in companies who do not pretend that they are going to hand back this relief, and ground landlords, are between them going to absorb, I do not say all—no one could argue that—but a very considerable proportion of the moneys now being voted by Parliament for the relief of public distress and the increase of employment.

We on these benches do not believe that by this method the Government will add appreciably, if at all, to the number of workmen employed in this country. The thing has been tried. To listen to the right hon. Gentleman, one would think that this was a new proposal, but the ironworks in Lanarkshire to-day have relief from rates, first of all, of, on an average, 33⅓ per cent. by a Quarter Sessions decision. A distressed industry can now go to the Quarter Sessions—our highest court in Scotland—and ask for relief. The iron industry has got relief to the extent of 33⅓ per cent. Then in addition to that, under the Rating Relief Act of 1926, the iron industry in Scotland has a relief of from 15 to 30 per cent. That is to say, it has already a relief of 63⅓ per cent. in some cases; and now, if you please, the Government are proposing to give to the iron industry an additional relief of 75 per cent. Indeed, but for the honour and glory of it, they might as well be paying no rates at all. Nevertheless, no relief that that industry has got in the past has, so far as we have been able to see, increased the output, or decreased the cost of production, or employed a single human being more. All that it has done, apparently, has been either to limit the losses which certain iron and steel companies have been incurring, or, indeed, in one or two cases, to make additional profits for them.

There are only one or two questions that I desire to ask the Lord Advocate. I spoke on the Second Reading about the water rate. That is a subject that is exercising not only the small burghs but it is exercising the farmer. The water rate is definitely excluded from the General Exchequer Contributions grant. That means that in future the water supplies for public drinking purposes, for horses, troughs and so on, are to be met by the tenants and the shopkeepers in the rated areas. The small burghs are by this Clause definitely going to have an added burden put upon the ratepayers, and I should like to have a statement from the Lord Advocate on that point. Then we were told quite clearly by the Under-Secretary to-day that all expenditure incurred, but not completed, would not rank for grant. That is a very serious matter for parish councils, some of whom have incurred very considerable obligations. For example, Glasgow has incurred the obligation of buying a building in which there will be a thousand beds for mental deficients. That purchase has been approved by the Scottish Board of Health and now we are calmly told that, because the expenditure has not been actually completed, it is not to rank for grant. We ought to have on that point a fuller statement from the Lord Advocate. On page 16 of the Financial Memorandum it is stated that: The annual grant to those authorities whose loans are owing to persons other than the Scottish Board of Health will amount to £18,000 a year for 15 years. 10.0 p.m.

I am informed that this is a most serious matter for the parish councils. They are to be allowed £18,000 a year for 15 years to cover their interest charges on loans borrowed other than from Board of Health services, and Glasgow alone is spending £56,000 on interest in that direction. If the Government persists in only allowing £18,000 for all Scotland for 15 years, a very considerable burden indeed is going to be added, not only to the local ratepayers, but to a comparatively smaller number of local rate-payers. It is going to be borne by a smaller valuation area. The larger rate-payers are going to escape and the smaller ratepayers are going to meet the burden, and I am certain, while the great Scottish newspapers are slavishly whistling to keep up their courage, while they are declaring day after day that all is well and the great bulk of public opinion in Scotland is coming round, the fact remains that every public board that is meeting is passing resolutions calling upon the Government to amend the Bill here, there and in the next direction. There are at least some Scottish Tory newspapers that are heartily supporting the attitude adopted on these benches, and one leading Tory paper yesterday opened its leading article with this. I offer it as a counter-blast to the farcical witticisms with which the Under-Secretary closed the Debate last night, and I call the attention specially of Tory Members of Parliament to the following excerpts: The friends of the Government in Scotland will follow the Debate on the Second Beading of the Local Government Bill, which began yesterday, with little pleasure, if for no other reason than that the Opposition Amendment with which it is met is manifestly true in nearly all its terms. Not only are the terms of the Amendment true, but they crystallise the opinion on the subject of a vast body of Scottish opinion by no means in the habit of looking to the Socialist party for the expression of its thoughts. The Amendment declares that the Bill is brought forward in defiance of the emphatic protests of local governing bodies in Scotland, and that is a fact that cannot he gainsaid. That is the "Courier and Advertiser," the leading Conservative newspaper in the East of Scotland, north of Edinburgh. [Interruption.] I know that English Members who go into the Lobby and carry this Measure against the wishes of the majority of Scottish Members, as they did last night, can afford to treat quotations from the Scottish Conservative Press and resolutions of public boards manned by majorities composed not of our friends but of theirs with scorn and derision, but I am certain they are marching to their electoral doom when they support this Measure.

Photo of Mr William Watson Mr William Watson , Carlisle

The hon. Gentleman had better do all the shouting he can at present, because he will find out that the bulk of Scotland is at our back. This Measure, which hon. Members opposite are affecting to suggest will be of no use whatever either to industry or to anyone else in the country, is being fully appreciated. A good deal of the reply I shall have to make will naturally be a somewhat disconnected dealing with some of the points that have been raised, but it would certainly be right that I should pay special attention to the opening speech of the right hon. Gentleman the Member for Central Edinburgh (Mr. W. Graham), who certainly demands high respect for anything he says on any financial question. A further reason for replying to him is that he has not been content with mere criticism, but has suggested something of a constructive nature as an alternative, although I entirely disagree with the alternative which he suggested. I should like to refer to two statements he made, both of which seem to be somewhat incorrect. At present, the cost of able-bodied relief is on the down grade and not on the up grade, and the amount of unemployed insurance being paid is on the up grade and not on the down grade. The other point is that he seemed to assume that the £750,000 of new money was the only fluctuating factor in the financial calculation. That is not so. It is the whole general Exchequer contribution that varies under the undertaking given with regard to the ratio. [Interruption.] If the hon. Member opposite will read the Bill, he will find that that is so. That is a necessary preliminary to understanding these points.

The right hon. Gentleman criticised what he described as the limping proposals of the Government and claimed that under his suggestion immediate and more impressive benefit would be received for industry and the country generally. He grouped his remarks under three headings—first of all, the de-rating relief to industry; secondly, the relief of necessitous areas; and, thirdly, the substitution of block grants for percentage grants. I propose to classify them as he did. In regard to the question of the relief of necessitous areas, he again brought out the same favourite proposal of the Opposition—of both Oppositions if I may say so—to transfer the whole charge of able-bodied poor relief to the State. Ever since we have had the publication of that book so often referred to—the Yellow Dawn, may I call it, breaking over the land—we have heard a great deal about this proposal. No one who talks of it ever comes down to practical details, to see how it works out.

I want to make one or two suggestions with regard to its impracticability. It sounds very nice to say that the Poor Law authorities are to be entirely relieved of all liability for the relief of able-bodied poor, and, presumably, the family of the man who is out of work. We have been told again and again that the rate of unemployment benefit is not enough to maintain a man and his family properly. Presumably, therefore, the able-bodied unemployed in the future are to have more than this; further, that there should be no limit to the period of payment, and, indeed, no conditions of any sort. Conditions to he operative must have the effect of excluding people who do not fulfil them, and that would mean, of course, making it a local charge again. That, in fact, would mean a great new scheme of weekly payments at the Employment Exchanges, a higher rate of the present unemployment, benefit without check of any kind, provided the man is able-bodied. If this is incorrect, I would venture to ask what the Opposition really have in mind in suggesting it. If it is correct, then I can only say that, whatever cause for criticism they may have of a temporary scheme of uncovenanted benefit, the basis of that scheme would collapse by the effect of such a demoralising proposal as that to which I have already referred, if either Opposition party has a chance of bringing it into force. I am not sure that the Liberal party would be very likely to do that.

Photo of Mr William Watson Mr William Watson , Carlisle

I, probably, do not require to be afraid of that. The indiscriminate payment of Government money is not a good thing either for the country or for the recipients of the money. [An HON. MEMBER: "Find them work!"] That is what we propose to do. We propose doing something to assist industry to find them work, rather than that we should shift the burden of the able-bodied poor on to the State. There is one other point about this proposal which I want to make briefly, and that is that it will mean a duplication of many services. A man might be on the Employment Exchange one week because he is well, and the next week he may fall ill and be back again on to the local authority. There would be all the endless trouble which always ensues, and the inconvenience of having two different authorities dealing with the same case.

Let me come to the question of the de-rating proposals, and here the right hon. Gentleman used an expression that it was a mere extension of differential rating as expressed in the First Schedule of the Scottish Rating Act, 1926. I would like, first of all, to say that I remember very well the keenness to get even moderate additions to the percentage deductions allowed in that Schedule as being of substantial and material advantage to the industries concerned. They were fighting for additions of 5 per cent. in that Schedule, but we are now giving them 75 per cent. I happened to be counsel in those cases to which reference was made, I think, by the hon. Member for Dundee (Mr. Johnston), the cases where the steel and the iron industries claimed certain abatements or rebates, because of the permanent depression in their trade. It is clear, according to our law, that a temporary depression would not do, and they had to prove permanent depression. I remember well throughout those proceedings, both in the lower Court where they were tried before the Valuation Committee, and in the Supreme Court, the enormous contest that arose over the advantage of every 5 per cent. in a rebate. It is idle to suggest that substantial reductions to the liabilities of an industry will not on the average be of as great advantage to them. Although it may be in some cases not enough to fill the gap, yet in others it will be so.

Take the case of the coal trade which has more than once been referred to. I do not propose to deal with it in detail. The coal trade will benefit, under this Bill not only in the direct relief it gets from rating, but from the fact that many of its customers who are unable to get sufficient business themselves and who use coal, will be in a position to use coal either because of the indirect relief to themselves, or became of the indirect advantage obtained through relief on what they use for raw material or for transport. The whole thing is cumulative, and the coal trade will benefit in that way. With regard to what the right hon. Gentleman called "a mere extension of the Third Schedule of the Act of 1926," I understood him to suggest that it might be regulated, if I may use the phrase, in one or two ways, first of all, on the basis of prosperous and non- prosperous industries, the Inland Revenue being called in to assist in defining these two categories. I understand that that was one suggestion. In the Schedule as it stands there is no such distinction. If you call in the Inland Revenue, I still ask you, how are you going to differentiate between prosperous and unprosperous industries? It seems to me to be an impracticable thing to do. Is it going to be a 5 per cent, basis in every business, or what percentage? How are you going to settle what is a fair return if it is going to be in different classes of business, with different risks? It is an impossible proposition. It is hard enough in many respects to ask the Inland Revenue to settle what is profit, but to ask them to settle what is a prosperous business and what is not, seems to me, even if it were justifiable, to be impracticable. I understood my right hon. Friend to suggest, also, that this might be more concentrated in the way of districts. Am I right in that? I do not want to misunderstand the right hon. Gentleman, and, if I am not right in that assumption, I will not deal with it.

Photo of Mr William Graham Mr William Graham , Edinburgh Central

The whole point of the argument was in terms of evidence tended to innumerable Committees, referring to the grading of areas. My case was that the county basis proposed by the Government does not necessarily give the kind of area that should be strictly in view.

Photo of Mr William Watson Mr William Watson , Carlisle

I understood my right hon. Friend to say that that was not relevant to de-rating, but that it was a general observation. Our view is that with regard to the question of de-rating, it is not right to make a choice between prosperous and non-prosperous industries. If this is a fair relief to give to industry because you do not wish to tax what really is their working capital or their working tools, then it is equally fair to do it whether the business is making a profit or not. If you are going to relate it to prosperity or non-prosperity, then it does become something in the nature of a subsidy, at once. It becomes, not a question of a fair basis of rating, but more of a subsidy for depression. We believe that our proposal is a fair alteration of the rating law, which should be given to all industries of a nature where their working capital or their working tools are rated, that is, taken into account in valuing the rating subject. We do that irrespective of whether the business is making a profit or not.

The third point referred to by the right hon. Gentleman was the time-old battle between the percentage and the block grant system. We know well the amount of thought which he has given to this subject, and his great capacity for dealing with it. I should like to suggest to him that, while it is quite true that one part of his argument in favour of the block grant as against the percentage grant is that the central Exchequer knows definitely what its commitments are, instead of being, so to speak, at the mercy of the local authorities, and while that is an important matter, it is not really the most important. The most important consideration is that by the percentage grant you are at the mercy of the richer districts and you penalise the poorer districts. That is a very vital point, especially when you consider the adequate development of public services, including the health services. It is not right to say that you will pay half the cost of a rich man's dinner at the Ritz and half the cost of a poor man's food at the coffee stall.

Mr. ROSSLYN MITCHELL:

That is just what you are doing.

Photo of Mr William Watson Mr William Watson , Carlisle

The correct thing is to pay half the cost of the rich man's dinner at the Ritz and see that the poor man is properly fed. Hon. Members opposite suggest that the central authority should bear the whole burden. That is not business. Local authorities have some liabilities in the matter. The question is: What is the just proportion; and what is the fairest method of ascertaining what is the fairest apportionment? We suggest that the block system is the fairer method of the two, and that the percentage grant system should be superseded. May I remind the Committee that when the education grant was placed on the block grant system we were able to give less than 50 per cent. to Glasgow, which did not require it, and more than 50 per cent. to Sutherlandshire, which did require it. We were able to recognise the greater need of Sutherlandshire as against the lesser need of Glasgow.

Let me come now to some of the points raised by the right hon. Member for Ross and Cromarty (Mr. Macpherson). First of all, let me say that I think the quotation he gave me from a speech by Mr. Henderson does Mr. Henderson an injustice. Surely the point of Mr. Henderson's speech was that because of the relief given to agriculture rate-able value in the country is much reduced, therefore, as the rate-able value of the landward area has gone down the burgh gets the heavier end of the stick. That is one of the reasons why the landward area gets only two-thirds of the amount which the small burgh gets in the apportionment of the general fund, after it is received in the county; that is one of the elements which has been taken into account in saying that the landward area should get a less sum.

The right hon. Gentleman also suggested that the method of splitting up the grants received in the county, as between the landward areas and the burghs in the county, might penalise some of these burghs. I have a rough estimate of what happens in Ross-shire. In that case the county apportionment is 321 pence per head, amounting to a sum of £94,719; and of that the small burghs in Ross-shire at 173 pence per head will get £8,236; and the landward areas at 115 pence per head will get 28,458. That shows, at any rate, that somewhat substantial sums are going to these various bodies. The right hon. Gentleman also referred to the obligation of the landlord to hand over half of the relief given to him, being continued beyond the end of the expiry of the lease. The right hon. Gentleman suggested that there was an unfairness as between the existing lease, where there was only one year to run, and a lease where there was, say, 11 years to run. I confess that I cannot see that, at any rate on the reason given for restricting it to the existence of the lease. The reason for giving to existing leases is that the rent in those leases has been arrived at on a basis which had no knowledge of the concessions given under this Bill.

Photo of Mr William Watson Mr William Watson , Carlisle

There has never been any other suggestion. Obviously, it is equally true whether there is only one year or there are 11 years of a lease to run. Another point was: Why not pay the whole relief direct? You cannot do that unless you begin by making a tenant pay all the rates, both owner's and occupier's, for he is getting one-quarter of relief at the present moment and he is getting a relief of half of that, and is being left with only one-eighth. The landlord, on the other hand, is being left with only one-eighth, and is at present paying on three-fourths. So that the landlord is getting five-eighths of relief. How are you going to give five-eighths of relief to one who is only paying one-fourth at present and one-eighth under the Bill, and leave him with anything to pay? The thing would be unworkable.

Now I come to questions asked by the hon. Member for Camlachie (Mr. Stephen). He was dealing with what he called the contrast as between England and Scotland. First of all, there was the question of the total amount of compensation for de-rating. Compensation for de-rating is not on a Goschen basis at all, but depends on the facts of direct relief. Therefore, in each country it is not a question of relative proportions at all, but a question of what the relief given to a fixed amount in each country comes to, as regards each individual subject totted up. It does not depend on apportionment. The hon. Member for Camlachie mentioned a figure in regard to Scotland, as compared with the English figure. This figure is correct, to some extent, but it emits to take into account a sum of £102,000 which in the Local Taxation Account is dealt with separately, and which is money diverted originally under the 1896 and 1898 Acts. When you acid that you will find that the total grants in England are £7,330,000 and in Scotland £922,000 Now, eleven-eightieths of £7,330,000 is £1,003,000, and then you have to take £102,000 off that, leaving £906,000, so that we ale the gainers on that calculation to the extent of some £16,000. Of course, a good deal of that is based on estimates, as hon. Members know.

Let me come to the question raised by the hon. and gallant Member for Montrose Burghs (Sir B. Hutchison). He asked why the figure of 20,000 had been fixed. That is a figure which already exists, for instance, for the purpose of tuberculosis schemes. If we had followed the figure for which we had advice in the Report of the Consultative Committee we should make it 50,000, and I do not suppose that would have pleased the hon. and gallant Member any more than the 20,000. May I remind him again that if the burgh of Arbroath did not show its true figures in 1921 it is open to them to satisfy the Secretary of State under Clause 59 that their true figure is a little over 20,000, and then they will get the benefit provided under the Bill.

Photo of Major-General Sir Robert Hutchison Major-General Sir Robert Hutchison , Montrose District of Burghs

On what basis and by whose authority was the 20,000 figure fixed? Was it by the advice of the county councils or the royal burghs, or of anybody in Scotland?

Photo of Mr William Watson Mr William Watson , Carlisle

Of course we had to take a variety of advice, and of opinions as to the figure. Another very important matter was the question of what was going to be a convenient practicable unit from the point of view of the distribution of the money which was going to the necessitous areas, so as to get a fair average distribution all over the country. Many considerations had to be taken into account. So far as general experience and guidance were concerned we had at least two figures, the 20,000 for tuberculosis and the 50,000 which was the direct suggestion and recommendation of the Consultative Committee.

Photo of Major-General Sir Robert Hutchison Major-General Sir Robert Hutchison , Montrose District of Burghs

Did not county councils fix a figure, and ask for it?

Photo of Mr William Watson Mr William Watson , Carlisle

Lots of people fixed different figures.

Photo of Major-General Sir Robert Hutchison Major-General Sir Robert Hutchison , Montrose District of Burghs

These are the people who have to administer it.

Photo of Mr William Watson Mr William Watson , Carlisle

Now I come to the next point raised by the hon. and gallant Member, who asked why the members of the county council nominated by the burghs from their own town councils should not sit on all county council business. To begin with, the provision which prevents them doing that is not in this Bill, but is a provision which has been in the County Council Act since 1889, and, after all, surely it is common sense. Take the burgh of Arbroath. That burgh has its own housing now, or will continue to have it, and its own drainage and other matters. As regards those matters, it sits by itself, and no county councillor intervenes. Its representatives go to the county council of the county of Angus, and they are entitled to sit and vote on all business in which they have any financial interest under this provision of the Act of 1889, but if a matter comes up, such as housing in the landward area of the county of Angus, the hon. and gallant Member's complaint is that they are not to be allowed to vote on that. That seems to me to be a little unfair. The matter could easily be remedied, of course, by the burgh of Arbroath coming entirely into the county of Angus, and then they could vote on everything.

Photo of Major-General Sir Robert Hutchison Major-General Sir Robert Hutchison , Montrose District of Burghs

After all, you are sending members to the county council from a town council instead of on the basis of population, and as county councillors they ought to have a fair share of the business of the county council.

Photo of Mr William Watson Mr William Watson , Carlisle

But what they get is a fair share—no more and no less. The hon. and gallant Gentleman next asked whether my right hon. Friend would promise the same further safeguards in regard to maternity and child welfare schemes as the Minister of Health had given in the course of the Debate on the English Bill. Certainly, my right hon. Friend is just as concerned as is the Minister of Health to see that these services should be fully and adequately protected and carried out. The hon. and gallant Gentleman's last question was with reference to the Road Fund. Undoubtedly, there is no guarantee that that money, £3,000,000 in all, which is being taken from the Road Fund is to be spent on Road Fund purposes. On the contrary, in regard to our share of the £3,000,000, the 11/91sts of the £3,000,000, which I believe is about £400,000, there is no undertaking. We claim that the benefit there is that these local authorities which are getting that money are getting it immediately, instead of having to wait, and they are getting an absolute, vested right to spend it on anything they find suitable, instead of having to confine it to the roads on which they are getting such considerable grants already.

The hon. Member for North Aberdeen (Mr. Benn) made one point about the guarantee being elusive, but that is true of any Act of Parliament, and I do not think there is very much in that. There is one other point to which I must refer. The hon. baronet the Member for Orkney and Shetland (Sir R. Hamilton) asked about the agricultural colleges. The position admittedly is a difficult one, but we hope and expect that, as and

when the county council becomes not only the local authority, but the education authority as well, it will be easier to get something done to help these agricultural colleges. Up to the present, they have been one of the difficulties of the situation, and we think that in time it will be easier.

Question put.

The Committee divided: Ayes, 224; Noes, 140.

Division No. 24.]AYES.[10.43 p.m.
Acland-Troyte, Lieut.-ColonelEverard, W. LindsayMacdonald, Sir Murdoch (Inverness)
Alexander, E. E. (Leyton)Fairfax, Captain J. G.Macdonald, Capt. P. D. (I. of W.)
Amery, Rt. Hon. Leopold C. M. S.Falle, Sir Bertram G.McDonnell, Colonel Hon. Angus
Applin, Colonel R. V. K.Fanshawe, Captain G. D.MacIntyre, Ian
Apsley, LordFermoy, LordMcLean, Major A.
Astor, Maj. Hn. John J. (Kent, Dover)Ford, Sir P. J.Macmillan, Captain H.
Astor, ViscountessForestier-Walker, Sir L.Macnaghten, Hon. Sir Malcolm
Baldwin, Rt. Hon. StanleyForrest, W.Maitland, Sir Arthur D. Steel-
Balniel, LordFoster, Sir Harry S.Margesson, Captain D.
Barclay-Harvey, C. M.Fraser, Captain IanMarriott, Sir J. A. R.
Beamish, Rear-Admiral T. P. H.Fremantie, Lieut.-Colonel Francis E.Merriman, Sir F. Boyd
Beckett, Sir Gervase (Leeds, N.)Gadle, Lieut.-Col. AnthonyMilne, J. S. Wardlaw-
Bellairs, Commander CarlyonGanzonl, Sir JohnMitchell, S. (Lanark, Lanark)
Benn, Sir A. S. (Plymouth, Drake)Gates, PercyMitchell, W. Foot (Saffron Walden)
Bennett, A. J.Gault, Lieut.-Col. Andrew HamiltonMonsell, Eyres, Com. Rt. Hon. B. M.
Bevan, S. J.Gllmour, Lt.-Col. Rt. Hon. Sir JohnMoore, Lieut.-Colonel T. C. R. (Ayr)
Birchall, Major J. DearmanGower, Sir RobertMoore, Sir Newton J.
Boothby, R. J. G.Grace, JohnMorrison, H. (Wilts, Salisbury)
Bourne, Captain Robert CroftGreaves-Lord, Sir WalterNelson, Sir Frank
Bowyer, Capt. G. E. W.Gretton, Colonel Rt. Hon. JohnNeville, Sir Reginald J.
Braithwaite Major A. N.Grotrian, H. BrentNewman, Sir R. H. S. D. L. (Exeter)
Brass, Captain W.Guinness, Rt. Hon. Walter E.Newton, Sir D. G. C. (Cambridge)
Bridgeman, Rt. Hon. William CliveGunston, Captain D. W.Nicholson, Col. Rt. Hn. W. G. (Ptrsf'ld.)
Briscoe, Richard GeorgeHacking, Douglas H.Nuttall, Ellis
Brittain, Sir HarryHall, Capt. W. D'A. (Brecon & Rad.)Oman, Sir Charles William C.
Brocklebank, C. E. R.Hamilton, Sir GeorgeOrmsby-Gore, Rt. Hon. William
Brooke, Brigadier-General C. R. I.Hanbury, C.Pennefather, Sir John
Brown, Col. D. C. (N'th'l'd., Hexham)Hannon, Patrick Joseph HenryPenny, Frederick George
Brown, Brig.-Gen. H. C.(Berks, Newb'y)Harland, A.Percy, Lord Eustace (Hastings)
Buchan, JohnHartington, Marquess ofPerkins, Colonel E. K.
Bullock, Captain M.Harvey, G. (Lambeth, Kennington)Peto, G. (Somerset, Frome)
Burman, J. B.Headlam, Lieut.-Colonel C. M.Pilcher, G.
Carver, Major W. H.Henderson, Capt. R. R.(Oxf'd, Henley)Power, Sir John Cecil
Casseis, J. D.Henderson, Lieut.-Col. Sir VivianPownall, Sir Assheton
Cautley, Sir Henry S.Heneage, Lieut.-Colonel Arthur P.Preston, William
Cayzer, Sir C. (Chester, City)Henn, Sir Sydney H.Price, Major C. W. M.
Cayzer, Maj. Sir Herbt. R.(Prtsmth, S.)Hennessy, Major Sir G. R. J.Radford, E. A.
Cazalet, Captain Victor A.Herbert, S. (York, N. R., Sear. & Wh'by)Raine, Sir Walter
Cecil, Rt. Hon. Sir Evelyn (Aston)Hills, Major John WallerRamsden, E.
Chadwick, Sir Robert BurtonHilton, CecilRawson, Sir Cooper
Chamberlain, Rt. Hon. N. (Ladywood)Hohler, Sir Gerald FitzroyReid, D. D. (County Down)
Chapman, Sir S.Holbrook, Sir Arthur RichardRhys, Hon. C. A. U.
Charteris, Brigadier-General J.Holt, Captain H. P.Richardson, Sir P. W. (Sur'y, Ch'ts'y)
Christie, J. A.Hope, Capt. A. O. J. (Warw'k, Nun.)Roberts, Sir Samuel (Hereford)
Churchman, Sir Arthur C.Hope, Sir Harry (Forfar)Ropner, Major L.
Clayton, G. C.Hopkinson, A. (Lancaster, Mossley)Ruggles-Brise, Lieut.-Colonel E. A.
Cochrane, Commander Hon. A. D.Howard-Bury, Colonel C. K.Russell, Alexander West (Tynemouth)
Collox, Ma|or Wm, PhillipsHudson, Capt. A. U. M. (Hackney, N.)Salmon, Major I.
Cooper, A. DuffHudson, R. S. (Cumberl'nd, Whiteh'n)Samuel, A. M. (Surrey, Farnham)
Cope, Major Sir WilliamHume, Sir G. H.Samuel, Samuel (W'deworth, Putney)
Couper, J. B.Hunter-Weston, Lt.-Gen. Sir AylmerSandeman, N. Stewart
Cowan, Sir Wm. Henry (Islingtn., N.)Jackson, Sir H. (Wandsworth, Cen'l)Sanders, Sir Robert A.
Craig, Capt. Rt. Hon. C. C. (Antrim)Jones, Sir G. W. H. (Stoke New'gton)Sanderson, Sir Frank
Croft, Brigadier-General Sir H.Kindersley, Major G. M.Sandon, Lord
Crooks, J. Smedley (Deritend)King, Commodore Henry DouglasSassoon, Sir Philip Albert Gustave D.
Crookshank, Cpt. H.(Lindsey, Gainsbro)Lamb, J. Q.Savery, S. S.
Culverwell, C. T. (Bristol, West)Lister, Cunliffe, Rt. Hon. Sir PhilipShaw, Lt.-Col. A. D. Mcl.(Renfrew, W.)
Curzon, Captain ViscountLloyd, Cyril E. (Dudley)Sheffield, Sir Berkeley
Davies, Dr. VernonLoder, J. de V.Simms, Dr. John M. (Co. Down)
Dawson, Sir PhilipLona, Major EricSkelton, A. N.
Dean, Arthur WellesleyLucas Tooth, Sir Hugh VereSmith, Louis W. (Sheffield, Hallam)
Edmondson, Major A. J.Luce. Maj.-Gen, Sir Richard HarmanSmith, R. W.(Aberd'n & Kinc'dine, C.)
Elliot, Major Walter E.Lumley, L. R.Smith-Carington, Neville W.
Ellis, R. G.MacAndrew, Major Charles GlenSmithers, Waldron
Somerville, A. A. (Windsor)Titchfield, Major the Marquess ofWindsor-Clive, Lieut.-Colonel George
Southby, Commander A. R. J.Wallace, Captain D. E.Winterton, Rt. Hon. Earl
Stanley, Lord (Fylde)Ward, Lt.-Col. A. L.(Kingston-on-Hull)withers, John James
Stanley, Hon. O. F. G. (Westm'eland)Waterhouse, Captain CharlesWolmer, Viscount
Stott, Lieut.-Colonel W. H.Watson, Rt. Hon. W. (Carlisle)Womersley, W. J.
Streatfelld, Captain S. R.Watts, Sir ThomasWood, E.(Chest'r.Stalyb'dge & Hyde)
Stuart, Hon. J. (Moray and Nairn)Wells, S. R.Woodcock, Colonel H. C.
Sueter, Rear-Admiral Murray FraserWhite, Lieut.-Col. Sir G. Dairymple-Wright, Brig.-General W. D.
Sugden, Sir WilfridWilliams, A. M. (Cornwall, Northern)
Tasker, R. Inigo.Williams, Com. C. (Devon, Torquay)TELLERS FOR THE AYES.
Templeton, W. P.Wilson, Sir C. H. (Leeds, Central)Mr. F. C. Thomson and Sir Victor
Thompson, Luke (Sunderland)Wilson, R. R. (Stafford, Lichfield)Warrender.
NOES.
Adamson, W. M. (Staff. Cannock)Griffiths, T. (Monmouth, Pontypool)Potts, John S.
Alexander, A. V. (Sheffield, Hillsbro')Grundy, T. W.Purcell, A. A.
Ammon, Charles GeorgeHall, F. (York, W. R., Normanton)Richardson, R. (Houghton-le-Spring)
Baker, J. (Wolverhampton, Bliston)Hall, G. H. (Merthyr Tydvil)Riley, Ben
Baker, WalterHamilton, Sir R. (Orkney & Shetland)Ritson, J.
Barker, G. (Monmouth, Abertillery)Hardie, George D.Saklatvala, Shapurji
Barnes, A.Hayday, ArthurSalter, Dr. Alfred
Barr, J.Henderson, Rt. Hon. A. (Burnley)Scrymgeour, E.
Batey, JosephHirst, G. H.Scurr, John
Beckett, John (Gateshead)Hirst, W. (Bradford, South)Sexton, James
Bellamy, A.Hudson, J. H. (Huddersfield)Shaw, Rt. Hon. Thomas (Preston)
Benn, WedgwoodHutchison, Sir Robert (Montrose)Shepherd, Arthur Lewis
Bondfield, MargaretJenkins, W. (Glamorgan, Neath)Shiels, Dr. Drummond
Bowerman, Rt. Hon. Charles W.John, William (Rhondda, West)Shinwell, E.
Briant, FrankJohnston, Thomas (Dundee)Sinclair, Major Sir A. (Caithness)
Broad, F. A.Jones, Henry Haydn (Merioneth)Sitch, Charles H.
Brown, James (Ayr and Bute)Jones, J. J. (West Ham, Silvertown)Slesser, Sir Henry H.
Buchanan, G.Jones, Morgan (Caerphilly)Smillie, Robert
Buxton, Rt. Hon. NoelJones, T. I. Mardy (Pontypridd)Smith, Ben (Bermondsey, Rotherhithe)
Cape, ThomasKelly, W. T.Smith, Rennie (Penistone)
Charleton, H. C.Kennedy, T.Snell, Harry
Cluse, W. S.Kenworthy, Lt.-Com. Hon. Joseph M.Snowden, Rt. Hon. Philip
Compton, JosephKirkwood, D.Stamford, T. W.
Connolly, M.Lansbury, GeorgeStephen, Campbell
Cove, W. G.Lawrence, SusanStewart, J. (St. Rollox)
Cowan, D. M. (Scottish Universities)Lawson, John JamesSullivan, J.
Crawfurd, H. E.Lindley, F. W.Sutton, J. E.
Dalton, HughLongbottom, A. W.Taylor, R. A.
Davies, Ellis (Denbigh, Denbigh)Lunn, WilliamTinker, John Joseph
Davies, Evan (Ebbw Vale)MacDonald, Rt. Hon. J. R. (Aberavon)Tomlinson, R. P.
Davies, Rhys John (Westhoughton)Mackinder, W.Townend, A. E.
Day, HarryMaclean, Nell (Glasgow, Govan)Trevelyan, Rt. Hon. Sir Charles
Duncan, C.Macpherson, Rt. Hon. James I.Viant, S. P.
Dunnico, H.Malone, C. L'Estrange (N'thampton)Watson, W. M. (Dunfermline)
Edge, Sir WilliamMaxton, JamesWatts-Morgan, Lt.-Col. D. (Rhondda)
Edwards, C. (Monmouth, Bedwellty)Mitchell, E. Rosslyn (Paisley)Webb, Rt. Hon. Sidney
Fenby, T. D.Montague, FrederickWellock, Wilfred
Gardner, J. P.Morrison, R. C. (Tottenham, N.)Welsh, J. C.
Garro-Jones, Captain G. M.Mosley, Sir OswaldWestwood, J.
Gibbins, JosephMurnin, H.Wheatley, Rt. Hon. J.
Gillett, George M.Naylor, T. E.Williams, C. P. (Denbigh, Wrexham)
Graham, D. M. (Lanark, Hamilton)Owen, Major G.Williams, David (Swansea, E.)
Graham, Rt. Hon. Wm. (Edin., Cent.)Palin, John HenryWilliams, Dr. J. H. (Llanelly)
Greenall, T.Paling, W.Wilson, R. J. (Jarrow)
Greenwood, A. (Nelson and Colne)Parkinson, John Allen (Wigan)Young, Robert (Lancaster, Newton)
Granted, D. R. (Glamorgan)Pethick-Lawrence, F. W.
Griffith, F. KingsleyPonsonby, ArthurTELLERS FOR THE NOES.
Mr. T. Henderson and Mr. Whiteley.

Resolution to be reported To-morrow.