Clause 21. — (Provision as to borrowing by county or town council.)

Orders of the Day — Local Government (Scotland) Bill. – in the House of Commons at on 8 February 1929.

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Amendments made:

In page 26, line 12, leave out the words "by virtue of this Act."

In line 13, at the end, insert the words: Provided that nothing in this Subsection shall be construed as preventing the borrowing of money for the purposes of the Housing (Scotland) Act, 1926, on local bonds in terms of that Act."—[Sir J. Gilmour.]

Photo of Mr George Hardie Mr George Hardie , Glasgow Springburn

I beg to move, in page 26, line 13, at the end, to insert the words: and provided that nothing herein contained shall affect the common good of any burgh, or property and revenue of revenue-producing undertakings the property of any town council. I should be glad if the Lord Advocate would explain to us whether what was done at an earlier stage with regard to the common good covers the provision contained in this Amendment. We axe in a difficulty unless what has already been passed with regard to common good funds covers this also. If, however, the Lord Advocate can say that what has already been done with regard to the common good covers this, there will be no need for the Amendment.

Photo of Mr William Watson Mr William Watson , Carlisle

I cannot do more than repeat the undertaking which I gave the other day to look into this matter and make sure that the legitimate common good shall not be affected in any way. What I said then would cover this point also. I do not need to repeat the illustrations that I gave the other day of cases in which the common good might be used for some purpose which would involve the transference of the results to the Department concerned, but the revenue-producing Departments are not included in any of the functions transferred under this part of the Bill.

Photo of Mr George Hardie Mr George Hardie , Glasgow Springburn

That was the point that I raised before. There are peculiarities of practice in Scotland with regard to the common good fund. In Glasgow, for instance, we get from the tramways s sum of £47,000 annually, which goes into the common good—

Photo of Mr William Watson Mr William Watson , Carlisle

There is no question about that.

Photo of Mr George Hardie Mr George Hardie , Glasgow Springburn

That is a revenue-producing undertaking, and it is from sources of that kind that the bulk of the money for the common good fund is obtained. If we are making certain provisions for a new kind of transport, the common good fund is used now for purchases for that Department, and I should like to know how that would be protected. What I have said applies, not only to the annual contribution to the common good, but also to extensions which are undertaken at various times. Would such extensions be covered by the provisions of this Measure, and would they be protected? I could understand it quite well if the common good fund were spent on an undertaking which was not a productive undertaking, but something such as a park, or the clearing away of slums and making open spaces, or something that is really of common value, but what I want be know is whether sums of money taken from the common good and applied for the development of a revenue-producing department within one of these councils would be protected by this Measure, or, if the Lord Advocate has not now at hand details regarding that matter, whether he proposes, in the consideration that he is giving to the whole matter, to include this point.

Photo of Mr William Watson Mr William Watson , Carlisle

That is rather a different point. If the hon. Member will look at the Clause, he will see that the first part only applies to future borrowings, and provides that the capital security shall include all the revenues and funds of the council. As regards existing borrowings, which I imagine would include the matters of which the hon. Member has been speaking, the Clause extends the security, and, therefore, makes the position better. It says that: All sums borrowed before the commencement of this Act by any such council on the security of any specified rate"— the common good is not within that— shall be deemed to have been borrowed upon the security of all the funds, rates or revenues of the council liable by virtue of this Act in repayment of the sums outstanding.

Photo of Mr David Kirkwood Mr David Kirkwood , Dumbarton District of Burghs

I should like to ask the Lord Advocate a question on this matter. In the Glasgow? Town Council, before the War, we proposed that a sum of £750,000 should be borrowed free of interest from the common good fund in order to provide houses for the working class. If we had been able to do that at that time, we should have been able to build houses for the working class at a cost of £250, but, because we did not get that money then, those same houses which are built now are costing £800, which makes it almost, impossible for the working class to go into them. I want to know from the Lord Advocate whether our rights are being preserved here, and that this money is not being locked up. Again, when the Prince of Wales visited Glasgow, and we were a power in the Glasgow Corporation, we raised the question of the expenses that were going to be incurred as the result of the visit, and we were informed that those expenses were coming out of the common good fund. At the same time—that was before the distress became so terrible as it eventually did—the Labour members of the council asked for a grant of £50,000 from the common good in order to feed the unemployed. It is true that we did not carry our request, but the result was that we were able to arrest the attention of the citizens of Glasgow, so that, when we did solicit subscriptions on behalf of the unemployed, they contributed handsomely.

I want to know if our rights are being safeguarded here, so that we shall have the right to tap the common good fund in order to protect the interests of people who are not able to defend themselves: that is to say, when the working classes are right up against it. Here is a source of revenue, a fund, a banking account, that we have been able time and again to tap. I want to know if our rights are being safeguarded here, because it has been invaluable to us in the past. We want to retain everything we possibly can, because otherwise the Bill will crush Scotland as it has never been crushed before.

Photo of Mr William Watson Mr William Watson , Carlisle

I think I can give the hon. Member the assurance which he desires, for this reason. The Clause in no way settles whether a particular proposed form of borrowing is lawful or not. All it says is that, if you borrow, you shall borrow on the whole assets of the corporation instead of on a particular fund.

Amendment negatived.

Photo of Mr Thomas Henderson Mr Thomas Henderson , Glasgow Tradeston

I beg to move, in page 26, line 14, to leave out Subsection (2).

In this Sub-section it is declared that a council will not be allowed to borrow unless two-thirds of the members are present. At present, a majority is competent to pass a matter of this kind, and we feel sure that the Lord Advocate will agree, after a moment's reflection, to substitute a bare majority for two-thirds.

Photo of Mr William Watson Mr William Watson , Carlisle

At present, in counties, the consent of the standing joint committee is required- The standing joint committee disappears under the Bill, and, therefore, there is no safeguard of that kind. The Government certainly will be quite content, instead of prescribing a two-thirds majority, to provide for the consent of the central department. If that method is preferred, we shall be quite ready to put down the necessary Amendment on Report.

Photo of Mr William Watson Mr William Watson , Carlisle

I am glad that the right hon. Gentleman is prepared to consider the point. It is true that the practice in county councils up to now has been that the council requires the consent of the standing joint committee, and I think it would be a good arrangement that it should apply to the central department rather than have two-thirds of the members present and giving their consent. There might be very important work for which a council had to borrow money, and it might be difficult to get a two-thirds majority, but, if the power to borrow could be arranged between the central department and the county council, it would be very much better.

Photo of Lieut-General Sir Aylmer Hunter-Weston Lieut-General Sir Aylmer Hunter-Weston , Bute and Northern

I should like to say how glad I am to have this concession. A two-thirds majority would have been extremely difficult to carry out. Even in Scotland, where we never disagree, we must allow that from time to time there are certain local jealousies, and in my constituency there would, no doubt, have been difficulty in ever getting a two-thirds majority for anything that was required. Therefore, I thoroughly approve of the proposal, and I thank the Government whole-heartedly for their concession.

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

It is obvious that the Government realise that their proposals make administration very difficult for the newly-constituted authorities. I can see the very greatest difficulty, particularly in connection with the working of the education committees. Up to the present, when we have required capital for building schools, a simple majority has been able to carry through the work. Now the whole question of rating and of the borrowing of capital is handed over to the county council. I can see the very point arising which the hon. and gallant Gentleman has mentioned. You might have a fight between two sections of the council and, though you had practically agreed to spend the necessary capital, it would be practically impossible for the majority to carry out its work. Having been met favourably by the Lord Advocate, I, for one, feel, on behalf of the authority I have been representing, that the concession will help to make administration more practicable.

Photo of Dr Thomas Shiels Dr Thomas Shiels , Edinburgh East

I appreciate the concession which the Lord Advocate ha* intimated, but I am not quite clear whether the proposed alternative is desirable or would be welcomed by the local authorities. I understand that at present they have power to borrow on a simple majority vote and that the central authority's authorisation is not required. We must not too hastily assume that a simple majority would be of great advantage if it brings in something new in the shape of the necessity of the central authority giving permission. Whether that would be a good or a bad thing depends on the nature of the central authority and the line of policy which it is pursuing. The central authority might, on certain occasions, even though there was a very large majority vote, even more than two-thirds, turn down a proposal. I should like to know if this is a new departure—if at present a local authority has power by a majority to borrow and if the concession the Lord Advocate intimates is really another breach in the power of local authorities. If so, I am afraid I could not, without further consideration, give it my support.

Photo of Mr William Watson Mr William Watson , Carlisle

I have a manuscript Amendment to give effect to my undertaking. It will come in at line 37.

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

It would be a very bad precedent to accept a manuscript Amendment that I have not seen. The right hon. Gentleman can put it down on Report.

Photo of Dr Thomas Shiels Dr Thomas Shiels , Edinburgh East

Will the Lord Advocate answer my point—if at present there is no central authorisation necessary before the council has power to borrow?

Photo of Mr William Watson Mr William Watson , Carlisle

Not in the case of burghs.

Amendment agreed to.

Question, "That the Clause, as amended, stand part of the Bill," put, and agreed to.