I beg to move, "That the Clause be read a Second time."
This new Clause is moved on behalf of the local authorities because the Bill does impose an additional burden on the ratepayers and it is a burden which has been brought about largely by the amount of social legislation passed in recent years. This adds considerably to the expenditure of local authorities on various commodities in clothing, food and so forth. In addition to the ordinary chargeable goods which they buy and for which they pay tax, this will mean an additional burden as far as the ratepayers themselves are concerned. I would remind the Chancellor that it will not have the effect of reducing expenditure. To give an idea of what is involved—and here I speak for an authority with which I am most intimately concerned although to a greater or to a lesser extent it concerns all local authorities—I might say that as far as London is concerned, it means an addition of a 2d. rate. That was worked out some little while ago, but we have been moving so rapidly that additional burdens have been thrown on local authorities since then by the influx of alien refugees and other people who are an additional charge. The provision of housing accommodation, food, etc., has added an increased burden on the local rates. It means that the figure of 2d. on the rates in London is brought a little higher.
I ask the Committee to consider what it means. In London we have to buy no fewer than 6,000 beds, with the necessary bedding every year. That will now be considerably increased by the guests we have had coming here. In addition, we have to clothe no fewer than 150,000 persons with uniforms of one sort or another—firemen, nurses, park-keepers and attendants. Something like £300,000 a year has to be spent on drugs, medicine and equipment for hospitals. Then there is the difficulty of getting in the rates. Every local authority must have had experience of that difficulty. It indicates the tremendously heavy burden on the people which they are finding it more and more difficult to bear.
I speak as one who, unfortunately, has to take the chair at an Assessment Appeal Committee and I am alarmed at the growing queue of those who cannot pay their rates. By recent legislation it is possible for them to be excused. That can only go on to a certain extent, for there is a danger that local authorities may be faced with bankruptcy. Every additional burden makes that probability more imminent. Surely this is a matter that could be spread more evenly, and the Government could well get the required money from direct taxation. I hope that the Chancellor will meet the difficulty which confronts local authorities. It is no trifle. It means in London an additional £500,000 a year on the rates. That amount was calculated before the other items to which I have referred were put in, so that the amount is now considerably more. Every local authority in the provinces will also be faced with this burden, and I submit that there is an unanswerable case for some relief.
The hon. Member has spoken largely from the London point of view, but this burden affects every county. It may not involve so much to the rates as appears on the face of it, because the bulk of the expenditure concerned is grant-aided. Consequently, the Government will be paying some of the taxes they themselves are imposing. Members with experience of local authorities know of the difficulty which councils are having to bring their finances into anything like order, and almost every council in the distressed areas will want relief.
My hon. Friend's last reference is not unknown to me, because for many years when I was Minister of Health that was always the state of local authorities. I had to address myself to the proposal in the new Clause, and much as I appreciate the difficulties of some local authorities, I must maintain the principle of this tax; that is, that the chargeable goods are always taxable except when bought by a registered manufacturer for manufacturing purposes or by wholesale merchants for purposes of retail. I have only to stress what I said when we were discussing the general implications of the tax. I want the Committee to see what would happen if I began to exempt certain bodies and made them free from the tax. Once we accept the principle of certain privileged buyers, it is difficult to see where we can draw the line. If I accepted the principle which has been submitted by my hon. Friend that local authorities should be privileged buyers, I should have to accept the principle for their hospitals. If I excepted their hospitals, I should be driven to except voluntary hospitals. Having done that, I should be driven to except other institutions like nursing homes. Then, if I gave exemption to the schools of local authorities, I must in equity exempt public schools. I must then also exempt the private preparatory schools and other educational institutions.
Directly I get on this downward course I am also driven to exempt similar goods purchased by parents for the education of their children. In these circumstances I think the Committee will realise that it is quite impossible for me to accept the Clause. As my hon. Friend the Member for Stone (Sir J. Lamb) said, the State is to-day assisting these local services, and we have to face the fact that the increase in costs will mean an increase in the assistance which the Exchequer will have to give; but I must say that I regard that as in every way preferable to a policy of exempting institutions because they are State-aided, with all the consequences which follow. I hope my hon. Friends will realise that it is my duty to maintain this tax over this very considerable area, and that local authorities will realise that in this way they will be making their contribution to the money which I hope to secure for the national effort.
The Chancellor of the Exchequer has made a forceful speech against this proposed new Clause on two grounds. The first is that it affects the principle of the Bill, and the second is that it would open the way to other proposals for exemption from the tax. With regard to the second point, I am sure that the Chancellor is able to draw a clear and firm distinction between a local authority and any other body. Local authorities are part of the administrative system of this country, and just as it is against the public interest that the purchases of the central Government should be taxed, so it is against the public interest that the purchases of local authorities should be taxed. Their institutions are in a totally different position from institutions which may be carried on for private profit or even for charitable purposes. This is a tax which is imposed by the State upon one of its own Departments.
As regard the Chancellor's argument that this Clause would affect the general plan and purpose of the Bill, let me remind the Committee that the Chancellor and his predecessor laid down the general principle that public utility services such as those which supply gas, water and electricity should not be subject to taxation. If the general principle is sound that these public services ought to be exempted, then the means by which local authorities provide those services ought also to be exempted. The right hon. Gentleman and his predecessor laid it down that the materials of industry ought not to be taxed, but here we have a tax upon the materials which local authorities have to use in performing those public services.
Lastly, the tax, in its application to local authorities, has no relationship whatsoever with restricting consumption. I believe that the local authorities generally, have been trying their hardest to restrict their expenditure to the narrowest possible scope. The tax will not cause them further to restrict their expenditure to an appreciable extent. It will merely add to the cost of the public services, which cost will fall on the ratepayers. It will become a double indirect tax, which will not achieve the purposes which ought to be served by taxation. It will become extremely repressive and unfair in its incidence and will burden the poorest members of the community to a very great extent.
Really, I cannot see the logic in the argument. The right hon. Gentleman said that he could not possibly make an exception in the case of local authorities buying goods for voluntary hospitals, because it would mean that nursing homes and other institutions would have to be exempted. Let him take the matter the other way and say that because the Government hospitals are exempt, those who are being treated in the London hospitals are exempt, too. Therefore the hospitals which are treating civilian casualties of war should be exempt. That argument is very poor and I hope that the right hon. Gentleman will give the matter further consideration. This tax is being put on to the ratepayers. I can see no technical reason why councils should not be exempt from the tax, which should go on to taxpayers and not on to ratepayers. The logic of the argument of the right hon. Gentleman does not bear a moment's consideration.