Orders of the Day — Local Authorities (Rate Revenue)

– in the House of Commons on 26th March 1942.

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Photo of Sir Adam Maitland Sir Adam Maitland , Faversham

I must apologise for intervening when hon. Members are anxious to discuss another subject. The question to which I wish to direct the attention of the House concerns local authorities whose areas have been blitzed. There is great anxiety on the part of the authorities, and I hope that the disappointment of the House in not immediately coming to the subject they wish to discuss will not prevent them, as we use local authorities for carrying out so many of the wishes of Parliament, considering their grievances. Among those authorities which have suffered losses from 'enemy action there has been and is to-day grave anxiety about the arrangements which have been made by the Government for paying compensation. The local authorities put up the case that it is wrong that, in addition to having had to undergo the onslaught of the enemy, they should be called upon to suffer the financial loss which ensued. The point of their objection to the attitude taken up by the Government can be put shortly in this way. First of all, they say that loss arising from enemy action ought not to be regarded as a burden to be borne locally but as a burden to be borne by the nation as a whole, and that contention has some substance. The second point is that under the system which has been put in operation by the Government they are in danger of losing something of their independence, something of their autonomy and something of their responsibility. Local authorities have put their case time and time again since as far back as May, 1939, and I know than my right hon. Friend the Minister of Health knows the case which they have put and which I shall put in moderation.

The objection taken can be paraphrased in this way: The Ministry of Health Report makes the statement that in April, 1940, the Government pledged themselves to assist local authorities if as a result of the war the machinery of local government in any area was in danger of breaking down, and between that date and March, 1941, financial assistance amounting to £4,600,000 was extended to 41 local authorities to enable them to maintain essential services. That is a frank expression of what the Government did by way of giving a solemn undertaking and an account of the extent to which they have implemented it in financial terms. My point is that they have interpreted their obligations to local authorities from a wrong standpoint, that it should not be a question of not giving assistance until there is a danger of local government breaking down but that the Government should frankly realise that the loss which local authorities suffer as a result of enemy action should at once be shouldered as a national burden.

If I anticipate the reply of my right hon. Friend by saying that the payment of compensation to local authorities for loss of revenue would introduce a principle which is not applied in the case of individuals, then I would say that I cannot accept the analogy. Local authorities are part and parcel of the government of the country. They are used by the national authority not only for local but for general purposes as well. From that point of view I believe that local authorities, in putting forward their claim that losses arising out of enemy action should be treated as a national burden, are standing on solid ground. There have been losses of revenue from rates amounting to considerable sums. It might be dangerous for me to give figures, and so I will not do so, but I will content myself by saying that in many areas there have been very large losses indeed of revenue from rates, as I am sure my right hon. Friend will agree. I will put my appeal to the Minister in tabloid form in this way: There is no question of difficulty in working out a practicable formula. There have been conversations between officers of the Ministry and the officers of local government with regard to a formula, and I am informed that there is no difficulty. Therefore, it is not a question of impracticability but a question of policy, and I appeal to my right hon. Friend to recognise the justice of the case which local authorities put forward and to endeavour to persuade his right hon. Friend the Chancellor of the Exchequer to take a new view of how these losses are to be met. If he does so, I venture to say that he will be doing not only what is right but what is fair and what is just.

Photo of Mr Cyril Culverwell Mr Cyril Culverwell , Bristol West

I am very grateful, as is the whole House, I am sure, to the hon. Member for Faversham (Sir A. Maitland) for raising this very important matter which concerns so many people in this country. I shall not take more than a few minutes of the time of the House, because I know hon. Members are very anxious to hear a discussion on a subject which is to follow. I think the House will agree that the case which the hon. Member has put for spreading this burden over the whole country or casting it upon the National Exchequer is unanswerable. I am sorry that my right hon. Friend the Minister of Health should be acting as the spokesman of the Treasury to-day, because I am convinced that he, with his knowledge of the valuable services which local authorities render to the Government, would not personally wish to resist this perfectly just and reasonable demand. The losses suffered by these blitzed areas have been very considerable and have cast a very heavy burden upon the ratepayers. As I understand it, the Government's position is that since they do not compensate individuals for loss of income, and since municipalities are aggregations of individuals, they cannot admit the principle of compensating local authorities. That principle sounds all right, but surely there is a very great difference between the position of an individual and the position of a local authority. A local authority cannot go out of business, it cannot transfer its business elsewhere, it cannot move to another locality, as an individual may do if circumstances compel him. A local authority has to carry on with the functions and social services which are delegated to it by the central authority, and the Government would be the first to complain were there to be any cessation of the work of local authorities. Therefore, the argument of the Government that by admitting the principle of compensation for loss of income they would open the road to claims by individuals seems to be completely fallacious.

Further, the ratepayer often suffers a double loss, because not only has he in many cases lost his own property, but he has to pay extra rates in order to compensate for the general damage, so that he gets it both ways. And not only is the extra burden of rates very considerable. I represent a constituency in Bristol which has been severely knocked about by the enemy and has suffered a great loss of revenue, a burden which the remaining ratepayers have to shoulder and which has meant an increase in the rates. In addition there may be increases in gas, electricity and water charges. If a considerable area of a city is destroyed the utility services suffer loss of revenue and they must recoup themselves by putting up their charges. It seems unfair that places which have suffered severe damage and from which people have been evacuated should be the sufferers—people are liable to leave their premises in such a way that no rates are leviable—while other areas which have been immune from bombing and have had a great influx of evacuees have become prosperous as a result and are benefiting from the war.

I would ask my right hon. Friend to reconsider the position which the Government have so far taken up and to try to persuade the Exchequer of the gross unfairness of putting upon areas which have been the target of the enemy the sole burden of this unavoidable damage. A small rise in rates may seem trivial to some people but it has a great effect upon a large proportion of people, not so much the workers because their wages have gone up with the cost of living but on people like widows and pensioners who are hardly able to keep themselves on their existing resources. I would echo the plea which has been made that the right hon. Gentleman should reconsider this situation.

Photo of Mr Ernest Brown Mr Ernest Brown , Leith

My hon. Friend the Member for Faversham (Sir A. Maitland) made it plain that there is no need for me to take long in answering the speeches which have been delivered, not because the subject is not of great importance or because local authorities are not playing a magnificent part in the war effort, nor for any reason of belittlement of the effects of bombing. I must first disclaim the attempt of my hon. Friend the Member for West Bristol (Mr. Culverwell) to create a breach between the Ministry of Health and the Treasury. I would remind him that this is not Treasury policy but Government policy. A case may appear logical so long as it is separated, in isolation, but this case rests upon this logical basis, that all other kinds of loss shall be separated from this one kind of loss. Nevertheless, the House will see that other areas which have not been heavily bombed have suffered a loss of rate income which has been proportionately much heavier than in the cities which have been bombed. I would refer to some of the towns upon the fringes of our coasts, where the loss of rate income has been out of all proportion. No doubt hon. Members who desire to pursue further this aspect of the matter will be able to do so upon the estimates for the Ministry of Health.

Government policy in this matter was arrived at in 1939 in pursuance of a discussion arising out of the problems of the war effort. The Government are prepared to make good capital losses but not losses of income. The case has been put and fully stated to the House by my predecessors, and there has been only one change since I became Minister of Health. I find that the original Government decision to come to the aid of such authorities as needed that aid for their essential services was on the basis of 100 per cent loan. When I discussed this matter with the representatives of local authorities when I went round the country and visited every one of these areas, it was clear to me that that basis was too heavy a potential liability to throw upon the shoulders of those who were responsible, and I was asked to give the matter reconsideration. The result of that reconsideration has been a new basis of 75 per cent, grant and 25 per cent loan, subject to reconsideration when the war is over and all the circumstances are known.

Representatives of the Association of Municipal Corporations have put the case as powerfully as it can be put, both to myself and to the Secretary of State for Scotland, and jointly to the Health Ministers and the Chancellor of the Exchequer. They know the answer; I would only add that one or two authorities whose representatives were foremost in making that claim have been able to reduce their rate poundage for the forthcoming year. I make only one further comment. War has more than one effect upon varying areas. The only areas which have experienced an entirely adverse effect are those which would not gain if the formula put forward by my hon. Friend were adopted. While they have suffered a certain amount of bombing and consequential loss, their general loss is due mainly to evacuation and because of their position on the seaboard. I am afraid I cannot give any hope for reconsideration in these cases. The matter has been thoroughly examined by the Government, and this is Government policy.

I want to make one other thing clear before I sit down. My hon. Friend the Member for Faversham gave certain figures from the report recently published, particularly that the number of applications from authorities was 41 and the amount of money disbursed was £4,600,000. The present position is that we have received applications from 70 authorities, and the total amount now is £13,000,000. I am sure he is aware that all the authorities who have been to see the Ministry of Health to put their case have been received not merely with understanding but with sympathetic understanding. The House may be sure that if there is need to maintain essential services and to prevent an undue burden being thrown upon other ratepayers because of these calamitous happenings, there will be no lack of sympathetic understanding or of financial support such as the Government have promised in the policy laid down.

Photo of Sir Adam Maitland Sir Adam Maitland , Faversham

The right hon. Gentleman said that the representatives of local authorities and their associations knew the answer which had been given by him. Of course, they know the answer, but does not my right hon. Friend appreciate in turn that they are still very dissatisfied? Will he still keep an open mind upon the difficulties of the situation and be prepared to consider this matter again with the representatives of the local authorities?

Photo of Mr Ernest Brown Mr Ernest Brown , Leith

I shall always be ready to do that. There may be a change of circumstances. The House will have seen in this short Debate upon our fundamental policy that we cannot take out one section of war damage and separate it from all other forms of war damage.