I beg to move, to leave out from "That" to the end of the Question, and to add instead thereof:
this House declines to give a Second Reading to a Bill which fails to have regard to the one fundamental understanding on which the Sorn recommendations were made, that the system of rating should not be overloaded; which fails to deal with the derating provisions of the Local Government Act, 1929; which further restricts the narrow basis of local taxation by placing the whole burden on tenants and owner-occupiers; and which fails to deal comprehensively with the financial problems of local authorities in Scotland.
The last thing we desire is that either the word "Sorn" or "torn" should be written on the heart of the Secretary of State. May I congratulate the right hon. Gentleman on overcoming his natural diffidence and reluctance to address this House at any length and on the efforts he has made today to explain this Bill?
I am sorry to say that even after the lengthy explanation he has given us it will be my duty to call attention to one or two things he has not explained. I think he will agree that will not be difficult with a Bill of this kind. Our reasoned Amendment makes clear that the Opposition are adopting not a negative but a positive point of view. Therefore, we ask the House to reject the Bill until the Government come forward with the complete picture.
As the Secretary of State has explained, the Bill has two major aspects, the abolition of owners' rates and a change in the method of valuation for rating. But these are only two aspects of a much bigger problem. Our purpose in asking the House to refuse a Second Reading to the Bill is to ensure that before we deal with these fundamental changes we shall know whether they are part of a comprehensive plan to deal with the problems of local government taxation. The Bill is a bit of a jig-saw puzzle, and before we put the pieces into place we are entitled to know what will be the complete picture when the Government's plan are eventually completed.
The Government should "come clean" about their proposals. We suspect that they are approaching the problem not so much with the object of clearing up the confusion which exists as with the object of using the existing anomalies in rating to cover a further invasion of the interests of tenants on behalf of their friends, the landlords and property owners. The Opposition have no wish to be any less just to property owners than the Government are, but will oppose the use of Parliament to set property owners free to do as they like or to include among the beneficiaries of legislation people who have been speculating in slums and squalor and the degradation of their fellow human beings.
We recognise that there are plenty of decent landlords who have been treating their property well and are entitled to consideration in respect of the Bill. However, in connection with this Bill and a recent Act, my hon. Friends and I suspect that the Government are rather tender to the wrong type of landlord and not to the decent landlord. The Government's progress so far gives us no cause to reject that suspicion about their intentions in the future, so far as they can be judged from the intimations of policy which have so far been made public.
Indeed, the whole career of the Government has made us extremely suspicious of the assertion that they are approaching the matter in any judicial or balanced way. When the Government came into power, we were supposed to be in a financial crisis. The first thing the Government did was to bring in a Measure to hand the public houses in the new towns back to the brewers. What had that to do with the crisis? The next thing they did was to introduce legislation to hand back transport to the road hauliers. It was pointed out in an unbiased way by the Opposition that it would be a disaster to do so. No one brought forward any reasons why it should be done. Nevertheless, it was done. Now the Government have intimated that they are introducing a Measure to prevent any further damage being done.
The Government's next Measure was one to hand back the whole of the steel industry to the gambling of the Stock Exchange market. The only reason which can explain that action is that the great iron and steel magnates had been deprived of the opportunity of making capital appreciation profits by speculating in stocks and shares. There was no technical reason for the Goverment's action.
The Government have already brought difficulties to local authorities by continually raising interest rates and asking local authorities to transfer more and more money to the people who lend them money. No one has given us any justification for such people receiving more interest or any reason why local authorities should pay more interest. After all, the Government control all the activities of local authorities quite well without putting any extra cost burden on them. The Government must accept some responsibility for the intensification of the problems of local authorities. They have increased loan charges and forced local authorities into the open market, and now they tell us that they are going to do something about rent control
The Government have not "come clean" about rent control. Is the Secretary of State telling us that rent control is to be abolished? If so, what becomes of his claim that the Government are trying to maintain a balance between tenant and landlord in ensuring that the rent is reduced to the same extent as the rates are transferred to the tenant? Obviously, that becomes absolutely meaningless once rent control is abolished. How can we judge the Bill unless we know what the Government are going to do about that?
The rake's progress of the Government has been an inverted Robin Hood campaign, with the Government bent upon robbing the people to benefit the rich. Those who have read "Man and Superman" will remember that Jack Tanner was captured in the Spanish mountains by an outlaw who introduced himself by saying, "I am an outlaw. I live by robbing the rich." Jack Tanner replied, "I am a gentleman. I live by robbing the poor." The Conservative Government are living up to Jack Tanner's definition of a gentleman.
I hope that the Solicitor-General for Scotland will tell us exactly where we stand. Is the Bill a prelude to a big offen- sive against tenants of local authorities? The abolition of subsidies and the abolition of rent control are two fundamental matters which cannot be separated from the Bill. Is the purpose of the alteration of rates to remove anomalies, or is it to make it easier to raise rents when control ends? We know very well that if the rating system remained it would be very difficult for landlords to raise rents, even if control went. We should like to know what the purpose is. Is it to set the landlords free?
The Secretary of State mentioned the question, which was referred to in two Sorn Committee Reports and during the proceedings on a previous Measure, of the existing system being a discouragement to the building of houses to let by private enterprise. Are we to understand that the Government are setting out to upset the principles which were established between the wars, when it was recognised that the possibility of private enterprise building houses for the mass of the people as a speculative investment had gone for ever? During the proceedings on a recent Measure I quoted the remark of Lord Balfour that everybody had to recognise that that system was finished. Is this Humpty-Dumpty to be put back on the wall? Is that one of the objects of the Bill?
The Secretary of State said that the Bill was based on a Sorn Committee's Report. I want to make clear that anything I say today has no reflection on the work done by the Committee. The latest Sorn Committee and the previous one went into matters very carefully and did a good deal of work. The Committee was asked to answer a question. It set to work efficiently to answer it but, clearly, the kind of answer one gets from a committee depends upon the question put to it. In the case of the earlier Report in which we had a Departmental Committee commenting on owners' repairs the question which had been put to that Committee was the wrong question. It was asked to make comparisons between two dates which had no reference to the real matter in hand, and the question was quite out of order.
The Secretary of State for Scotland put a very narrow question to the Sorn Committee. My hon. Friend the Member for Hamilton (Mr. T. Fraser), in the Scottish Grand Committee, pointed out quite clearly at that time that the terms of reference were so narrow and restricted that the Sorn Committee could not give a proper answer to the question asked. The Committee should have been asked a question on a much wider scale on the relationship of local government finance to the Government themselves.
The Bill is claimed to be based on the Sorn Committee's Report, but, as our Amendment points out, the Sorn Committee placed a fundamental condition on its recommendations and it is because that fundamental condition has been ignored that the recommendations now fall to the ground. If the premise on which the recommendations are based is not observed, it cannot be said that the Secretary of State has based his Bill on the Report. The situation is very much like that of the economists of last century who blamed on the theories of Adam Smith and Malthus the ruthless exploitation of the people because they extracted from those theories only those parts which suited them and left out all the rest.
Since the Bill will result in restricting still further the basis of rateability, it means that, instead of being in accordance with the Sorn Report, it will be going directly contrary to it. If the Bill cannot be based on the Sorn Report the Secretary of State ought to tell us what is its basis. He has failed to do that today. Rumour has it that derating is to he abolished. The Secretary of State has not told us even that. Is it? Even if it is, that would not broaden the basis of rating in Scotland but merely alter the incidence. It would be interesting for the House, in approaching the Bill, to know whether industrial derating is to be abolished in Scotland. A step is being taken in the Bill in connection with agriculture, but what is to be done about industrial derating?
Our Amendment is constructive and is not a policy of negation. We have no intention of frustrating or obstructing any legislation which the House wishes to pass. It will certainly be examined in detail. The Secretary of State can have no justification for suspecting from anything that we have done in this or the last Parliament that we would in any way frustrate the will of the House or prevent legislation by means of any kind of fillibustering.
We recognise that a difficult problem exists, but that does not imply that the problem exists only for the landlords. Our objection is that only one section of the problem is being tackled and that, as a result of the Bill and other proposals which the Government are contemplating, the whole relationship of tenants, owners, owner-occupiers, local authorities and Government is to be drawn into a general meléee. Landlords are to be given carte blanche to raise rents at a time when tenants are wholly at their mercy because of the housing shortage.
The Secretary of State has not indicated how tenants are to be protected until that shortage is removed. The whole purpose of the Rent Restrictions Acts was to ensure that while conditions of free bargaining were not possible tenants should have some protection. Housing rentals are now to be drawn into a market in which the tenants' hands are tied and the landlords' hands are free.
The Government seem to assume that valuers should have some idea of a fair rental even in these conditions. I have discussed this matter with valuers. It is moonshine to think that any free market exists from which valuers can determine what a rent should be. Is there any guarantee that landlords, set free from restraint, will not extort rack rents from tenants much in excess of what is reasonable? Even after the last Act dealing with the subject was passed, I agree quite frankly that many landlords did not pursue the object of extracting high rack rents.
My hon. Friend the Member for Gorbals (Mrs. Cullen) has mentioned on a previous occasion that good landlords have acted in the most humanitarian fashion in trying to clean up the conditions in which people are compelled to live. Our complaint is that the worst landlords, those who should not be set free, are likely to take advantage of a Measure of this kind. The Secretary of State should assure us that they will be prevented from taking advantage of the poorest people in the community.
The Government are only tinkering with the problem. The real problem is how local government is to be financed and whether it is to be the partner or the agent of the central Government. The Amendment indicates that the Government have failed to make the Bill part of a comprehensive and well-considered plan to give local authorities a new deal and to establish intelligable relationships between them and the national Government and between both of them and the citizens.
We on this side of the House do not pretend that the problem is easy. It has been tackled by a Royal Commission in 1902 and by a Departmental Committee in 1922. Both the Commission and the Committee have pointed out that local government has two functions. On the one hand, it is carrying out as agent of the central Government certain fundamental national services. On the other hand, it is providing services for each community in a communal way, and each community has to provide for itself individually. The cost of too many of the national functions is being placed on local government, and on the present basis local authorities are expected to bear half, or at least some proportion, of the financial burden of carrying out these duties.
I recognise the fundamental principle that it is very wise to provide that if local government is spending some Government money it should spend some of its own at the same time, but the Government must look at the whole question of the proportion of grants given in respect of these national agency services as the best way of relieving local government of excess expenditure. The present dispute with the teachers is just a product of passing the buck from the national Government to local government, the argument which goes on about who is to pay, and the fact that if the two cannot agree the teachers are expected to pay.
Everybody knows that this was double-crossing in regard to a bargain made in 1925, and it is because the local authorities were so reluctant to take on any more responsibilities that they have refused to pay the 7 per cent. or to make the proper arrangements about teachers' superannuation. The only reason the Government have for saying that teachers can recover it by making another bargain over wages with the local authorities is that the Government will save ½.per cent. If the extra percentage is to be paid by the local authorities, the Government pay half, and so this trifling argument is throwing the entire teaching profession into a ferment for no real purpose.
In the first category of public services performed by local government are Civil Defence, the police, the prevention of disease, and education. In the second category are housing, water, transport, lighting, town planning, the care of children and old folks, streets, drainage, cleansing, baths, washhouses, parks, and welfare. If people were buying these things through private enterprise they would pay through the nose for them, and much more than they are paying the local authorities.
I am not suggesting that local authorities should not do their duty. Indeed, the party to which I belong has been defeated in one local government election after another on Tory promises of keeping down the rates. These promises were made by people who had no interest in local government, no interest in doing anything for the community. They were put up as the champions to keep down the rates. My City of Edinburgh is probably an outstanding example. For generations, the rates were kept down and, for example, the streets of Edinburgh were left with gaping holes. They are not all repaired yet. So it is no credit to a local authority if it keeps down the rates by avoiding its duty. I am not, therefore, justifying local authorities skimping on the roads.
The history of local government is interesting, because the developments in local government did not take place, I am sorry to say, because of Christian teaching, of making the souls of the merchants generous to their fellow men. Entirely the opposite was the case. It is a comment on those who criticise nationalisation and municipal government that all the great progress in local government took place because of the meanness of people who wanted to keep down the rates. For instance, Sir George Nicholls was the great hero who founded the workhouse in the nineteenth century—that place of terror which people would rather die than enter. He was a great saver of rates. He pointed out that to
obtain a clear view of the English Poor Law—this applies to Scotland also—
… it is necessary to see how … it has become engrafted on our institutions as a means of protecting life and property by affording needful relief to the destitute.
That sounds charitable, but Bagehot, in "The Principles of Taxation," explains it more clearly:
It may be considerably cheaper to fill empty stomachs to the point of ready obedience than to compel starving wretches to respect the roast beef of their more industrious neighbours.
In other words, the cost of losing property was so great that it was cheaper to give people enough to eat to keep them quiet than to pay policemen or to engage soldiers to keep starving wretches in order.
In 1834 the Poor Law Commissioners wrote a letter to the then Home Secretary which gave impetus to the spending of money on hospitals for infectious diseases. It always strikes me as interesting that if people had merely appendicitis, or cancer, or a disease which would not affect anyone else, they were left to charity. The reason was that the rates would not be affected but, as the history of the time shows, infectious diseases affected the rates because, as the Commissioners pointed out, if the breadwinner died from an infectious disease, the mother and children were thrown on to the rates.
Therefore, two things were important. The first was to keep infectious diseases from spreading and the second was to keep down the rates. Hospitals were built to deal with such diseases, not through Christian charity, but because it kept down the rates. So people who claim credit for these developments should claim credit for the right reasons. Even the agitators for street lighting could make no headway until Queen Anne's carriage narrowly escaped being robbed in St. Paul's Churchyard. A few years afterwards, the City was lit.
My hon. Friends and myself do not want to encourage meanness in local authorities, and we would like to see them trying to make their cities beautiful and worthy of the citizens who live in them. Here, I would pay tribute to many places in Scotland, my own constituency among them, which have been beautified. It is a pleasure to see flowers growing at street corners instead of having to look at dumps of soil. It is a pleasure to see gardens where the people live, instead of having gardens behind high walls which can only be glimpsed through key-holes and gates. This happened in a country which can grow flowers everywhere. Labour local authorities in many parts of Scotland are now trying to grow in their villages flowers as beautiful as any in Southport and other places which make it commercially worth while. Indeed, the face of Scotland has changed since 1945. The idea of making cities beautiful has spread.
I should like to pay tribute to Sir Patrick Geddes, a citizen of Edinburgh, who tried to make gardens among the homes of people even in the Cowgate of Edinburgh. I am glad to say that this missionary effort is spreading over all Scotland. I also want to pay tribute to the local authorities who have devoted money to it, although there are still some people who think it is a waste to do so. I do not think it is a waste to bring beauty into the lives of people. They deserve it. We will support the right hon. Gentleman in eliminating the slums and in trying to make our country beautiful. It is part of our duty and one of the best things we can do for posterity.
Yet the local authorities must feel that they are being treated justly by the State. A system must be devised by which they can finance what they are doing without eternal argument with the Minister as to where they are to get the money. Local authorities are now faced with having to pay more for loans. I have never heard of anything so stupid. They must build houses, but first the Government increased the interest rates. Then the Government found that this was so complicated that they increased the subsidies. They had to do this to compensate the local authority for the extra interest. Then they increased the rates again, so in many cases the Government will have to give grants to meet the extra cost of building.
We are simple people. We want to know who gets the extra money which the local authorities are paying. Who is getting away with the "kitty"? If it is merely going back to the Government, what is the good of this circumlocution by which the Government switch the money around as a housewife switches an egg? If somebody is getting it, why? What justification is there for these people getting more money when the local authorities cannot get enough to pay the teachers their superannuation? These are things we want to know. The Government seem to be moving in mysterious ways. They hand out hundreds of millions of pounds to the fininaciers and skimp on those things which are necessary for our people.
The abolition of owners' rates is an important decision. I do not think anybody can justify the results of the present rating system, which produces some of the consequences that the Sorn Committee illustrated. There is no doubt that it is a tangle that it would be desirable to sort out. The Sorn Committee's description of it as "fantastic" is well justified. It is, however, an equally fantastic solution when the Government propose that the whole body of property owners should be relieved of any responsibility of payment for the benefits they receive. The owner who has property is protected by the police, and the fire brigade is available to protect his property.
Is there any reason why he should not pay something for this? What has it to do with rent? If a street is constructed in front of an owner's property, the capital value is raised and it can be sold at a higher price, yielding a substantial capital profit, on which no tax is paid. There are weaknesses in this change, which does not deal with the problem as it should. The Sorn Committee made its recommendation
upon one fundamental understanding. That is, that the system is not overloaded
and commented on the narrow basis of the present system. What are the Government going to do to broaden the basis of local rating? We are entitled to know the answer before we approve of the Bill, the difficulty of which is that it narrows the basis.
Have the Government given any thought to other methods of raising local government finance? There have been suggestions concerning local income tax, land values and poll tax. I have read the reports that deal with these methods, which are made to work in other countries. I can see great difficulties, but difficulties sometimes have to be overcome. The simplest way would be to use the principle of the equalisation grant, which catches all incomes according to the system of our Income Tax law. That is the best way of raising extra money without establishing new and expensive machinery.
I admit at once that we come up against another problem. If local government is to retain its independence, it must pay for that independence in some way and not be too dependent on the national Government. If too much money comes from the central Government, local authorities will feel that they have no independence and are merely rubber stamps.
If the Government accepted a greater responsibility for the things in which the local authority acts as agent, it would leave sufficient finance for local government to run all the domestic and communal services for which it is responsible and which it can very well provide. I do not see why this should not afford a complete solution to the problem. But as the Government are not prepared to do this, I suggest another way. If land values cannot be taxed, is there any reason why there should not be, say, an extra 10 per cent. tax on feu duties? Feu duties are simply money for dirt; they cannot be passed on.
People in Scotland do not like feu duties. The lawyers, perhaps, like them, but not the ordinary people. If there were an extra tax on feu duties, the basis would be a little broader than at present and there would be some money coming in. This would be a way of reaching the people who very often have their property protected although the feu does not necessarily cover the property.
The whole thing is linked with valuation. When we come to that aspect, we reach the less controversial parts of the Bill, our views about the details of which will be discussed at a later stage if we have one. That depends on what happens at the end of this debate.
For the moment, on behalf of my hon. Friends, I should like to say that we commend, in general, Part IV of the Bill. We have no intention of delaying it. If, as on a previous occasion, the Secretary of State would make a separate Bill for Part IV, we promise him that we will give it a speedy passage with no delay. That is a generous offer on behalf of Scotland.
We welcome the idea of getting a fairer valuation. Should occasion arise, we will discuss it in greater detail. There are, however, one or two points which
might be cleared up today. Assuming that the assessor is appointed, as provided for in the Bill, it would appear that very largely he will be the creature of the Secretary of State. We are not sure exactly what is
meant by Clause 9, which seems to be very wide in its powers. It states that the assessor shall in each year
value or revalue, in accordance with any directions that may be given by the Secretary of State after consultation with the Advisory Council. …
We are not sure whether that is in some way limited by the fact that it deals only with the six years or the first year, or what exactly are the limitations, if any, to these powers of the Secretary of State. If he has no powers, there does not seem to be any explanation for the new procedure in Clause 3, by which an advisory council is to be set up to advise the Secretary of State on a whole lot of items. If it gives the Secretary of State advice on them, how is he to make use of it? What is he to do about it?
The valuation committees are to employ the assessor. Will they be the assessor's boss, or is the Secretary of State his boss? What control will be exercised by the valuation committees and what control by the Secretary of State?