Orders of the Day — Industrial Rating Bill

Part of the debate – in the House of Commons at 12:00 am on 16th March 1956.

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Photo of Mr Graeme Finlay Mr Graeme Finlay , Epping 12:00 am, 16th March 1956

I beg to second the Amendment.

As Edmund Burke said, To tax and to please, no more to love and to be wise, is not given to men. I dare say that that statement applies equally to local taxation as it does to anything in the nature of general taxation, and I think that this is a subject which hon. Gentlemen opposite would do well to approach with caution, I should almost say gingerly. This subject has a very long history indeed, starting with the derating of ecclesiastical and charitable institutions away back in the 1830s.

I am not the only one who has expressed this view, because there is higher authority in the ranks of hon. and right hon. Gentlemen opposite about this. Speaking of derating, the right hon. Member for Ebbw Vale (Mr. Bevan) said, in his picturesque way, in 1949: It is too difficult to put the eggs back into the shells now."—[OFFICIAL REPORT, 2nd November, 1949; Vol. 469, c. 509.] In 1953, the right hon. Member for Bishop Auckland (Mr. Dalton), in the course of a debate, said that no fewer than 159 of his colleagues had subscribed their names to a Motion on the Order Paper in favour of what the hon. Member for Acton (Mr. Sparks) is now supporting, and were like rabbits caught in a trap in the moonlight. He went on to give a number of reasons—some of which have been touched upon by my hon. Friend— why we should approach this subject with caution.

First, he said that if we re-rated we might allow unemployment to arise in Development Areas. This was spoken of by my hon. Friend. Secondly, he said that some local authorities would lose more on the swings in the shape of lost Exchequer equalisation grant than they gained on the roundabouts of re-rating. Thirdly, he said—and here he was dealing with agriculture, which is outside the scope of our discussions today, but in respect of which hon. Members opposite are not clear in their minds—that if we re-rated agriculture the first thing that would happen would be that agricultural interests would come forward and ask for an increase in the guaranteed price at the next Annual Review. The effect would be that there would be a commensurate rise in the cost of living. That shows that there have been some second thoughts among the friends of hon. Members who are now coming forward in support of the Bill today.

I always like to look at these matters in the light of broader objectives. Re-rating is only one manner of many by which this problem can be tackled. What we must really consider is whether it is the best way of infusing health into the organs of local government today. If it is not, we should discard it. Although I have not reached a final opinion I believe that, prima facie, it is the simplest and probably the best way of dealing with the problem. But I am not absolutely sure, and I cannot be absolutely sure because I have not yet had access to the fullest information on the matter.

If we are to change the structure of local government we ought to make a really good job of it and not tackle just one facet of the problem. I do not believe that we can achieve anything satisfactory unless we have access to the whole picture. It is against that background that I consider this comparatively narrow Bill. What is the kind of local government that we desire? Do we wish it to be dominated from the centre, or do we think that we should have a local government organisation in which the words "local" and "government" are underlined and given some power? I favour the latter view.

The reality of the situation is that local government electors do not care; they are apathetic. In many cases, too, representatives of local government are frustrated; they have the illusion of power but not its reality, because they are not allowed sufficient discretion in financial matters. That means that there is a shortage of talented people coming forward to do the job of governing local areas. There is too much central control in financial matters, and that leads to an unhealthy degree of reliance upon the apron strings of Whitehall. That is my opinion, anyway.

Only the other day a county councillor told me that he had gone to a meeting of a local government committee dealing with the local fire brigade, and that after several hours' deliberation the only thing that they had been able to decide decisively was the type and style of the jumper which should be worn by the men in that fire brigade. That is the kind of thing which leads to frustration on the part of intelligent local government representatives, and does not really serve national purposes. We should approach this general problem with a broad philosophy of devolution, because. in the long run, that will be the best way to achieve a healthy local government structure. We must recast the financial arrangements upon that footing.

Now I turn to the history of the matter. which was dealt with at some length by the hon. Member for Acton. I recollect that in 1929 Sir Kingsley Wood thought that the great local government reorganisation which took place in that year was to be a permanent settlement, and he devised the 1929 block grant to replace all previous forms of compensation for derating. The important thing about the block grant—in which it differed from the Exchequer equalisation grant—was that local authorities could use it according to their discretion. There are far too many strings attached to the equalisation grant today, and that has been responsible for continued frustration on the part of local government representatives.

The next great landmark in local government financial reorganisation took place in 1948, when the block grant was replaced by the Exchequer equalisation grant. But there were some other most significant changes in the structure of the administration, which were not touched upon by the hon. Member for Acton when he dealt with his very involved set of figures. First, there was a change in social services. The National Health Service had been set up by the Act of 1946. All the Poor Law responsibilities which had been cast upon local authorities in 1929 were put upon the National Assistance Board, so, in 1948, local authorities were relieved of about £63 million worth of financial responsibility. That is a significant factor.

When we take into account the way in which the Exchequer equalisation grant was then issued to local authorities, we find that the amount which went to local authorities in 1948 was more than that which went to them before by way of block grant. The net gain was about £4 million per annum. The hon. Member for Acton touched upon the question of compensation. If, in 1948, as a result of the changes which then took place, £4 million extra went to local authorities, it is true to say that, in substance, compensation for derating was continuing in 1948, and in the years which followed. I concede that, at the same time, the grant system may have resulted in some local authorities ceasing to receive grant notwithstanding the fact that they suffered loss due to derating—but that occurred only in special cases.

We must consider whether industrial re-rating will serve the best purposes of the nation, and whether it will provide better local government. The hon. Member for Acton dealt at some length with its effects upon industry. I think it would be fair to represent his view as being that industry is paying too little; its gross profits have greatly incresed; it is deriving more assistance from local government, and it really is not paying its way. That seems to summarise the hon. Member's angle upon the matter. My hon. Friend the Member for Henley (Mr. Hay), however, has drawn to the attention of the House the speech made by my right hon. Friend the Member for Woodford (Sir W. Churchill) in 1928, upon the subject of rates and their effect of increasing the prices of a commodity at all stages of production, in relation to the steelmaking process—going right through from coal to iron ore, coke, limestone, pig iron, and, eventually, to steel.

That is a consideration which we just cannot cast aside in a cavalier manner by saying that only a few pence or shillings will be added to the price of the article. It is a matter which must give us serious thought in the present situation. It is true that industry is comparatively thriving today, as compared with 1929. There is higher production, higher employment, and higher wages and profits. But prices were stable in 1929, although unemployment was high. Hardly any hon. Member has touched upon the fact that this year, 1956, we have a balance of payments crisis, and we must be very careful before saddling our export industries with an extra burden. We cannot embark lightly upon such a course as this, if an extra penny or shilling will prevent a commodity from being able to compete in world export markets.

What benefit does industry derive from rates? It is quite true, as the hon. Member for Acton said, that it may derive considerable benefit from police protection of its property, and to some extent it receives benefit from sanitary arrangements, under the Public Health Acts. No doubt it takes its share of those services. No doubt industry takes more than its share of the use of the roads, but there is provision in the law for the local authority to turn to the industry concerned and get back something from it in return for the damage it does.

The hon. Member for Acton referred to things like sanitation and said that industry in many cases took its share in that direction and did not pay for it, but that can be covered, and is in fact covered, by contracts made between the local authorities and the industries concerned.