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Clause 1—(Grants To Local Authorities In Consequence Of Postponement Of Second Appointed Day)

Volume 302: debated on Friday 24 May 1935

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Motion made, and Question proposed,

"That the Clause stand part of the Bill."

11.7 a.m.

I raised a point on Second Reading with regard to payments to local authorities and expressed the hope that it could be arranged that they should be paid month by month, subject to a final allocation. As Sub-section (3) now stands, the matter is purely in the hands of the Treasury, and local authorities do not know the extent to which they are to find money the reimbursement of which may be delayed. Perhaps the Minister of Health will enlighten the Committee on this point.

11.8 a.m.

I could not answer the right hon. Gentleman's question during the earlier stage of the proceedings because the arrangements had not been completed, but now I am glad to be able to give him a reply. We recognise that it is for good administration by local authorities that payment should be periodic, so that the arrangement will be, first of all, that there shall be a payment more in the nature of a lump sum to cover the initial period, and that then we shall proceed by a system of monthly payments such as that to which the right hon. Gentleman referred. There will, of course, be the necessary adjustments in accountancy.

Question put, and agreed to.

Clauses 2 to 5 ordered to stand part of the Bill.

Bill reported, without Amendment.

11.10 a.m.

I beg to move, "That the Bill be now read the Third time."

The House will remember that a promise was given by the Government that local authorities should be put in the position financially as if the second appointed day had taken place on the 1st March, and this Bill seeks to achieve that object. A calculation is made as to the cost of relief borne by local authorities, the total of which is £6,000,000 in England and Wales and £2, 400,000 in Scotland. That calculation is arrived at by estimating the expenditure on relief in respects of the three winter months, December, 1934 and January and February, 1935. Having arrived at that estimate of relief expenditure, it is assumed that that will continue for the next seven months. From that total are deducted the contributions that local authorities would have made under Section 45 of the Unemployment Act.

The House will remember that the expenditure on relief in the standard year 1932–33 has been calculated, and local authorities, by paying 60 per cent. of the then expenditure, are relieved of the whole of it. That bargain has turned out very much to the advantage of the local authorities, because everywhere the expenditure on relief has gone up, and local authorities are relieved of the total charge by payment of the same sum as they would have paid, calculated in relation to a lower expenditure. In point of fact, local authorities in England and Wales and in Scotland, faced with a cost of relief expenditure of £8, 400,000, are being relieved of no less a total than £5, 600,000. That is the grant for England and Wales and Scotland.

These grants will be made, as my right hon. Friend has just promised, month by month. When this Bill is passed and the Supplementary Estimate is agreed, there will be a grant for the three months down to the end of May and thereafter month by month. The House will notice that this arrangement is provisional for seven months, until September, 1935. That provision was put in at the special request of the local authorities, but I hope the House will agree that we have carried out to the full our promise to the local authorities that they shall not in any way suffer by the postponement of the second appointed day. In so far as their hopes were disappointed and they expected that their financial responsibilities would be taken over earlier, we have enabled them, under a later Clause in the Bill, to borrow and spread over the next five years the expenditure of which they hoped to have been relieved as from the 1st October last down to March. I trust that the local authorities as a whole will accept this as a generous settlement.

11.15 a.m.

I do not wish to go over the ground which I covered on the Second Reading of the Bill. I think that we are bound to accept it, because it is handing over to local authorities money to which they axe morally entitled. I should have liked the Parliamentary Secretary to say something about future intentions, because this is a purely temporary measure extending only until the 30th September and, with the present trend of rising Poor Law expenditure, the understanding which it contains will probably not be applicable when the winter months arrive. I regret very much that in the discussions on this Bill, which is primarily a finance Bill, we have not had the presence of the Chancellor of the Exchequer. I made this complaint on the Second Reading of the Bill, and one would have thought that before it passed to another place the Chancellor of the Exchequer would at least have come to the moral assistance of his colleague on whom has been put the responsibility for introducing the Bill. There is nothing that we can do about the Bill unfortunately, and, so far as I am concerned, it can pass to another place. I would, however, like formally to thank the right hon. Gentleman for making this small concession to the local authorities in regard to their immediate payments.

11.18 a.m.

I am sorry that the Postmaster-General is not in his place, because he has really some interest in this Bill by reason of his propaganda work. I hope he will state that there has been a large increase in the amount paid in out relief since 1932–33. Then we shall be able to get a bit of the truth on those hoardings all over the country for which the Postmaster General is responsible. The Parliamentary Secretary said that the full amount is £8, 400,000 and that the Treasury will meet £5, 600,000. That leaves the local authorities to find £2,800,000. We on this side of the House feel that the local authorities should have to pay nothing because the care of the able-bodied unemployed is a national business and the national Exchequer should bear all the burden. I trust that the Parliamentary Secretary will see that the Postmaster-General is kept busy this week-end getting these figures out and putting them on the hoardings for next Monday morning.

11.19 a.m.

It is impossible for us on this side to divide against this Bill for we recognise that it is some little concession to the local authorities, but the local authorities will not be satisfied until either this Government or some other Government takes over tile full financial responsibility for the able-bodied unemployed. I was not converted to this principle to day; I have held it since the first time I took part in an unemployed agitation as far back as 1884. Along with many of my colleagues at that time, when unemployment was not so deep-rooted as it is to-day, that is to say, when there were not so many workpeople out of employment in proportion to the population, I made a declaration that the money paid to the able-bodied unemployed should be a national charge. Either this Government or the Labour Government, if we come back at the next general election—I do not know whether we shall, but time will tell—will have to deal with this problem. My right hon. Friend the Member for Wakefield (Mr. Greenwood) and many other members on this side have declared over and over again that there was an understanding, even if it was not actually implied, that the obligations of the Government should be recognised from the 1st October, 1934. We still adhere to that proposition.

At the present time the local authorities are called upon to pay 60 per cent. That is another question that will have to be dealt with shortly. The Scottish members are much concerned about it, and there have been several meetings recently to deal with it. The hon. Member for one of the divisions of Liver pool has called one or two conferences, and there are to be some more, for the purpose of declaring that the local authorities are not altogether satisfied with the monetary provision that is now being made. Local authorities have many obligations. West Ham is one of the highest rated boroughs in the country. Our rates are 19s. 4d., which is due to the fact that we have so many unemployed and so many people on public assistance. It is one of those unfortunate boroughs which has no source of income of any kind, as many other local authorities have. We shall not divide on this Bill but the time must arrive when either this or some other Government will be compelled to take over all the obligations for the able-bodied unemployed.

11.23 a.m.

As I come from one of the distressed areas, I would like to say a word on this Bill. It is good in parts and bad in parts. The good part is that which takes over the responsibility for the able-bodied unemployed from the 1st March, although one regrets that that responsibility is limited to the 30th September. That is a mistake because there does not seem any prospect of the appointed day being made the 1st October, and, if that be so, it means we shall have another unemployment Bill. One of the things about which we have to complain is the large number of unemployment Bills which have been brought before the House. This is the second Bill that has had to be produced because of the blundering of the Government in their 1934 Unemployment Insurance Act. But for those blunders this and the former Bill would have been unnecessary. The other part of the Bill which cannot be described as good gives power to the local authority to borrow for the money they spend from the 1st October to the end of March.

The local authorities, especially those in the distressed areas are entitled to complain of being put in the position of having to borrow for this expenditure. Although there had been no definite announcement, they were entitled to expect that the Government would fix the appointed day at 1st March at the latest. I wonder sometimes what was in the mind of the Minister of Health on 12th April, 1933, when he made an important pronouncement to the House respecting the Government taking over the able-bodied unemployed. We were discussing a vote of censure which had been tabled by our party, and the hon. Member for Sunderland (Sir L. Thompson) moved an Amendment to the effect that the Government should accept responsibility for all the able-bodied unemployed. The Minister of Health accepted that Amendment, and thereby gave the impression that the Government were going to take full responsibility for all the able-bodied unemployed. He made this rather remarkable statement:
"the central Government shall accept responsibility, both administrative and financial, for assisting all the able-bodied unemployed who need assistance. "— [OFFICIAL. REPORT, 12th April, 1933; col. 2607, Vol. 276.]
That was bound to create an impression—

That is the whole of the quotation I have copied out. It is quite sufficient. The Minister, when he replies, can finish the quotation. There is difficulty in understanding what was in the mind of the Minister that day, because he delivered a rather long speech arid wound up with this peroration:

"I am confident that when, 10 years hence, this plan being completed, we look back upon its completion."—[OFFICAL REPORT, 12th April, 1933; col. 2611, Vol. 276.]
What had the Minister in mind when speaking of the completion of the plan 10 years hence? Did he think it would take 10 years to complete the plan to deal with unemployment? If that be so I think he will prove to have been right, because that was in April, 1933, and we are now in May, 1935, and the Government are no nearer to completing the plan to-day than they were then. At the pace they are going it will take the Government 10 years to complete the plan. When, that day, he agreed to take financial responsibility for the unemployed he did not expect that two years later he would have to bring a Bill like this before the House to give local authorities power to borrow in order to meet their expenditure between 1st October last year and 30th March this year. Those who submitted that Amend ment to the House in 1933 never expected that the Government would not be long in shouldering responsibility for all the able-bodied unemployed, because the hon. Member for Sunderland said:
"I am satisfied that…. the able-bodied unemployed will be taken over by the State and the cost of their maintenance discharged by the State."— [OFFICIAL REPORT, 12th April, 1933; col. 2637, Vol. 276.]
And here we are to-day making provision for the local authorities to borrow in order to meet the money they have spent between 1st October last year and the end of March this year. As one from a distressed area where the rates are already very heavy, I submit that that is not fair to local authorities. Up in the County of Durham our burdens are already heavy enough, without this addition to them. It is said that by the de-rating of agricultural land the County of Durham must have lost no less than £1, 20,000 per annum, and the rateable value lost through the derating of machinery under the Rating and Valuation Act, 1925, was estimated at no less than £200,000, and even the Derating Act of 1929, although there was an allowance made by the Treasury, added to the burden of the ratepayers in the County of Durham.

I hope the Minister will reconsider this matter, in spite of what is in this Bill, having regard to the burdens upon local authorities in the distressed areas. A gentleman who, I believe, is an authority on the subject, made the statement not long ago that the result of the various reliefs in the matter of the payment of local rates had been that about 90 per cent. of the rates in the County of Durham are now paid by householders, where as a few years ago they bore only about 55 per cent. of the burden. In his report on that area the Civil Lord of the Admiralty said that no less than 76½per cent. of the dwelling houses in the County of Durham were rated at £10 a year and less and 3 per cent. at more than £20 a year. The burden is gradually being thrown on the small householders in the County of Durham, and we have a right to expect that the Government should come to the rescue, that they should not be content with giving the local authorities power to borrow, but shoulder the responsibility themselves and find the money from the 1st October last year. We cannot too often remind the Minister that the Government sent commissioners into the distressed areas. The Civil Lord of the Admiralty visited the North-East Coast and made a report on this question. So far the Government have ignored that report and have done nothing in connection with it. He said, in the Report:
"For the year 1933–1934 the cost of public assistance in the administrative County of Durham was £1, 223, 169 net, which, even after deduction of the special distressed areas grant, represented a rate of 8s. 6¼d. in the pound, as against 8s. 5d. ….This figure compares with an average of 2s. 8½d. for England and Wales for the year ending 31st March, 1932."
Then he goes:
"Eighty per cent, of the money disbursed for public assistance was expended upon outdoor relief—able bodied and ordinary. Although the Unemployment Assistance Board will shortly become responsible for able-bodied relief, Durham County Council will still have to make to the Board an annual contribution."
Later he says:
"The remedy which would achieve the best results would be to grant from the Exchequer such further relief as would reduce the cost of public assistance still falling upon the rates to the average level obtaining throughout the country. It is recognised that such a step would raise complex questions of why implication, and would involve an annual subsidy which upon present figures must be estimated at over £700,000."
Then he deals with economies. I suggest that the Minister should re-read that report upon the position existing in the County of Durham. He would realise that what we want is, not power to borrow from the Exchequer, but a larger Treasury payment in order to relieve the county of the burden that is falling so very heavily upon them.

We have allowed the Bill to go through without intermission because of the good part that is in it, but the other part, which throws upon the local authorities the power to borrow in order to meet their expenditure, is of no help to the county, because the county have to repay the money sooner or later. The position of local authorities in the north-east part of the county demands that the Government should not treat them in the same way as local authorities are treated in more wealthy areas. The Government should give special consideration to them and be prepared to help them to meet expenditure, which they contracted under a false impression. The Government are responsible for the impression made upon those local authorities that they were taking over the whole financial responsibility from the able-bodied unemployed. If the Government cannot do it for the whole of the country, the local authorities in distressed areas should have special consideration. I hope, even though the Bill passes to-day, that the Government will take this matter into consideration, and that they will try to help the local authorities in the, distressed areas.

11.39 a.m.

I rise to deal with one or two matters raised in debate and to set right some misapprehensions. I will not follow the hon. Member for Spennymoor (Mr. Batey), because most of his points were covered on the Second Reading. Lest it should be thought that any lack of consideration exists on the part of the Government in respect of the conditions of the special areas to which the hon. Member referred, on this or on any other occasion, let me point out that the assistance given in relief of rates by the Exchequer to such areas is in excess of that given to other areas. I find that in Durham no less than 63 per cent. of the expenditure of local authorities borne by the rates is found by the Exchequer. In those conditions, I am sure that the House will agree that very great help is already received from the National Exchequer by those areas. Let me clear up also a misapprehension which I think is in the mind of the hon. Member with regard to the seven months' limitation imposed in the Bill. That limitation is not inserted in order to limit the concession which the Government recognises is necessary, but at the express request of the local authorities, who say that circumstances may change and make the present basis of financial settlement unfair in the future, and that it is right that there should be this limitation which is secured by the seven months.

There are two other statements to which I would make reference, because they are inaccurate and should not come to be believed by the mere force of repetition. In the first place, we never undertook that the second appointed day should be on 1st July last year, and it is not contended that that is so by any responsible party. If local authorities formed an opinion that that was so, they did it without any undertaking from the Govern ment. The second matter of that sort is the assertion that the Government ever at any time undertook to discharge the whole financial responsibility for the able-bodied unemployed under the new arrangement without any contribution from the local authorities. That is not so. The House might well think from the quotation read by the hon. Member for Spennymoor that it was so, but I wish his eye had side-slipped and that he had seen that the subsequent sentence, which I will now read, was material to the argument which he was putting before the House. The sentence is:
"The acceptance of this responsibility by the Central Government will necessitate a readjustment of the present block grant paid to the local authorities by the State, since they will be relieved of a liability to which they have hitherto been subject. "—[OFFICIAL REPORT, 12th April, 1933; col. 607, Vol. 276.]
Throughout all the statements on this subject by myself and subsequently by Lord Rushcliffe, who was then Minister of Labour, it was made clear that acceptance of financial and administrative responsibility was undertaken for the first time, but in consideration of that relief to the local authorities from financial liability, which, in meal or in malt, would be paid by the Exchequer, the form of contribution may have to be changed from time to time. The principle, however, remains. I welcome the support which this Measure has obtained from all sides of the House, and I trust that the hon. Member for Spennymoor may come to see that the Bill is good throughout.

11.45 a.m.

I cannot understand how an unemployment assistance Bill comes to be in charge of the Minister of Health. This is a very serious matter of principle. It may be remembered that, in the original Insurance Bill of 1911 one part of which related to unemployment insurance and the other part to health insurance, adivision of function was decided upon, by which the Minister of Health looked after the health insurance section and unemployment assistance which became part of the unemployment problem, which was under the separate Ministry of Labour. Many of us who are concerned with health have, over and over again, felt that the health side of the Ministry of Health is being swamped by their taking over administrative provisions. It is very largely swamped by having to deal with questions of local government administration, and it is also swamped by having to take over the very controversial question of housing, which is not directly a question of health. Now it is being given this extra work in connection with unemployment assistance under the present Bill. To add all these different matters to the work of the Ministry of Health—I do not know whether it is because that Ministry is supposed to have more time than the Ministry of Labur—is wrong. The subject of health needs all the time that can be given to it, and not nearly enough time and attention is given to it at the present moment. I want to know why it is that this particular business is given to the Ministry of Health instead of to the Ministry of Labour.

11.46 a.m.

I warmly welcome the kindly effort of my hon. Friend to reduce the labours of the Ministry of Health, but I am afraid that the answer to his question is really quite a simple one. He is quite right in pointing out that the general administration of the law relating to assistance to able-bodied unemployed is a matter for my right hon. Friend the Minister of Labour, but this Bill relates in its first line to a question of local authority finance, and the financial relations between the local authorities and the central Government. The Minister of Health, among his varied functions so well described by my hon. Friend, is responsible to this House for all matters of local government finance, and he is, therefore, the appropriate Minister to deal with a Bill the central purpose of which is a matter of local government finance.

Question, "That the Bill be now read the Third time, "put, and agreed to.

Bill read the Third time, and passed.