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Clause 25—(Application Of Preceding Provisions To Local Authorities)

Volume 436: debated on Monday 28 April 1947

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I beg to move, in page 31, line 28, after "and," to insert:

(subject to the provisions of the Section of this Act (Additional compensation to local authorities)."
In Committee upstairs, when we were discussing the question of compensation to local authorities, hon. Members on all sides pressed me to look at this matter again to see if some additional compensation could be paid to local authorities over and above meeting their sinking fund debt charges. I undertook to do that, and mentioned that my right hon. Friend the Minister of Fuel and Power would also be looking at this problem, and that there would have to be some relation between the decision with regard to trans- port undertakings of local authorities and electricity undertakings of local authorities. Since then my right hon. Friend the Minister of Fuel and Power has made a statement in Committee on the Electricity Bill to the effect that the sum of £5 million will be set aside for additional compensation to meet severance and overhead expenses which local authorities might have to incur as a result of the transfer of these undertakings.

The problem that has confronted me has been a little more difficult, because the question of the transfer or treatment of the transport or undertakings of local authorities would not arise until area schemes were initiated by the Commission and ultimately considered and determined by Ministerial order. Nevertheless, as a result of consultations with those who represent the local authorities, we have reached a more or less tentative agreement upon a transport sum. As we calculate the capital expenditure, the gross receipts of the transport undertakings of local authorities as compared with electricity undertakings are only about half, or half the capital expenditure represented. For the time being, it is proposed that I should set aside a sum of £2½ million for the purpose of meeting a similar compensation payment to local authorities. I must make it plain that it will not he until the area schemes arise that the payments will be made. In the meantime, I hope that with consultations we shall be able to carry it a stage further. According to the type of scheme that is evolved to deal with ports and harbours, there may be some similar compensation in that direction, and a sum of £200,000 is anticipated as being likely to meet that charge. This Amendment is for the purpose of preparing the way, and making provision for that arrangement.

8.30 p.m.

The method which we are following in trying to work tonight makes it very difficult for the Committee to follow the proceedings adequately. We are still on the Committee stage, as we are aware because Mr. Speaker is not in the Chair: we have not got to the Report stage. We are now, I understand, dealing with the second Amendment on the Paper. So far as I understand it, from what the Minister was good enough to tell us, the proposal he has made will go some way to meet the difficulties of local authorities as a result of their transport businesses being taken away from them. I am not prepared to say, here and now, that we can say that this arrangement is satisfactory, because I am not at all clear as to what it does. All I can say is that it is better than the original proposal presented in Committee, and to that extent we are grateful to the Government.

I should like to ask one question. The right hon. Gentleman mentioned the Electricity Bill, in reference to the sum of £5,000,000, and said that half that sum was to be spent under this Bill. Is the Minister certain in his own mind that the figure of £5,000,000 in the Electricity Bill is at all adequate to meet the cost of the electricity undertakings to be taken over by the local authorities?

It is not the Electricity Bill that we are discussing.

I appreciate that, Sir Robert, and I only ask the question because the Minister himself said that the reason why he was proposing £2,500,000 was, that it was half of the sum in the Electricity Bill. He himself mentioned the Electricity Bill, indicating that the number of undertakings affected by the transport Bill is half the number affected by the Electricity Bill; and so he divided the sum of £5,000,000 by half, and arrived at £2,500,000. We want to know at this stage, before we discuss it further, what is the basis of this £2,500,000. All we have been told is that it is half of the £5,000,000 mentioned in the Electricity Bill. As a Member of the Committee dealing with the Electricity Bill upstairs I would say that there is no suggestion at the moment that £5,000,000 is at all adequate. There is no suggestion that there is any basis on which that figure can be arrived at and it was rather suggested that it was a guess. I think we need to know a great deal more at this stage. Is this a case of a guess on top of a guess?

Or half a guess? I do not know what it is, but I do suggest that we should be given a little more information.

I would ask one question on a matter about which I have had some correspondence with the right hon. Gentleman. He did say that £200,000 was to be given for the purpose of compensating local authorities in connection with harbours. In my constituency there is Brixham harbour. The financial position arises on a later Clause, but the right hon. Gentleman has been dealing with the local authorities and harbours. I do not think it would be possible for him to answer me now, but would he mind having that matter gone into again and letting me know the position in regard to this case? If his proposals do not deal with that matter will he have it dealt with in another place; because it affects a considerable number of small local authorities which have small harbours, such as Brixham? I should welcome some assurance on that point.

The case raised by the hon. Member for Torquay (Mr. C. Williams) would not be prejudiced by this Amendment. The matter is being looked at at the moment. All we determine here is a round sum. I was careful to point out that the question of the dispersal of the amount, and what will be finally settled in area schemes, is to be resolved when compensation in respect to harbours, large, small or medium, comes in for more detailed consideration.

With regard to the point raised by my right hon. Friend the Member for the City of London (Mr. Assheton), and the hon. and gallant Member for Ecclesall (Major Roberts), I am aware that they are never satisfied with the amount of compensation that is determined in this matter; but nevertheless the sums were determined by the Government namely £5,000,000 in the case of electricity. and £2,500,000 in the case of transport. It is not either a single guess or a double guess. It is a sum that we feel will meet the cost of severance, and the additional overhead charges which the local authorities will incur as a result of the separation of their businesses. We think these sums will discharge all obligations in matters of this kind. We cannot accurately assess it to a pound, but we believe that, roughly speaking, the sum will meet the case. I suggest that this should not be looked upon as a guess, but as an attempt to assess a sum which will meet the representations made to us by the local authorities. Some of the points submitted to us, we have not accepted, but the problem of severance did seem a real one, and this is an effort to meet it.

Can the right hon. Gentleman tell the Committee, roughly, how the sum of £2,500,000 is arrived at?

I do not want to repeat my argument. We believe that that sum will meet the additional overhead charges which the local authorities will incur.

The details have to be worked out in discussion with the local authorities.

I do not think I have ever listened to a more unsatisfactory explanation made to a House of Commons which is being asked to find a sum of £2,500,000. There must have been some basis on which the sum was arrived at Did the Minister in his office calculate a figure in his own mind, and divide it by two or three, or what? What method did he pursue? Was it that he saw his right hon. colleague the Minister of Fuel and Power had got £5,000,000 out of the Treasury and thought, "I will see what I can get," and came away with only half? We must surely learn something about the basis of this figure. It is ridiculous to put before this Committee a sum of £2,500,000 for the local authorities without giving us the slightest notion of whether it is the right sum or not. I think the Minister ought to lay a White Paper before the House of Commons, telling how this figure has been ascertained, showing us what local authorities have any claim against it. It is absolutely intolerable at this stage of the Bill, to propose a figure this way with no basis whatsoever. No hon. Member on the other side has any more notion than we have how it was arrived at.

I think it is equally ridiculous for the right hon. Gentleman to assume that we should be prepared at this moment to state all the details. [HON MEMBERS: "The basis."] I have told the Committee the basis upon which this sum was arrived at. The details cannot be determined until we come to the area schemes. But I have pointed out that the Government have fixed a global sum—if hon. Members would prefer that term—in this case, which in their view will meet the charges incurred by the local authorities as a result of the separation of then transport undertakings from the rest of their municipal expenditure. That sum has been negotiated with the proper, accredited representatives, of the local authorities. I undertook in Committee to endeavour, as far as possible, to meet the representations that were made to me. In view of those circumstances, I feel that the line which the right hon Gentleman has taken is not correct, in view of the discussion we had on this matter in the Committee stage.

The last thing I would wish to be is incorrect, and I think we have got a little further through the latest intervention of the Minister. The right hon. Gentleman has said that the figure was arrived at in negotiation with the local authorities. I am bound to say that that puts the matter in a wholly different light, and we were not informed of that on he Committee stage. If the Minister has negotiated this figure with the local authorities, then, presumably, each local authority knows what it is going to get. Will the Minister assure the Committee that the local authorities are satisfied that this is a fair propostion?

Before the Minister answers that question, may I help him further? The basis of the £5 million was that it was given by the Minister of Fuel and Power as a payment to the local authorities to make good the loss by overheads—something like £1 million a year. The Minister said he would take five years purchase at that sum, and it came out at £5 million. The question I want to ask the Minister of Transport is this: Has there been some figure worked out with regard to transport, calculating the overheads at £500,000, and has the figure of £2,500,000 been arrived at in the same way? We ought not merely to say that, because electricity undertakings have been taken at five years' purchase on £1 million, transport undertakings should be taken over at half that figure.

It seems reasonable to assume that the number of municipal authorities with their own transport undertakings is considerably less than the number of local authorities which have electricity undertakings, and, from that angle, it is perfectly obvious that the amount of money must be less. I think my right hon. Friend was quite right when he argued that it is not possible at this stage to determine what the local authorities will receive. After all, the smaller local authorities have been paying rather bigger salaries to their town clerks, for example, and their borough accountants, because they were qualified to deal with the accounts of their trading undertakings. That does not apply in the case of the bigger local authorities, because one assumes, in the case of the bigger undertakings, that the people concerned are wholly employed on transport work and will be transferred with the undertaking. Again, there is the case of the smaller authorities which, because they have trading undertakings, have had to erect larger town halls. The cost of these will obviously fall unfairly on the rate burden when the trading undertaking is a transport undertaking. It is obviously not possible at this stage to say what the burden will actually be; that will only be possible when the complete scheme is worked out. It seems to me, therefore, that it would be impossible for anybody at present, with any degree of accuracy, to determine what each local authority is to receive, but, on the assumption that the number of local authorities which have transport undertakings which might conceivably be transferred is approximately 50 percent. of the number of local authorities which have electricity undertakings, it seems to me that the Minister's argument is perfectly reasonable.

Amendment agreed to.

Clause, as amended, ordered to stand part of the Bill.