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Local Authorities (Financialprovisions) Bill

Volume 47: debated on Tuesday 8 November 1921

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Order of the Dow for the Second Reading read

My Lords, this Bill is one of the series of Bills which have been introduced by the Government to deal with the situation produced by the unexampled condition of unemployment. The main objects of the Bill are dealt with in the first clause, and are destined to facilitate relief. This falls into two categories— indoor relief and outdoor relief. With regard t o outdoor relief, the machinery already exists in the Metropolitan Common Poor Fund, established in 1867. This Bill enables the payment for the maintenance of a person enjoying indoor relief to be increased from 5d. to 1s. 3d. per day.

But the main provision is in Clause 2. I think it is common ground everywhere that the abnormal state of things in London requires immediate attention. It is impossible to allow things to remain as they are and to leave upon the shoulders of the poorer boroughs the whole financial responsibility of their own outdoor relief. Three possible solutions have suggested themselves. The first, I think it is obvious, could not be considered at the present time. It is the general reform of the Poor Law of the country. Apart from the fact that any such Comprehensive measure would be highly controversial, it would be impossible to realise such a measure in the short time at present at the disposal of Parliament, and even if such a scheme were contemplated in the immediate future it would be necessary, as regards the Metropolitan area, to wait until the Royal Commission presided over by the noble Viscount, Lord Ullswater, has reported. An immediate measure is, I think, clearly necessary to afford relief for the crying necessity that exists.

Two schemes, and two only, have been put forward for this purpose. The first scheme was the increase of the present equalisation rate of 6d in the £ The second is the scheme proposed in this Bill. With a view to considering this question a conference was held at the Ministry of Health at which the representatives of all the Metropolitan Boroughs were present. This question of the equalisation of rates was considered. The paying boroughs were unanimously opposed to such a scheme; the receiving boroughs were equally hostile, for the very good reason that even if the rate were raised from 6d to 2s in the £ a sufficient sum would not be produced to set free enough money to meet the heavy expenses of outdoor relief in those poorer boroughs. Thus, in Woolwich and Poplar, which are the two most necessitous boroughs, only £19,941 and £ 30,879 respectively would be produced. So, by common consent, this suggest ion was dropped.

At this conference the town clerk of Westminster, who is one of the most distinguished and experienced of our local officials in London, suggested the extension of the Metropolitan Common Poor Fund to outdoor relief The matter was carefully considered by all the boroughs and eventually a common agreement was reached by them. Under the scheme, which is Cal-bodied in this Bill, Poplar and Woolwich will receive £130,900 and £131,300 respectively. These sums are equal to a reduction of 2s 4d and 2s 9d in the £ respectively in the rates for the half-year, and they will afford material assistance to those boroughs in meeting their liabilities, which, of course, the equalisation of rates scheme would not do The effect which it would have on the rates throughout London is set out in the White Paper which lies on the Table, and therefore I need not go into that The objection which has been raised to this scheme of using the Common Poor Fund is that this Fund would be making payments which they do not control. But 1 would point out that under the Bill the local authorities will not be able to make any payments except such as are sanctioned by the Ministry of Health.

I think the most important matter which I should like to explain to your Lordships at the present moment is how the Common Poor Fund will be safeguarded against relief being administered in an extravagant manner In the first place applicants for relief will have to make a statement in writing in regard to the particulars of their resources, and I have the authority of my right honourable friend for saying that he will use his authority to the utmost limits, even to the extent of handing the matter over to the Public Prosecutor in the event of any fraudulent proceedings being detected. Secondly, a certificate will be required front the clerk to the Guardians for all expenditure charged on the Fund, and this certificate will have to be produced to the district auditor. The district auditor will hold audits of the various applications and payments, and further security for compliance with the Regulations will be obtained by making the general inspectors of the Ministry of Health keep in close touch with the administration of this outdoor relief. The general inspectors will obtain particulars from the clerks and other local officials, and will draw the attention of the district auditor to any case in which they have reason to believe the Regulations have not been properly complied with. I should say that the clerks to the Guardians may be dismissed by the Ministry without reference to the Guardians and they may not be dismissed by the Guardians without reference to the Ministry. That power gives the Ministry control over those officials.

I pass to Clause 2 which provides for the ease of a Metropolitan Borough neglecting to raise a rate to meet a precept, such as was recently the case in Poplar. If such a case occurs the authority issuing the precept shall, with the consent of the Ministry of Health, be empowered to apply to the Court for the appointment of a Receiver. Clause 3, which deals with borrowing on short term loans by local authorities, legalises a practice which, I think, has been followed by several authorities— namely, the making of overdrafts on the banks. Strictly speaking, that is not legal and this clause legalises it. If they did not overdraw at the Bank they would have to raise a higher rate in order to obtain working expenses. Many of these rates are not payable until December and therefore they would have no money to carry on throughout the year. Your Lordships will see that they have to make their books balance at the end of the year, and so it is only in order to facilitate their working expenses that this clause is introduced One other point. to which I should like to draw attention is the proviso on page 4, which gives power to deal with the temporary state of affairs which occurs at present, when very heavy expenses have been put on the local authorities. Power has been taken in case of necessity to spread repayment over a. term of years, instead of making it compulsory at the end of every year.

Clause 4 is introduced to facilitate the construction of new work, and thereby to relieve unemployment. It gives local authorities power to do what any business concern would do— namely, to defer payment of sinking funds until the concern begins to pay. Clause 5 was introduced in another place to meet the case of the East Coast towns which had been very badly hit during the war Their trade had gone, and they had been bombarded, summer visitors had left them, and they were really in a very bad state indeed. This clause gives them power, through the Minister, to recast their financial arrangements to suit the special disabilities under which they suffer. Clause 6 does two things to facilitate relief work: it puts money borrowed for such purposes as 1 have mentioned outside the limits of borrowing powers of local authorities, and it temporarily does away with the necessity of holding local inquiries before loans are sanctioned. Those are the main provisions of the Bill, and I hope your Lordships will consent to give it a Second Reading It has practically been agreed to by all the local authorities in London I beg to move

Moved, 'That the Bill be now read 2a —( The Earl of Onslow)

My Lords, unfortunately I was not able to be in the House when the noble Earl began his speech, and I merely desire to ask one or two questions of him as to what has actuated the Ministry of Health in the precise form which this Bill for the relief of the poorer boroughs in London and the poorer Unions has taken. It was, as I understand, the fixed policy of the Local Government Board that the Metropolitan Common Poor Fund should in no circumstances become responsible for outdoor relief. There was an Inquiry conducted by a Royal Commission on the Poor Law and Relief of Distress in which important evidence was given by Sir Hugh Owen, who at that time was the permanent Secretary of the Department now represented by the Ministry of Health. In the course of that Inquiry, Sir Hugh Owen was asked whether there had been any proposal to put outdoor relief on the Metropolitan Common Poor Fund, and he explained in great detail— I will not trouble your Lordships with the whole of it— why such a course was, in the opinion of the Local Government Board, an impossible one to take. He prepared a table which was afterwards circulated as a White Paper, explaining what the effect would be upon the different unions in London, and the general trend of his evidence was that to place the whole of a charge of this kind upon the Metropolitan Common Poor Fund would mean that there would be no incentive whatever to economy on the part of the poorer districts in the expenditure of the money by the granting of outdoor relief.

At that time the figures were these. If the charge were equalised, Poplar, which had to raise £ 34,000 a year for outdoor relief, would have to raise only £5,200, or, to put it in another way, out of every £500 spent by Poplar in outdoor relief £490 would be found by the Metropolis at large. The point 1 wish to impress upon the noble Earl is that it is not only a question of hitting the wealthy unions, such as Westminster and Kensington, but the tendency of putting the whole of the charge upon the Metropolitan Common Poor Fund would also be to hit sonic of the poorer districts, if they are in fact carefully administered at this time. Sir Hugh Owen mentioned St. George's-in-the-East and Whitechapel, both of which, having been very strictly administered unions, would have to pay a considerable amount— up to £12,700 in the case of Whitechapel— as part of the contribution of £29,000 to Poplar. I have been lately reminded of what would happen at Fulham, which is not a specially wealthy district. The proposals in the Bill would mean, I suppose, a cost to Fulham of £10,000 or £12,000 a year on the rates as an extra contribution.

The question, therefore, I really wish to ask the noble Earl is what it is that has actuated the Ministry of Health in placing the whole charge, rather than one-half or some other fraction of it, upon the Metropolitan Common Poor Fund? What is the purpose of not leaving a certain proportion to be treated under the system of the equalisation of rates? It is not, I take it, either out of consideration for, or in order to inflict damage upon, the wealthier parts of London. They have recognised, fully recognised, that in a crisis of this kind they are bound to make a substantial contribution, but they desire, of course, that the money should be equitably spent; that there should not be anything like an indiscriminate system of poor relief in those unions where discrimination has not been very carefully exercised in the past; and they are quite unable to understand, as I am told, why it is that the other system—that is to say, dividing the charge between the two different methods of raising money either through the rates directly or from the Common Poor Fund— has not been adopted by His Majesty's Government. That is really the only question I desire to ask the noble Earl. It is possible, of course, that other speakers may take part in the debate, and if the noble Earl replies I dare say he will be good enough to explain these matters.

My Lords, I should like to say a word or two upon this Bill because I called your Lordships' attention, at an earlier stage this year, to the enormous burden which not only lay upon the rates then but was constantly being placed upon them. I pointed out at that time that the income derived from the rates had risen to £ 200,000,000 a year, although only charged upon certain classes of property. At that time the representative of His Majesty's Government—I think it was the noble Viscount, Lord Peel—intimated that the whole question would be considered by the Government in order that these enormous charges might be disposed of on some more equitable basis. Of course, when we come to the question of "equitable basis" we open the whole discussion as between local and what are called Imperial charges; but that is a matter which must inevitably be undertaken.

Meanwhile, we are always having the excuse, if I may so put it (though I am not, of course, charging the noble Earl with it)—"Do not object to a further interference with the rating question"—which, in fact, is putting a further charge upon people who are now monstrously overcharged— "because we cannot deal with the general question." I suggest that that is a very bad argument indeed, and the further we go into this piecemeal legislation the more difficult it is to put the whole matter on a satisfactory basis.

May I call your Lordships' attention, for instance, to what I understand are the proposals in this particular Bill on the two material points? The first proposal, in reference to indoor relief, is to raise the limit from 5d. in the half-year to ls. 3d.; in other words, 1s. 8d. in the year. That is so, is it not? It is 2s 6das against 10d., that is a difference of 1s. 8d. Just think what that does straight off, without considering any other matter in the Bill at all. It practically does away with the advantages which have been given to Poplar, to take Poplar as an instance, under the other head. I do not know if the noble Earl can tell me— there are no figures as regards the point upon the White Paper—what is the actual increase which may be thrown upon any of these various boroughs as a result of increasing the power of rating for indoor relief purposes from 10d. to 2s. 6d. That seems to have been disregarded in supplying the figures, and the information certainly ought to have been supplied.

To any one who has not had a great experience of the rating question it is difficult to understand what the effect of this Bill will be. The noble Earl will correct me if I am under a misapprehension —I only saw the White Paper when I came into the House—but it appears to me to contain no reference whatever to any additional charges which might arise under subsection (1) of Section 1 of the Act. If I am wrong in that, the noble Earl will put me right. As regards the second question, the necessity of some relief to these poor boroughs may be conceded, but let us see what the nature of the, relief is. My mind goes back to a period now long ago, when a Royal Commission was considering this question. That Commission was presided over by the late Lord Balfour of Burleigh. There was considerable discussion before that Commission as to whether, amongst other matters, a proportion of the Poor Law expenses should not properly be charged on the Imperial or central fund.

If the noble Earl looks into the Report he will find that there was considerable discussion, but the discussion turned upon this point. Those who took one view said: "We do not want to disturb the principle which makes those who spend the money responsible for providing it." That, of course, is the real principle at the bottom of all local government in this country, and is the only theory on which you can, in any way, support the rating principles which have been adopted in this country. What you are doing here is absolutely contrary to a principle of that kind. You are placing an expenditure on people who are not responsible for the conditions under which that expenditure is made. You are putting on one district expenditure for outdoor relief given under the control of guardians for a different district. Therefore, what I want to point out, first of all, is that directly we come to this piece-meal legislation we find it founded on antagonism to every real rating principle, and not only that, but also to the very principle laid down by the Royal Commission to which I have referred, which thought that certain charges should still be left to the rates, apart from any further assistance from the central fund. That being so, I deeply regret, that these matters should be dealt with in this piece-meal way.

I want to ask the noble Earl a further question on the figures. Take, for instance, Whitechapel, which will be penalised by its rate being raised on this calculation by 4s 6d in the £ for the year. Can the noble Earl tell me what the total rate in White-chapel will be after this 4s 6d is added to the existing rate? You cannot, of course, estimate the expenditure of an additional burden unless you know what the rates are at the present time. Under this table ratepayers from one district, whose rates put together were only 8s, would possibly be receiving benefit; whereas another district, whose rates altogether might be as high as 10s, would be penalised, because you are dealing with one item only of the local expenditure. I cannot, therefore, accept the first table as really giving any true information as to what the effect of this rating Bill will be. I should like to know whether, in a district like White-chapel, which is not other than a poor district, the effect of adding the 4s 6d to the rate will not be to raise the total rate there above that in some of those other districts to which assistance will be given. I think the noble Earl understands my point.

With reference to this matter we also have to consider what is the true position of the ratepayers. This is one of those Bills which, because it is wrong in principle, can only be carried out in a very costly and inconvenient way. The noble Earl says that "starting front the wrong principle, it must have some special safeguards. It must have provisions for particular audits, and persons from central bodies must have the power of seeing what is being done." That sounds very well on paper, but it is the source riot only of an immense amount of expenditure in modern times, by increasing seine of our official bodies to an undue size, but also of friction if you want to have true local administration.

I regard our local administration as one of the finest developments in the world's history as regards a system of local government, but if, in order to use it wrongly, you have to introduce an enormous amount of what I call rather obstructive intervention from outside, your central authorities may counteract the main principle on which the whole superstructure is based. No doubt safeguards of this kind may be necessary—that is a Departmental matter — but I regard the fact that they have to be put into the Bill as, in itself, proof that the Bill is not founded on the right basis. It is, indeed, admittedly founded on the wrong basis, because you make one district responsible for what another district has done. That causes an upsetting of the primary principles of local administration.

As to the other matters in the Bill, after all they are rather like merely warding off the evil day. The noble Earl will recollect the Irishman who, every time he renewed his bill, thought that he had paid his debt. That is exactly what is being done here in what is called the extension of the loan principle. Instead of paying your way as you go on, you leave it to some future period, and at that future period there will probably be heavier liabilities on local authorities than there are at the present moment. I regard with great suspicion a proposal which says that instead of paying your way for the year you should be allowed to extend your expenditure into future years, which will have their own burdens to bear, and very likely heavier burdens than those which are imposed at the present time. It is very- important that we should consider these casual Bills in their true light, and that we should express the opinion that we hold that, although it may be inconvenient and troublesome to deal with the matter as a whole, still such legislation has long been overdue, and the longer you delay it, the more you will get conditions such as are exemplified in the present Bill.

My Lords, I think I can deal with the main questions put to me by the noble Marquess and the noble and learned Lord who has just sat down. As to the reasons why this particular course was followed rather than adopting the equalisation of rates, I endeavoured to explain them when I first addressed your Lordships, and the objections which I mentioned are these The richer boroughs objected most strongly to such a course, but the poorer boroughs showed that, even if you were to make a rate of 2s in the £ (which was a great deal more than has been contemplated in practice) it would nothing like meet the ease. They would not have been able to raise the necessary money to assist them out of their difficulties. Poplar, for instance, would receive only about £30,000, while in this Bill it receives £120,000.

Might I remind the noble Earl that the question I put to him was why the Department had not adopted both methods so as to give some inducement to the poorer boroughs who will receive the bulk of the money not to expend it extravagantly. There would be a certain degree of check upon them if they became liable to some increase of their own rates, although the Metropolitan Fund had contributed a considerable part of the money.

The noble Marquess really asks why both schemes were not adopted, or a part of both schemes. The answer to that is that the objections were so strong to the equalisation of rates scheme that it was thought better to adopt the second scheme— namely, the consolidation of outdoor relief. The equalisation rate is levied not on rateable value but upon a population basis; the other is levied on rateable value, and it is this rate which produces the sum necessary to deal with the state of affairs that has arisen.

The objection of Lord Parmoor is that this is piece-meal legislation. It is, of course, emergency legislation; it is part and parcel of the Government's scheme for dealing with the present state of unemployment. To introduce a comprehensive measure of Poor Law reform at the present moment would have taken so long that it is out of the question to suppose it could have had any bearing on the immediate necessity. The present solution of the problem is one which has found favour with all the boroughs concerned, both the poor and the richer boroughs. The proposal came from the town clerk of the borough of Westminster, one of the richest in London. It was adopted after careful consideration by both sides and has been accepted by the Government. The safeguards to which Lord Parmoor referred are not, I think, of such an expensive nature as he seemed to suppose. The general inspectors, district auditors and clerks to the Guardians, are the officials who will deal with the matter, and 1 doubt whether it will be as expensive as the noble Lord suggested.

With regard to the question of figures I should like to draw Lord Parmoor's attention to paragraph 6 of the White Paper which, if I understood him correctly, gives the answer, or part of the answer, to his question. It says—
"It appears from particulars furnished by the clerks to the several Boards of Guardians in London (i) that the additional 10d per day per poor person in respect of whom the 5d grant is now payable would have amounted to £ 202,000 in the past half year."
I think the noble and learned Lord also asked me for particulars of each borough.

What I really wanted to know was whether they had been taken into consideration in the estimate of the increases given lower down in the same White Paper.

I should like to make inquiries on that point. I cannot answer offhand but I will let my noble friend know at the next stage. He also spoke of handing over your debts to posterity. I should like to point out that the proposal of the Bill is that a borough might borrow money on overdraft for current expenses; that is to avoid having to raise a higher rate than is absolutely necessary. But the borough will have to balance its books at the end of the year. There are very heavy charges on local authorities at present, and in order to spread this charge out power is given in the Bill to enable money borrowed before April 1, 1923, to be spread over ten years. That period is a very outside estimate and it is hoped that the time over which this money will be spread will be much shorter than that.

I also asked the noble Lord whether he could give us the effect on total rates of the changes effected by the Bill?

I have not the figures with me, but I will make a note of the point and give the noble Lord the information at a later stage.

My Lords, the noble Earl has informed us that this is an emergency Bill. I do not know whether he used that phrase for the purpose of recommending it to our affections, but I should have thought that a more unpromising introduction could hardly be discovered to a Bill than to say it was an emergency measure. Nearly every emergency Bill has been introduced in haste and many of them repented of at leisure. I do not rise for the purpose of commenting upon that peculiarity of the Bill, however, but for another and different reason. The real defect in the Bill is that the central authority which will administer the Poor Law Fund is really inadequate to the task You have not got a. representative body at all; neither have you got effective control over the monies that will be raised in one parish for the purpose of redeeming the distress in another.

It seems impossible to find out, even from the White Paper, the extent of this relief, and it would have been better if the House had been informed what a penny rate would have produced in the City of London, in Westminster, Hampstead, and the other boroughs mentioned, as it would have enabled us to know the actual contribution from each of these boroughs to the central fund. I think the actual contribution made, by the City of London will be very large, for a penny rate there is highly productive. Until this information is given one cannot tell the extent to which these boroughs are being called upon to make a sacrifice for purposes for which everybody recognises a. sacrifice has to be made.

I should also like to have seen a statement as to what the existing rates are in order to see how far there was equalisation when this further proposal had been introduced. But the real comment I wish to make is that the authority which is provided for the allocation of monies under the Bill is inadequate, and I hope that some noble Lord will see his way to introduce an Amendment in Committee which will afford a more perfect protection for the administration of the fund.

On Question, Bill read 2a , and committed to a Committee of the Whole House.