We are now asked to agree with the Committee in the Financial Resolution which we have had before us on a previous occasion, and it is to be read in conjunction with the Local Government Bill which is under discussion in the Committee. Although this Financial Resolution is in itself in vague terms, the Bill to which it refers is marked by very great rigidity. The de-rating scheme which is the piece de resistance of the Bill is not in any way a temporary proposal, but is designed to be permanent in character. Not only is de-rating designed to be permanent, but the distribution of the money given out of the Exchequer is to be distributed under a system which is essentially rigid in its character. The amount to be given to the counties and county boroughs is rigid, and the amount that has to be given to the lesser areas is also rigidly defined, both of them by the formulas in the Bill. Although this Financial Resolution is so far vague as to relate only to the amount of the Exchequer contribution, not as given in the terms in the Bill but to the terms as they may be decided when the Bill becomes an Act, nevertheless, in view of the Government majority, it is exceedingly probable that the actual terms in the Bill will be the terms to which we are asked to give our consent. Not only is the amount of the Exchequer contribution rigidly fixed, not only is the formula rigidly fixed, but so far as any additional money may be concerned that is also determined for a period of five years. In the first place it is to be fixed on an exact amount for the first quinquennium, and in subsequent quinquennia it is proposed to pin it down to an unalterable sum during the five years.

The only temporary features are the alleviations. If I may give an illustration, I would say that the Minister of Health and the Parliamentary Secretary are engaged in picking up the existing roadway of our local government administration and our local government finance. They pick it up and they attempt to lay down a hard material for a new roadway. Then in order to make it a little more acceptable to the traffic they throw a certain amount of gravel over it in the shape of various additional Exchequer contributions, and then they throw over that a little sand on the top. Although it may be quite true that that process will make the position acceptable for a temporary period, what we in this House have to consider is whether the permanent structure of the roadway as now proposed is going to be adequate in the future. After the rain has come and the gravel and sand in the roadway have been washed through, we have to ask whether the underlying structure of the roadway laid clown by the Minister of Health and the Parliamentary Secretary is a good solid reliable and level foundation which will carry the traffic, not merely for this year and next year, but for a considerable number of years until the proper time arrives to again review our local government system and our local government finance.

I am inclined to think that the sand thrown over the roadway will turn out to be more like dust intended to be thrown in the eyes of the public of this country. If the general public were left to themselves to analyse these proposals, I think it is quite likely that the methods adopted by the Government to calm the public apprehension might be successful. But fortunately that is not the case, because there is, between the Government and the general public, a number of thoroughly well informed people. All the local authorities have auditors, surveyors and treasurers and those people are quite capable of analysing the exact effect of these proposals, and with no uncertain voice, up and down the country, in county councils and in county boroughs and the smaller areas which are parts of the county council areas, they have declared emphatically that these proposals are thoroughly unsatisfactory, not because of the temporary alleviations which may smooth over the difficulties for a time, but because of the permanent features which, when the temporary gravel and sand have been washed through, will come up as inequalities and afford a bumpy passage to any further attempts to drive over the imperfect local government road which has been laid down.

Furthermore, there are the irregularities produced by the quinquennial periods. in my speech on the Second Beading of the Bill, I demonstrated that, so far as the matter of unemployment was concerned, it was entirely unsuitable to determine the amount of grant that an area should receive, not by the unemployment existing at the time, but by the amount of unemployment at a period that might be as mach as six or seven years antecedent to the date when the grant was actually being given. But, quite irrespective of that, there is the grave disadvantage to local authorities of having a fixed grant for a period of five years. We have been accustomed in the past to see the expenditure of the local authorities gradually and continuously increasing year by year to meet the requirements of the case.

Of course, in certain circumstances, the assessable value of the rates in the locality may be increasing at the same time, but, equally, in certain circumstances the expenditure may be increasing and the actual assessable value may not be increasing very much. Under this new scheme, neither will the Treasury grant go up year by year as the expenditure goes up, nor will the assessable area for the rates go up in certain circumstances, because of the de-rating proposals. Therefore, the position will be this. For each period of five years, assuming a steady growth in the requirements of the locality, an amount which, if it be adequate at the beginning of the five years, will be totally inadequate at the end of the five years. The Exchequer grants will be fixed for the whole period, and the localities will be compelled to provide, out of a limited field of rates, for an expenditure that may be continuously rising in each year all the time.

Then you come to the next period of five years, and, if it were possible that the amount received in the fifth year of the preceding quinquennium was adequate, it may be found that the amount received in the first year of the following quinquennium would be too much. It would mean a tremendous drop in the rates, and the effect of this Bill in its various forms, therefore, under steadily growing expenditure in a given locality, will be that the rates will be at a certain amount in the first year, they will go rapidly up during each of the five years; then, in the sixth year, when the next quinquennium begins, they will show a sudden drop, and then they will go up and up again during the next quinquennium. That will be true for each quinquennium under this plan. That is a thoroughly unsatisfactory arrangement, and I cannot see any advantage in the way in which the local government machinery will jolt, as it must do, under this Bill. What we want is continuity—continuity of development, steady, continuous progress. This Bill will give us nothing of the kind.

In addition to that, this quinquennial system will tend to put a drag on the coach of local government advance, and for this reason. This threat that, if the expenditure goes up gradually, the whole of it will have to be borne on the limited area of assessable value, will tend to make the local authorities very cautious in their advance, and it will, therefore, tend to keep down their spending in the later years of the quinquennium. Here comes in the subtlety of this Government proposal, because the amount that the national Exchequer is to provide in the second quinquennium is to relate to the total expenditure in the fourth year of a quinquennial period. I have just shown that the tendency of this Bill will be to force the local authorities to keep down and limit their expenditure in the later years of the preceding quinquennium, and, therefore, the result will he, not merely to handicap them in one quinquennium, but to handicap them in successive quinquennia, owing to the peculiar way in which this Bill is devised. These criticisms relate to the jolting and the rigidity for periods of five years which is one of the features of the financial scheme of this Bill and of this financial proposal.

Now let me turn to the larger issue, the rigidity which is involved in the whole system of permanently fixing the amount that is to take the place of the de-rating. How can the local government and the whole rating system of this country go on when so large an area is taken out of the field of contribution to rates? That is really the vital issue. Had the Government said, as my hon. Friend the Member for East Ham North (Miss Lawrence) has so frequently pointed out—had the Government said, "What you lose to-day in rates we will repay to-day; what you may lose next year in rates we will repay next year; what you are going to lose 20 years hence we will repay 20 years hence"—[Interruption]. Hon. Gentlemen may laugh, but that is the whole essence of the matter. If the essence of this scheme were to repay to local authorities, not only what they are losing at the present time, but in each year what they will lose under this de-rating scheme, there would be some sense in it, but this scheme does nothing of the kind.

This scheme says the Government will repay to the local authorities next year, 10 years hence, 20 years hence, 50 years hence, not what they will be losing from time to time, but what they are losing in this particular year in which we are living to-day. That is a most dangerous proposal, which in my opinion must destroy the whole rating system of this country. We have seen in the last few years the great difficulty in which local authorities have been placed in regard to meeting their current needs, owing to the limited nature of property subjected to rates. Instead of being based on a true ability to pay, rates are based solely upon the landed and house property in the localities. But that has, at least, covered the whole field. It has covered the dwelling houses, it has covered the shops, it has covered the industries, and to a certain extent it has covered the agricultural holdings. Now the Minister comes along and gives away a very considerable part of this field, and the question which we on these benches deem to be very urgent is whether the remainder of the field is large enough to carry the whole structure of local government. For my own part, I do not believe that it can possibly be big enough.

The expenditure of local bodies has increased during recent years. Hon. Members on the other side of the House are sometimes apt to gibe at that, and to represent it as an extravagance on the part of local authorities. I do not think that that is the case at all. Not only has Parliament in many instances definitely thrown additional burdens on the Localities, and compelled them to meet them, but the good sense of the community has demanded from local authorities health and other services which make it incumbent upon them to spend more money than they spent before. Where a locality is growing owing to increased industries, the needs of the locality for additional houses, additional education, additional health services, all grow concurrently. Now comes the Minister and cuts off part of the funds of the local authority at their source, and he only pays back to it a rigid fixed amount. It cannot stop there. I believe that the Minister will find as years go by—[Interruption]—he may be here in Opposition if he is not here in office—that the local authorities cannot meet their obligations in this new form. The whole structure of local government is one. The Minister, in taking out one of the essential bricks and not replacing it adequately, is taking the first step towards pulling the whole structure to the ground.

If this were a temporary measure, that is to say a temporary de-rating of industries due to a particular depression at present, there might be something to be said for this proposal, but it does not profess to be temporary. It professes to be permanent, and no future Government, as I see it, can possibly put back the rating of industries to what it was before or restore the rating of agricultural land. As we cannot go back we shall have to go forward. I do not believe for a moment that you can throw on to the shopkeepers and householders the whole burden of local government in the future and the whole increase of the services of local government, as this Bill really in effect would do. If that is the case you will have to go forward and reduce the burden which the shopkeepers and householders will have to bear in the future. Gradually that process will undermine the whole structure of local government finance as we understand it at present.

It may be a good thing that we should transfer the burden of running the institutions of the country from the persons who have borne it hitherto in rates to the general taxpayer. In some ways, un- doubtedly, that would be an advantage. The back of the taxpayer is broader and the taxes are raised more in accordance with ability to pay. In this change I think it will be the rentier who will bear the larger share, rather than the active producer. That is not in the Bill, but it may be a consequence of the Bill. Whether it be good or ill that we should destroy the rating system and transfer the burden to the general taxpayer, I hope Members on both sides of the House, and particularly on the opposite side, will be under no illusion as to what they are doing. The Government are taking the first step in the destruction of our whole system of local government finance and, by taking that step, they are bringing about a revolution far greater than they or their supporters realise, a revolution which will not end until a completely different method of financing the local requirements of the country comes into being from that which we have at present.

I was very interested in the speech of the hon. Member who has just sat down. He began by describing a road which has been hauled up and talked about gravel, dust and rubbish generally, and the impression left upon my mind is that his speech was so obscured with rubbish of various sorts that I really do not know what he was driving at. In one sentence he rather approved of the Bill and in another he condemned it. I absolutely deny that it is not received with favour by local authorities throughout the country. I have spoken on it outside the House as much, I suppose, as any other Member, and while it is true that there are certain things in it which various local authorities would like to see altered, nevertheless representatives who have come to see me as a Member of Parliament have all admitted that on broad, general principles they approve of the Bill.

After having listened to the debate for many days, I would congratulate the Parliamentary Secretary on the fact that he has nothing to answer except trivial objections. The Bill does something that every party has asked should be clone for a long time. It has separated rates into two broad principles. It places in the hands of county councils the maintenance of those services which concern the county as a whole—Poor Law and Highways— and it leaves to the local authorities their own domestic concerns. That is a demand that has never been met before, and it meets with the general approval of the country. Naturally there are people who have objections to the Bill, because you cannot make an omelette without breaking eggs. Some people will find their functions very much curtailed, and none of us like having our authority diminished. But these are small matters when we look at the thing as a whole and consider the needs of the country.

We must not speak on the merits of the Bill itself, but must confine ourselves to the Money Resolution.

I only wanted to say that the Bill was received favourably by the country, and that local authorities are not in opposition to it.

In Committee on the Resolution I raised the question of the position of education authorities with regard to finance, and stated that they regard the situation with a great deal of fear and suspicion, and that, in spite of the fact that it had been repeatedly stated that education was outside the purview of the Bill and of the financial arrangements, that was altogether a wrong idea. The President of the Board of Education replied that my fears were entirely imaginary. Since then the official organ of the education authorities, representing all the education authorities in the country, has been published, and I find it stated in a leading article that the President's reply to me certainly aroused suspicion in the hearts of local education authorities. I am wondering whether we shall have a reply from the Under-Secretary for Health which will reassure us. First of all, is the principle of a fixed block grant going to remain where it is? Are we going to have this very same principle applied in the immediate future to the education service? The education authorities are very much disturbed about a number of other things. The first is this. Will the financial position of the Bill destroy the Part III authorities up and down the country We have two major sets of education authorities, one responsible for both elementary and secondary education, and the Part III authorities, responsible in the main for elementary.

I believe that practically all these Part III authorities will be subject to the flat rate distribution of the money provided under the financial Resolution; that is, they will be subject to the 150 pence provision. Batley, Shipley, and a number of other authorities are responsible for elementary education, and, according to the White Paper, they do not gain a single penny under the financial provisions of the Bill. What does it mean? It means that the education service in the future will have to be financed on a restricted rate-able area and that will inevitably mean, with the industries de-rated, a rapid increase in the rates in those areas. Therefore, it is clear that lurking behind the financial provisions of this Resolution is the intention and the deliberate policy to kill the Part III authorities up and down this country. Even those authorities which gain, I find gain less than the other authorities. Take the ease of Mon-mouthshire. If the Part III authorities there are examined, we find that places like Abertillery and Ebbw Vale responsible for education gain less under the provisions of this Bill than the other areas which are not responsible for education.

Therefore, one of the very clear effects of these financial provisions as far as Part III authorities are concerned is that they will be unable to carry out their education service without a tremendous increase in the rates of those particular areas. For my own part, I think that this is a retrograde policy. Most of these Part III authorities, urban districts, which are so adversely affected by the financial Resolution that we are going to pass to-day are progressive authorities. Most of them have made the pace for the other areas, and we ought to know, the Government ought to be frank enough to, tell us to-day, whether it is their deliberate intention, as I believe it is, to kill these Part III authorities and throw the burden of taxation upon the wider county areas, as they are doing with the other services under this Bill. The education authorities will not be satisfied I can assure the right hon. Gentleman until we have a clear and distinct reply to that question.

I want to ask the Parliamentary Secretary this question. At present, the areas which cannot maintain fully and independently their secondary education service have a legal power to aid secondary education. They can give in aid the value of a 1d. rate. Obviously, with the de-rating proposals of the Government, the value of that 1d. rate would be reduced, and they will not have as much money out of a ld. rate to aid secondary education. I want to ask what provisions have been made in order to make up the loss which these authorities will suffer by the de-rating proposals in that respect. As a matter of fact, the more this is examined in relation to the education grants—and you cannot separate them—the more it becomes abundantly clear that the whole substantive grants which now finance education, the necessitous area grant, the grant-in-aid to secondary education, all these, will have to undergo drastic and revolutionary revision. I say that it is not fair to the local education authorities up and down the country. It is not fair to the teachers whose scales of salaries depend upon this arrangement. It is not fair to the local authorities whose three-year programme of education is entirely dependent upon this financial arrangement to ask them, under the guise of this financial Resolution and the provisions of this Bill, to take a leap in the dark.

We want to know what the Government are doing in order to maintain the money income of those authorities so that they may be able to go on with their education services. Quite clearly, if education expands, if it becomes more effective, if it progresses, then every step in that progress will have to be borne permanently in part of the areas by the ratepayers and largely by the ratepayers in all the other areas to which even the formula applies. Because, after all, what has happened in this formula? The Government have taken £24,000,000 from the rates. That £24,000,000 was surely an expanding factor, a variable factor, and they have turned that £24,000,000 into a fixed invariable factor which will no longer expand. What else have they done? They have turned the present grant of about £16,000,000, of which, on the average, £6,000,000 is an expanding factor, into a fixed grant and a non-expanding factor. Here we have a sum of about £30,000,000 which is now an expanding factor turned into a non-expanding factor. Then they come along and say: "Look, here is £5,000,000 for you, new money." It has been shown quite clearly in this House that this is not new money.

Let us examine this a little further. We have never had a reply to this question. I do not know whether it is too difficult for us to be able to get a clear exposition from the Front Bench. In the second quinquennium, according to the illustration in the Financial Memorandum, that £5,000,000 will expand. It is estimated at the outset of the scheme the total cost will be £180,000,000. Supposing, says the financial Memorandum, that in the first quinquennium there is an expansion to £188,000,000, that is, an addition of £8,000,000 expenditure, then this scheme comes along and says: "We will give a quarter of that £8,000,000 for the second quinquennium." It is quite clear that that increase of grant in the second quinquerium, if there is to be any increase at all, must depend upon a previous increase in rate expenditure. The rates must rise before they can attract any new expenditure for the second quinquennium. That is the variable magnetic factor. Why have the Government done it? Because they have greater hopes for reaction from an increase of rates than even from an increase of education. Reaction can he put into operation in the local authorities on the basis of an increase of rates. To tell us that this will not adversely affect education is trying to befool the country.

The fact of the matter is—and I am quite sure that my words will be echoed throughout the education world, and that is why I have got up—that we as educationists have to be alive to the interests of education. The education authorities, according to this leading article, are going to approach the Government. They are perturbed enough for that. I hope this morning that the Parliamentary Secretary, who is going to reply, will deal specifically with the whole of the points relating to education. Are we going to have block grants? What is going to become of the Part III authorities? Is there going to be a lessening of the efficiency grant as far as education is concerned? Are the Government determined to stifle the Part III authorities by financial stringency? These are some of the questions which educationists want answered, and want answered before this Bill leaves the present House of Commons.

I do not intend to try and follow the somewhat curious picture drawn by the hon. Member for Leicester West (Mr. PethickLawrence). He first of all indicated that the Minister of Health was engaged in scattering dust, and in the next minute that he was pulling out bricks from some fanciful building. The right hon. Gentleman is blessed with a fair share of capacity and energy, but I do not think he is really a person who is likely to indulge in these two kinds of work at one and the same moment. My object in speaking this afternoon is to refer to the quinquennial period. I suggest that there is a great deal more support for the Bill in the country than is indicated by the views of the Opposition, and I believe it is likely to effect a tremendous amount of good in the future. A great number of readjustments will have to be made in the financial position of various local authorities. When you consider the enormous differences there are in the position of various local authorities, some growing at a great rate, others practically stationary, some with an enormous number of people out of work, others again on a basis of comparative prosperity and even great prosperity, and when you go further and look into the position of the smaller local authorities which are not dealt with under the Bill, authorities which are not county councils or county borough councils—the rural and urban districts some of which have very heavy commitments of their own—which cannot possibly be dealt with at the present time under this Bill, it is obvious that many financial readjustments will have to be made.

Let me give one or two illustrations. Take a health resort, where the factor population is comparatively low but where they have to provide for all sorts of expenditure, for drainage and water and many other things which must inevitably come on the rates, for a population out of all proportion to the first figure in the formula. In those circumstances I say that during the next five years it is likely that there will appear a great number of discrepancies, minor discrepancies possibly, but discrepancies which the Minister himself has described, and which with his natural fairness he would be the first to endeavour to put right. Let me make a humble suggestion on this point. The right hon. Gentleman during the whole of these debates—and the Parliamentary Secretary too—has shown himself quite willing to realise the fact that in a Measure like this there must be a certain amount of give and take; that it cannot be considered as a rigid Bill which is never to be changed. The right hon. Gentleman has been accused of acting wrongly because he has accepted Amendments which will have the effect of improving the Bill; but he has proved himself willing to do so, and I think it would be well, considering the extraordinary differences in the position of local authorities, to have some preliminary period, say of three years, in order to see how actually the financial position is going to work out. Some hon. Member may say, "Think of the uncertainty." I am prepared to risk the uncertainty. I think the Minister would be wise to arrange the position in such a way that it will be possible to consider the financial position during the first three years of its operation, so that if it is necessary it may be altered and varied as occasion demands. That is a view which I think is widely held by many people who are strong supporters of the Measure, and it is a suggestion which, I think, might be considered by the right hon. Gentleman and his Department with advantage and in the interests of the Bill as a whole.

The hon. and gallant Member for Torquay (Commander Williams) may rest perfectly happy. This Bill will be considered long before the first quinquennium is over and he will have an opportunity of putting to the House in more detail the particular points he wishes to raise. I want to return to the major question before the House; that is the calculation of the total to he paid to local authorities. I do so for two reasons: first, because it is the major question and many local authorities have written to me about it, and, secondly, for subsidiary personal reasons. This is the point on which the Minister of Health and I did riot see eye to eye. I want to go into the remarks of the right hon. Gentleman in his speech in reply to the Second Reading Debate; remarks to which I have long desired an opportunity to reply. I will come to that later. Local authorities are concerned mainly with one thing, and that is the amount of the total which is to be repaid. It is very natural that they should be nervous; there are a good many reasons why they should be nervous. The first is that the Government are changing the system to which they are well accustomed. The history of local government is strewn with the pledges which Parliament has made to local authorities and broken. We are dealing now with the remnant of the Assigned Revenues. The Chancellor of the Exchequer allocated expanding revenues to meet expanding services; and both expanded according to plan. A hungry Chancellor of the Exchequer took away the expanding revenues and left the expanding services to local authorities. It took a Thirty Years' War between local authorities and the Treasury to get an increase in grants to correspond with that loss.

Then there was the Road Fund, which repeats exactly the story of the assigned revenues—a particular tax allocated to a particular service, just like the unfortunate proposal of Mr. Goschen and the Assigned Revenues. The services expanding, the revenues expanding; a Chancellor in difficulties confiscating the expanding revenues. In this Bill we have a breach of a bargain with local authorities carried out as late as 1923. When a quarter of the land was de-rated Parliament promised to ascertain the loss year by year and repay local authorities. The Act of 1923 was quite incorrectly described by the Parliamentary Secretary as a temporary Measure. It is not a temporary Act; it does not appear in the Expiring Laws Continuance Act. It is permanent; and that is proved by the fact that it is necessary to repeal it. A temporary Act means an Act passed for a definite time; this is permanent. It is not surprising, as I have said, that local authorities should be nervous when they have this history before them and when they have also the frightful fact that because the loss under the Act of 1906 was compensated by a fixed grant of £1,300,000 they had to find £5,000,000 more per year.

Those are all things which naturally make the local authorities examine very carefully the terms of Parliamentary Bills. The upper limit is to be whatever Parliament likes, according to the Financial Memorandum. The lower limit is determined by a pure expenditure factor on a rather complicated basis. That is where I got into some regrettable controversy with the Minister of Health. It is very regrettable when two people do not agree on the meaning of a page of plain print. I said two things: First of all, that the first Exchequer grant depended on the contributions in the fourth year; that subsequent Exchequer grants depended in their turn on the rate-borne expenditure of the fourth year or the previous quinquennium. Then I said that the table presupposes a smooth rise in rates during the period, and I gave that amount as £2,000,000 and was grossly wrong. Anyone who looks at the table can see that a much larger rise in rates is contemplated; the Minister was perfectly right in pointing it out, and I acknowledge my mistake at once.

I began by saying that the Exchequer grant depended on the rate-borne contribution of the fourth year. I said, that is, that the value of a simple equation with one unknown depended on the value of that unknown. The Minister said No, it also depended on the value of the known terms. In the general public platform sense of the word "depends" you cannot say that the Minister was wrong, but if you want technically, strictly and accurately to explain the relation between an expression containing one unknown and the value of that unknown, you can only say that "it depends" on the unknown or is determined by that unknown. Take an example. If the rates did not rise at all in the fourth year, according to the table we should be back on the minimum General Exchequer contribution. If the rates are higher than in the table the minimum General Exchequer contribution would be higher. It will not be equal to the rise or proportional to the rise, but it will depend on the rates.

Now I come to the point where the Minister said that what I last said was funny, but not true. What I said was that the rate-borne expenditure of 1945 would depend upon the Exchequer grant of 1945, would depend upon the rate-borne expenditure of 1944, 1939 and 1935; that is on the fourth year, the ninth year and the 14th year of the scheme, and so on. For the curiosity of this formula has escaped the Minister's notice, and it is just this: That the amount of the first Exchequer grant, as the years go on, becomes very steeply more negligible, and the whole thing ultimately is a pure expenditure basis on a rather complicated formula. Let me give an example. Take the ratio a fourth, as given in the table, that is suppose the grant-borne expenditure to be initially £135,000,000. Let us suppose that by the ninth year the rates have gone up sixteen millions, so that the total rate-borne expenditure in the ninth year is £151,000,000. What will the third general Exchequer contribution be?

12 n.

That will depend not only on the height of the rates in the ninth year, but upon the path that the rates took to arrive at that amount. If the rates jump the authorities will get a great deal less than if the rates rise smoothly. Suppose that the rates did not rise till after the fourth year, and that after the second quinquennium had begun they made a jump of £16,000,000. If they did not rise in the fourth year the general Exchequer contribution would be £45,000,000 and not £47,000,000. You would, therefore, get in the third year a quarter of of £151,000,000; plus a quarter of £405,000,000; that is you get £49,000,000. Suppose that the rate jump was smoothly divided. Suppose that you add £8,000,000 in the fourth year and another £8,000,000 in the ninth year. Your second general Exchequer contribution in that event would be £47,000,000, as in the table, and what you would get in the third general Exchequer contribution would be a quarter of £151,000,000, plus a quarter of £47,000,000 that is £49,500,000. [HON. MEMBERS: "Hear, hear!"]. I have done that sum. I know that I ought to ask for the patience of the House. I have been so emphatically contradicted by the Minister that I want to put this matter into plain figures in the OFFICIAL REPORT. It is true that if you assume an increase in rates of £16,000,000 in the ninth year, you get £500,000 more or less according to whether the whole rate increase took place in the second quinquennium, or whether it went smoothly up with an equal rise in the critical year of each quinquennium. This may not be in practice at all a negligible figure.

If we look at the course of rates during the past two quinquennia we can see how enormously important to local authorities would be the year on which you pitch as the critical year. We have seen rates,£121,000,000, £170,000,000, £141,000,000, back again to £148,000,000. These enormous sums have varied very steeply during the past ten years, and nobody can think that we have reached stability in rates. If good trade comes back there will be two enormous disturbing factors. Good trade will mean less unemployment, a decrease in rates; good trade will almost certainly mean dear money, high prices and the increase of rates. It is absolutely uncertain what effect these two causes will have, whether they will operate simultaneously, or whether, as in the years since 1927, we shall see their full effects showing one after the other.

Then I come back to the pant, which the Minister thought particularly funny. The second general minimum Exchequer contribution is a quarter of the first, plus a quarter of the rate-borne expenditure of the fourth year. The third general Exchequer contribution is one quarter of the rates contribution of the ninth year, plus a quarter of the second general Exchequer contribution; that is to say, it is a quarter of the rate-borne expenditure of the ninth year, and one-sixteenth of the rate-borne expenditure of the fourth year plus a sixteenth of the first general Exchequer contribution. If I had a blackboard—and any other audience would demand a blackboard, especially if they had to pass a competitive examination in this thing, as my present audience will have to do before long—if we were in Committee, and I had a blackboard and bit of chalk, I could work the thing out showing the successive general Exchequer contributions in terms of the first general Exchequer contribution, and the rates in all the previous critical years; diminish- ing in effect in geometrical progression. I could then show how you have a quarter of the rates of the five years previously, and one-sixteenth of the rates of nine years previously, and one-sixty-fourth of the rate of 14 years previously, and so on right to the end.

Would the hon. Lady do so in a Committee room upstairs?

I know it is intolerable to talk in this way in the House of Commons about the intricacies of this formula. It is an unbearable thing to do. This is not a suitable place for it, I agree. We ought to be upstairs. But, after all, we are dealing with enormous sums of money, and the real grievance is that enormous sums of public money are being distributed on a plan which is very difficult indeed to understand. Even if it were a good plan, that would be a very great objection to it; but it is not a good plan, and it is difficult, to show that it is not a good plan without going into details like this at which naturally the House is impatient.

It is necessary however that I should do it in order to show that while the Minister remarked that what I said previously was funny but not true, it is, on the contrary, true but not in the least funny. It is only funny to the kind of mind which thinks a practical joke is funny. It is in the nature of a booby trap or a butter-slide for the local authorities, and there are misguided people who can laugh when they see misfortunes of that sort occurring to others. But anybody can see that the only factor taken into consideration in determining the total is expenditure.

In the formula of distribution there is only the one factor which varies and that is the expenditure. In the formula there are four variables. Here is only one. The grant is calculated on total expenditure. Now there are two sorts of losses to be made up. You may say that you are compensating for the loss an proportional expenditure on certain services by repaying on a basis of expenditure over all services. There is a great deal to he said against such a substitution, but at any rate here you are relating like things to like. You are relating gross expenditure on all services and proportional expendi- ture on particular services, and that is an arguable matter. But what on earth relates loss in rate-able value to expenditure? Nothing in the wide world. You have cases, if you take the districts just outside the City of London, where rate-able value is jumping up, and where expenditure is going down, because you are turning working class dwellings into great commercial buildings. You can go out of London on the Great Western Railway, and see districts where expenditure and rate-able value are going up together. You can go out and see there great lines of factories, and see the houses attracted towards them in districts like Southall and Hayes. You see a jump in rate-able value first, and a jump in expenditure next.

Then if you take all the districts North of the imaginary line drawn once by the Chancellor of the Exchequer to separate the prosperous from the unprosperous districts, What are you doing there? You are compensating for loss of rate-able value at a time when the rate-able value is at the very bottom figure. We have heard about Middlesbrough, that the assessment committee there have cut down the assessment values of manufacturers. Right or wrong, why did the assessment committee do so? They did it on the manufacturers' plea of poverty—the plea that they were doing such bad business that their property was worth little. If Middlesbrough were prosperous again the assessment committee would put up these low assessments. You can see the same thing in the colliery districts and in the iron and steel districts. You can see it in every distressed district. Either people have put themselves out of account altogether like the collieries by closing down, or the assessment committees have lowered assessments in pity for the poverty and unhappiness of the manufacturers. But you are taking this assessable value at the very bottom figure, and you are taking an expenditure which is swollen artificially by the present demands upon it. Is that fair to the local authorities? If prosperity returns, it is undeniable that the loss owing to de-rating will be very great, because you are de-rating at the bottom value, and when the value rises, they will lose heavily. If you de-rate for a fixed sum at the very bottom value it is quite clear that they will lose heavily, and it is absolutely uncertain and fan- tastic to say that rate-able value and total rate-borne expenditure are related in any except the most remote way.

I spoke of the terrific rate jumps and fluctuations of the past 10 years. Why did we go from about £120,000,000 to £170,000,000? Because of the fall in the value of money. Why did we come down to £141,000,000? Because of the rise in the value of money. Why did we go up to £148,000,000? Mainly on account of bad trade and unemployment—things which have only a remote connection with rate-able value. And then you ask for £24,000,000, and the future loss on that might be in proportion as the loss of £5,000,000 of income on the agricultural land de-rated in 1896 was to the £133,000,000 then given. You ask the local authorities to accept a fantastic expenditure basis. Remember that this is not the only loss which applies to local authorities. There are other things which will have to be put against the £5,000,000 of new money. What about compensation for the de-rating of machinery under the 1925 Act? There you have de-rating without a shadow of compensation at all. People tell us that industry is relieved by the de-rating of machinery. I am glad of anything that can relieve industry, but who bears the burden? There you have relief of industry spread over the local rates.

Then there is the Road Fund, but I will not talk too much about the Road Fund, because it is a sore subject and I do not want to repeat what other people have said. But only yesterday the Minister of Health put a new burden on the rates. He took away a great part of the housing subsidy, and if local authorities go on with housing they will have to put on the rates a stun corresponding to the loss of subsidy. I am not going to deal with the fantastic idea of the Minister of Health that the change in the prices of houses in 1919, 1921, and 1923 were due to taking off the subsidy. I have said that the major deficiency in this de-rating scheme is that the greater part of the future loss to local authorities in de-rating is supposed to be compensated by a formula related to their expenditure. That is a fundamental error. But, Mr. Speaker, there is one little joke which I want to share with you. We have seen a great many Financial Resolu- tions, and Financial Resolutions are usually things which limit expenditure. We now have quite a joyful thing, namely, a Financial Resolution which is in the nature of a blank cheque. Just look at it.

"That for the purposes of any Act of the present Session to amend the law …relating to …local Government."

we

"authorise the payment out of moneys provided by Parliament of such grants and other expenses so …that the amount of the General Exchequer Contribution,…shall not in respect of any year exceed the sum of the following amount.

(a) an amount equal to the total losses on account of rates of all counties and county boroughs in England and Wales calculated in accordance with the said Act."

The said Act is now only a Bill. That is, the amount is calculated in accordance with a definition which does not exist yet,—a definition proposed in a Bill which may alter as it pleases. Supposing Parliament in its wisdom instead of adopting the method of calculation in the Bill were to insert the definition which is in the Agricultural Rates Grant Act, there is nothing to prevent Parliament doing so The Financial Resolution speaks of a sum according to the loss calculated by the provisions of something which Parliament has not yet settled. It is saying in effect to Parliament, "Put in whatever calculation of losses you like," and the Financial Resolution binds Parliament, and future Parliaments to foot that bill. Therefore, I think it will be impossible, when the Bill comes in, to have an Amendment which increases charges, for the Financial Resolution simply says we are to pass whatever money is necessitated by a definition which Parliament has not yet passed; and instead of binding us, this Financial Resolution is a charter of liberty, a blank cheque. Parliament cannot be bound by definitions which it has not yet passed. It has not yet passed the definition in the Bill, and when Parliament has passed it, all that the Resolution does is to bind Parliament to find the amount. I have been exploring the annals of the House, and I find that there was once a Financial Resolutions a little like this, but only a little. This, I think, is a record Financial Resolution, a joyful Financial Resolution.

I am sure no one will grudge the Hon. Lady the Member for East Ham North (Miss Lawrence) a single minute of the time which she has occupied, and I only rise, since she mentioned Middlesbrough, to emphasise the correctness and cogency of the point in which she took that town as an example. I am assuming that it was one of the objects of all this legislation to relieve the distressed areas of those burdens which they suffer in the matter of rates, simply because they are distressed areas, and that the object of this Financial Resolution, among other things, is to provide sums of money to make up the losses of rates in those areas; and I want to emphasise that in the spirit at any rate, this is not really being done at all and that we are not getting our total losses of rates made up. Just at the time of the election which enabled me to come to this House, an increase in Middlesbrough to the extent of 10d. was announced, and it was explained by two factors—first, that the policy of the Government in regard to tightening up unemployment benefit had increased the amount of expenditure by the guardians. and, secondly, because of the reduction in the assessments of certain very important industrial hereditaments. Those were the reasons for putting that increase upon the ratepayers in Middlesbrough, and I have no doubt that this process was not confined in any way to Middlesbrough. It must have been going on in many other parts of the country, in different proportions, and when this legislation comes along it is trying to impose a method of making up losses of rates upon a system of rating which was in a state of flux at the time. It was altering everywhere, and in altogether different ways in different parts of the country.

There is going to be a very great inequity in the application of this so-called compensation with regard to rates, and when it is applied to a town like Middlesbrough we are not going to have our losses made up. Already where assessments have gone down in some places to about a third of their previous figure, only three-quarters of that third is going to be given to us in respect of that. We shall already be bearing through the general ratepayers an enormous amount of the burden, and the result is that we, as a distressed area, will continue to bear a burden which is solely due to our having that great volume of unemployment in our midst. Therefore, in this respect, the whole object of this Resolution will be defeated. The Resolution will not be carrying out the good intentions for which I am momentarily giving credit to the Government, and it is very necessary that we should give them credit for good intentions, because it is very difficult to give them credit in this matter for anything else. This is no time to re-state a general opposition to all the principles in the Bill, but I want to reinforce and emphasise that very valuable point made by the hon. Lady the Member for East Ham North, because it does apply with such peculiar force to the town which I have the honour to represent.

When my hon. Friend the Member for East Ham North (Miss Lawrence) was speaking, the hon. Member for the Moseley Division of Birmingham (Mr. Hannon) invited her to give a lesson upstairs in a committee room, where a blackboard, with, I presume, coloured chalks, would be available. I think that was rather a reflection on the right hon. Gentleman the Parliamentary Secretary to the Ministry of Health, because I understand that he has been holding classes upstairs, very exclusive classes, to which I could not gain admittance. I am told they were called "Kingsley's kindergartens," but apparently hon. Members opposite have not learned very much from them, and if the master does not understand the lesson, I can understand the pupils not taking it in. I have not found an opportunity or thought it desirable to address the House on this Measure before, but when there is a matter that affects 42,000 householders in my Division, of which the Minister of Health and the Prime Minister also, I believe, are going to hear presently, I want to make at any rate one constructive suggestion. Why does not the Minister of Health, since this Money Resolution is impossible to follow without going right through the Bill on almost every page, issue a cross-index with it? I would suggest that this should be done at the expense of the Minister of Health and that a cross-index should be issued on the Committee stage of the Bill and again on the final stage, when it comes from another place.

Having, I hope, commended myself to the right hon. Gentleman with that suggestion, which I am sure would help him and many of his followers, and also myself, I want to bring this point to his notice: He is going presently to receive a deputation from the whole Council of the City of Hull, specially chosen from all parties, and headed by the Lord Mayor, to draw his attention to an extraordinary anomaly that arises in the Bill, an anomaly which this Money Resolution, with its heavy charge on the taxpayer, does nothing to relieve at all. As I believe I have a constitutional right to voice grievances before voting Supply, I ask him to listen to this grievance of the citizens of Hull. Unless something is done before we bind ourselves by this Resolution—it may be possible to do it by the 1st April next year—42,000 of the poorest hereditaments in the City of Hull under £10 valuation will have their rates put up from an amount that varies from 4½d. to 8½d. a week, which, of course, the people will have to pay on the rents. This is the result of an action known as Nicholson versus Jackson, which will he familiar to the Minister.

This City of Hull is one of the few places that are affected—I believe that Glasgow is the only other part of the United Kingdom that is affected—in this way, and the reason is that under the Rating and Valuation Act of 1928, mentioned here, and previous Acts, of course, also mentioned in the Bill, and amended, but not in this respect, we compounded our rates to the utmost limit under those Acts, with the result that we were able to go to the full limit of 50 per cent. in the general district rate and 25 per cent. in the poor rate, in order to reduce the whole rating of the City by 7d. in the £; but nobody at the time knew it would work out in this way, that the hereditaments under £10 a year value would have their rates and rents increased. Nobody knew it, the City does not want it, and the industrialists who are getting relief do not want it either, at the expense of the very poorest workmen, the casual labourers at the docks. At a big seaport like Hull we have a great deal of bachelor casual labour, which is largely unemployed in these hard times, and owing to the increase on these poor properties of 2s. 10d. in the £ in order to equalise the. total reduction of rates by 7d. in the £, these people will have their rents put up.

I must remind the hon. and gallant Member that this is a Financial Resolution.

This is a point under the Rating and Valuation Act, 1928, which is referred to as one of the things for which we are voting money in the Financial Resolution. Also we are voting a large sum of money, including the £5,000,000 of new money from the general taxpayers, to make up the loss of local authorities, but as the Resolution is drawn, and as the Act is drawn at present, people will not be able to rid themselves of this grave inequality. It has been overlooked, and I am making this special appeal because I can only do it on the Money Resolution.

The hon. Member said, "the Act," he means the Bill?

Yes, Sir.

The Financial Resolution is not affected by what the Bill does.

In the Financial Resolution we have these words:

"to grant complete or partial relief from rates in the case of hereditaments to which the Bating and Valuation (Apportionment) Act,]928, applies:"

We are voting this money, and my constituents, who have to pay their share of the taxes, will get no relief to meet this admitted inequality. That was the grievance I thought I had the right to voice before assenting to this Money Resolution. I have made my point. The Minister of Health, I think, knows something of the difficulty we have, and I hope he will seriously consider the matter and try to give us some help. He is going to be asked, as I say, to receive a deputation, but I want to have something to bargain with, if I may put it quite bluntly, before we vote this money. That is the only way I can bring pressure to bear on the Minister. There are only two or three cases in the country affected as this particular city is, and most of these people are in my own division. Therefore, I make no excuse for bringing this matter up. Some of this money is going to wealthy districts, Brighton, for instance, will get a nice little present, and nothing is being done up to now to remedy this terrible injustice and grievance. I have always taken rather a cautious attitude on this Bill, for the reason that it is an attempt to do something, and one of my complaints in the last four years against the Government has been that they have been doing nothing. Now they are doing something, and though they may be doing it the wrong way, they are treading the road of good intentions. The general principle in this relief is that it is being given to industrial concerns whether they are losing money or making it. I would suggest another line. I think the test should be, not whether they are losing or gaining money, but whether they are efficient or inefficient.

The hon. and gallant Member is now discussing the Bill. The Bill does not govern the Financial Resolution.

I thought I would be in Order on the Financial Resolution in referring to this. I must plead that I was following the example—perhaps a bad one—of other hon. Members, but I know that is no excuse, and so I do not proceed. But I do, at any rate, appeal to the right hon. Gentleman—I have not worried him much over this matter—to look into this local grievance in Yorkshire.

I want, for a few moments, to examine the contribution which is made under this Resolution to the relief of agricultural interests. I suggest that, under this Resolution, the landed interest is going to get away with another piece of public plunder a good deal more easily than I think ought to be done. It may be that most of the Members on this side of the House, not being landed proprietors do not see exactly what this Resolution means as far as the landed interest is concerned. Of course, on the other side they are proprietors, and are showing a wise discretion in not raising this issue very prominently. Under this Resolution we are to make an additional contribution from the public funds of some £4,500,000 per annum for the relief of owners and occupiers of agricultural land and buildings, and that sum capitalised means something like £90,000,000, which this Resolution is going to convey from the public taxpayers to the relief of owners and occupiers of agricultural land. That is serious enough, but one has to take that in conjunction with what has gone before. It is a matter of common knowledge that the £4,500,000 which this Resolution will present annually to the agricultural and landed interests is in addition to what has been already given, roughly £4,500,000, and as the hon. Member for East, Ham, North (Miss Lawrence) said, in addition to the £1,750,000 in 1890.

Therefore, under this Resolution, we are going to confer an annual contribution of some £10,000,000 from the public funds in perpetuity to the relief of the agricultural and landed interests, and that side by side with the relief which is being given to other forms of industry. I submit that this Resolution which, as I say, will convey £4,500,000 additional money irrespective of merits, is out of proportion to the relief which is to be given to industrial hereditaments. All that the industries of this country are to receive is something like £16,000,000, but here is one industry which is going to receive £4,500,000. What is the argument which is put up for that? In the Whit, Paper we are told that the main purpose of this proposal is to give relief so as to stimulate industry. The question of the rearrangement of local government is incidental. The main purpose of this proposal and of the relief conveyed by this Resolution is to stimulate industry. We have had the experience of over £100,000,000 being poured into the agricultural industry, and no stimulation has occurred. No one will contend that there is any evidence of stimulation to the agricultural industry as the result of this policy.

I am not quite clear how the hon. Member connects this agricultural question with the particular Financial Resolution under discussion.

I submit that we have a right to examine, in the light of past experience, what is going to be the result of a Resolution conveying substantial, sums of public money in this way.

That opens a very much larger field than is contained in this Financial Resolution.

I must bow, of course, to your Ruling, but I hope that I may be entitled to discuss the question as to what is going to be the effect of carrying this Resolution. I submit that this Resolution is based upon the purpose of the Bill which, as is explained in the White Paper, is to stimulate industry, and that, therefore, I am entitled to adduce arguments to show that this money will not stimulate industry as a reason for opposing it.

The relief of agriculture comes under other Acts of Parliament.

May I submit that the Government are discontinuing certain grants from the Exchequer including grants under the Agricultural Rates Acts, and they are granting complete or partial relief from rates in the case of hereditaments to which the Rating and Valuation (Apportionment) Act of 1928 applies? These hereditaments include agricultural land and buildings, which are to be completely relieved. I submit, therefore, that agriculture is a subject that can be discussed.

The hon. Member is raising an argument as to the effect on agriculture of de-rating agricultural land, and I do not think that that can come within this discussion at all.

Agricultural land is de-rated under the Rating and Valuation (Apportionment) Act, and that applies to a quarter of agricultural land. This Financial Resolution says that the purpose of the Resolution is:

"To grant complete or partial relief from rates in the case of hereditaments to which the Rating and Valuation (Apportionment) Act, 1928, applies."

These hereditaments include agricultural land.

That may be so, but it does not open up a discussion of the effect of this Resolution on agriculture.

I should like to emphasise the fact that the first part of the Resolution undoubtedly refers specifically to the relief from rates of hereditaments to which the Rating and Valuation (Apportionment) Act applies, and, in so far as this Resolution will convey relief to agricultural hereditaments, I thought that I was entitled to refer to the effect of it. If I am out of order on that point, may I submit that I have a right to examine whether the conveyance of public money by this Resolution will achieve the purpose for which it is intended?

I do not think that the hon. Member understands. There is no money in this Resolution for de-rating agricultural land.

I beg to point out that the hereditaments to which the Rating and Valuation (Apportionment) Act applies include agricultural land. That Act made arrangements for de-rating another quarter of agricultural land, and this Resolution compensates the authorities for the complete de-rating of agricultural land.

The hon. Member will agree with me that this Resolution does not interpret this Bill at all. Perhaps I may have the assistance of the Minister to tell me whether I am right or wrong.

May I call your attention to the fact that, in the £24.000,000 which is to be provided, £4,500,000 is allocated for the relief of agricultural land.

I would ask the Minister to assist me to say whether I am right or wrong.

I see some difficulty in this matter being discussed so far as its effect on agriculture is concerned. It is true that paragraph 1 of the Resolution authorises

"the payment out of moneys provided by Parliament of such grants and other expenses,"

but, even if that be so, I doubt whether we can have a discussion on the exact effect on agriculture.

In paragraph 2 are there at least two references, which are almost as important, to the Road Fund and cattle pleuro-pneumonial?

It is true that it refers to the Road Fund. However, it is a very near thing, if I may say so.

Will the Minister say whether or not a sum of £4,000,000 or £5,000,000 is allocated in the Bill for the relief of rates of agriculture; if he will answer "Yes" or "No," we shall be grateful.

Even if we were allowed to discuss the effect of de-rating to the extent of this Resolution, would that justify the hon. Member for Dewsbury (Mr. Riley) going into all sorts of questions connected with agriculture?

Paragraph 1 of the Resolution authorises the payment out of moneys provided by Parliament for various things, one of which is

"an amount equal to the total losses on account of rates ….calculated in accordance with the said Act."

and it might be argued that on that account agriculture can be discussed. So far as the Government are concerned, we have no objection to it.

Why cannot the Parliamentary Secretary answer the question? Is there, or is there not, allocated in the Bill the sum of between £4,000,000 and £5,000,000 for de-rating agricultural land? Will he say "Yes" or "No"? He is incapable, as I have often noticed, of saying "Yes" or "No" to a question.

I am afraid that I am responsible for bringing the Minister into this, but I told the hon. Lady that it is difficult to interpret this Bill by the Resolution. It may be that a certain amount of this money is necessary because of the de-rating of agricultural land. Let us leave it at that, but that does not justify the hon. Member debating the question of the effect of de-rating on agriculture. That is another point altogether.

On that point of Order. Surely it would be quite improper for this House to vote this large sum of money for the de-rating of agriculture unless we are satisfied that it is going to be of benefit to the industry?

That is a matter for discussion on the Bill, and not on the Financial Resolution.

I appreciate your difficulty, Sir, and also your courtesy in the matter, but I want to conclude by pointing out that we are voting a very substantial sum of money and, if I can do so without trespassing against your ruling, I wish to ask whether if this Resolution be passed the effect of it will be to convey this money by way of relief to those persons who it is intended shall be relieved? I submit that the money will not fulfil the purpose for which it is intended, and in support of that argument I should like to quote a speech delivered in this House only a fortnight ago by the hon. Member for North Kensington (Mr. Gates) who is, we understand, interested in the brewing trade. Referring to his own property, he said he would probably get £2,000 relief, and then went on to say:

"there is a great possibility that when the next valuation comes, it will be the duty of the rating authority under the Acts of Parliament to re-assess these industrial properties at the rent that a tenant from year to year would give, and a property freed from 75 per cent. of its rates will, of course, pay a great deal more"—[OFFICIAL REPORT, 20th November, 1928; col. 712, Vol. 223.]

My case is that the money voted under this Resolution will not relieve the persons for whom it is intended, but will find its way into the hands of the owners of property.

I think it is a sad reflection that the defence of the Government's Bill this morning has been left, to the hon. Members for Wimbledon (Sir J. Power) and Torquay (Commander Williams). From the somewhat rarified atmosohere of these healthy and well-to-do places we might expect to get a defence of the financial provisions of the Bill, because it is precisely places like Torquay and Wimbledon which are to receive such benefits as there may be in this Measure. I should have preferred to have some further financial justification from the Chancellor of the Exchequer and from the Minister of Health. I view with a certain amusement the carefulness of the Chancellor of the Exchequer to evade any discussion of the Financial Resolution. It cannot be too strongly insisted, especially from these Benches, that this Financial Resolution is based on a whole series of betrayals of local government authorities. Instead of being given the additional assistance for which they have pressed, they have, under this Money Resolution and under the Bill which will implement it, been deprived of assistance to which they are entitled. I wish to put to hon. Members opposite as simple a view as I can of the effects of this Resolution. It is clear that the resources of local authorities are going to be seriously restricted by the de-rating of industrial enterprises. The maximum amount of de-rating will take place in precisely those areas where the need for social services is the greatest. That is an undeniable fact. It is not the Wimbledons and the Torquays which will be seriously de-rated, but the mining areas, the iron and steel areas and the big manufacturing districts with their congested populations needing the development of social services—these are the areas where the local authorities will find their resources seriously restricted.

There has been a good deal of talk about the shifting of industry from the north to the south. There is no evidence to support that assertion. If hon. Members will study the question, they will see that all that is happening is that industry is becoming more dispersed, and not that the industrial districts are becoming less industrialised. With any resumption of normal trade, certain economic advantages which there are in the industrial areas, will become powerful factors in leading to the further development of industrial enterprises in those areas. Every new industrial enterprise which goes into an industrial town will become to the the local authority not an asset but a liability. There will be no additional help from the central authority in respect of the loss to the local authority through the de-rating of these industrial enterprises. They can be rated at only a quarter of their rateable value, and this will mean in the long run that industry, so far from making even a quarter contribution to the expenses of a local authority, will be subsidised by the local authority. Every penny which a local authority will in future spend will under this Bill he spent as a result of greater sacrifice from the ratepayers. That, again, I say, is an undeniable statement. There is no town in this country which will be able to produce a given sum of money by the same rates per pound as it produces to-day.

Therefore, every penny which is spent in the future means a demand for a higher poundage of rates. When you get your developing factories, new mines and other industrial enterprises, and the local authorities have to provide the onerous services from which they get no return at all—streets, sewage works, all the necessary services to enable mills and factories to carry on—those enterprises are not going to pay even their quarter contribution to these onerous services from which they get direct benefit. If you add, as you ought to add, the expenditure by local authorities on new houses, health services and schools for the workers in the new factories, it is quite clear that industrial enterprises are going to he put in a position of special advantage, and that the services from which they get direct or indirect benefit will have to be provided by the ordinary ratepayers, who are not being given any advantage whatever under this scheme. It must be remembered that all the expenditure of a local authority is not on a grant-earning basis: a good deal of it is on services for which there is no State assistance. Further expenditure on these services with no State help will in fixture mean a heavier burden. Take the case of a large town where a penny rate produces, say, a round sum of £50,000 per year, and in future produces £40,000 a year. It is perfectly clear in that ease that an expenditure of £100,000 a year on the development of, say, the fire brigade service would mean a rate of 2½d. in the pound, whereas in the past it only meant a 2d. rate. That will mean a rate of 2½,d. on the people who are not being de-rated. but only a rate of one-quarter of that or rather over ¼d. on industrial enterprises which profit by the fire brigade service probably more than the ordinary householder.

The disturbing effect of the scheme on local authorities and ratepayers does not stop there. The operation of the five yearly period will mean an additional burden upon the local authorities. There is only one way in which the block grant for five years can he just, and that is, if each year we give one-fifth of the aggregate expenditure during the whole of the five years; in other words, if it were a regularly rising expenditure, and if at the beginning of the quinquennium we paid on what normally the local authority would have expended in the third year. In that case during the first two years the local authority would profit by the block grant because it would be receiving something in excess of its average expenditure for the five years and in the third year it would be receiving just the equivalent, and in the fourth and fifth year it would be losing, but it would only lose as much as it gained in the first and second years. That would be a fair way if we could ascertain with precision the necessarily growing expenditure on many social services year by year.

Will the House observe the Government plan? I am not going into the question of the expenditure in the fourth year of the quiquennium being fixed upon by the Government for the purpose of calculating the grant. The position is that for the succeeding five years the expenditure is to he calculated on the expenditure of the fourth year of the quinquennium.

What other way does the hon. Member suggest?

I am not saying there is another way, but I am pointing rut what an absurd way this is. The grant is to be fixed on the fourth year and to be operative for five years. The mere weight of population alone, without any consideration of the development of the social services, will mean an expanding expenditure, and every pound spent above the amount determined upon in the fourth year of the previous quinquennium will have to be provided by the ratepayers out of the reduced rateable value. That, therefore, means a substantial rise in rates. If I had here the blackboard which has been referred to this morning, and which is very necessary in dealing with questions of this kind, I could show by a curve how expenditure normally advances and how by a flat rate for five years and a jump followed by another flat rate for a further five years there is always a loss accruing to the local authorities if the grant is based on the fourth year of the quinquennium. In other words, from whatever point of view the financial arrangements outlined in the resolution are regarded, the local authorities will be adversely affected. When we take into account the necessity for the Minister of Health and the Minister of Transport encouraging expenditure on the services for which they are responsible, it is quite clear that one of two things will happen, either local authorities in defiance of the in- creasing expenditure will continue with their services, thereby adding enormous burdens to the ratepayers, or they will not proceed with the development of their social services. Whichever happens will be unfortunate from the national point of view.

I should like to see the formula modified. I should like to see different weights given to the different factors in the formula. But juggling with the formula is robbing Peter to pay Paul. Juggling with the formula does not put another penny into the pool. All that it does is to take away from some local authorities and give to others. While I would gladly despoil Torquay and Wimbledon in the interests of the mining areas, it does not seem to be doing justice to a big question like the relations between national and local finance to operate the formula, any alteration of which merely means that you are going to rate certain local authorities in order to give assistance to others. The Minister of Health has tried to come to some new arrangement which he felt would give a little more satisfaction to the local authorities. I need not remind the Parliamentary Secretary that the Minister has failed. The decision to pay 25 per cent. is of no real help to the local authorities. To keep up the same proportion will not help the local authorities. Suppose you keep the same proportion and instead of £100,000 expenditure with £25,000 coming from the State the expenditure is £200,000 with £50,000 coming from the State—75,000 comes from the rates in one case or roughly that proportion and double the amount in the other case. This increasing expenditure is to be paid for out of diminishing resources. To keep the proportion the same in face of expanding expenditure, coupled with the serious restriction of the powers of the local authorities to raise money, inevitably means putting more burdens on the local authorities.

I do not wish to use extravagant language about the financial proposals of this scheme, but they are of the most unsound character. They are a real betrayal of local government interests. They are a surrender to all the worst vices of the Treasury, utterly regardless of national interests. It is going to work such a revolution in the local government system of this country as hon. Members of this House on the Government side will live to regret. There is only one cause for satisfaction, and that is that whatever Government may be in office, this scheme will never come to full fruition. We have been given tables about what will happen 15 years hence. This scheme will have been modified out of all recognition before 15 years have elapsed, not merely by the Government, but by the pressure of circumstances and the position in which local authorities will be placed. This is a damaging Bill, and it is damaging to local authorities at a time when they need far more sympathetic consideration from the central departments of Government. This Money Resolution is enough to destroy the initiative of our local authorities, and it will most certainly discourage them in their work. It will have the effect of postponing many of those activities which all progressive local authorities have had in mind, and it will make it more difficult for them to carry out the commitments which they have made in the past, often at the instance of the Minister of Health. This Bill will place the finances of our local authorities in a state of utter confusion, and, even if all the other provisions of the Bill were sound, I would not vote for a Measure in which the financial principles were so unsound, so unjust in their incidence, and so damaging in their effect on the work of local authorities.

At all the stages of this Bill we have had a very interesting discussion, and some very valuable contributions to the Debate. We have just listened to a very interesting speech from the hon. Member for Nelson and Colne (Mr. Greenwood).

Of which you have taken no notice.

I have taken due notice of those speeches. The hon. Member for Nelson and Colne has used some very strong language, but his arguments are dreadfully lame. If this Bill is all which the hon. Member says it is, I should have thought that he would not have been content with the simple statement that our scheme could be modified. We are all aware that Bills of this kind, like the National Insurance Act and the Unemployment Insurance Act, have to be modified on the experience of their working. I should have thought the hon. Member for Nelson and Colne would have said that it would be the first duty of the Labour Government when they come into power to rid the Statute Book of this obnoxious Measure. We heard nothing of that kind from the hon. Member, who simply offered the mild criticism that in after years it would be modified. Some hon. Members have expressed considerable concern about the position of local authorities, and they have put the case before the House which the Minister of Health and myself have repeatedly heard from deputations, but they have ignored a good many of the further concessions which have been made, and I am confident that, when my right hon. Friend has concluded his reception of the deputations from local authorities, they will be pleased with this Measure in its final form.

The hon. Member for West Leicester (Mr. Pethick-Lawrence), who opened this discussion in a very interesting and informing speech, took up the question of the position which the local authorities would be in during the first quinquennial period, and he traced what he thought would be their position during the following periods under this scheme. In considering the first five years of the operation of this new scheme, I do not think the hon. Gentleman really appreciates the very considerable contribution which is going to be made to the local authorities. Is it a small thing that for the next five years the local authorities are going to have given to them, not only a sum of £25,000,000, but also special grants averaging over £2,000,000 a year. I should have thought, as I am sure the local authorities themselves feel, that hon. Members opposite would have agreed that that was a very considerable contribution to improve social services in this country and to extend new services and matters of that kind. We are providing a very considerable sum of money. The hon. Gentleman the Member for Nelson and Colne seems to have a very curious conception of what the local authorities will do after this Measure becomes law, and he said: "It is all very well for the first year of the five years, but when you have got into the fourth or the fifth year of the first quinquennium, the local authorities would be driven, owing to the operation of their new services or the extension of their present services, to put up the rates." Hon. Members opposite have no authority whatever for saying that local authorities would act in that way under this scheme.

One of the benefits of this Measure, from the point of view of the local authorities, is that in regard to their local administration in the future under this Bill they will know exactly where they stand for a period of years so far as their finances are concerned. [Interruption.] I often notice when I make points of that kind the Hon. Member for Nelson and Colne gets very angry. Under these proposals, obviously the local authorities will know exactly, so far as the State contribution is concerned, the amount of money that they are going to receive for the next five years. They will then be in a better position to make their budget for each of those particular years, and they will determine, as they have long desired to be able to determine, exactly what services could be encouraged. They will then be in a better position to meet their present needs, and they will also have complete control of their financial affairs which they have not had in the past. As far as their independence and power of action goes, they will be in a stronger position than under the present system, under which Government Departments are continually and for ever interfering, often in a provocative manner, over some silly points. All that will go and the local authorities, so far as the first five years are concerned, will, in the first place, be in possession of very large sums of new money; and, in the second place, they will be able to budget for the whole of that period for the present services and those services which they wish to extend and improve. That will put them in a position of being able to make experiments which they are not able to do now.

I come to the next five years and the following period provided for under this Bill. There has been some controversy as to what is going to happen. The hon. Member for East Ham, North (Miss Lawrence) and other hon. Members opposite seem to be under a mis- apprehension as to what is going to happen so far as this particular aspect of the scheme is concerned. I think it is perfectly clear what is going to happen. In the first place, hon. Members should understand that after the first five years the amount of what we call the General Exchequer Contribution is to be fixed by Parliament. We cannot take away from subsequent Parliaments the right at the end of this period to decide what sum shall be given.

I want to make the point that at any rate so far as Parliament is concerned, and subject to the proviso to which I will refer in a moment, it will be able to review the position in five years. At the end of that time, Parliament will consider whether during the first five years any of those things have happened which have been prophesied in connection with this scheme, and which have been prophesied in connection with almost every scheme of this character that has been brought forward during the last four or five years. Parliament will be able to examine it, and they will no doubt note the speech of the hon. Member who dealt with the subject of education, and compare it with the results. If he is right, Parliament will be in a position to say whether the contribution which they will then make in the next—[Interruption.]—perhaps the hon. Gentleman will allow me to develop my argument—Parliament will then decide what sum shall take the place of this £25,000,000, or whatever the figure is, which comes into operation in the first quinquennium.

Hon. Gentlemen opposite may say, "Yes, but look at the broken promises of Parliament. How can local authorities possibly rely on Parliament, especially as we anticipate that we ourselves will be in office? We must have a guarantee." The guarantee that is given is perfectly clear, and is contained in Clause 69 of the Bill, which we shall discuss later. That guarantee has been given with a view to satisfying the local authorities on this point, so that Parliament may increase the financial provision over and above this minimum guarantee. There can be no playing fast and loose with the local authorities, because they can be certain that Clause 69, passed by this House, will give a binding guarantee so far as the minimum amount is concerned. That will be the position for the remaining time of the operation of this Bill, and not only for the following five years, as some hon. Gentlemen seem to think. It is a continuing guarantee. Clause 69, quite rightly, provides that the additional mounts given by Parliament shall be revised at quinquennial intervals according to the circumstances of the time, and I do not see how anyone can quarrel with that suggestion. I should have thought that it was obviously just to local authorities, and, having heard the local authorities on this aspect of the matter, I can say that there is no quarrel on their part with this guarantee. I am not now arguing whether the period should be five, or four, or three years, as one of my hon. Friends has suggested, but everyone will agree that a provision which says that Parliament shall revise and consider the amount to be given at the end of a particular period according to the circumstances of the time is a perfectly reasonable and right one.

What does this guarantee come to? I do not think it has been sufficiently appreciated by the hon. Gentleman who opened the Debate. If anyone wants to look at the exact wording, they can see it in the Clauses of the Bill, so there is no need for us to dispute among ourselves as to the exact wording, but, broadly, it comes to this. If there has been a general increase in local government expenditure during the quinquennial period, Parliament will be asked to increase suitably the general Exchequer contribution for the next quinquennium. The hon. Gentleman who spoke with reference to education has not, I think, sufficiently appreciated what was put to us at a very early stage in connection with the case, say, of an increase in educational expenditure. In our first White Paper, we put in a guarantee which was very much more limited than the one contained in the Bill, and the local authorities came to us, and, quite rightly, put to us the point in which the hon. Gentleman is interested. They asked, what about a rise in education expenditure? What about a rise in expenditure which is not covered by the operation of this scheme? We accordingly remodelled our guarantee so that the ratio proposed to be maintained under the Bill will enable any increase in rate-borne expenditure, whether on account of the specific services mentioned or of other services, to be reflected in an increase in the General Exchequer Contribution. The local authorities regard that guarantee as a valuable one, and they recognise that the new guarantee which we have given in the Bill goes a very long way to meet their point of view.

There are, I agree, other points in connection with education, to which I will come in a moment, which are not completely covered by the statement I have made, but what I am dealing with is the statement of the hon. Member for West Leicester as to rigidity. He coined some word which I think, perhaps, was only applicable to this Bill, and which I have not heard of before, but which was intended to imply that the local authorities were absolutely fixed in a vice under this scheme, and that no allowance was made for increased expenditure. Surely, however, the hon. Gentleman cannot have considered the terms of the Bill, the very large sum of money which is being given, and particularly the terms of this guarantee. Then there is the controversy as to how, for the next quinquennium, the amount of the General Exchequer Contribution should be determined. I was very glad to hear the hon. Member for Nelson and Colne say that of course it was the fourth year of each quinquennium that had to be taken for the purposes of determining the minimum total Exchequer Contribution for the next quinquennium. That is perfectly correct; you do not have to go hack over a series of years and bring in one calculation after another, as was mentioned by one hon. Member in the course of this Debate. What you have to do is, under Sub-section (1) (c) (ii) of Clause 69 of the Bill, to look at the fourth year of expenditure, and that was why my right hon. Friend was so surprised that such a well-informed Member as the hon. Member for East Ham North should say this:

"The final General Exchequer Contribution will depend upon the total rate-borne expenditure of 1948, 1943, 1938 and 1933."—[OFFICIAL REPORT, 27th November, 1928; col. 289, Vol. 223.]

Of course, as the hon. Member for Nelson and Colne has said, you have to look at the fourth year. [Interruption.] Heaven forbid that I should get into a controversy with the hon. Lady.

Then it was said that, owing to this business of fixing the amount for five years, notwithstanding that it is such a large sum of money, the rates, in the first place, will go up, and, secondly, a drag will be put upon the expenditure of local authorities, and health services and so on will be starved. What an unreasonable and unwarranted conclusion to arrive at! The local authorities are given very large sums of money, and here is a very definite guarantee as to what will happen to them after the first quinquennium. As far as I, at any rate, can judge the opinion of local authorities, there was very little in question between them and my right hon. Friend, and they certainly do not take the view that has been expressed by many hon. Members here this morning. Naturally, local authorities would like more money. If the figure were £10,000,000 instead of £5,000,000, the first person to say it ought to be more would be the hon. Member opposite. He said on the Second Reading he did not care what the sum of money was, it would not be sufficient under this system, but I think most people will agree that this is a very reasonable and considerable contribution to their new services and their old ones.

Then it is said once again, that you are not treating the local authorities properly unless you make up the loss that arises from de-rating year by year. That is a matter which I should associate with the Socialist party. It is a Socialist conception. The idea apparently is that, whatever the rates of the local authority may be, over which we have no possible control, we should write out a cheque for them every year for the loss due to de-rating. I remember very well that on the Second Reading it was said: "Why do you not adopt the suggestion of the Agricultural Rates Act, which was proposed as a temporary Measure, at any rate until a readjustment was made in national and local finance, under which a cheque was given to local authorities in connection with the partial de-rating of agricultural land?" I never heard a more perfect example of Socialist ideas of what should happen in connection with local and national finance. It would obviously be an impossible thing to do. It would suit Poplar; it is Poplarism. "Whatever we like to spend the State is to send us a cheque for three-quarters of it." It certainly would not do. I do not think even the late Chancellor of the Exchequer would be prepared to go as far as that; in fact, no one who has any care for the national finance at all could possibly countenance such a proposal.

Again, the formula is challenged by the Socialist party. I thought, after all the professions I have heard of their concern for hard-pressed industrial areas and the necessitous areas, that the system of a formula grant would have appealed to them. The present system is one by which the State makes a contribution simply in accordance with the ability of the particular local authority to spend a certain sum of money. In other words, if they are well enough off to afford to spend a certain sum of money on a particular service, under this extraordinary system, as I think a grossly unjust and unfair system, that now exists, the State is to give them a certain proportion. The position of necessitous and hardly-pressed areas under the present arrangement is an impossible one, and, if you examine the figures, as I have been doing in the last few days, in connection with maternity and child welfare, anyone who wants to see a fair sum of money expended in these hardly-pressed areas could not possibly defend the percentage system, because the very places that ought to be receiving assistance the most are not getting it, and the places that are well off and are able to spend money are attracting the State contribution.

What are we suggesting under this formula which the Socialist party, of all parties, opposes? We say that the basis of future Exchequer contributions should have regard to the needs of the community. Does anyone quarrel with that? Not withstanding the various criticisms that, we have heard, there will be few people, when the time comes, who will be prepared to challenge the formula and suggest any substantial alteration which will improve it. Middlesbrough, of all places in the world, ought not to complain of this formula. I was amazed at the hon. Member for West Middlesbrough (Mr. K. Griffith)—the senior, male Member—

On a point of Order. It is true the hon. Member is the male Member, but I am the senior Member.

I must say that I should never have thought it.

I am speaking of position and not of age.

The junior Member for Middlesbrough, the senior Member will be amazed to hear, complained of the formula grant. Of all the places that are going receive assistance under the scheme, certainly Middlesbrough is one. I hope the hon. Member will go to Middlesbrough and, at the same time that he tells them he is voting against the scheme, will also tell them exactly what it means to do, because Middlesbrough cannot wait for a Liberal scheme to come into operation. However good the scheme of the Yellow Book may be, every citizen in Middlesbrough knows that he will be in his grave before it can come into operation. Therefore, it is no good saying: "I have a better scheme if you will only adopt it," because it is not a practical possibility. As I understand it, from what I have heard about Middlesbrough so constantly, the need is urgent. Trade is so severely depressed there that they cannot wait. The Members for Middlesbrough need not quarrel about a formula which is going to bring thousands of pounds to the town more than it is getting now. It is no good going to a hard-pressed manufacturer in Middlesbrough and saying: "I have a fine scheme." He will say: "My friend, I want the money now. Why are you voting against a scheme that is going to bring assistance to me? I do not want to hear about one that may perhaps be better. I want my money now." The hon. Gentleman says: "I am sorry. I did my best. I voted against this scheme, because I honestly believe that I have a better one." That will not satisfy him. He wants now the assistance which this scheme is going to bring to him.

In conclusion, let me assure the hon. and gallant Gentleman the Member for Central Hull (Lieut.-Commander Ken-worthy) that I will certainly look into the case which he has put with regard to Hull and the effect of the Nicholson and Jackson judgment. If he will send me, during the next few days, any further papers which he thinks will assist us in coming to a conclusion, I need hardly tell him that we will certainly examine a case such as he has made this morning. In reply to the hon. Gentleman the Member for Wellingborough (Mr. Cove), who is interested in education, but who, apparently, has forsaken the cause for the moment, I may say that there is nothing in the Bill itself in connection with his question of block grants. I see no reason to anticipate that the de-rating proposals will interfere with Part III education authorities. I am aware that Part III education authorities may now raise a penny rate for higher education, and, if the hon. Gentleman will refer to Clause 59 in the Bill, he will see that provision is made there in that particular respect.

I apologise for detaining the House for so long, but I felt that I might perhaps take up a little more of the time of the House in view of the very extraordinary ideas which hon. Gentlemen still have on this particular proposal. I think that we are getting on. I see signs of conversion in many hon. Gentlemen. I do not want to be out of order, but, inasmuch as the concluding speech was made with reference to de-rating and agriculture, I think that it is within the terms of this discussion that I should say how much the Government are appreciating the conversion, gradually one by one, of many Members of this House who were previously opposed to the complete de-rating of agriculture. I remember, as, I dare say, do the two occupants of the Liberal benches opposite at this moment, the days when the Liberal party were totally opposed to the de-rating of agricultural land. I wonder how many of them are prepared to go into the Division Lobby against it now. I take it that their convictions have changed. I should not like to think for a moment that they have their eyes on the voters in the agricultural constituencies. I observe, however, that Sir Herbert Samuel and the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) are still to be found uttering an occasional word of complaint against, the de-rating of agriculture and stating how money is going to flow into the landlords' pockets. I am glad to see that Members of the Liberal party are pausing before they oppose these proposals, and who knows, now that the Liberal party are changing their views, in time to come, we may have Socialists doing the same. Therefore, the Government feel very encouraged this morning. When these propositions and proposals become known—that is all that we want —no doubt by the time we come to the conclusion of the Debates on this Bill we shall in all probability get a unanimous Third Reading of the Bill.

The right hon. Gentleman seems to me to have become the Aunt Annie of the Government bench. We know Aunt Annie as the type of lady who talks in a high voice very rapidly, very sweetly, who never by any chance stops talking for even a moment to let anyone else get a word in edgeways. Then when Aunt Annie has talked through the entire afternoon until her nieces are so tired that they really had given up in despair any chance of replying, Aunt Annie says sweetly: "And now, my dears, I knew that you would agree with every word I have said. Goodbye." We have a very typical Aunt Annie in the Minister who has just spoken. But, even with all the guillotining to come, we can at least reply occasionally, and we shall have a good many more opportunities in the country. The Minister really takes one's breath away. He waves a hand and talks about all this new money which is going to flow into these industrial areas, of the money that the local authorities are going to have given to them. He does not pause, as Aunt Annie never pauses, to realise that this is not new money in any sense. It is not new money. The greater part of it is merely money in order to make up losses. It is money which has already been taken from the local authorities by the de-rating proposals. That is why we complain.

I want to bring the mind of the right hon. Gentleman back to the question of Middlesbrough, because it seems to me that this great industrial area, this very depressed area, is one of the crucial tests of the Government's scheme. We talk a great deal about the distress in the mining areas. We are apt to forget that while we are all talking about the miners there are great depressed areas like the iron and steel areas which are just as badly waterlogged and in which in many cases probably the distress is almost as bad as that obtaining in the mining areas. It is these areas that the Members on this side of the House, and, for that matter some Members on the Government side of the House have consistently been bringing to the notice of the Government. We are continually asking what are they going to do? Are they going to do anything to relieve distress? The right hon. Gentleman comes along, and, with his sweetest smile, says: "Middlesbrough is going to have thousands and thousands and thousands of pounds."

What does it amount to when you analyse these fairy, golden promises of the right hon. Gentleman? To begin with, I have to remind him of the point with which he did not deal in his reply —the point which was raised by my hon. Friend the Member for Middlesbrough West (Mr. Griffith) and by my hon. Friend the Member for East Ham North (Miss Lawrence), that the Government's figures will be calculated on a rock-bottom valuation. If you were dealing with the problem that Middlesbrough had before the Rating and Valuation Act and the re-assessment under that Act, you would then at least be dealing with a normal valuation and a normal assessment. As a matter of fact, under that Act the great works which surround Middlesbrough, and on which Middlesbrough entirely depends, appealed against that assessment and were granted such a reduction in assessment as almost to bring it below the amount at which it stood before. The representatives of those companies laid it before the Assessment Committee that they were going through an abnormal time, and that the rates were too great to be borne; they asked that some relief might be given, at any rate, for a period. The Assessment Committee, in view of the appalling distress in Middlesbrough, gave that relief. Therefore, I want to point out to the right hon. Gentleman, who, unfortunately, at the moment is not here to listen, that they already have had very considerable relief. I have not the figures with me, but I understand it amounts to as mulch as £66,000 a year. That amount has to be put on the cottage property in Middlesbrough.

That is what the Parliamentary Secretary forgets when he is spinning all his pretty promises about these thousands and thousands of pounds which are coming to Middlesbrough. We have an enormous burden in Middlesbrough already, which we have to face to our cost. Indeed, some of the people are revolting because the rates are so high, and no one can say that Middlesbrough spends too much money on its social services. The town council and board of guardians are dominated by members of the Government's own party and they take care that as little money as possible is spent on social services. All this extra burden is being placed on other property in Middlesbrough. The many shopkeepers have to bear the burden which has been taken off works and factories, and I am told that many of them are unable to pay their rates, and that thousands of pounds are owing. What are these thousands and thousands of pounds which the Parliamentary Secretary talks about as coming to Middlesbrough? Money is certainly coming to Middlesbrough, but it is only to make up the loss on de-rating, plus, of course, their share of the guaranteed grant. Compare places like Middlesbrough with towns like Leicester or Northampton. I take Leicester as the better example. The works there have not appealed against their assessments. They know that they would not have the slightest chance of being considered; they are doing well. Everybody who wants a job in Leicester can, more or less, get it. There is practically no distress in these areas, or, at any rate, nothing comparable to the distress in the iron and steel area of Middlesbrough. The boot and shoe trades are doing very well at the moment; and it is no use Aunt Annie pulling faces.

There is also this point to be considered in areas where valuation is already at its lowest point. I want to hammer this home, because the Parliamentary Secretary will not listen to it, and always skirts round it gracefully with his sweetest smile. The amount that is being met at Middlesbrough is not only this loss of £66,000, due to the reassessment of works and factories. The Government grant is going to be based on the present rock-bottom valuation, so already an injustice is being done to cottage property in Middlesbrough. I am not saying that the Government scheme does not help works to a certain extent. It does, but works are not the only things to be considered in Middlesbrough. There is a vast population, a large number of whom are out of work and have been out of work for years, who are told that they are permanently out of work because their labour is displaced by improvements in processes. Even if the amount of money given to works in Middlesbrough was going to make an appreciable difference in iron and steel, then, obviously, it would not affect those who are displaced by these processes.

There is another point which the Parliamentary Secretary has never mentioned. Not only are the citizens of Middlesbrough not going to he relieved, but they are going to have a double burden cast upon them by the reassessment of last year. If the price of steel goes down owing to the effect of the Government's grant then the wages of the citizens of Middlesbrough are going to suffer, because they are based on the selling price of steel. The citizens of Middlesbrough are going to be hit all ways at once. The Parliamentary Secretary has challenged the hon. Member for Middlesbrough West (Mr. Griffith) and myself to debate this de-rating scheme in Middlesbrough. Although we differ vigorously on a very large number of things, there is one thing which we shall both be delighted to do, and that is to accommodate the Parliamentary Secretary at the Town Hall in Middlesbrough where he can explain this scheme. It would be really an entertaining time. If he went down to the board rooms of the great works in Middlesbrough he might get a different reception, but I am concerned with those thousands of people who are living on the poverty line, and I say that the Government's scheme is hitting them all the time. The Parliamentary Secretary does not even realise how hard they have been bit, and how much they will be hit. They have been hit by the reassessment of works and factories and they will be hit by the price of steel should it drop, and they will be hit by the de-rating of works and factories under the Government's scheme, which will have to be met at the ratepayers' expense.

The appalling thing about Middlesbrough is that they have spent so much on unemployment relief and outdoor relief, due to the policy of the Government in clearing as many people off national funds on to local rates that they have no money with which to provide the essential social services. At the present moment not one single school child in Middlesbrough is being fed by the local authority, at a time when great distress prevails. The Salvation Army are making the most pathetic appeals in order that starving children shall be fed by that religious body, when they ought to be fed by the local authority. When the Parliamentry Secretary says that we are asking the Government to write out a cheque for any amount which local authorities may choose to spend, he knows that he is deliberately misrepresenting the whole position. He has not been at the Ministry of Health so long without knowing that there is control over expenditure, and that the 50 per cent., or is it the 75 per cent. grant, is only given for approved expenditure. The phrase "approved expenditure" is used continually