for current expenses under section 3 (1) of the Local Authorities (Financial Provisions) Act, 1921.* It is made up as shown in the statement below; for comparison, the corresponding figures for the previous year are also given.

Gasworks

Tuberculosis, Sanatoria and Dispensaries

Public Offices

Lunatic Asylums and Institutes for the Mentally

Deficient

Burial Grounds and Cemeteries..

Maternity and Child Welfare

Baths and Washhouses ..

Hospitals and Ambulances

Allotments

Sea Defence

Depôt Purposes

Housing of County Councils' Employees

Fire Stations, Engines and Appliances

Sanitary Conveniences

Police Purposes

Public Lighting

Markets

These loans are divided among the different classes of Local Authorities as follows:

There has been an increase of nearly £3,000,000 in the total amount of loans sanctioned during the year as compared with the previous year; at least £10,000,000 of the total amount sanctioned was for

* Sanctions were issued under this provision up to the 31st March, 1922, in respect of gross sums up to a total limit of £792,836 (see page 55 below).

schemes which were put in hand primarily for the relief of unemployment, and would not have been carried out at the present time had their inception not been demanded by the prevailing industrial depression.

In a circular letter issued by the Department in February, 1921 (Circular 182), the need for the curtailment of schemes involving capital expenditure was strongly emphasised, and it is satisfactory to note that the number of applications in respect of schemes distinctly of a "luxury" and non-essential character was appreciably smaller. Had there not been the need to put in hand public work in order to provide additional employment, the capital expenditure of Local Authorities would have shown a large reduction.

In view of the increasing need of providing work for the unemployed, it became necessary in September, 1921, to issue a circular letter (Circular 244) informing Local Authorities that the Minister would be prepared to consider favourably applications for sanction to loans for necessary work affording a relatively large amount of employment, even though a case for extreme urgency could not be made out and the undertaking of the work was not primarily for the purpose of relieving unemployment, the aim which the Department had in view being the indirect benefit obtained by the absorption of labour on the works.

In the case of proposals for the acquisition of land, the Department required very special reasons to be adduced before acceding to an application for sanction to a loan, but it was felt that cases in which the opportunity to acquire the land was not likely to recur, and failure to purchase would involve permanent injury to the amenities or development of the district, or would render more difficult the proper execution of the duties of the Local Authority, were entitled to exceptional treatment. In every case, however, the Department required to be satisfied, under the procedure described on page 53 below, that the price proposed to be paid for the land was reasonable.

In order to assist Local Authorities to finance capital undertakings, the Government decided in October, 1921, that one-half of the money raised subsequently to the 1st October, 1921, by the sale of National Savings Certificates in the area of any Local Authority, irrespective of its rateable value, should be made available for loans for any purposes for which the Local Authority is authorised to borrow.

In dealing with applications for loans for purposes of gas undertakings, special arrangements were made with the Board of Trade under which sanction is not given to the loan except on the recommendation of that Board. The application for sanction to the loan must, as hitherto, be submitted to the Ministry of Health, and any necessary local investigation is made by them.

Limits of Borrowing Powers.

It is worthy of notice that the Local Authorities (Financial Provisions) Act, 1921, contains a provision relaxing temporarily, for schemes undertaken with a view to the provision of work for unemployed persons, the limitation that sums borrowed for purposes of the Public Health Acts must not exceed two years' assessable value. In virtue of this provision several Local Authorities were enabled to carry out pressing schemes of primary sanitary importance (such as sewage disposal and water supply) which had been suspended, in some cases for years, owing to the statutory limitation of borrowing power.

It may also be mentioned that expedition has resulted from the temporary vesting in the Department (by section 6 (2) of the Act of 1921) of power to dispense in suitable cases with the holding of a public local inquiry, as required by section 234 (3) of the Public Health Act, 1875, in cases where the sanctioning of a loan would increase the debt to an amount greater than the assessable value of the district

for one year.

As is explained later, special measures were necessary for dealing with despatch with the large numbers of applications put forward with a view to finding work for the unemployed, and public local inquiries. were held in these urgent cases only when other measures could not be adopted for arriving at a considered conclusion.

Assistance of the

Valuation Department in connection with
Loan Sanctions for Land.

The large savings which it has been possible to effect, through the services of the Valuation Department, in the price paid for land required for housing, made it clearly advisable to use that Department also in connection with the purchase of land by Local Authorities for other purposes.

It is now the practice of the Ministry to obtain the advice of the Valuation Department as to the value of land before a loan is sanctioned for its acquisition, and not to sanction a loan materially in excess of the value, as advised, unless there are very special reasons to the contrary.

Large savings have already been effected through this procedure, as will be seen from the following instances, large and small, among the cases where reductions have been effected :

Schemes to Relieve Unemployment.

During the year officers of the Department have continued to work in the closest touch with the Unemployment Grants Committee, under the chairmanship of Lord St. Davids, which administers the distribution of the Government grants for the purpose of assisting Local Authorities to carry out works of public utility which provide employment.

The original grant was based on 60 per cent. of the wages bill, and further grants of this kind continued to be given by the Committee till the end of 1921. After September this grant was limited to new schemes financed out of revenue.

In September, owing to the serious state of unemployment, a new and more extensive scheme was initiated, under which Local Authorities were encouraged to put in hand at once works of public utility involving capital expenditure which would not otherwise have been immediately

undertaken. A grant was provided, (a), in the case of non-revenueproducing schemes, of 65 per cent. of the charges for interest and repayment of loans for half the period of the loan, subject to a maximum period of fifteen years, and (b), in the case of revenue-producing works, of 50 per cent. of the interest for a period of five years on loans raised for a period of not less than ten years.

The grant was subject to the following conditions :-(a) that the Ministry of Labour should certify the district as one in which serious unemployment, which was not otherwise provided for, existed; (b) that the Government Department concerned certified that the work proposed was one of public utility; (c) that in direct labour schemes the men should be engaged either (i) through the Employment Exchange, who give preference to ex-service men (the usual rule being that 75 per cent. of the men employed must be ex-service men), or (ii) through the Guardians, provided that the same preference was given and that particulars were furnished to the Employment Exchange; (d) that, where the Local Authority carried out the work by direct labour, the rate of wages paid for unskilled labour, for a probationary period of six months, must not exceed 75 per cent. (or, under certain conditions, 87 per cent.) of the Local Authority's rate for unskilled labour; and (e) that the work in respect of which a grant was paid must be completed by the 31st March, 1923 (unless the Unemployment Grants Committee allow a longer period for special reasons).

A very large number of applications have been submitted under this scheme to the Committee, who have referred them to this Department where sanction to a loan and the Department's certificate that the work is one of public utility have been required. Special steps have been taken to ensure a speedy decision in these cases, and in deciding them the Department have had regard to the public utility of the work itself, to the probability that it will be speedily executed, and to the amount of unemployed labour which the work is likely to absorb. Particulars of the schemes approved by the Committee up to the 31st March, 1922, are given in Appendix VIII (page 148 below).

One of the main objects in view has been to avoid the inception of mere relief works, and to ensure that the works, when completed, will have a definite value to the community. The particulars given in Appendix VIII indicate the kind of work approved.

The grant is intended to encourage Local Authorities to take in hand at once works which, owing to high prices or for other reasons, they would otherwise defer.

Criticism has from time to time been directed against the condition that in direct labour schemes the Local Authority, for a probationary period, shall not pay to unskilled labour more than 75 per cent. of the Local Authority's rate for such labour. In cases where a man is not employed for more than three days a week the percentage may be raised to 87 per cent. An investigation which has been made by the Department into a number of schemes shows that the output of labour is usually more than 25 per cent. below the normal.

In some cases, after a scheme has been approved for grant and a loan sanctioned, the Local Authority have tried to borrow the necessary moneys without success. In such cases, which are very few, the Department have been able to assist the Authority.

Local Authorities (Financial Provisions) Act, 1921.

BORROWING FOR CURRENT EXPENSES.

This Act received the Royal Assent on the 10th November, 1921. By section 3 (1) Local Authorities are empowered, with the consent of the Minister, to borrow moneys in order to meet current expenses. All sums so borrowed, and the interest, must, however, be repaid out of the revenue received in respect of the financial year in which the expenses were incurred, except that, as regards moneys borrowed before the 1st April, 1923, the Minister may extend the term within which the repayment has to be made to a period not exceeding ten years.

Apart from applications from Boards of Guardians, which are referred to in another section of this Report (see page 88 below), up to the 31st March, 1922, the Minister gave forty-eight sanctions under the Act for overdrafts in the cases of forty-four Local Authorities in respect of gross sums up to a total limit of £792,836.

In thirteen cases the overdraft was to be repaid out of the revenues received in respect of the financial year in which the expenses were incurred. In the remaining thirty-five cases the time for repayment was extended, but in the majority of the cases the extension was for a period of less than one year. It is considered that any overdraft to meet a revenue deficiency in the accounts of a Local Authority should be repaid at the earliest possible date, and that extension of time for repayment should be granted only in exceptional circumstances, as was the obvious intention of the provision of the Act mentioned above. Up to the 31st March, 1922, so long an extension as five years had been granted in only one instance.

Apart from this special temporary provision, the section represents an amendment of the general law which will be of service to Local Authorities by enabling them to borrow for working balances.

SUSPENSION OF SINKING FUND.

Section 5 of the Act provides that, where any Local Authority, owing to circumstances arising out of the War, have been unable to make the required provision for the discharge of any loan, they may submit a scheme to the Department varying the statutory requirements for repayment.

The cases which this section was designed to meet were those of the Local Authorities who were unable to make the requisite payments to sinking funds during the War. This was the position in the East Coast watering places, which were granted financial assistance out of Imperial Funds. This assistance was granted solely to meet unavoidable expenditure, and could not be applied towards making the payments to the sinking funds.

During the year the Department have received an application from the Lowestoft Corporation for their approval of a scheme relating to the loans for the tramways and electricity undertakings of the Corporation.