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(8) Health Grants payable to voluntary associations in county boroughs will be treated as grants payable to the county borough council.

(4) The grants to voluntary associations in aid of the welfare of the Blind will be apportioned among county councils and county borough councils according to the residence of the beneficiaries and treated as grants payable to these bodies.

(5) The Tuberculosis Grants to the Welsh National Memorial Association will be apportioned among the county council

and county borough councils of Wales according to rateable value and treated as grants payable to the councils.

32. Although all health grants payable to authorities and to voluntary agencies within a county will be treated for the purpose of ascertaining loss of grants under the scheme as if they were grants payable to the county council, it is not intended to interfere with the existing arrangements under which certain borough and district councils administer the Maternity and Child Welfare service for their area. It is proposed that a scheme for each county should be prepared by the Ministry in consultation with the county council showing the grants which will be payable by the Ministry to the borough and district councils who continue to administer the Maternity and Child Welfare service. These grants will be fixed in amount for five years and will be deducted from the grant in aid otherwise payable to the county. The scheme will also show the basis of the necessary county rate adjustment to be made between the county council and the separate maternity and child welfare districts.

As regards Maternity and Child Welfare services carried out by voluntary associations, the county council or county borough council in whose area the associations function will be responsible for the work of these bodies and for the contributions to be made to them out of the grant in aid. It is proposed that each county and county borough council should submit for the Minister's approval a statement of the contributions proposed to be made to the voluntary associations in their area and of the conditions for securing the efficient administration of the service subject to which the grants will be made.

County Councils and county borough councils will also be required to make contributions to the voluntary associations for the Blind. It is proposed that these contributions should, as at present, be made on a capitation basis in accordance with a scheme to be made by the Minister.

It is also proposed that the grants to the Welsh National Memorial Association should be made by the county and county borough councils of Wales in accordance with a scheme to be made by the Minister.

Contributions will continue to be made by county councils to borough and district councils in respect of medical officers of health and sanitary inspectors, and county and county borough councils

will be responsible for the payments to public vaccinators hitherto made by boards of guardians.

33. Any grants under the existing scheme in respect of any period prior to the 1st April, 1980, unpaid at that date, will be paid. The grants payable under the new scheme will be ascertained, so far as they depend on local assessments and rates, from returns which will be furnished by local authorities and certified by the district auditors, and will be paid in 6 instalments during the financial year. It will be necessary to withhold some small part of the grant pending certification, but the part withheld will not ordinarily exceed the remanet grant under the old scheme outstanding on the 1st April, 1930, so that local authorities will receive a full year's grant revenue under the new scheme each year. The only conditions attaching to the grant will be the compliance with the general requirements of the new scheme and the efficient administration of the local services. Provision will be made for withholding some part of the grant in the event of a reasonable standard of efficiency not being maintained.

34.

The new general grant scheme will not come into force until the 1st April, 1930, but the derating provisions will operate as from the 1st October, 1929. It will be necessary, therefore, to make transitional arrangements for the compensation of authorities for the loss of rates in the period from the 1st October, 1929, to the 31st March, 1930. It is proposed that every County Council, county borough council, borough and district council, and board of guardians, should, for that period, receive a grant equivalent to the full loss of rates calculated for the second half of the standard year. The calculation will be made as explained in paragraph 30 above, except that as the local government changes will not have been made there will be no transfer or apportionment of expenditure on poor law and highway services. The grant will be payable in 3 instalments during the half-year, and, as there will probably be some delay in the ascertainment of the grant payable, payment on account will be made on the closest estimates available.

35. As an illustration of the approximate effect of the scheme, calculations have been made showing on certain assumptions what would have been the effect in certain areas if the scheme had been in operation in these areas in the year 1926-27: the grants to be withdrawn and the losses of rates are contrasted with the new grants under the scheme.

For the purpose of this illustration the loss of rates has been roughly estimated from returns recently furnished by Rating Authorities. The formula grants for counties and county boroughs which would have been payable under the scheme have been calculated on a money factor of 31.35d. per head of weighted population for the year 1926.

It is estimated that the aggregate of the formula grants on this basis would amount to nearly £15 million, which is roughly equivalent to 25 per cent. of the loss of rates and grants, together with £5 million new Exchequer money.

The results of these calculations are shown in the Tables at the

end of this memorandum for each of the 82 county boroughs in existence in 1926-27 and for 12 of the administrative counties. In the case of the administrative counties, figures are given showing:

(1) the actual rate poundage for 1926-27 for each of the boroughs and districts (442 in number) within those

counties.

(2) the estimated rate poundage which would have been required for 1926-27 under the scheme before payment of the special grant referred to in paragraph 26.

(3) the estimated rate poundage which would have been required under the scheme after payment of the special grant.

The grants to boroughs and urban district councils have been calculated at 150 pence per head of population, and the grants to rural district councils at 30 pence per head of population.

The twelve counties have been selected as being typical, and it is believed that the working of the financial scheme in counties. generally is adequately illustrated by the Tables.

The illustration is, of course, not intended to do more than give a rough picture of the position. The new Valuation Lists which, under the Rating and Valuation Act, 1925, come into force in April, 1928 or April, 1929, may affect the calculations to a considerable extent, altering, as they will, not only the proportion which the value of derated properties bears to other properties, but also the rateable value per head of population; and many sharp differences in the poundage of the rates levied in the same union for poor law purposes in 1926-27 have already disappeared under the precepting reforms effected by the Rating and Valuation Act of 1925, while the variation in the poundage of the rates levied for county purposes arising from the difference between the county rate basis and the parochial valuation lists will disappear when the first valuation lists under the Act of 1925 come into operation.

Further, where a union is situated partly in one county or county borough and partly in another, the rate-borne expenditure has been apportioned, for the purpose of the illustration, between the various parts on the basis of assessable value, and not on the basis which will be adopted when the scheme is in operation. As already explained, that basis will be the number of persons in receipt of relief normally resident in each part.

Particulars showing the numbers of persons at present in receipt of relief have, however, been obtained for 12 unions each of which is situate in more than one county or county borough, and the expenditure of these unions for the year 1926-27 has been reapportioned on the basis of these numbers. It is found that in 8 cases (excluding West Ham) this reapportionment standing alone would have resulted in rate increases in the county boroughs ranging from 1d. in the £ to 18. 5d. in the £ and in three cases there would have been rate decreases in the County Boroughs ranging from 23d. in the £ to 18. 2d. in the £.

In 6 of the 8 cases in which there would have been rate increases the net gain of grant under the scheme more than counterbalances the estimated rate increase.

The case of the West Ham Union is quite exceptional. If the expenditure of the Union were apportioned between the County Borough of West Ham, the County Borough of East Ham and the County of Essex according to the number of persons in receipt of relief in each part the equivalent rates for 1926-27 would have been 12s. 52d. in West Ham, 68. 84d. in East Ham and 5s. 8d. in the part of the Union in the County of Essex, as compared with a rate of 88. 83d. for the Union as a whole. Special arrangements will require to be made to meet the difficulties which will arise on the transfer of the poor law functions to the County Borough of West Ham, and proposals for this purpose are under consideration.

36. On the assumptions on which the illustration is based it will be seen that of the 82 county boroughs there would be only 5 in which the loss of rates and grants would have been in excess of the new grant, while in 77 the new grant would have exceeded the loss of rates and grants (in 4 by less than 18. per head of population; in 18 by 18. and less than 2s.; in 18 by 2s. and less than 38.; in 18 by 38. and less than 48.; in 5 by 4s. and less than 5s.; and in 14 by 58. and over).

As regards the 12 selected counties, in each case the total grant shown for the county as a whole is in excess of the loss. The illustration shows that the general effect of the scheme of distribution will be not only to mitigate very considerably the changes in the incidence of rates due to the widening of the area of charge for poor law and highways, but also to reduce the rate poundage in most districts, especially in rural districts. The year 1926-27 is, of course, an unfavourable year to take for illustrating the working of any scheme so far as the mining areas are concerned and it may be expected that in a more normal year the divergencies in the poundage of rates would be considerably less than those shown in the tables for these areas.

APPLICATION TO LONDON.

37. Certain modifications of the financial scheme will be required to meet the special circumstances of London. Poor Law will be transferred to the County Council, but not highways. The classification grants for Class I and Class II roads will, however, be absorbed in the new grant.

In view of the large measure of rate equalisation which is involved in the local government changes under the scheme, it is proposed that the present Equalisation Fund in London should be abolished as from the 1st April, 1930.

The proposals as regards grants for the first quinquennial period are as follows::

A grant will be allotted to the administrative County equivalent to 75 per cent. of the loss of rates in the standard year of the County Councils and of the Metropolitan Borough Councils, together with the formula grant appropriate to the weighted population of the county.

Out of the grant so allotted, a grant will be payable to each Metropolitan Borough Council equivalent to 75 per cent. of its loss of rates and grants in the standard year, together with one-third of the formula grant appropriate to its weighted population without the loading for unemployment.

The aggregate of the grants payable to the Borough Councils will then be deducted from the total grant allotted to the County and the balance will be the grant payable to the County Council.

If the total grant payable to the County Council and the Borough Councils does not exceed the aggregate loss of rates and grants in the standard year by a sum equivalent to 18. per head of actual population, the grant to the County Council will be increased by such sum as will bring the net aggregate gain up to the equivalent of 1s. per head of population.

In the ascertainment of the loss of rates in the standard year

(1) the rates raised for the purpose of the Equalisation Fund and the grants received from the Fund will be excluded. from the calculations, and

(2) the highway and health grants of the Borough Councils will not be treated as grants payable to the County Council as in the case of Counties outside London, but will be included in Borough Councils calculations. The grant in aid payable to the Borough Councils ascertained as explained will be in substitution for all highway and health grants.

The proposed local government changes will involve considerable alterations in the incidence of rates in London, where various special circumstances exist. It is hoped that it will be possible to introduce an arrangement analogous to that provided for non-county boroughs and county districts, by which increases in rate poundage might be avoided. But it is desired before working out the exact form of these proposals to consult further with the London County Council and the Metropolitan Borough Councils and accordingly no table in respect of London is appended to the present paper.

ESTIMATED TOTAL COST TO THE EXCHEQUER. 38. It is estimated on the calculations of 1926-27 that the additional grants to make the minimum gain to counties and county boroughs up to 18. per head of population and the special Exchequer grants in reduction of the increases in the poundage of rates would amount to £2 millions, so that, with the £5 millions new Exchequer money included in the formula grant, the cost of the scheme to the Exchequer over and above the equivalent of the loss of rates and grants would amount to about £7 millions for England and Wales, including London. The corresponding cost for Scotland would amount to about £1 million, making a total for Great Britain of about £8 millions, of which £3 millions will be charged upon the Road Fund.

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