J^^ LOCAL GOVERNMENT AND TAXATION. PEW SUGGESTIONS OKGANIZATION AND IMPROVEMENT. WILLIAM RATHBONE, M.P. LIVEEPQOL : ADAM HOLDEN, 48, CHURCH STREET. LONDON : LONGMANS, BROWN, GREEN, LONGMANS & CO. CONTENTS Page Introduction 5 I. — Abeas - . - - 10 II. — Constitution of Local Authorities ------ 15 III. — The Incidence of Local Taxation ------ 22 IV. — The Belief of Local Taxation 28 The first part of this Pamphlet appeared iu the form of letters to The Times: the latter part, on the Incidence and Relief of Local Taxation, is now published for the first time. LOCAL GOVERNMENT AND TAXATION. INTEODUCTION. We are not without authority for behoving that the subject of Local Government and Taxation will, at an early date, be brought before Parliament with a view to legislation. Mr. Gladstone's Government, had they remained in office, would have met Parliament pledged to bring forward, during the past Session, a measure of reform ; and the present Administration has given emphatic expression to its sense of the shortcomings of our present system. Sir Stafford Northcote having, in his Budget speech of the 17th of April, summed up its defects under three heads: — "It is said,'' he observes, ^^ in the first place, that there are Imperial services which are charged exclusively or in undue proportion on local resources. It is said, in the second place, that the area of rating is not fair, and that many classes of property, including the very important class of personalty, are exempted from the burdens which are borne for the benefit of all kinds of property, the owners of personal property among the rest. And there is also a third complaint, coming, perhaps, from rather different quarters from those from which we hear most of these complaints made — viz., that our system of Local Taxation is bad and uneconomical, because we have a bad system of management, a bad system of administration, and an improper division of the country into local districts. I think," Sir Stafford Northcote adds, '^ that there is truth in all these complaints." In the meantime the murmurs of the ratepayer are incessant and loud. He feels that the growth of 6 his taxation has outstripped that of his capital and income, that it is inequitably adjusted, that it is inefficiently administered, and that it is inadequate — sometimes even injurious — in result. For an example of the disproportionate growth and inequitable incidence of taxation, I will take the town which I represent. Though the rise in wages in Liverpool has been very considerable of late, and the increase in the value of rateable property extraordi- narily great, the rise in the local rates has far out- stripped both. In 30 years— viz., from 1841 to 1871— wages rose less than 30 per cent., but the amount of rates in the pound, during the same period, rose 64 per cent. In 1841 the rates amounted to 7s. 4d. per head of the population : in 1871 they had risen to 25s. 3d. per head of the population. Yet Liverpool is relieved by possessing a very large municipal income, besides that derived from rates. In 1871, the total income from all sources was ^£960,000, of which JC481,000 was derived from rates : its income, independent of rates, being JC479,000. Again, while the merchants, brokers, and other rich classes in Liverpool pay for local rates from one-half per cent, up to, in a few cases, 2 per cent, of their income, the labouring man pays 3| per cent., and the retail tradesman pays from 5 to 12 per cent., and sometimes even more. Of inefficient administration it is hardly necessary to give instances. The machinery by which the large funds raised by Local Taxation are administered is too cumbrous and confused to insure effective and frugal expenditure. The individual ability and energy which are in many places devoted to local administration have certainly furnished examples of hospitals, work- houses, and prisons both admirably and economically constructed, but these examples do but serve by con- trast to expose the costly and unsatisfactory character of similar institutions existing side by side with them, and to justify the complaint of the ratepaper in the less fortunate districts that his money is wasted. The most striking failure of our present system is certainly in the administration of outdoor relief. The paupers in England are more than 4 per cent, of the population. That this result is not inevitable is proved by the fact that Ireland— a poor country, but with a better Poor Law — has the comparatively low percentage of 1*2 of pauperism to the population ; while even in England, in one instance, that of the Atcham Union, pauperism has been reduced under the good manage- ment of the late Sir Baldwyn Leighton from 8 per cent. to If per cent. The action of Parliament has in some respects even tended to aggravate rather than to remedy these evils. It has aggravated the burdens of Local Taxa- tion ; by multiplying Boards and authorities it has frittered away much of the local interest and ability at the service of local government, while it has increased their duties beyond their capacity. In a word, as the work to be done has been multiplied, the machinery for doing each part of it has been weakened. Many of these defects are more or less known to the public. They have been exposed by speakers and journalists, and with some of them most households are familiar by practical experience. But there is one which has attracted little popular attention, and which yet con- tains, perhaps, more than any other, the germs of grave complications in the future. While the atten- tion of the nation is annually concentrated on the total amount, and on the items of Imperial taxation, the particulars of local finance are known only to a few statisticians. The vast amounts expended, and the extent of the loans contracted by these various local bodies throughout the country, could not other- wise have escaped notice. The fact is that, while the future resources of the country are being heavily mortgaged for these debts, the attention given by men of property and of business to the manner and limits of this immense expenditure is constantly diminishing. I will ask the public to weigh carefully the very few 8 figures which I shall cite in illustration of this point. The amount of loans raised by local bodies throughout the kingdom in a single year — 1871 — was J65, 500,000. It is obvious that the power to charge our successors with such sums as this may, if imprudently exercised, become a most serious danger. The financial history of New York affords a conspicuous instance of the result of neglect in local expenditure. In 1861 the debt of that city was ^3,700,000 : in 1871 it had risen to JC13,700,000 — an increase in ten years of ten mil- lions sterling. In the case of New York, dishonesty, no doubt, as well as carelessness, preyed on the muni- cipal resources ; yet even in Liverpool, with its able local administration, ^3,000,000 was, between 1841 and 1872, added to the muncipal debt. I am anxious not to be misunderstood on this point. I do not wish to imply, for I do not believe, that all this increase of local indebtedness is unnecessary or wasteful ; but I would point out that the number and variety of bodies w^ho raise and apply these funds, their want of expe- rience, their divided purposes, and the comparatively small amount of attention and scrutiny which their proceedings attract, inevitably introduce into local expenditure an element of irresponsibility and loose- ness, which, acting on such large amounts, is fraught with peril. It must also be remembered that a great portion of the yearly increase of rates arises from these loans, and cannot therefore be checked at once when the country may be roused to the importance of this question. The debts which it is levied to repay will not be got rid of within the lifetime of one gene- ration. The pubUc has, it is to be feared, overlooked these dangers, and Parliament has taken no practical precaution against them. The generation is fast passing away which remembers that before the reform of the Poor Law the poor-rate had risen to an amount which in some cases exceeded the entire rental of the parish in which it was levied. I will not suggest that a recurrence of a similar state of things is probable ; 9 but even our statesmen have too often forgotten that a country may be ruined by local mismanagement as well as by Imperial extravagance. The defects to which I have referred are, for the most part, such that the mere statement of them indi- cates the leading principles which must be embodied in any measures of reform. I will try to suggest some considerations of detail with reference to the mode in which effect may best be given to those principles, and particularly with reference to the arrangement of areas of local government, to the constitution of local governing bodies, and to the incidence of taxation. Whatever conclusions may be ultimately arrived at on matters of detail, there are some leading conditions which any thorough scheme of reform must satisfy. The form of taxation must be such that all classes of ratepayers may be made to feel how seriously and directly their interests are affected by good or bad local administration. They must be given the opportunity of a real and effective representation in the local governing bodies ; and — what is not the least impor- tant, though it is one of the least regarded conditions of success — the governing bodies must be so organized that it may be possible for men to take an effective part in the work of local administration, in the time which they can be reasonably expected to devote to public business. 10 I.— AREAS. In the discussion of these subjects, it is necessary to go over ground that has been gone over bj far more able men than myself— men whose labours and services are too well known to render it necessary that I should particularly acknowledge my debt to them. Following the arrangement indicated in the intro- duction, the first subject with which I propose to deal is the division of the country into areas suitable and convenient for the administration of local affairs. This subject, though, I fear, a somewhat dry one, is not only first in order, but is second in importance to no branch of the question ; for, until order has been evoked from what Mr. Goschen well called the existing chaos of areas, effective reform of our local institutions is almost impossible. The country has been at different times divided into various areas, for the various purposes of local government, such as the Parish, the Borough, the Local Board District, the Highway District, the Sanitary District, and the County Court District, and embracing some of these, but not always conterminously, the Union and the County, with its Petty Sessional Divisions. Any given spot will be found to be included in several of these areas, and to be under the superintendence of the several local authorities who have charge of these areas. These separate bodies discharge their duties with respect to the inhabitants of the same place inde- pendently. The first step towards obtaining good management of our local affairs must be to obtain, instead of those various areas, one primary area for most of the work 11 of local administration ; and the aggregate area must then be formed by grouping the primary areas, for those works which can be better and more economi- cally managed on the larger scale. The Sanitary Commission urged strongly the im- portance of this ''coincidence of areas," and recom- mended that, ''having ascertained the right boundary for local government, all such government should be transacted within it, whether of public health, poor relief, highway management, justice, education, or any other local interests." To enable such important duties to be efficiently performed, primary areas must be large enough to interest men of ability and public spirit in their man- agement, and they must also be large enough to pay for sufficient, able, and efficient officers to assist the unpaid local administrators : for local self-government will inevitably break down under the increasing work which it has to do, and the difficult problems which it has to solve, unless it has a thoroughly efficient paid executive to carry out its directions. On the other hand, the primary areas must not be too large or straggling, or they would cease to enlist local interest, and would become, for obvious reasons, unmanageable. These conditions indicate limits as to size, in the oppo- site directions of extension and contraction, within which the convenient primary area is to be found. To obtain this primary area in a country where, as in England, local government has been the rule, it is neither desirable nor necessary to obliterate existing divisions and boundaries. It will be more practicable and convenient so to modify existing boundaries as to obtain the area most suitable in size and shape for the pm^poses of local government. The last Act which dealt with this question of areas was Mr. Stansfeld's PubHc Health Act of 1872. That Act divided the whole country into sanitary districts. It gave considerable powers for altering areas, for regulating their size and shape, and for 12 combining areas for certain purposes, and there can be little doubt that its author intended, in the sections providing for the constitution of joint Boards and united districts, to point the way to County Boards, and that he hoped that boundaries would be assimi- lated, various duties of local government combined, and simplicity and completeness of arrangement attained. It may be well, therefore, to consider what has been done under that Act, and what further legislation is required. The division of the country into sanitary districts by the Public Health Act was effected by taking dis- tricts which already possessed a corporate organization for general purposes of local administration — that is to say. Boroughs, Improvement Act and Local Govern- ment Act districts — and designating them Urban Sanitary Districts. Of these districts, there were 600 or thereabouts. Outside the limits of the urban dis- tricts, the residues of the Poor Law Unions were constituted the sanitary areas with the distinctive title of Kural Sanitary Districts. There were thus esta- blished about 1,300 sanitary districts — viz., about 600 urban and 700 rurah The necessity for considerable modifications of the districts thus called into existence, in order to bring them into shape and size suitable for purposes of local government, will be obvious, if it be remembered that they were constituted, not with immediate reference to those purposes, but by subtract- ing from areas formed by united parishes for Poor Law purposes whatever portions of those areas happened to have been brought at some time prior to 1870, by the vote of the ratepayers, under the operation of the Local Government Acts, or to have been under the jurisdic- tion of Town Councils or of Improvement Commis- sioners. In some instances the areas left by this process of subtraction under the jurisdiction of the newly-consti- tuted rural sanitary authorities are too small to justify their retaining an existence as a sanitary district. In 13 other instances these remainders are found to consist of separated parts of the original union, being remote from each other and from the centre of administration. To reduce these areas into districts of suitable shape and size will necessitate considerable modifications of boundaries. Power to effect such modifications in isolated cases is already provided by the Statute (section 26 of the Public Health Act 1872) ; but if areas are to be dealt with and adjusted upon a com- prehensive system, each must be treated, not as an isolated case upon its own merits, but with reference to other divisions. No machinery at present exists for this purpose. Probably it can only be satisfactorily accomplished by an Executive Eoyal Commission with statutory powers. The greatest difficulty of the task will be found in the adjustment of the area of taxation to the area which is benefited by the taxation. At present it happens, in many cases, that a whole area is rated for expenditure which benefits only a part of it. The consideration of this difficulty belongs rather to the subject of the incidence of taxation than to that of the arrangement of areas. Here I will only suggest that the solution may be found in a more general applica- tion of the principle approved for certain purposes by the Duke of Buccleuch's Commission of 1843 — the principle of dividing rates into two classes, general and special ; the first being levied generally and equally over the whole area, the second only upon the owners and occupiers specially benefited. I will conclude this branch of the subject with an illustration of the extent to which an area really homo- geneous can be subdivided, and the labour and cost of its administration multiplied, in the present state of things. A Parliamentary Borough comprising 40 square miles, with 30,400 houses and 158,000 inhabitants, who are mostly grouped along the centre of the district and engaged in one staple trade, is divided for Poor Law purposes into three parishes and two Unions: for 14 purposes of Local Grovernment, into three municipal boroughs and six Local Board districts ; and for sani- tary purposes, into nine urban and two rural sanitary districts. A part of one parish and rural sanitary dis- trict appears to be detached from the rest, and to be enclosed within the territorial limits of the neigh- bouring parish and borough. On the other hand, a detached part of another neighbouring parish appears to be locally included in the first-mentioned parish and Union. The administration of the local affairs of the whole district occupies three Mayors, about 60 Aldermen and Councillors, probably an equal or even greater number of Commissioners, or members of Local Boards, and nine Town Clerks or Clerks to Local Boards or Commissioners, and nine separate staffs of surveyors, clerks, auditors, &c., not to speak of two sets of Guardians, or of clerks to Guardians, overseers, collectors, chief officers of police, or members of School Boards. I do not know or suggest that the local administration is in any part of this area otherwise than efficient. I cite it merely as an instance of the complication and want of economy which result from the absence of system in the arrangement of the areas of local government. 15 II._CONSTITUTION OF LOCAL AUTHOKITIES. I now proceed to discuss a question which appears to me one of the most interesting as well as the most important of the problems of local self-government — viz., the constitution of the Local Authorities having jurisdiction within the several districts so formed, and the duties which should be devolved upon them. The duties of local administration are now frittered away among a number of Boards. They fail, therefore, to excite general, permanent, and vigilant interest in the great body of the community, or to engage the services of men who would probably be willing to act on a Board with extended powers and objects. Courts of Quarter Session, Boards of Guardians, Town Councils, Local Act and Lnprovement Act Authori- ties, Highway Boards, etc., have, or may have, juris- diction over the same areas for different purposes, and often, to increase the confusion, they have the manage- ment of areas nearly, but not quite, coincident. Elec- tions, with their attendant expense and trouble, are multiplied; and it is not to be wondered at that no sufficient interest is felt in these multiplied elections, except when occasionally aroused by political or reli- gious excitement. To remedy these serious evils I would propose to intrust to one body the whole of the multifarious duties now performed by several bodies acting on the same area. A body to which all these important duties is to be intrusted should be so elected as to secure the representation of all sections of the com- munity. I believe that this can be effectually done without disestablishing any of the existing special constituencies. 16 It would, probably, not be wise to apply such a system to very large towns, where affairs are on a scale to attract attention and interest, and to pay for good service — at least, not until experiment had shown its working elsewhere. The mode in which the recent Act has placed the primary education of the country under the charge of a local authority furnishes a striking instance how legislation has of late added to the weakness of local administration, when it might have effectually strengthened and improved it. Perhaps the strongest argument for immediate reform is the importance, in the interests of education especially, of repairing this error. I shall, therefore, ask the attention of the public especially to this point. No question is better calculated to enlist the interest and exertions of the best men throughout the country than that of national education. Had the Education Act intrusted it to the existing local authority, it would have increased the inducement to good men to serve as members of that authority : whereas, by constituting a new local autho- rity specially for its particular purpose, it tempts them away from the bodies already existing. The result has proved to be disadvantageous to the cause of education itself. Much of the opposition to School Boards arises from the dread which the rate- payers have of the expense and trouble of an additional election, and from their belief that a body specially elected will incline to justify its existence by being troublesome and extravagant. Yet most friends of education admit the need of a school authority, even where no additional expenditure is necessary. It is wanted, even in districts where voluntary schools supply ample school accommodation, in order to get the children into school. But I am assured by those who have interested themselves in the education of rural districts, that in many of them the farmers believe that, if the labourers were educated, they would become unsettled and disinclined to work, and that, so 17 believing, if they were called upon to elect Boards, solely to manage education, they would elect men to impede instead of electing men to promote it. A body intrusted with the whole local government of a district, including the management of education, would attract some of the best and most able men of every class, for they would feel that such an authority was charged with duties of sufficient interest and importance to induce them to make the necessary sacrifices of thought and time to share in their per- formance. Such a body would be at once a superior Local Board for general purposes, and a school autho- rity, obtained without expense, less likely to be chosen from motives of mere party or religious animosity, which would enjoy the confidence of the public, and in whose hands the power of compulsion (*' permissive" or otherwise) might be safely placed. It appears to me that the urgent need of a good school authority in each district is a reason why the reform of our local institutions, otherwise demanded, should be at once undertaken, and that the strong interest which is now felt in education would aid a Minister in carrying out such a reform. A Board possessing such varied powers must, of course, divide its current work, and intrust much of the detail of administration to committees. But the principles by which the action of such committees should be governed would be determnied by a broadly constituted body which would represent fully the various classes of the community, and w^hose delibera- tions would be of such importance as to excite public interest, and to secure the control of a vigilant public opinion. The duty of telling off men willing to serve the public for the various departments of local govern- ment would be performed far better by such a body than they can be performed at present by numerous popular electorates, which are often utterly uninterested in the duty which they are called upon to perform. At the same time, it will be well to consider 18 whether we cannot preserve and even strengthen any tendency which any of the existing modes of election may have to promote the choice of men possessing special qualifications and representing important inte- rests. The magistrates, nominated by the Crown, when acting in their administrative capacity in Courts of Quarter Sessions, or as ex officio guardians, practic- ally represent the owners of realized property. The elected members of Boards of Guardians, and the members of Local Boards, are chosen by a form of election, in which the possession of the plural vote gives to the large ratepayers the opportunity of an effective voice. The Town Councils are chosen by householders equally whether they pay little or much to the local rates. The magistrates are commonly men of leisure and education, often of wide experience and enlightened views. Most of them have a large and permanent interest in the country, and they often show great ability and forethought in the manage- ment of the affairs intrusted to them ; but, on the other hand, there is certainly sometimes a tendency to magnificence in their expenditure, and sometimes a want of knowledge of and attention to details. The guardians, elected under the plural vote, and in whose selection consequently the large ratepayers have influ- ence, are, as we might expect, vigilant as to expendi- ture, and they often, as tradesmen or as farmers, possess experience and knowledge most valuable in the management of parochial and other local matters ; but, on the other hand, they are sometimes short- sighted in their economies, and, to save a present small expense, they will incur a large ultimate one, and spend more money in temporarily staving off the pressure of difficulties than it would cost effectually to remove them. The Town Councils, from their mode of election, reflect more immediately the popular feeling of the time. They are often very ready to adopt reforms and carry them out, at least, for a time, with energy; but they are subject to hot and cold tits of 19 expenditure, alternately lavishly extravagant, and vio- lently, and therefore wastefuUy, economical. Let us, then, endeavour to secure all that is good in each of these constituent elements, and so to combine them as to neutralize what is bad. Men selected by each of these methods to act together in one combined governing body would bring into the common stock their respective knowledge, experience, and powers, and would check each other's defects. It is not an altogether new or untried principle that is here proposed. Where, on Boards of Guardians, some of the magistrates of the district attend regularly and take their fair share of the work with the elected guardians, the system works admirably ; as, for exam- ple, in the Atcham Union, and in many others which any Poor Law inspector could point out. But the defect of the present arrangement is this — any magis- trate may act as an ex officio guardian ; but it is not the special duty of any one to do so. What is every- body's business being nobody's business, they fre- quently do not attend at all ; or, what is worse, they attend only when an appointment is to be made, or a special point to be carried over the heads of those who do the actual work of the Board. For the ex officio element let there be substituted a limited proportion of members nominated by the magistrates out of their own number. Let another portion of the Council, or Board, be elected by the constituency which now elects Boards of Guardians and Local Boards, i,e., the rate- payers with the plural vote ; and let the remainder be elected by the constituency which now elects Town Councils, School Boards, &c., each householder having only one vote. I am only proposing to apply to the constitution of governing bodies for smaller areas a principle which more than one authority on this subject has proposed to apply to the formation of County Boards. For many years the late Mr. Hume brought in a Bill to establish County Boards, to consist of members partly 20 nominated by the magistrates, partly elected. Mr. Butt proposed a similar system is his plan for local government in Ireland, and Mr. Dudley Baxter, in one of his pamphlets, makes a similar suggestion. It appears to me no small test of the wisdom of the plan proposed, that it should recommend itself to able men of such varying political opinions, who have approached the subject from such different points of view. With one primary local council thus constituted the expense of one election would be substituted for that of many ; the magistrates at their usual meeting could select their representatives, while one election would suffice to elect the other members, each voter, when he received his voting paper, being asked if he voted as a ratepayer or as a householder. The ques- tion how many representatives each body of electors should furnish will, of course, require careful consider- ation. If the owners of property and magistrates are wise, they will desire that the number of magistrates should not exceed the number who might, probably, be willing to attend regularly. Influence, in such a case, would not be at all dependent on proportionate numbers. In this country men of position, education, and leisure, who will attend and really do their fair share of work, will find that their opinions and views will have, at least, their due weight, and that, with patience, they will be able to bring their colleagues round to their way of thinking when they are in the right. Where an able landowner will give the necessary time to the subject, and attend regularly as an ex officio guardian, you will find him influential, and, if willing, probably chairman of the Board. Supposing two-fifths of the governing body were elected under the plural vote, and two-fifths under household suffrage, the magistrates forming the remaining one-fifth — nay, if it were found, on investigation, that we could not hope to obtain the regular attendance of so large a proportion as one-fifth of the governing body from the magistrates. 21 even a smaller number, if men of ability, education, and leisure, would still exercise a most powerful and beneficial influence on the conduct of these bodies. To sum up the advantages which I conceive the plan proposed would possess : —It would save the trouble and expense of numerous elections, and would concentrate public interest on one. It would combine in one Board ability and public spirit, now frittered away among many, or lost altogether to the public service. In it, the occasional tendency to short-sighted stingi- ness in the ratepayers' representatives would be tem- pered by the wider views, and sometimes greater adminis- trative ability of the magistrates. On the other hand, the tendency to extravagance which magistrates and Town Councils sometimes indulge in would be kept in check by the ratepayers' direct representatives. It would bring home to the different classes of the country the duty, and give them the power of sending representatives to share in the local administration of the country, and to guard their special interests. It would tend to bring about naturally that intercourse between dif- ferent classes of the community in the discharge of public duties which is so desirable in order to prevent barriers growing up between them. Finally, local bodies, so formed, would furnish an admirable elec- torate for the formation of County Financial Boards to whom to intrust the management of the great high- ways and the other administrative work, for which a larger area than the primary unit of area of local government may be desirable. 22 III.— THE INCIDENCE OF LOCAL TAXATION. The exemptions, real and apparent, of the property of certain classes, from direct contribution to local burdens, appear to me alike contrary to justice and unfavourable to good management. The injustice of these exemptions has been so frequently and so widely denounced, that it will be only necessary here to touch on it as an introduction to the remedy proposed. While, as I have mentioned before, the rich mer- chant, or shipowner, with an income, say, of JCl 5,000 a year, may pay only 1 per cent, of that income towards the local rates, the labourer in his service may pay nearly 4 per cent, of his 24s. a week, the professional man 2^ per cent, of his JC600 a year, and the retail tradesman sometimes up to 12 per cent., or more, of his income. The ground landlord often escapes alto- gether from sharing the cost of improvements which permanently benefit his property. The landowner, though he may have ultimately to bear the burden of rates on agricultural land so far as they become per- manent, does not feel the rise and fall in rates which are paid by the occupier and borne by him until they are unbearable. The exemption of the capitalist and landowner from direct contribution to local rates creates an evil beyond its injustice. These classes do not feel sensi- bly the rise and fall of local burdens, and, consequently, they take little share in local administration. I know it is sometimes denied that there is this connection between the payment of rates by different classes and the share they take in local works. It is said that, even if the capitalist paid directly his full share of 23 local taxation, he would still prefer to bear his share of its excess rather than give up time and thought to local affairs. But this is a fallacy. It is not necessary that a whole class which feels a grievance should sacrifice time and labour for its remedy. The influ- ence of the public opinion of the class would naturally induce men of leisure and public spirit in it to seek usefulness and credit by joining in efi'ort for reform. I hope I have already shown how the duty may be clearly brought home, and the power given, to each class, to send representatives to share in local adminis- tration. If taxation be made equitable, it will bring home to them that it is their interest to perform the duty and to exercise the power. An investigation of the composition of local boards proves in the clearest manner the connection between direct taxation and interest : the occupiers and owners of that kind of property which is rated directly being found there in abundance, active and vigilant. The capitalists and the owners of property which is not directly rated rarely take their part. In England, wherever the cottage owners are directly rated, they, as a rule, are active in local administration. In Scotland, where most rates are paid half by owner and half by occupier, the owners and their representatives are among the most active local managers, and the administration is far superior to what it is in England. The speeches of leading members of the late and present Governments show conclusively that they have been anxiously considering this subject in connection with improvements in local administration. Mr. Gladstone stated, on the 23rd of April last, in his speech on the proposals of the present Government for the rehef of local taxation, — '' Our view with regard to this subject has been that when we dealt with it, it ought to be dealt with as a whole, and we ought not to commence by making these grants from the Exchequer in aid of local taxation, which we have always recognised as a portion of the work to be done 24 in some shape or other, but we should reserve these grants, and use them as our levers for securing good arrangements in the numerous branches of that widely complicated and difficult subject/' Sir Stafford Northcote, in reply, said that — '* The whole question of local administration and local agency closely connects itself with those great social and economical improve- ments which it is important to make, and that we are prepared to make, and we are prepared to deal with local taxation with the view of promoting and facili- tating those improvements." And he pointed out that the ratepayers might be relieved in two ways, — either by handing over, to the control of local bodies, certain branches of Imperial revenue, or by grants from the Imperial revenue in aid of local expenditure, on conditions calculated to improve local manage- ment. Now, it would certainly afford immediate relief to the local ratepayer if the house tax, as proposed by Mr. Goschen, or any other branches of Imperial revenue, were handed over to local bodies ; but on the 16th of April, 1872, Mr. Disraeli distinctly stated that he should have voted against giving up the house-tax to the localities ; and I fail to see how any such surrender of sources of revenue could be connected naturally and efiectively with the desired improve- ments. The simple acquisition of a new source of revenue would hardly of itself diminish the much-com- plained-of tendency to local waste and ill-considered expenditure. But I would ask whether, taking the other alternative, it would not be possible so to levy taxation that it should be felt to be more just— so to distribute grants from it as at once to give a sensible inducement to an improved system — to promote improved relations between the central and local authorities, and, as a consequence, greater efficiency of both in the public service. It will be my object to show how, in redressing in some measure the inequities of local taxation, *' those 25 improvements may be promoted," and *' those good arrangements secured." The speeches of the Chancellor of the Exchequer last session showed that Government had under con- sideration whether the income-tax should be abolished or improved, and what further relief should be given to the ratepayers. But, unless some extraordinary change takes place in the state of trade, it may be assumed that it will not be possible next year at once to abolish the income-tax, and to give that promised relief to local taxation, which, after the vote on Sir Massey Lopes' motion, can hardly be estimated at less than a million a year. If, then, the income-tax must for the present be maintained, I would ask the public to consider what chance there is of its extinction, within any reasonable time, after it has escaped the opportunity afforded by such a surplus as that of 1874, and the doom pronounced by both the outgoing and the incoming Prime Minister in their declarations of policy at a general election. No statesman has yet proposed a practical substitute for the income-tax, which would secure from the wealthy owners of per- sonal property their fair contribution to public bur- dens. Until that substitute has been found, the abolition of the income-tax would increase the anom- aly so loudly complained of — the exemption of per- sonalty from local taxation. The duty of endeavouring to remedy the cruel anomalies of the tax has been escaped from by holding out to the nation the hope of its early abolition. That delusion must now be at an end, and it would surely, then, be wise to see whether the tax could not be so amended, and its proceeds so applied, as to mitigate or remove the sense of injus- tice which enables men not otherwise dishonest to cheat their consciences into evading the tax. A moderate and amended income-tax, the proceeds of which should be applied in relief of local taxation, would, I think, commend itself to the sense of right of the nation, and be free from many objections which 26 attach to it in its present form. It would be out of place here to attempt to show how its anomalies may be reduced. I will only allude to Mr. Gladstone's objection — that it taxes labour as well as capital. This objection might be met by deducting, say ^200 (as salary for labour) from every income, or from every income below, say J05OO or JC700, or even ^1,000 a year, before charging it with income-tax. This would relieve the most heavily-taxed class of the com- munity. The income-tax, when amended, might be abandoned in time of peace as a resource for Imperial expenditure, and specially appropriated with such other taxes, or portions of taxes, as might be neces- sary, to the budget for aiding local expenditure. I suggest, then, that any further sum to be devoted to the relief of local taxation, should be taken directly out of this tax, and thus that the income of personal property should be brought directly under contribu- tion to local expenditure. I further suggest that the amount thus derived should be so appHed as to check and discourage the form of local expenditure most liable to abuse, and where the effect of abuse is most disastrous; and that this should be done by sub- sidising expenditure not only far less dangerous, but in which the central government can see that the nation has value for its grants. In so doing, we can also most materially facilitate that aid which the central government can give the localities out of its concentrated stores of experience, and through its able officers. In other countries the amounts expended by local bodies, but raised by the Imperial government by the same taxation which furnishes the means for Imperial expenditure, are clearly and separately shown. If this were done here, there would be far less danger of the growth of local expenditure being overlooked. The amounts to be contributed in Imperial grants might appear in a separate estimate, and be brought forward in the annual statement which Sir Massey Lopes 27 proposed that the President of the local government board should make for his department : just as the Secretary at War or First Lord of the Admiralty, on moving their respective estimates, explain the state and progress of the army and navy. The Budget would then show how the amount of such expendi- ture was specially provided : the estimates, how it was disposed of. In discussing the relief of local taxation, I shall hope to show how, in giving the proposed relief to local taxation, abuses can be checked, and economy and good management promoted. 28 IV.— THE RELIEF OF LOCAL TAXATION. In the preceding suggestions I have discussed the formation of local areas, the constitution of governing bodies, and the incidence of taxation, and I will now try to suggest, how relief from Imperial sources to localities may be given equitably, and so as to promote improved administration. Out-door relief is the form of local expenditure admittedly most open to abuse, and the abuse of which is most demoralising and injurious to the weKare of the community; but, because the immediate cost appears less, guardians are often tempted to resort to it injudiciously. The evils of out-door relief are so familiar to all who have taken an active share in parochial affairs that it would seem unnecessary to dwell upon them, were it not that there has been a constant tendency to relapse into the old vicious system. In the early years of its operation, the new Poor Law, by its discouragement of that system, reduced the expenditure on poor relief from JC6,317,255 in 1833-34, to JC4,044,741 in 1836-37. But, with relaxed strictness, the expenditure had risen in 1871- 72 to J£8,007,403. Though this rapid rise of pau- perism has of late excited attention, and brought about partial and local improvement, it is the constant complaint of the most able inspectors, that the dis- position to give out-door relief injudiciously is still one of the most fertile causes of pauperism, and, consequently, of excessive expenditure and rating. It was, no doubt, partly in hopes of diminishing this evil that Mr. Gathorne Hardy and Mr. Goschen applied to the Metropolis the principle of extending 29 over a larger area a portion of the cost of in-door relief, leaving the burden of out-door relief to be borne, as before, by the smaller area. It is now proposed that by an extension of this principle the whole country shall undertake a share of the cost of in-door relief. If a Governraent grant of, say, 2s. per head per week were given for every pauper inmate of workhouses whose management was up to the required standard of efficiency, the scale would be turned in favour of in-door relief, local taxation would be lightened, and economy and efficiency promoted. The confinement of a well-conducted workhouse is rarely sought improperly, and laxity of management is soon revealed by the presence of an undue number of able- bodied pauper inmates. It is easy to ascertain by inspection where the defects lie, and to remove them by requiring that regulations which have proved effective in the best managed workhouses shall be enforced as a condition of the grant. I venture to think that this proposal will be found alike more equitable and beneficial, and less formid- able than it would, at first sight, appear to be. Since the alteration of the law of settlement, pauperism has become less and less a local concern, and the burden of much of it most unfairly falls on those who have tried to do their duty. Some relief of this burden would, therefore, be equitable, if it could be given without diminishing the inducements to care and good management. Almost every authority — from the Poor Law Com- missioners, on whose Eeport the New Poor Law was founded, to the latest Poor Law reformer— agree in attributing much of the unnecessary increase of pau- perism to injudicious out-door relief, and agree also that, as stated by Mr. Longley, in his Beport to the Local Government Board on Poor Law Administration in hondon, dated November, 1873, the administration of the Poor Law has been successful in proportion to the nearness of its approach to the adoption of the work- 30 house system. Most, if not all of them, would, I think, go so far as to say that it would be well, if it were possible, to abolish out- door relief altogether, and to leave those cases in which out-door relief was desirable to be dealt with by organised charity. The waste of the money of the ratepayers is far from being the greatest evil produced by out-door relief. It encourages indolence and deception. It induces nume- rous recipients to remain where they are, sinking into permanent pauperism, and depressing the wages of the class to which they belong, instead of going where their labour is required, and where they would thus be well off and independent. It is unfair to the inde- pendent poor, who (especially the able-bodied and their children) would, by a better system, *^ be pro- tected from the unfair competition to which they are now exposed by those who, deriving part of their support from the poor-rates, can afford to sell their labour for an inadequate remuneration." (a). Those who have often sat to administer out-door relief, must have been painfully impressed with the fact, that by this competition we are manufacturing whole classes of paupers. For example, the able-bodied pauperism of Liverpool consists mainly of women with families, who ought not to be paupers at all: for almost at its door lies a large district full of textile manufactories, in which the labour of women and children is in request and well remunerated; and yet these women hang on in Liverpool, encouraged by the doles of out-door relief, and so depress the wages of female labour there that it is difficult even for the striving to keep their heads above water. Now, if no such resource as out- door relief existed, a sufficient number of the most suitable families would be com- pelled to move off, and, instead of being demoralised by pauperism in Liverpool, would become, in the manufacturing districts, well-to-do producers of wealth, (a) Reports of Poor Law Commissioners ^ vi., p. 30. 31 benefiting alike themselves and the country. This is no fancy. About two years ago, impressed alike with this state of things and with the possibility of a remedy, I arranged with a gentleman to visit the different manufacturing districts, and to place himself in connection with the Liverpool Guardians on the one hand, and the Liverpool Central Relief Com- mittee on the other, with the view of seeing whether we could not induce some of these people to transfer themselves from a place where they were becoming demoralised and a burden to others, to districts where they would soon be useful members of society. In less than two years we had induced 747 indi- viduals to migrate to the manufacturing districts, and most of them were doing well there ; and not only that, but 255 cases had been reported to the guardians as probably suitable cases to go to the manufacturing districts, of which 70, on refusing to go, had been removed from the relief list. Similar operations in London and elsewhere have been attended with similar results. I am firmly convinced that, if there were no legal out-door relief, able-bodied pau- perism would cease to exist in Liverpool, except in times of very exceptional distress ; and that Liverpool is not peculiar in this matter will be seen by anyone who will turn to the recent official report of Mr. Long- ley, on Poor Law Administration in London, to which I have previously referred. The superior economy of the in-door system has been abundantly proved by experiment. Sir Baldwyn Leighton showed how, by the application of sound principles of Poor Law administration, out-door pau- pers in a district were reduced from 1,199 in 1834, to 139 in 1870, and the expenditure from jC9,800 m 1837, to ^4,200 in 1868. No such proportionate decrease has taken place in the adjoining districts, and the average pauperism of the country is, relative to population, three times as great as that in "the Atcham Union. Sir Baldwyn Leighton naturally 32 asks — Is it impracticable to introduce the policy pur- sued in the Atcham Union into the present Poor Law ? And he estimates that the financial result of that policy would be a saving to the ratepayers of from JC2,000,000 to ^3,000,000 per annum. At Atcham, no doubt, wise and kind personal supervision on the part of a resident landlord, must be credited with a considerable part of this great success ; but similar results in kind, if not in degree, have followed the application of sound principles elsewhere. Mr. Longley, in his Eeport, dated the 7th November, 1873, states, as a substantial proof of the success in a union in the east of London of the application by the guardians, during the previous few months, of the workhouse test to a large proportion of the applica- tions for relief made to them, that the change in question was so marked, in point of time, as to render it possible to connect it distinctly with the consequent and equally marked decrease of pauperism in the union. He gives a table showing that the number of out-door paupers decreased in a year from 2,584 to 1,366 ; yet the application of the workhouse test only raised the number of indoor paupers from 720 to 808 ; the net decrease of paupers was therefore 1,130 ; and, while the weekly cost of out-door relief fell from ^164 to ^90, the weekly cost of the additional inmates in the workhouse was only ^18, leaving a net weekly gain to the union of £65. In other words, by the adoption of a better system, when no material change had taken place in the prosperity of the district, out- door pauperism was reduced 47 per cent., while the number in the workhouse only increased 11 per cent. Up to April, 1874, the progress was maintained, and the saving to the union was then at the rate of .£3,522 per annum. Nor is it to be feared, that if by a Government grant the locality is relieved of part of the cost of maintaining the inmates of workhouses, this will dim- inish the inducements to economical management, and 33 to take care that persons do not enter workhouses who have no right there. The grant being hmited to a fixed sum per head, all the cost of the maintenance of inmates which exceeded that sum would stil] fall on the locality. The Poor Law Inspector, familiarly acquainted with the best managed workhouses, will, as representing the Government, be justified in insist- ing, as the condition of the grant, that all workhouses shall be managed on the best system. If they are so managed, if due control is exercised, if strict discip- hne is preserved, if sufficient labour is enforced, that will of itself restrict the number of inmates : for there is nothing that the class inclined to pauperism dishkes more than order and restraint; and, if they are to work, they will find work outside rather than inside a workhouse. In Atcham Union, where the good management extended over a long period, while the extraordinary decrease which I have previously quoted took place in the out- door relief, not only was there no corres- ponding increase of the numbers in the workhouse, but those in receipt of in-door relief were diminished from 196 in 1834, to 154 in 1870. In the London parish, instanced by Mr. Longley, the process having been short and sharp, even the most sanguine would have expected to have found, at least for a time, a very great increase in in-door relief, yet while, as has been, seen, out-door pauperism was reduced 47 per cent., it was at the cost of raising the number of in-door paupers only 11 per cent., and three-fourths of even that increase, continued good management, had in twelve months caused to disappear. In Ireland, too, where out-door rehef is comparatively rare, the pro- portionate pauperism, as I have previously stated, is not one-third that of England. To estimate the cost of the required subsidy we may take the number of in-door paupers now and again in 1868, when increased pauperism had caused general alarm. On the 1st of January, 1874, there were in 34 the workhouses of the United Kingdom 206,069 pauper inmates. A subsidy of 2s. a week on that number would amount to ^1,071,559. On the 1st of January, 1868, there were 225,197 such inmates, and the same subsidy would cost il, 171, 024. In order to be on the right side, I have taken the period of the year when pauperism is about at its height. If this suggestion be objected to, or if the Govern- ment were disposed still further to relieve local expen- diture, then, it has been suggested that great advantage may be gained by applying any further subsidies in relief of taxation, towards the payment of the salaries of the superior paid officers of local bodies — such as clerks-to-guardians, masters, matrons, and trained nurses in workhouses and workhouse hospitals, and of relieving-officers — in fact, of those who hold offices of responsibility, or which require special training; and these subsidies might be given on conditions which would tend to raise the status and improve the quality and training of those on whom so much of the good management of our local affairs depends. This, then, appears to me to be the best way of bringing income derived from personal property under contribution to local burdens, viz., by charging further contributions from Imperial sources to localities directly on the income-tax, and applying it to discourage out- door, and to encourage in-door, relief, and to improve the administration of our local affairs. I must now allude, in a few words, to an adjust- ment of local taxation, which, though recommended by a committee of the late House of Commons, is, I fear, not popular with the majority of the present House. Yet I believe it to be a most truly Conserva- tive proposal, and one greatly in the interests of economy, of good management of our local affairs, and especially of the landowners themselves — I mean Mr. Goschen's proposal to divide the payment of rates between owners and occupiers. The Poor Law Com- missioners, in a Keport on Local Taxation, dated the 35 1st of June, 1843, and signed by Sir George NicoUs, Sir George Cornewall Lewis, and Sir Edmund Walker Head, in making a proposal founded on the same principle, say: — ^'Then, also, the right of the landlord to a supe- rior share of power in vestry, and in the election of guardians, to protect himself from injustice in the imposition, and from mismanagement in the adminis- tration of the taxes, to which he would then be seen to be the sole contributor, would not be viewed with the present jealousy, if, indeed, it were at all con- tested. This result would be not only valuable for the sake of the abstract fairness of giving protection to those whose interests are really involved, but would be equally desirable for the sake of those classes who, though not interested as tax-payers, are otherwise deeply interested in the proper administration of the laws ; for perhaps the greatest abuses which ever prevailed in the administration of the Poor Laws arose from this fact, that the tax fell, and that it was found out by the occupiers that it did fall, upon the land- lords, while the administration, expenditure, and appropriation of" the tax was given exclusively to the occupiers, who did not really bear the burden." Now, it is pretty well admitted, I think, on all hands, that the rates on agricultural land ultimately fall upon the owner; and, if that be so, it stands to reason and common sense, that it is most important, in the interests of that owner, that the rise and fall of these rates, and the question of the wisdom and economy of their management, should be brought home to him, and his attention directed to it while there is yet time to prevent a burden being tied for a genera- tion round his neck : for, as I have already pointed out, under the present system of large loans for local expenditure, he may easily be saddled with a burden for his lifetime, before he is awake to the danger. In this pamphlet I have attempted to show how areas should be simplified, local government strength- 36 ened, taxation made more just, and its proceeds most beneficially and economically applied. The discussion in it of the improvements necessary in our system of local government, is incomplete without some con- sideration of the duties and relations of the central with the local administrations, but I have already exceeded the length which I intended or wished, and I will, therefore, only say that the changes suggested in this pamphlet would afford a natural opportunity for such a re-adjustment of those relations as would, at once, make them more cordial, and render the work of each more efficient. J J^Jw V^s^^tI I^N IT- -^n ■y^WaSOBBj^^Mia ■P^ "^ Bb ~ II JB^Bi ' ^ ^' J r . "^- -v,, " j^Ei^^H ^I^JW^ W^-'-i- ^^li^^^^^lnSSB