EQUIVALENT GRANTS IN AID.
In 1888 a system was inaugurated by which Grants in Aid of Local Purposes have been made in the Three Kingdoms on the basis that England should get 80 per cent., Scotland 11 per cent., and Ireland 9 per cent., when such subventions are given from the Imperial Exchequer. The Legislation sanctioning this proportional allocation began with the English Local Government Act of 1888, when Grants in Aid were made out of the Probate Duties, and has been carried into several other Statutes relating to England, Scotland and Ireland. These proportions have become to a large extent stereotyped in the allocation of such grants. The new basis of contribution was originated by Mr. Goschen and was stated by him to depend upon the amount of the assumed contribution of each country to the Revenue for Common purposes. The method of calculation, he said, was a very complex one.[80]
It was pointed out at the time that under the new system the party that would probably require the largest amount of the grant would be the poorest country, and yet the richer country would get the larger proportionate grants.[81] The method of segregation is as follows. The Revenue and Expenditure Returns divide public expenditure into four clauses: (a) "Imperial or Common Services," (b) "English Services," (c) "Scottish Services," and (d) "Irish Services"; and having treated the three latter as "local services" and charged the particular outlay on them against each of the three countries, they estimate the balance left in cash as "the Contribution" of England, Scotland and Ireland to the "Imperial" Expenditure. It is admitted that this division is absolutely arbitrary. It has no sanction by any Act of Parliament. It is opposed to the system of Finance under the Act of Union. All the revenues of England, Scotland or Ireland are contributed for "Common" purposes, and in which all expenditure of any kind in any portion of the United Kingdom is alike "Common" or "Imperial." The details of the division were never disclosed, when the proportions were originally fixed. The segregation of the services classified as "Imperial" is open to serious objections. The method of computation is empirical and unconstitutional, and if carried to its logical conclusion would now result in depriving Ireland of any share whatever in future Equivalent grants, as her contribution to the services thus classified as "Imperial" is practically a minus quantity, though the revenue actually raised in Ireland is much higher than it ever has been before. This method of Distribution of Grants in Aid has been condemned by a succession of the highest financial authorities. Lord Ritchie, as Chancellor of the Exchequer, said, "he did not think it possible really to defend in all its details distribution by contribution."[82]
Mr. Wyndham said—
"It leads to results which all must hold to be illogical, and results which everybody in Ireland holds to be unjust because the greater the increase of taxation the less is the proportion that comes from Ireland, the poorer partner in the business, and so the less is the equivalent grant. As the evil increases the remedy diminishes, and you have only to force up taxation sufficiently high to extinguish the remedy altogether."[83]
Mr. Asquith said—
"A more confused and illogical condition of things it is impossible to imagine. The House ought really to take the opportunity of threshing out the principle upon which these equivalent grants ought to be distributed between the three countries."[84]
Lord St. Aldwyn said—
"That he always had a very strong objection to the system of Equivalent Grants, because when they had to make a grant for certain purposes to England, they were obliged to make proportionate grants to Ireland and Scotland quite irrespective of whether they needed them or not."[85]
Neither the "Imperial" contribution basis nor the "Population" basis, which has in some instances been resorted to for grants in aid, is satisfactory, nor is the method desirable of setting aside a certain fund raised by some particular tax to finance a particular service. For instance, the subvention of Education in Ireland out of the "Whisky money" recently broke down owing to the diminution of the Revenue from this source. The more sober Ireland became, the less she got for Education. Chaos was imminent, and finally, after much friction, a special grant had to be made from the Treasury to save the situation. There are numerous instances in which great complications have been caused in dealing with local authorities owing to these methods of making grants in aid, and the system should be reformed. The true basis is the basis of each Kingdom's need.... England has her needs, let them be supplied. Scotland has hers, let them be supplied. Ireland has hers, and having regard to her present comparative poverty, let them be supplied "not grudgingly or of necessity," but by the Chancellor of the Exchequer "as a cheerful giver." This is the constitutional principle under the Act of Union, and the soundest financial principle to observe for the United Kingdom.