§ Order for Second Reading read.
§ *(12.40.) MR. HALDANE (Haddington)
I think the House will agree that, having regard to the shortness of the time at the disposal of private Members, speeches on a Wednesday should not be longer than necessary. Therefore, I will proceed without preface to lay before the House the somewhat complicated provisions of the measure for Land Law reform I have to present. The Bill aims at the accomplishment of two purposes. In the first place, it seeks to provide Councils for counties and boroughs, now thoroughly representative bodies, with powers for the compulsory acquisition of such land as is necessary in the interest of the population they represent. 67 In the second place, the Bill seeks to deal with the problem of unearned increment, a problem which has interested many statesmen and economists for years gone by. Land in this country stands in a different position from any other form of property. In the whole of it society is interested; in some of it, that which is in the occupation of those congested portions of our population which are drawn into our towns and cities, society is deeply and vitally interested. This land, called for brevity urban land, is essential for the existence and life of the urban community, and it is in view of this that we feel some change must be made in the existing condition of the law. You have created these Local Bodies, you have made them representative of the inhabitants of the locality, yet you have not provided them with the power which of all powers is the most important to them—the power of acquiring and controlling the land which is necessary for the existence of the inhabitants whom they represent. Well, Sir, as things stand at present, a whole city may be at the mercy of a single individual. Land is, after all, a monopoly; it is something which cannot be provided but in a definite and specific form. It is not like money or any other form of property, one portion of which may do as well as another. This particular portion of land, and no other, is essential for the purpose of the people to be benefited. Under this condition of things, it seems to some of us right that you should provide the Local Authority with such power as will enable it to acquire and control land which is necessary for the health of the people whom it represents. Now that, of course, involves compulsory purchase, or, in other words, it involves the expropriation of the present landlord. But that is no new procedure; it is one with which we are extremely familiar nowadays. We have extended it to Railway Companies in the public interest for half a century. We have had it extended by a Conservative Government for the building of artizans' dwellings under the Act of 1875. Only a year ago the right hon. Gentleman who represents the Local Government Board in this House and who has attended to the question of the housing of the working classes in so fair and so keen a spirit, that 68 right hon. Gentleman brought forward a Bill consolidating and amplifying that power of expropriation given to the Local Authority. But even probably more familiar than that, though I doubt whether Members realise the extent to which the House has gone in the direction of expropriation—is the instance of 1882, when a Conservative ex-Lord Chancellor of immense ability, the late Lord Cairns, brought forward a Bill, which passed through Parliament, for amending the law relating to settled land. That Bill, promoted and enacted in the public interest, provided that where a man had only a subordinate and life interest in property he, for the public interest, should be enabled to turn that property, including the interest of the remainder-man, into money. This involved the principle that in the public interest the expropriation of the remainder-man may be made; that even where a person has a limited interest in it, he may be empowered to change that property into money subject only to the restriction that no portion of the value shall be taken from the person so affected. That is the principle of the Bill we propose to the House, and that is our case to be debated. We propose to give to the owners of the land which it is necessary to take in the interest of the public the pecuniary value of that land—the full pecuniary value. We say that under the provisions of this Bill, if it passes into law, there will be taken from the landowner not a single penny to which he has any legal or moral right. So much for the first purpose of the Bill. Now, as regards the second purpose, connected with unearned increment, urban land stands in a peculiar position. In the case of the land upon which the town is built, and which lies immediately around the town, there is a special increment of value which is absolutely diverse from anything else in the nature of property. It is not like the increase in value of Railway Stock, which rises and falls with the market; it is unlike the increase in value of any form of movable property; it is not even like the increase in value which takes place in land generally owing to agricultural reasons and the greater demand for land on the part of the population generally. It is a specific increase arising from this, and solely from this, that a certain piece of 69 land is vitally necessary in the interest of a particular community, and that a particular landowner who has the monopoly of the land has the power to dictate his own terms, and who says, "You shall not have the land except at my own price." That is the present state of things which differentiates the unearned increment in the case of urban land from the increase in any other form of property, and it is with that exceptional form of unearned increment, and that alone, we propose to deal in this Bill. It is instructive to look at the way this works. There is land around London which the people of London could, 40 years ago, purchase at the rate of £300 an acre, but the price now is from £5,000 to £10,000 an acre. What has been the cause of this increase? Certainly nothing that has been done by the owner, certainly nothing proceeding from any cause of a general nature. This growth—this enormous growth—is due to this, and this alone—the necessities of the population; and that those who represent the people have, on their behalf, to pay the owner what he chooses to ask and what it is right to give him, for the law allows him to make the demand. We cannot go back on past transactions; we cannot take the value which has accrued to the owner and which the law allows him, but we may alter the law for the future and prevent those scandals, for I can call them nothing else, which have occurred in the past from being repeated in the future. This Bill, then, is of a prospective nature altogether; it proposes nothing in the way of confiscation of increment, the title to which has already accrued. There is another view of the question. In London, in the course of the 21 years since 1870, annual ground values have increased, as distinguished from the buildings and erections on the land, by the sum of seven millions. If the people of London, so lately as 1870, had purchased the land on which their city stands, that city would be now in receipt of this enormous annual income of seven millions, which would go a great way towards the furtherance of public purposes, and certainly would have put them in a very much better position than they are in at present. When I take the period between 1870 and 1891, I do not mean the annual amount 70 each year—I mean the total amount. We say it has been a great error and mistake in the legislation of the past—that a Municipality such as that which represents London should not have had the power to take land and to divert into the pockets of the persons who created it, the value which has hitherto gone into the pockets of the owner. That is the aim and object of this Bill. It proposes to deal with the future, and I regret that it cannot deal with the past. I will now say a few words as to the reasons which induced us to bring it forward at the present time. Nothing is more striking than the way in which the extension of the franchise in 1885 has educated the public mind, and I might also say the minds of Members of this House, on this question. We no longer come to this House to represent individuals, however numerous and important they may be. We come here to represent the large mass of the people, and the consequence has been that the mind of the Legislature has been directed much more than formerly, to what I may call the collective, rather than the individual, interests and grievances of the people. The question about which we are now concerned is not that which relates to the diffusion of ownership, and to the breaking up of estates; but as to how the public may most effectually maintain and preserve their interests in the land. An illustration of the present position of affairs was provided in the controversy which took place the other day on the Small Holdings Bill and other Debates which took place last year, especially on the Leasehold Enfranchisement Bill. We felt that the Leasehold Enfranchisement Bill was brought forward not in the interest of society in general, but of a body of individuals, and that the effect of it would be to transfer the annual increment from one class of owners to another class who had no better right to it. We considered that, while leaseholders had grievances which ought to be redressed, that redress should come from some public body through a measure which should not give uncontrolled power to individual leaseholders.
§ *MR. HALDANE
My hon. Friend says he would put in Clauses of Control, 71 but we feel that the time has come when a measure of land control should be brought forward on a wider basis. I will pass now to the machinery of this Bill. In order to accomplish its objects, which I have attempted to describe, Local Authorities should be enabled to purchase land in the interest of the community, and to deal with it in a perfectly free manner. Now, it has been said, in quarters of this House from which I should hardly have expected it to come, that a proposal to give compulsory powers as to land to Municipalities is objectionable, as tending to lead to jobbery. It has been our business of late years to enlarge the number of these local Representative Bodies, and to extend their powers, and I think it comes with bad grace from some hon. Members to say that they distrust the power of dealing with land which has been given to Municipalities on account of the risk of jobbery which it might involve. If there is anything which characterises the Democracy of this country it is this—that it hates and detests anything like corruption; and I think we may safely trust to the Democracy, when it comes to the election of these Local Bodies, to see that they are elected on a basis which will preclude any danger of that kind. The awakening which came to London in connection with the abolition of the late Metropolitan Board of Works, and the zeal which has been shown in the Metropolis in regard to the County Council Election, has produced a body of members for the Council as pure and free from any suspicion of jobbery as it would be possible to find throughout the length and breadth of the country, and I have no doubt that the same may be said with regard to the Municipality of Birmingham. It is unworthy, therefore, of those who believe in these Local Bodies to suggest a suspicion of jobbery in this case. They may rest assured that the people who elect these bodies will take care that the risk is very small. Now, there is nobody in this House who has more closely associated himself with, municipal life than the right hon. Gentleman the Member for West Birmingham, and I confess I should have been glad if I could have seen him sitting in his place during the discussion of this question. He has been one of the 72 pioneers in the movement for increasing the powers of our Local Bodies, but it sometimes happens that he finds himself unable to give us that support which we should like to receive from him in regard to these matters. I trust, however, that in the Division we shall have the support of hon. Members who have been associated with municipal life in the past, and who are in a position to render yeoman service in the future. I would like to point out, with regard to the machinery of this Bill, that it proposes to enable the Municipal Authority to purchase the land in the first place, and to use it in the manner it thinks best. It maybe stated that injustice may arise in the case of individual owners of land, but I think that the Bill will put an effectual and thoroughgoing check on any abuses of their powers which may be contemplated by Local Authorities. Before there can be valuation of land and compulsory purchase, the authority of the Local Government Board must be obtained, for the Local Government Board must have notice and hold an inquiry, and say whether in its opinion what is being done is for the benefit of the inhabitants. If the Local Government Board sees that there is any real ground for suspicion in the case it will not sanction the proceeding. Then, again, public notice must be given of what is proposed to be done, and it will be in the power of the inhabitants concerned to draw the attention of the Department to the position of affairs. The Bill has been carefully drawn to prevent any such objections with regard to compulsory purchase. I now come to the question of unearned increment. Many propositions have been brought forward for the purpose of getting at the unearned increment. It was once proposed by Mr. Mill that there should be a general valuation of the land in the country, and that the subsequent unearned increment should be obtained by means of taxation. We do not look forward to the carrying out of any such far-reaching proposition. On the other hand, we think that a mere rating power is insufficient. I would point out that a rate for such a purpose is either a rate, or it is something more. If it is a mere rate, then it only gets a fraction of unearned increment; whilst if the whole is to be taken, then it is not a rate, 73 and you will be doing a very great injustice, because you draw no distinction between accrued increment and that which is to accrue after the passing of your reform. We propose in this Bill to deal only with the unearned increment which is created in the future, after the alteration of the law, and after notice has been given. We propose the adoption of what we consider is the only remedy—the remedy of purchase. By enabling the Local Authority to purchase the land you put them into the position of getting unearned increment. But it may be said that the Local Authority, such as the County Council in London, has not sufficient funds to enable it to purchase the land it requires for the purpose, and which it believes is likely to be the subject of greatly increasing value. Accordingly we provide powers of compulsory valuation. Suppose there are 100 acres of land on the confines of London which will probably go up in value, and that the County Council wishes to purchase it and to divert the stream of population in that direction. Suppose that the County Council further thinks it expedient to put the provisions of this Bill into operation. The result would be that it would have a valuation of the land, and that valuation can only take place with the consent of the Local Government Board. The valuation would take place, and it would be the duty of the arbitrator or umpire to give the owner of the land its actual value—that is, the sum that a willing buyer would give to a willing seller. The first valuation would take place on the basis of giving the owner the full market value of the land. The County Council may at any time within twenty years afterwards come forward and say—"We now require this land, and we will pay you the actual value at the time of purchase, minus only so much as is ascertained, upon the basis of the first valuation, to be due to the movement of population in the meantime." The result of my inquiries has been that the problem of the valuation is much simpler than many solved in the provisions of the Lands Clauses Consolidation Act, and that men of skill would quickly make rules which would enable them to determine this matter without the slightest difficulty. They would sit as jurymen and come to a kind of approximate estimate such as pertains 74 to the purchase of railways, and even more difficult elements than we have to deal with on this occasion. Having arrived at that value, the County Council would be able to purchase at the capital price of the time being, minus so much as represented this special unearned increment accrued since the first valuation. The owner of the land would get everything he had expended in the way of improvement. For instance, he might have desired to lay out the land as building land in order to attract people there; and it would be perfectly safe immediately after the first valuation to erect his buildings, lay out the land, and bring tenants there, and so increase the value of the estate in that way, because the value of all that he had put there would be secured under the provisions of this Bill. I wish now to deal with one or two objections which will be raised. It will be said that this Bill would depreciate the value of the land. Let me first say that as regards future owners it is, of course, absurd to say that they would buy without notice that the change had been made in the law under which this special unearned increment was no longer to be appropriated by private parties. Therefore we may dismiss the case of future owners. In the case of existing owners I agree there would to some extent, but not to the whole extentalleged, be depreciation of the value of the land. It is part of my case that it ought to be so. The matter stands in this way. Anybody owning the land would be paid for it at the full market value at the time of the purchase; but assuming there was a valuation with a view to subsequent purchase, then it would be paid when the time came on the basis of what I have described as the value at the time of purchase, minus special unearned increment accrued in the meantime. Of course, in the minds of purchasers who were speculating in the land, that would affect the value of the land, and to that extent they would not be in a position to give as much as if the Bill had not been passed, and the law left in the same unaltered condition. But such a purchaser would get the actual capitalised value of his income to begin with, and all actual value which had accrued up to the date of the first valuation and had entered into the market value. He would get everything which would be 75 his as the law stood, apart from the passing of the provisions of this Bill, as at the date of the first valuation; and he would be in a position to realise that value and to sell the land, because the purchaser of the land would know that the County Council could not then take it for less. There might be a general drop all-round, because of the existence of powers of compulsory purchase, but that is what you have to face, in kind at least, in all instances of giving powers of compulsory purchase. Take the case of a man who sells during the period within which the second valuation and purchase can take place, that is, 20 years, and it is the only case which distinguishes what I am describing from what occurs under any scheme of compulsory purchase. The seller may go into the market and say—"Here is my land valued at so much; the County Council cannot take it for less, and accordingly you may take it with this certainty—you buy it knowing you get that much for it. You can develop it and lay out money upon it, and you get the value of your improvement, and you get the income in the meantime which may be largely in excess of what you would get in the shape of ordinary interest on your money. You take it with the certainty that the County Council cannot take it for less than the capitalised value of the income, and with the chance that the County Council may not purchase it for some time." What this Bill proposes to do is to give everybody who owns this kind of land exactly the same price he would have if it were ordinary land. It proposes to secure that. It is only in the case of speculative purchasers that the price could be affected. In all the other cases, in the case of people buying for occupation and objects of that kind, matters under this Bill would stand as at present. And, therefore, while I admit that the effect of the passage of this Bill must be to bring about a certain depreciation in the value of land in the hands of some existing owners, I also say that what would be affected would be merely the speculative value, and not the legitimate and ordinary value of the land, treated as upon the same footing as the other land in the country. There is another objection made to this Bill. It is said that if you are going to take the 76 unearned increment you ought also to compensate for what was described the other day in a Debate in this House by the hon. Member for the Stamford Division (Mr. Cust) as the undeserved decrement. It is said—"If the land goes up in value you are going to take this increment, you ought, by another provision, to pay the man if it drops in the meantime." That is founded upon a complete fallacy and misapprehension. What you do is to value the land, and in that valuation you get at the market value, and it is open to the owner of the land to sell it at the amount of the valuation. He can get his money and pocket it. If he desires to continue the ownership, he only does so because he hopes for, and takes his chance of, an increase in his income and in the value of the land, and with it the risk of drop which attends that chance. The effect of this Bill is merely to give notice that you are not going to allow this form of increment to be appropriated in the future as it has been in the past. Involved in that there is no correlative obligation to make allowance at the public expense for the diminished value. That is due to the ordinary incidents of which speculators take the risk; and if a man does not choose to realise at once, and a worse time comes to him, that is his fault and misfortune. Certainly, the population of the town or its representatives, the Local Authorities, cannot be blamed. It seems to me that is an answer to the two objections—the only two real objections—which can be made to this measure. It seems to us that this measure is one which does not involve the confiscation of a single penny to which any man has a legal or moral title. We know the law may be altered, and the only change as regards the landowner is that the law has been altered. The objections brought forward to this Bill are objections which in kind may be brought forward in precisely the same way to every Bill giving powers for compulsory purchase. Does the right hon. Gentleman opposite (Mr. Ritchie) imagine that in his Bill giving enlarged power to Local Authorities to acquire land for the purpose of artizans' dwellings he did not thereby affect the value of the land which was likely to be so taken? I venture to say that he brought about a great change in the value of certain urban properties in 77 London, and I will go further and say that the change is one of the best things which the right hon. Gentleman has accomplished in his administration.
§ *MR. HALDANE
; In the machinery which you had established by successive Acts of Parliament you had created the theory of these unsanitary conditions, and then you gave compulsory powers to take the land to which they apply, and now you say there as a distinction between that sort of thing and what we contemplate. But we are laying our hands upon an unsanitary spot in the administration of these affairs by urban authorities, and we want to deal with it on the same principle and in the same way the right hon. Gentleman did in the case of the Housing of the Working Classes Bill. All measures for compulsory purchase must affect the value of land, but it is time we ceased to recognise that as a valid objection. I remember how in 1886, in that January Debate which has been so often referred to, the right hon. Gentleman the Minister for Agriculture denounced my hon. Friend the Member for the Bordesley Division (Mr. J. Collings) and the right hon. Member for West Birmingham (Mr. J. Chamberlain) for their proposition of compulsion at that time. He said those were the proposals of a class with predatory instincts represented by the two hon. Members. Well, there came a time when the Minister for Agriculture was working in harmony with those two Members, calling them his friends, and agreeing with them as to the principles of a measure they were bringing forward in common, and which, only the other day, they were all supporting. It seems to me that experience is not unlikely to be repeated. I dare say we shall have a speech from the Minister for Agriculture denouncing this Bill as confiscation and robbery, and I shall attach as much importance to that speech as I attached to the speech on that January afternoon in 1886. Years will pass, perhaps it will take two or three or more, but the time will come when this Bill, which I am now bringing forward, will, in principle at all events, be advocated from the Benches opposite. Do you think as the franchise is still further extended, 78 and as the people begin to feel more and more the power you put into their hands, that they will tolerate a state of things under which value, properly theirs, and which ought therefore to go into their pockets, is to go into the pockets of a few monopolist landlords who have no more right to it than I have? It appears to me that the Bill we are introducing from this side of the House is a Bill of really Conservative policy—it is a Bill which seeks to give effect to the tendencies of our time, and to recognise the new views of Land Law reform which have been forced upon us as a result of the wider franchise which now obtains. We who sit here are, after all, the people's men of business, and it is our duty to be responsive to their opinions. There was, a few years ago, great agitation on the subject of the land. There came to this country a gentleman of great oratorical ability, who went through the land rather in the character of a preacher than in any other guise, and he preached the doctrine of the iniquity of private ownership of land, and the doctrine of expropriation without compensation. I bring forward this Bill, not because I agree with Mr. Henry George, but because I disagree with him. If you are to stop the agitation which then began, and which, it seems, has been acquiring force ever since, something must be done. The mind of the people is awakened on this subject; and I think in this connection we owe something to Mr. George instead of having a grudge against him. He has made the people see that the time has come when something must be done; and what we seek in this Bill is to do that something, not in the unjust form he proposed, but in a just form. And we feel that in the proposition we are laying before the House we are taking that step. I do not say that this Bill deals with the whole land question, or even with more than a small part, but I do say that it seeks to grapple with a real grievance, perhaps the most important the people have. In seeking to deal with that grievance, we seek to deal with it by altered law for the future, avoiding those doctrines of confiscation which have been talked about so much and denounced so often, but the true significance of which has not, I think, been understood. Our business is to disengage the nature of the real diffi- 79 culty, and to find a remedy for it. It is not in any revolutionary spirit that I bring forward this Bill. It is with a desire to grapple with a grievance, a most real and substantial one, in a way which is consistent with justice, and it is in that spirit that I venture to commend this Bill to the favour of the House.
§ Motion made, and Question proposed, "That the Bill be now read a second time."—(Mr. Haldane.)
§ (1.27.) MR. BAUMANN (Camberwell, Peckham)
I shall move, Sir, that this Bill be read a second time this day six months, and in doing so I must say that if this Bill had been moved by anybody but my hon. and learned Friend the Member for Haddington (Mr. Haldane), and if it were not to be seconded, as I understand it is, by the hon. and learned Member for Fife (Mr. Asquith), I should have regarded the Bill as an elaborate joke, not a very good joke, but as a Wednesday frolic. The characters of the hon. and learned Members, however, preclude such a suspicion. These two hon. and learned Gentlemen have professional reputations to lose, they are both looking for office in the next Radical Government, and we are obliged, therefore, to regard this Bill, this ugly and sinister Bill, as the serious conception of the rising lawyers of the Radical Party. The Select Committee on Town Holdings recommended that in the case of large industrial populations in permanent employment living close to their work, and where the people were able and willing to buy the freehold of their houses, the Local Authorities of such places—places, for instance, like Woolwich, and such communities as are to be found in the neighbourhood of slate quarries or coal mines—should be armed with the powers of compulsory purchase. In that recommendation I heartily concur; but, Sir, this Bill proposes something very different from that. This Bill says that "where it appears to any County Council that it is for the interest of the inhabitants of any district within the county that any lands shall be purchased … … the Council may purchase those lands." No public object stated; simply for the interest of the inhabitants. Sir, I say it never can be for the interest of any of 80 the inhabitants in any county in England that any lands should be bought under the terms and conditions of this Bill, because it is for the interest of all the inhabitants of all the counties in England that security of property should be maintained, and I am old-fashioned enough to believe that what is wrong in morals cannot be innocent in politics. In these modern days, with the extended franchise, there are many limitations imposed on the rights of property, as the hon. and learned Gentleman (Mr. Haldane) has reminded us. I know a man cannot do what he likes with his own if, by so doing, he injures his neighbours. I respect the maxim, sic utere tuo ut rempublicam non lœdas. But, Sir, I ask this House if the hon. and learned Gentleman has produced a single argument to show that the present ownership and distribution of landed property in England inflicts on the community evils half so serious and grave as those that would flow from the shock to security which would be given by this Bill, and from the open war on property which he proposes to wage? When you make war on property, as Burke says, you make war on human nature. But, Mr. Speaker, the proposals in this Bill for the immediate purchase of land, though monstrous enough, and unjustified by any public object, are mild, innocuous, and even laudable when compared with the provisions in the Bill for valuation with a view to subsequent purchase. It appears from Clauses 4, 5, and 6 of this Bill, that if the County Council should cast its covetous, and regal eye upon the vineyard of any Naboth in the country or out of the country, and if the envious monarch should not feel inclined to force a sale at that particular moment, either from scarcity of funds or because the market is brisk, then the vineyard in question is to be tied up for 20 years to await the royal pleasure of the County Council, under a valuation which is pleasantly described as a charge on the land, and which is to be registered under the Registration Act of 1888. And if at any period within the 20 years the County Council think they see a favourable moment for buying, down comes their hand upon the property. And, Sir, the price to be paid for it is to be the price which is described as— 81The fair market value of the lands at the time of the purchase thereof, after deducting the proportion of any increase of that value over and above the value of the lands as the same was ascertained when the lands were previously valued under the provisions of this Act, which may be ascertained to be the special increment due to the increase or movement of the population in, or to the industrial or other development of any town or other populous place in the neighbourhood of such lands.Now, Sir, that is not easy to realise at first. It requires an effort of the imagination to gauge even approximately the bottomless injustice of this proposal. It is, again, a case of "Heads I win, tails you lose." If the land rises in value the owner is not to receive the increment, if it can be traced to any of those causes which usually produce a rise in the value of landed property. If, on the other hand, the property falls in value, the owner, after having been prevented from dealing with his own property for 20 years, will then have it left on his hands damaged and depreciated by the County Council, because the House will observe there is no power in the Bill to force the County Council to buy the land which they have locked up for 20 years under the blight and padlock of their valuation. In other phraseology, Sir, the County Council is to have the call of any land it likes to put its finger upon; it is to have an option of purchase extending over 20 years, and for that option not a single farthing is to be paid! Mr. Speaker, that is a proposal which most business men will regard as the fantastic scheme of young lawyers who dream nightmares, because, Sir, I do not think any man will deny that the effect of this clause will be to make any lands subject to the County Council valuation absolutely unsaleable. What man would be such an ass as to buy lands from which he would be liable to be expropriated at any moment by the County Council, particularly as he would not be allowed to make the ordinary profit that might attach to a judicious investment? Now, Sir, I am bound to say, with all due deference to my hon. and learned Friend, that of all the blundering and plundering fallacies propagated by modern Radicalism, this so-called doctrine of unearned increment is the most shallow and sinister. The hon. Gentleman very conveniently proposes to confine this 82 doctrine to landed property in the neighbourhood of towns; but I entirely refuse to accept that limitation from the hon. and learned Gentleman. He will find, as the franchise is extended, that what is sauce for the landlord is also sauce for the commercial millionaire. I want to know with what object any man buys property of any kind? Is it not in the hope and belief that the property will rise in value? And every man expects to be allowed to enjoy every chance, whether from accident or his own exertions, to augment any part of the value of his property. Why does a man buy shares in a mine or a bank? Why does he buy Government securities? Not only to get interest for his money, but in the hope and belief that his investment will improve in value. I buy Consols at 90, and they go up to 95. I have done nothing, except as an ordinary citizen who shaves, and pays his debts and says his prayers. I have done nothing to increase their value and yet they rise. If ever there was a case of unearned increment, it is that of the increased value of industrial undertakings; and I will venture to say that most, if not nearly all, of the hon. Gentlemen opposite who are going to vote to-day for the confiscation of the unearned increment in land have made their fortunes and to-day draw their incomes from the increased value of industrial undertakings in different parts of the world, and to which they have never contributed one moment's thought or exertion. I will go further, and say that the fruits of the earth contain as large an element of unearned increment as the earth from which they are derived. The farmer gives his care to the cultivation of the soil, but his labour and anxiety differ not at all from the labour of managing an estate, and the prices which the farmer gets for his produce—the value of his corn and beef—depend almost entirely upon facilities of transport, the railways and canals in his neighbourhood, and the proximity of markets. The farmer has done nothing to make the railway and very little to increase the population that consume his produce. But since the railroad was made the farmers' profits have doubled. Is the County Council coming down upon that farmer for his unearned increment? Because it seems to me that with pre- 83 cisely the same logic as they propose to come down upon the landlord they might come down upon his tenant. Mr. Speaker, the real issue raised by this Bill—although it is not avowed—is whether private ownership in land is to continue to be recognised by the Legislature of this country. If it is not to be recognised, let us say so plainly, honestly, and openly, and let us say to the Local Authorities, "Buy up existing landlords," but do not let us pretend to recognise the principle of private property in land, and then destroy that property piecemeal by depriving the owners of the rights and profits and advantages of possession. I may be told by the hon. and learned Gentleman opposite that property is only an idea: that it has been created by law, and that it can be destroyed by law. I agree with that to some extent. But do hon. and learned Gentlemen opposite, whose profession has battened and fattened upon property, who are the children and who should be the champions of property—do they really wish to destroy the idea of private property in land in this country? What is that idea of private property? It is that established expectation—that certainty of power—based upon the law of the country, which prompts a man to enclose a field, and to give himself to its cultivation in the distant hope of the harvest. Destroy that expectation, diminish that certainty, and your complex society tumbles to pieces like a house of cards. Sir, this legislation may appear to some to be progressive and enlightened. It strikes me as a remarkable piece of political atavism. To the principle of private property in land we owe what is admitted to be the most marvellous achievement of modern times—namely, the cultivation mainly of that modern Continent of North America. But the legislation embodied in this Bill strikes me as a curiously applied determination to employ the machinery of the 19th century to introduce into this country the barbarous economy of Russia or a Hindoo village community. Not very long ago, Mr. Speaker, Sir Charles Dilke recommended the rising generation of Radicals to read their Bentham. There is no man better qualified to guide the rising Radicals than he, and I wish they would take his advice. I do so, and I 84 will give the hon. Gentleman opposite a concluding quotation from Bentham's Principles of the Civil Code. He says—With respect to property, security consists in no shock or derangement being given to the expectation, which has been founded on the laws, of enjoying a certain portion of good. The legislator owes the greatest respect to these expectations to which he has given birth. When he does not interfere with them, he does all that is essential to the happiness of society; when he injures them, he always produces a proportionate sum of evil.Mr. Speaker, I trust that this House will reject, as it has always rejected, these proposals to legalise confiscation. I hope this House will, by an overwhelming and decisive majority, reject the proposals of this Bill, which is really one of the coolest and most impudent attacks upon the security of property which I think has ever been submitted to the Legislature of a civilised country. I now beg to move that this Bill be read a second time this day six months.
§ *(1.48.) MR. RENTOUL (Down, E.)
I rise to second the Motion of the hon. Member for Peckham (Mr. Baumann) that this Bill be read a second time this day six months. The hon. Member said that he should have regarded the Bill as a joke had it been brought forward by any other gentlemen than the hon. and learned Member for Haddington (Mr. Haldane) and the hon. and learned Member for East Fife (Mr. Asquith); but I regard it as a joke, and chiefly because these hon. Members have brought it forward. The ability, eloquence, and power of the two hon. and learned Members are admitted, but they themselves know that they are not regarded generally as having much power of joking; and therefore, I think, they wished to prove by this Bill that they had as much ability in the direction of joking as in any other direction. The matter of compulsory sale has many advocates in Ireland; but even the most advanced advocate of that theory in Ireland whom I have ever met has never had the audacity to advocate that a law should be made compelling landlords to sell in cases where the tenants wished to buy, unless the same law compelled the tenants to buy where the landlords wished to sell; yet this Bill compels the landlords to sell, and leaves the County Council perfectly free, to buy or not as it may wish. Indeed, the principle is that the County Council ought not to buy 85 where there is any risk; they shall buy only where the gain to them is immediate and certain, and the loss to the landlords or owners equally certain. I thought that some parts of Ireland led the way in the desire to rob landlords; but here is a Bill that goes beyond anything that any Irish land reformer has ever dreamed of, and beyond anything of which any man has ever dreamed; and really, in certain respects, this Bill goes further than the wildest theories of Mr. Henry George. But my hon. Friend who moved the rejection of this Bill said that it never could be for the advantage of the inhabitants to apply its proposals, because security of property was for the general good. I think my hon. Friend is partly right and partly wrong—right if he looks away into the future, and to the general unsettlement and insecurity which would arise; but wrong if he looks merely at the near present, because, if there are in a given area thirty thousand people, and if thirty of those are the ground landlords, it will, undoubtedly, be a present advantage to the twenty-nine thousand nine hundred and seventy that the thirty shall be robbed, and the proceeds distributed among the others; therefore, robbery is present gain to those who share the plunder, but future loss to the whole community by unsettling the rights of property, and of all kinds of property, should the principle of this Bill be fully extended. The hon. and learned Member for Haddington had the greatest difficulty in keeping from laughing while he was moving this Bill, and his Radical friends around him certainly seemed to be greatly amused. The audacity of the proposal was so boundless that no one could really treat it seriously. The Mover of the Bill said that land stood on a different footing from other property, but that I entirely fail to see. Where is the real difference between what may be called unearned increment in the case of land and in the case of a newspaper, a bank, the goodwill of a business and especially of the business of a solicitor or a doctor, and, indeed, of almost all kinds of business adventure which grow with the growth of a locality? Take the case of a newspaper. A man purchases some land with or without houses on it, in a growing town, and, at the same time, and for exactly the same amount, he purchases a newspaper 86 in that town. Well, in 20 years the town has doubled in population and in prosperity, and at the end of the 20 years the purchaser wishes to sell both the land and the newspaper. He will in all probability have a larger profit on the sale of the newspaper than on the sale of the land. All the time, during the 20 years, he has lain out of both the capital which he invested in the land and the capital he invested in the newspaper. He has, during the whole time, paid the outgoings of both—namely, the rent and taxes and other expenses regarding the land, and he has taken the profits, whatever they may have been; and in like manner he has paid the running expenses of the newspaper, which he has employed others to work for him, and has taken the annual profits therefrom. He has expended neither time nor personal labour, to any great extent, on either the land or the newspaper, and, in proportion to the capital expended, and the current expenses, his profits during the 20 years have been as great, or greater, from the newspaper than from the land. I want to know, in what single particular the two cases differ? The increase in value of the land and the increase in value of the newspaper have arisen from exactly the same cause—namely, the growth and improvement of the town or district. Does not exactly the same thing apply to a solicitor's practice? Two solicitors of equal ability start in two towns. The one town progresses, and so does the solicitor's practice. The other town goes back, and so does the solicitor's practice. There is no business I can imagine in which there is not what I may call unearned increment; that is to say, an increase in the value of the business which is solely dependent on the growth and improvement of the locality in which that business happens to be situated. It may be said that the people cannot live without land, but equally little can they live in this age without many of the businesses that grow with the growth of towns. But, if this Bill passes, who will purchase land, especially in towns? Will any man put one penny of capital into land when if it falls in value he loses, and if it increases in value he makes no profit whatever? Nay, more—his land will not be taken even at the price he paid for it. He may buy land at a certain price, and five years later it falls 87 one-third in value. Then the County Council gets it valued when its value is at its lowest; then fifteen years later the land may be worth double the price paid for it, and then the County Council takes it, not at cost price, but actually at the lowest figure it reached in twenty years. That this would be so is clear; for a County Council must do its duty in a business-like manner, and it would not be business-like to value the land at the date when the owner buys it, except where there was an absolute certainty of constant increase in value—and that occurs in very few places. The County Council must be prudent. It must be business-like; it must wait for the lowest moment to value, otherwise it will not be doing its best for its electors. It is difficult to argue seriously about this Bill. It surely must be a joke. If it is good in principle, the principle must apply to all businesses in which an unearned increment is possible, and that I have shown is possible in any business I can imagine, as so much depends on the good fortune of placing the business in a growing locality. If this Bill undertook in any way, however slight, to compensate for loss, then I could see some reason in it. If it valued the property, and then gave the owner the option of forcing the County Council to take it in case it fell in value, there would be some shadow of reason for the Bill; but, as the Bill stands, no legislation like it has been attempted in the civilised world. But I think this Bill has a political tendency. Its promoter several times spoke of the electors, and of the extension of the franchise. Therefore, his idea seems to be that his Bill, looking like an attempt to rob the great landowners for the good of the people, will be so popular with the middle and lower classes. But in this respect it will fail if the facts are put before the people, for this Bill applies to the property of small owners as well as of large owners' and I find that while the gross rental of the large owners in the United Kingdom, who own each above one thousand acres, is 37 millions sterling, the gross rental of those owners, whose property is less than 20 acres, is 43 millions sterling. Thus it is the small owners who will be hit hardest by this Bill, firstly because they own a greater quantity of the land of this country than 88 the large owners do; and, secondly, because, in the case of large owners, probably only a portion of the property of any given owner will be taken; whereas in the case of the small owners, if the property of any man is taken, it will probably be his whole property that will be taken. But let me show how entirely it would stop enterprise if the principle of this Bill were applied generally to all property, as I hold it must be if it is applied to land; let me take the case of a tramway in a new district. The County Councils say that at some future time they may probably take over all tramways; therefore a tramway is an appropriate illustration. A company makes a tramway towards a new suburb. At first the tramway will pay very little, but the Company makes it, knowing that as the district is growing, the tramway will pay well in the future. But suppose the County Council have power to value the tramway in the first year of its existence, with a view to taking it over at that valuation if it became a really paying concern, what Compare will, under such a state of the law, ever make a tramway in a new suburb? Therefore in its earlier stages a new district will be deprived of any chance of having a tramway. Why, the more this Bill is looked at the more foolish it appears. But the hon. and learned Gentleman made a long speech, and he did not spend five minutes of it in dealing with the Bill. He only dealt with general principles. He was afraid to face his own Bill. The Bill appears to give to the Local Government Board a right, if it thinks fit, to refuse to consent to the County Council valuing any given land—but really the Local Government Board cannot withhold its consent, for the Bill, says the Board is only to withhold its consent where it appears that taking the land or having it valued would not be for the good of the inhabitants; and such a thing would never appear. How can it ever be for my disadvantage to have-another man's land valued and power given to me to take that land if it rises in value, and to leave it alone if it does not so rise? In fact, I think it would be possible, if this Bill were passed, that the inhabitants of a district could mandamus a County Council to compel it to value all the land in the county and register the same with 89 a view to its being taken in future in case it increased in value. But the hon. and learned Gentleman tries to put a gloss on the really terrible part of the Bill—namely, the part allowing a County Council to value land and then, at some future time to take the land, not at the market value at the time of taking, but at the market value at the time of valuation. He says, "Oh no; my Bill says, take the land at the market value at the time of taking, minus the unearned increment accruing since the date of valuation." Where is the difference between this and taking the land at the value at the time of valuation? It is exactly the same thing, but the hon. and learned Gentleman shies at boldly saying, "Land shall be purchased compulsorily at a price perhaps only half the market value." This is what his Bill says really, though he does not venture to say so much. But this Bill, though brought in by two Scotch Members, says that it shall not apply to Scotland or Ireland.
§ MR. HALDANE
There is another Bill before the House to apply the provisions to Scotland, but it was decided that the two countries should not be included in one Bill because the machinery was necessarily different in the two cases. Substantially, however, the Bills are the same.
§ MR. RENTOUL
Oh, very well. I wonder how the Scotch people will like it! But this Bill does not apply to Ireland. Is this another injustice to Ireland? But it is needless to say more. It is difficult to discuss the Bill seriously. It is only backed by one English Member. (Cries of "Three.") Well, it is the production, the sole production, of two Scotch Members. They may deal with Scotland as they like, but better leave English Members to begin this new scheme in England. I am sure the Bill will be rejected by a great majority.
§ Amendment proposed, to leave out the word "now," and at the end of the Question to add the words "upon this day six months."—(Mr. Baumann.)
§ Question proposed, "That the word 'now' stand part of the Question."
§ (2.27.) MR. SYDNEY BUXTON (Tower Hamlets, Poplar)
I regret that my hon. Friends who oppose this Bill are not present, as I should like to have made some remarks on their speeches. 90 They dealt with the Bill as a good joke, and, apparently, thought it better to treat it as a joke rather than to bring any serious arguments against it. They did not advance any very serious arguments against the proposal of my hon. Friend. There is no doubt that proposal is a very considerable new departure in regard to land legislation, but the reason for that is, that there is a growing feeling that the true mode of dealing with land legislation is to municipalise it rather than to increase the number of proprietors. The reason why this matter has made greater progress of late is twofold. First, that the present system accentuates year by year the injustice that the community should sow and the individual reap; and, secondly, we have in existence powerful representative Local Bodies into whose hands we can safely put these questions. The whole argument of the hon. Member for Peckham (Mr. Baumann) was, as far as I can judge, a question of property; he based the whole matter on the question of security of property, and said that the Bill would break down the whole fabric of society. It struck me that what the hon. Member was really more afraid of was the giving of further powers to the London County Council. The hon. Member never speaks in this House without taking the opportunity of saying something harsh, and in most cases, I think, unjust, about that great body, and I think that hon. Members on that side of the House seem to think that these public authorities being created, the powers which were originally given them ought to remain with them, that they ought to attend to, and deal with, our drains, and do nothing further; but I am glad to think that they have created what they themselves think is somewhat a monster, and that monster I hope will swallow up a great many of the duties which are at present performed by this House. The two hon. Members used very strong words and somewhat poor jokes in reference to this Bill. If the Bill be as bad as they represented it to be, it appears to me that their speeches in reply were singularly weak. Their great argument so far as I can judge was this—that if we deal with land in this direction and under these circumstances, we ought also to deal with all other forms of property. I have myself no 91 particular objection to dealing with other forms of property as well; if the hon. Members will show us the way in which that legislation can be carried out. But I think my hon. Friend the mover of this Bill pointed out the very essential difference between dealing with land and dealing with other forms of property; because, as he pointed out, the land is limited in extent, it is at the bottom of all productions in this country, and it is really a monopoly which no other form of property can possibly be, and further—and I think this is an important point—while it is quite within the competency of our Local Authorities to deal with the question of the land, it is not by any means within their power to acquire great businesses and to carry them on for the benefit of the community. As regards the general question put forward by the two hon. Members who have spoken, as I understood the hon. Member for Peckham—who I am glad to see has returned to his place—he did not seem to understand this question of the unearned increment at all. So far as I can see, he said nothing in regard to what, after all, is the pith and marrow of the Bill of my hon. Friend, in regard to what we consider the injustice of the present situation. He made a few jokes—I am bound to say a few excellent jokes—but he did not deal with what we believe to be the present position in regard to the question of the unearned increment. It is a difficult thing to define the unearned increment. Every one can define it in a way. For myself my definition of it is this: that it is the value of the land, apart from its ordinary agricultural productive process, and apart from any capital, outlay or enterprise that may have been put into it by its owner; the value which is created by the existence, by the presence, by the outlay, the enterprise and the energy of the community at large. That is the portion and the value of the land which we desire, if possible, to obtain for the community, and which, at present, is confiscated by certain individuals throughout the country. I desire especially, in speaking in this Debate, to deal with it from a London point of view. I think the London point of view is, after all, the strongest case we have, because the number of owners in London is probably 92 more limited than in any other town. They have a greater monopoly under the leasehold system over land of that kind, the rents are higher, and this unearned increment grows at a greater proportionate rate than probably anywhere else throughout the country. I suppose I may say that probably the agricultural value of the land is something like, or would be about £250,000, whereas the actual value of the land, apart from the value of the buildings, it has been estimated by many competent persons, at the lowest estimate out of a total rateable value of £40,000,000, is something like £15,000,000. That is what we may consider to be the unearned increment in regard to London itself. Everyone knows that it would be superfluous to-discuss the question at any length. Everyone knows that the very large increasing annual value of the land of London is due in no sense to the energy or outlay of the owners of that land. It is due partly to the expenditure of the tenants, and partly to the buildings. Hon. Members will remember with regard to the evidence given before the Strand Committee on the betterment question, that there were cases mentioned in which it appeared that the sites had been advertised, with this additional attraction in the advertisement, that the Local Authority were going to make improvements; and that the result of that would be that it would greatly increase the value of the sites. And I suppose that no one will deny that the bulk of this expenditure goes practically into the pockets of the owners; the community at large is what we may call rack-rented for the benefit of those who happen to own the land. My hon. Friend below me when my hon. Friend the Member for Haddington (Mr. Haldane) was speaking, seemed to imply that the best way of arriving at the value of the unearned increment for the benefit of the community would be by some form of taxation. In that I very much agree; and this proposal of my hon. Friend is in no sense of the word antagonistic to any pro position to get at this unearned increment by means of taxation. As regards-the question of betterment, I may say that the right hon. Gentleman the President of the Local Government 93 Board in his place the other day practically admitted the principle that is contended for by my right hon. Friend, and by hon. Members on this side of the House. He admitted the principle of betterment. The principle of betterment is this, that, where it can be shown that an individual is benefited at the expense of the community, that individual ought to pay a sort of ransom to the community for the benefit which is done him. That is the principle of betterment, as that is the principle which underlies the Bill of my hon. Friend. We were told by hon. Member opposite that there would be great injustice done in regard to this Bill; but as my hon. Friend pointed out there is no proposal in this Bill to take anything from anybody to which he has a just right, and to which he can show a just claim, and I must say that the object of the Bill seems to be one which ought to commend itself to the Liberty and Property Defence League, because it is really in the interests of property that this Bill will be carried through. Then we were told—I think the hon. Member who seconded the Amendment specially dwelt upon this—that, it would discourage enterprise, and the development of estates in London. How would that affect the question of the vacant land? Is there any enterprise or development in regard to these vacant spaces? The whole of their value is the result of the expenditure of the neighbouring inhabitants and out of the rates, and there is no doubt, as regards them, that the effect of the Bill would not affect in any way the question of dealing with them. As regards the owners themselves, as was pointed out by my hon. Friend opposite, the bulk of the improvements in London are not done by the owners, but by the builders, the leaseholders, and the occupiers, and where they are done by the owner they are done, not with the view of unearned increment, but with the view of immediate profit for any outlay they may have undertaken; and practically the bulk of the improvements are done under the leasehold system by builders and by the occupiers, and surely, theoretically, if one were asked, what system would be the most likely to encourage enterprise, and development under any system of land tenure, one would have thought that the leasehold system, which 94 prevails in London, would certainly do that. It is under the leasehold system that, practically, the additional expenditure of the occupier is absorbed by higher rents and higher rate, first by the owner and secondly by the community. But no one would have thought that this would be the greatest possible discouragement to the development of enterprise, seeing that London has developed under it in the most extraordinary way. As regards the question of insecurity, I am bound to say this, that, so far as regards this Bill, we look at the matter more as a question of principle than as a question of detail; and if it were thought that the period of twenty years was too long—and I am inclined myself to think it is somewhat too long—I am quite sure that when the matter was considered, there would be no objection to reduce that length of time. And in regard to the question also of the interference of the Local Government Board as a check over the proceedings of the Local Body, there, again, I am sure, if it can be shown that a further check is necessary, there would be no objection to put in any fair proposal in that respect that might be made. But as regards the general principle of the Bill, we say that where an increase of value is due to the action of the community, there the community ought to be able to intercept that profit. It is mainly where the question of compulsion comes in, that this Bill—the novel portion of it, is in reference to the land valuation and the ultimate purchase of the unearned increment. My hon. Friend the Member for Peckham (Mr. Baumann) said if you give what he called "the call for land" to the County Councils for public improvements, you ought to give it also in reference to tramways. That is exactly what exists under the present system, because in London, only the other day, a case occurred in which the tramway had been built; and in the very Act which enabled the company to build the tramway there was a provision that 20 years afterwards the local authority, if necessary, could buy, not with, but without the unearned increment. So that that is not an argument against, but a very useful precedent in regard to this Bill. The hon. Member for Peckham said if you give these powers 95 to the County Councils, they will certainly deal with them in an unjust way; and it will probably lead to jobbery and to corruption.
§ MR. SYDNEY BUXTON
Then I am very glad, and it is not necessary for me to argue that point. There is this further to be said, that as I said just now, I think it very reasonable that a check in the interests of the public should be placed on the action of the Local Body in the use of these powers, and if any hon. Member can show, that further powers ought to be given to some public body to prevent any abuse of these powers we should be content to accept them. But we believe that our great Local Authorities are now so representative and efficient that these extra-additional checks on their proceedings are no longer necessary. The machinery proposed in this Bill is of a very simple and efficient character. The valuation will be done under the ordinary rules of valuation. As my hon. Friend pointed out, there will be no more difficulty in regard to the valuation of these properties than there is in regard to valuation for railways or for any other purpose. All that is required is that, if the Local Authorities desire to buy, a second valuation will be necessary in order to show what outlay has been expended on the land by the owner, and that, plus the first valuation, will be the price the Local Authority will pay to him. We believe that this is, to a certain extent, a middle course between the existing state of things, which is confiscation of the property of the community by a few individuals, and between what goes by the name of nationalisation of land, which is confiscation of the property and outlay of the landlords without compensation. One great advantage of this proposal is that it will not complicate in any sense the questions of contracts, or of individual interests in a particular property, or of the past. It will only apply to the question of the future, and will, to that extent, be very much simpler than any of the proposals with regard to ground rents. We believe it is right that the community at large should be able to intercept the increase of value which belongs to themselves; and while we do not say that this is a very perfect 96 or far-reaching plan, we believe that it is the first and the best step towards the municipalisation of the land in the interests of the community, and that it will be in the interest not only of the community at large, but also of the property owners themselves.
§ *(2.54.) MR. LAWSON (St. Pancras, W.)
I join with the hon. and learned Gentleman the Member for Peckham (Mr. Baumann) in characterising this Bill as one of the most fantastic and irrational proposals that were ever made to Parliament, although I do this from a somewhat different point of view. I claim to be a strong advocate of land law reform; but I believe this Bill to be reactionary, and to be calculated to arrest the development of our towns, and to put a stop altogether to the improvement of agricultural holdings. I fully accept the doctrine laid down by Mill that the ownership of the land should be subordinate to the general policy of the State, and I differ from hon. Gentlemen opposite who deny that land is essentially different from other kinds of property. I believe myself that from the nature of things, as is admitted by all thinkers and economists, there is a fundamental difference between land and all other kinds of property about which it is not necessary to debate; and I go further and say that I know from my own experience, municipal and Parliamentary, that there is a large unearned increment due to the growth of the community. I do not think it goes to the extent pointed out by the hon. Member for Poplar (Mr. Sydney Buxton). All increment is not unearned, as he seems to imagine. A great deal is earned by the energy and industry of the small tenants and householders who have spent their lives in creating a value which has nothing whatever to do with the movement of population, and by the work of many who have themselves attracted the population, the movement of which is made one of the elements of valuation under this Bill. But with the unearned increment the Bill will not deal. The Bill engages Municipal Bodies in some isolated gambling transactions in land. It does not enable them to take the increased value of the property from time to time. It plunges them in the gambling of Tokenhouse Yard in competition with land com- 97 panies and with individuals. Sometimes they may make a good shot; more often, as experience points out, they will probably make a bad one. We know that the hon. and learned Member (Mr. Haldane), who introduced this Bill, is a very bold and uncompromising legislator. The House will recollect, from its recent experience, that the last measure which came from him was one to render women eligible for the office of Commander-in-Chief. This Bill which he introduces to-day will make it impossible for any person to occupy his home, to carry on his business, or to earn his livelihood without the leave or licence of the Local Authority, the County Council, or the Municipality. From all I have been able to learn, this Bill has a somewhat different origin from that supposed by hon. Gentlemen opposite. It comes, I believe, from a well-known body of "Possibilists," or Progressive Socialists, the Fabian Society, of which I think my hon. and learned Friend (Mr. Haldane) is one of the chief priests. (Mr. HALDANE: NO.) I only know that this Bill is adopted by them, and that they oppose it to the measure of leasehold enfranchisement. My hon. and learned Friend very wisely and skilfully glided over the effective provisions of this Bill, and I wish to draw the attention of the House to the distinction between the objects stated by the hon. Member and the means as interpreted by the clauses. He told us that the land was to be taken, if required, in the interests of the population. There is not a word in the Bill about the community in that sense. He said it was partly done now for public purposes, and I am fully aware that land is taken for public purposes under Private Bills. (An hon. MEMBER: And by Provisional Orders.) He said it was done in the interests of public health, and I know there are several Public Health Acts, including two for London. Under one of these, the Housing of the Working Classes Act, which contains the best terms ever yet accorded to a Public Body when it is a question of public health, the Local Authority may take land and refuse to pay the owner for the additional value which he derives from keeping it in an insanitary condition, thus trading on the misery of the tenants; and the other Act empowers the Local Authority to put houses into a 98 sanitary condition at the cost of the owner. This Bill absolutely destroys all security of tenure. I should like to know how any person would spend anything on his home, when at any moment for a period of 20 years the County Council may send their officers to purchase and take possession? My hon. and learned Friend knows that the copyholder at one time "could not eat, drink, and sleep securely," and that is the condition to which he seeks to reduce every inhabitant of a corporate town, whose only resort in such a case would be to arbitration for compensation. There is a great deal, after all, in the sentiment of property, but there will be no compensation for the sentiment of "home," and I doubt whether there would be any compensation for the loss of that trade and goodwill which a person may have done a good deal to make, and which has increased the prosperity of the neighbourhood. There is a provision giving compensation for disturbance, but will that cover the case of the tradesman who has not yet reaped the full meed of all his efforts, and whose business may be in a more or less transient condition, although he may have expended large sums with the view to future business? Then I deal further with this question of valuation, and I ask any hon. Member who has had experience of municipal government whether he believes that in fixing the rateable value the Committee that goes round, assisted by experts, is in the habit of defining how much exactly of the rateable value is due to the movement of population. The building is valued as a whole. I admit that some surveyors said in evidence that in their own minds they did separate the land from the buildings, but I never heard any of them say that they attempted to define how much of it was the unearned increment, and how much the increment earned by the efforts of the tenant But of course that is a practical difficulty which the hon. Member may think he may be able to get rid of by a re-assessment of the whole country. But then let me deal with the absolute improvement. What is the improvement of a house? It may add considerably to its value in the eyes of the owner, but it is very often doubtful whether it adds to its letting value. An 99 artist adds to his house a large studio; he receives notice from the County Council that he will be turned out. Will he get any compensation for that? Will they allow him the expense to which he has been put for light, and all the purposes of his calling. They cannot do it under the Bill, and I venture to say that that artist would not receive much satisfaction from the thought that the Municipal Body would receive the reward if they were able to let the house at an enhanced rent to another would-be tenant. It is an adage in law that a man's house is his safest retreat. Under this Bill no man could be safe in the occupation of his house; and I oppose this Bill most strongly, because I think it should be the aim of all land law reformers to increase security of tenure more and more to identify occupancy with ownership. This Bill does all it is possible to do to render occupancy and tenancy as unstable and as transitory and as uncomfortable as they could be made. The hon. Member objects to our talking of the possibility of jobbery arising under the Bill. I do not wish to use the word "jobbery." But unfortunately in London we do not think ourselves free from the suspicion of jobbery. The London County Council takes every means of avoiding suspicion. This Bill will plunge County Councils in a Serbonian bog of land speculation. It is a question whether land speculation in this country has been profitable. I ask the hon. Member to take the case of the great Land Companies working in and around London. They purchased in the open market land which they felt sure from the conditions of the neighbourhood was likely to considerably rise in value within a short period of time. Some of these companies are in liquidation; others pay dividends of one or two per cent. Does the hon. Gentleman think it would be to the advantage of Municipal Bodies to embark in such a speculation? They could not buy under such advantageous conditions as the land companies, because they are forced to buy compulsorily under the Lands Clauses Act. The right hon. Gentleman the Member for West Birmingham (Mr. J. Chamberlain), giving evidence before the Housing of the Poor Commission said that Birmingham paid thirty-three per cent. over the market value for land, taken for 100 the purpose of municipal improvement. I But I daresay the hon. Member would I like to hear something of the experience of our own Council in London which has gone in for land speculation in the past, and which has taken a great deal of land abutting on new thoroughfares and likely to increase enormously in value on account of public improvements. I quite admit that the hon. Member for Poplar (Mr. Sydney Buxton) was absolutely right when he said there has been a great increment of value on the frontages on account of public expenditure, and therefore it is the more striking to point out that in every case but one there has been an actual loss incurred by the method of recoupment over and above the cost of the work. I have a paper that was handed in to the Strand Betterment Committee, and from it I take the case of Charing Cross Road. Charing Cross Road was a thoroughfare pierced through the slums, and there were new lines on either side which you would have thought would have attracted a different class of buildings and led to the expenditure of capital in building fine houses, and, of course, it made an immense difference to our municipal revenue. As actually carried out the amount of compensation paid was £691,000; the amount realised by sale of surplus, £180,000; the net cost being £510,000. If only the property actually required to form the street had been taken the amount of compensation would have been £478,000; the amount realised by the sale of surplus, £55,000; and the net cost £423,000—or a loss of £80,000 by pursuing the method of recoupment and compulsory purchase by the Corporation. In the case of Shaftesbury Avenue, though the figures were not quite so significant, the result was the same. The only case in which the London authorities have reaped any benefit by buying land for the purpose of recoupment when they have made public improvements is the notorious case of Northumberland Avenue, where, the gardens of the Duke of Northumberland being uncovered, there was no compensation to be paid to the multiplication of interests that always arises in the case of buildings. In that case there was a surplus of £130,000. That is the net result that can be set against, the 25 great schemes carried out in 101 London by the method of recoupment. The advice of Mr. Charles Harrison, the Chairman of the Finance Committee of the London County Council, is very important from our point of view. He was asked, before the Strand Betterment Committee, whether this had been his experience, and he said—A very curious set of results is shown by the table presented. I was alluding to the artizans' dwellings scheme first. There was a statement of the artizans' dwellings scheme under the Cross Acts. They give the list there—the amount paid for compensation in the whole of these schemes was one and a half millions in round figures. The other payments were £330,000, so that the gross cost was £1,850,000. The value of the land obtained was £365,000, and the net cost £1,483,000, and the recoupment is given in. The Chairman: Q. I am asking you upon the broad principle of recoupment—do you say that there is no necessity for recoupment because, in the case of land purchased for artizans' dwellings, which is in no sense a public improvement of thoroughfare, which is simply displacing workmen's houses and putting other houses upon that site, and which other houses will have a letting value, of course, which is not mentioned here—do you say the principle of recoupment should be abandoned where a street improvement is carried out? A. My own opinion is decidedly that it should. You find the recoupments, as far as we have been able to ascertain them, have invariably brought back a comparatively small sum of money in most of the cases compared with the outlay, and that it has not resulted in a profit. The net result is that the more land you take the more you lose.The experience of Liverpool affords another instance of the failure of municipalities to make a satisfactory profit out of their estates. I maintain that the difficulties surrounding Municipal Corporations as landowners are many and insuperable, and I do not wish to see our authorities "jobbing" in land. I think it would be a disastrous failure, even from the financial point of view. If there is unearned increment to be intercepted, let us fall back upon the methods of taxation, upon the division of rates and upon a municipal Death Duty, for example, which will give the locality a certain share in the unearned increment as real estate passes from possessor to possessor. This was Mill's principle. The Bill is really not a Bill to enable Municipalities to obtain any large portion of the unearned increment. It is a cumbrous and fantastic way of dealing with the subject; it is an attack upon the whole principle of private property in 102 land. I, for one, think it should be the object of all land reformers to put it within the grasp of every class in the community to secure possession of the great immovable land. It is because I feel that this Bill is vicious in principle, and absolutely unworkable, especially with the governmental restrictions inserted by my hon. Friend, that I intend to vote against it this afternoon.
§ (3.15.) MR. ASQUITH (Fife, E.)
The three hon. Members who have addressed the House in opposition to the Second Reading of this Bill commenced their observations by stating that they looked upon it as a joke; and, under those circumstances, I think they ought to be congratulated on having succeeded, without apparent difficulty, in treating it so seriously and at such great length. It has been refreshing to some of us to hear this afternoon, in these days of Democratic Toryism, from the hon. Member for Peckham and the hon. Member for St. Pancras, the old story about the rights of property, about the dangers and risks of invading them, and about the indefeasible sanctity of any law which happens to exist, even though it places the community at the mercy of individuals, and even though it may be proved to demonstration that the community at large is suffering grievously from what those individuals have done. The hon. Member for Peckham told us that property consisted in an established expectation. An established expectation of what? Apparently, according to the bon. Member, an established expectation that the law will never be changed. But this House has been engaged during the last fifty years in disappointing established expectations of that kind and in doing what the hon. Member and his predecessors, both leaders and rank and file, call legalising confiscation. There has not been a single great measure, from the time of the abolition of the Corn Laws down to the Irish land legislation of the right hon. Gentleman the Member for Midlothian, that has not been denounced in exactly the same terms and ridiculed with exactly the same unction as this Bill has been denounced and ridiculed this afternoon. I do not think that some hon. Members have quite realised the scope of this measure. The framers of it have two objects in 103 view, which are perfectly distinct, although they may be combined. The first object is to enlarge the powers of Local Authorities to purchase land in the interest of the people they represent; to restrict the compensation payable to the vendor to such sum as will, at the moment of purchase, represent its market value as between a willing buyer and a willing seller; and to give him, in addition, a complete indemnity against all damage that he can show he has actually sustained. The second object is to enable the community to appropriate for its own purpose, and for the relief of public burdens, that share, and that share only, of the value of land which, after the passing of this Bill, can be shown to accrue, not from the efforts or the exertions of the owner or occupier, but from the growth of the community or from other social causes, and of which at the present time the owner, and the owner alone, reaps the exclusive benefit. Now, let me deal briefly with these two points. In the first place, I say that the object of the Bill is to enlarge the powers of Local Authorities to take land. In every respect I differ from the arguments of the hon. Member for St. Pancras in regard to this part of the case. The Bill, although it takes a step in advance, involves nothing in the nature of a new legislative departure. The President of the Local Government Board knows very well, and most hon. Members must know, that every Urban Sanitary Authority in England has at present the power of acquiring land compulsorily for sewerage and drainage works, for street improvement, for parks and pleasure grounds, for the erection of markets, the construction of baths and washhouses, and a multitude of other subordinate purposes of local interest; and also where a Local Authority has obtained powers from Parliament to supply gas or water, or to construct tramways, for the purposes incidental to such undertakings. Therefore we are not asking the House to initiate a new experiment, but to proceed upon lines which have been established during the last fifty years, and which—differing here, again, from the hon. Member for St. Pancras—I venture to think have been abundantly justified by their success. I challenge contradiction, on evidence supported by instances, to this 104 broad and general proposition which I do not hesitate to assert—that the Municipal Authorities of this country, working as they do in the light of day, responsible to their constituents, subject to searching and sleepless criticism from public opinion, have amply justified the confidence with which the power of acquiring and dealing with land has been entrusted to them; and there is no ground for fear or apprehension that if these powers are enlarged, and the area of operation is extended, they will show themselves more indifferent to the public interest or more susceptible to corrupt influences in the future than in the past. Now, it is perfectly true that this Bill does make a change, for whereas, under the present state of the law, land can only be acquired by Public Authorities for certain specified statutory purposes, this Bill proposes to give to the Local Authority a general power of acquiring land wherever it is necessary in the interest of the people it represents. In our judgment that is a change not only in harmony with past legislation, but it is necessitated by the growing and shifting economic and social conditions of our large towns. Let me give an illustration showing how a Local Authority, if this Bill were passed, could deal with a matter of great urgency with which it cannot now deal. The case I will take is that of a comparatively small but increasing town, which has become the seat of an industry, or has been resorted to for the purposes of pleasure and recreation. The land of the town and its immediate environments belongs, to a single person. That person, from good or bad otives, does not wish the town to extend, either because he desires to preserve the amenities of his property, or for other reasons. He says—"I will not let you have the land; or, if I do, it shall be only on my own terms," which may be unreasonable or exorbitant. Instances of this kind have been stated in the House. Now, is the House, with the experience we have had of Municipal Government, to allow private property in land to be carried to such a length that the whole growing life and development of a community is to rest upon the discretion of a single person, who may be wise, but who may be foolish; who may be public-spirited, but who may be altogether unfitted for the discharge of 105 the responsibilities of the position in which he is? There is also another case in which the hon. Member for St. Pancras is interested—the short leasehold system which has done so much injury to London. I did not vote for the Leasehold Enfranchisement Bill which the hon. Member introduced, because I saw no advantage in substituting for a small body of large landowners, who from the fewness of their numbers and the weakness of their position are more or less amenable to public opinion—in substituting for them a large body of small landowners who could deal with the land as they pleased, and who were absolutely unrestrained by any public authority. Now, this Bill will enable the Local Authority to get rid of the system of leasehold tenure in towns where it is injurious. It will enable it to re-sell the land, or let it, or feu it out on reasonable terms, with adequate security of tenure, and subject to proper restrictions. There is one other point I will refer to, and that is the question of compensation. Those who read the Bill will see that the compensation which it gives to the vendor whose land is taken is everything he is entitled to. A part from the valuation provisions, with which I will deal later, whenever the land is purchased he will get the market value of it at the time of purchase; and he will get, in addition, compensation for disturbance. Further compensation will also be paid for severance. Will then anyone say that the provisions of the Bill do not give everything which the owner is entitled to expect? We all know that Public Authorities are in the habit of purchasing land at extravagant prices. My right hon. Friend the Member for West Birmingham has been quoted as having put the excess of purchase money in transactions with which he has been connected in his public capacity at something like thirty or thirty-three per cent. over a fair value. That is a monstrous tax upon the community. It is due to two things. In the first place to the fact that the machinery of compensation is defective, seeing that you have to come to Parliament for a special Act, or even, under the Public Health Act, after the Local Government Board has given its sanction for a Provisional Order. Under this Bill you would do neither. Further, the 106 cost to the community of making these advantageous works of public improvement has been enormously enhanced by the excessive prices you have had to pay in the form of compensation for compulsory purchase to the owner from whom the land has been obtained. Where it is to the interest of the community that the Local Authority should obtain the land, we say that if the Local Authority is prepared to pay the full value with indemnity for loss sustained, that is going quite as far as justice requires. I pass from that to say one or two words as to the other branch of the Bill—the provisions dealing with the unearned increment. The hon. Gentleman the Member for Peckham (Mr. Baumann) denied the existence of the unearned increment, or at any rate, if he did not deny its existence, suggested that it existed in exactly the same degree and kind in the case of all other forms of property.
§ *MR. ASQUITH
He does not; but since the argument has been advanced, and since it appears to be supported by a considerable amount of opinion on the other side of the House, it may be worth while pointing out its fallacy. The hon. Member for Peckham referred to Consols. He took the case of a person who had bought Consols at 80 or 90, and had seen them rise to 100, which, I suppose, he regards as unearned increment due to the progress of society. ("Hear, hear!") I thought so. What is the difference? The person who buys Consols at 80 has the right to receive the sum of £3 per year, and when they have risen to 100 he has still the right to receive £3 per year, but not one penny more. The only difference that has taken place is this—that an annual return of £3 is worth so many more years' purchase after Consols have risen than before. Yes, but what is the case in relation to land? Why, that not only does the capital value of the landowner's land rise in the number of years' purchase, but that the annual income itself rises. He is able to let his land not for £3, but, say, for £30 per year, and even after he has got that he is able to sell 107 that annual income of £30 at an increased number of years' purchase. Therefore, I say that the suggestion of the hon. Gentleman is not to the point. Then, take the case of industrial companies. The hon. Member says that we are all, as shareholders or as deriving profit in some form, participators in the unearned increment. To some small and indefinable extent, that may be so. But there, again, the hon. Gentleman mistakes, or fails to observe, the fundamental difference between the two cases with which he is dealing. Land differs from every other kind of property, and the owner differs from every other owner in this respect—that land is strictly limited in amount; that the owner possesses a monopoly; that there is no effective competition between him and other vendors of the same commodity, and that, therefore, he is able to demand what is practically a monopoly price. I am speaking of urban land. The case is not similar, I admit, with regard to agricultural land; because, owing to the abolition of protection and the devolopment of the means of communication, we have, practically, a number of alternative sources of supply in relation to food. But when you are dealing with land as a site for human habitation and residence—and particularly land in and about great towns—it remains true, and will always remain true, that the owner of land enjoys a strict monopoly; that there is no alternative supply from which the demand can be met. The more population increases, the greater is the gravitation towards these centres of industry; and he, without raising a finger by way of effort or exertion, without even observing the virtue of abstinence, of which we read in books of political economy, while doing nothing, is exacting from the community that which, in the form of increased value, is neither more nor less than a toll on the progress of the country, and—