§ Motion made and Question proposed, "I. That it is expedient to amend the Law relating the National Debt, Customs and Inland Revenue, including Excise."—[Mr. Lloyd George.]
§ Mr. AUSTEN CHAMBERLAIN
On a point of Order: The Chancellor of the Exchequer was good enough to put upon the Notice Paper the Resolutions which are to be moved. May I ask whether for the convenience of the Committee the Government can make a general statement of their intentions on the first Resolution, and whether we can engage in a general discussion on that Resolution as is customary with the first Resolution of the Budget?
§ The FINANCIAL SECRETARY to the TREASURY (Mr. Hobhouse)
I think that would be the most convenient course to be followed by the Committee, and will be in accordance with the understanding arrived at last year. With your leave, Sir, I should venture very respectfully to suggest that that course should be followed.
§ The CHAIRMAN
I think it is obvious that it would be for the convenience of the Committee to adopt such a course. I accede to it, with this caveat, that I cannot be bound by what was arranged last year. On that occasion I myself had nothing to do with it, but I believe the arrangement now suggested to be convenient, and therefore agree to it.
§ Mr. AUSTEN CHAMBERLAIN
Will that cover a discussion on the remaining two Resolutions on the Paper?
§ Mr. HOBHOUSE
Yes, I understand it would cover both those cases, and that certainly is the intention of the Government.
§ The CHAIRMAN
If the right hon. Gentleman is going to include those in the statement which he is now about to make, I think certainly it would cover them all.
§ Mr. HOBHOUSE
The Committee will remember that last June an agreement was come to, that within the limits of the Financial year full opportunity should be 1588 afforded for the discussion of the finances of the year, and that there should be no curtailment of time or opportunity for discussion before the end of the Financial year. In accordance with that promise, I propose to make, on behalf of my right hon. Friend, the Chancellor of the Exchequer, who, though he is present, is unable from physical causes through a slight, temporary affection of the throat—I propose, on his behalf, to make a general statement. It would be, I think, unnecessary, and even undesirable, if I were to refer in any way to the taxation of last year. It was complete in itself. The Finance Bill, which was introduced in the middle of last June, and passed in November last, completed the taxation of the year, and any measure which these Resolutions are a prelude to, is merely a general sweeping up of those small alterations of the law which are commonly embodied in Customs and Inland Revenue Bills.
The right hon. Gentleman opposite will recollect that one of the interesting parts of the Finance of last year was the uncollected Revenue of 1909–10. I desire to be as little controversial as I can in language and in argument, but owing to the Parliamentary disturbance which took place, there was, instead of an ordinary surplus uncollected Revenue leading to a deficit of something like twenty-six and a quarter millions, I think the exact figures were £26,248,000. I am sure the Committee will be interested, and I hope it may be satisfactory to learn that the whole of that deficit, notwithstanding some fears which were expressed, was wiped off by July last. So satisfactory has been the collection of that Revenue, that instead of the surplus of £2,970,000, which my right hon. Friend anticipated, so far as the extraordinary mixture of Finance for the two years will allow us to arrive at the totals perfectly accurately, we expect to have a surplus Revenue for the year 1909–10 of something approaching £4,300,000. The Committee will clearly understand that this is merged in the accounts and in the apparent surplus which my right hon. Friend will lay before the House, at the end of the Financial year, but so far as it is possible to disentangle the whole accounts for 1909–10, from the whole of the accounts of this year there has been during the Financial year 1909–10, this substantial surplus. That deficit of twenty-six and a quarter millions was financed by temporary borrowing. The Committee will remember we introduced a Bill called the Temporary Borrowing 1589 Powers Bill, by which we took power to borrow up to the extent of expenditure authorised by the Appropriation Act. We did not, as a matter of fact, exercise the whole of those borrowing powers, but we borrowed a sum of £21,000,000, of which £17,000,000 was by Treasury Bills and £4,000,000 by Ways and Means. The whole of that money was repaid within the half-year, the actual date being 29th September last, when we actually had the funds at our disposal. I think those two facts—the realisation of the surplus and the ease with which the temporary borrowing was met—are the very largest tributes to the financial skill of my right hon. Friend the Chancellor of the Exchequer. If I may, I should like to give the Committee, very briefly, the details of the various Estimates which were made originally, and show to the Committee how the surplus, to which I have referred, was made up. The estimate of arrears of Income Tax was £22,950,000, and the realised Income Tax was £24,000,000. The estimate of the yield from the new Liquor Licences was £2,100,000, and the actual return £2,450,000. The estimate of the Land Taxes and House Duty actually balanced, and the revenue for Land Values as closely approximated to the estimate as it possibly could. The difference between the estimate as to the Death Duties and the actual returns was only £3,000.
§ Mr. GEORGE YOUNGER
As to the Liquor Licence, does the right hon. Gentleman take into account the Revenue still due on that year, or all the Revenues collected? There were certain adjustments.
§ Mr. HOBHOUSE
I only want to give to the Committee, without going into details, in the briefest possible manner, how this surplus was realised. I do not think it would be fair to press me with supplementary questions of the kind which the hon. Member has put. Passing from that I come to the Resolutions which will regularise the Revenue Bill shortly to be presented by my right hon. Friend. The first resolution has reference to local taxation, and deals with the question of education. In the course of the financial disturbance of last year it happened that the consumption of whisky was very much under the normal consumption, and that there was a shortage of money available for education amounting to £328,000 as compared with 1908–9. The receipts in 1908–9 were £1,384,000 and in 1909–10 £1,056,000. But for the purposes of calculation of the money due to the education 1590 authorities from the proceeds of the Whisky and Beer Duties, 1908–9 was an abnormal year; there were forestalments at the beginning of the year which greatly swelled the revenue. 1909–10 was also an abnormal year from another point of view, because there were postponements at the end of the year as well as shortages at the beginning. The consequence was that the revenue payable to the education authorities was down, not by £328,000, but, as far as we can ascertain, taking one year with another, by £225,000; because you have to take into account the almost continuous variation represented by the annual drop in the consumption of whisky, amounting to about 2 per cent. For a great many years past every Chancellor of the Exchequer has noted, quite apart from the duty levied upon whisky, a tendency to a lessening of the consumption of whisky, which may be taken at 2 per cent. I stated the other day, when dealing with a cognate subject that the principle of assigned revenues has many drawbacks and complications. In connection with this particular payment of revenue to the local authorities, the fluctuations of the assigned branch of revenue are very noticeable. We propose to make up the amount for the year 1908–9, £328,000. The normal variation would have been £225,000. This year we allotted in the Estimates £319,000, but there is not very much doubt but that the amount required to make up the shortage will be considerably under £300,000.
§ Mr. HOBHOUSE
I am afraid I have not got them, but I will endeavour to get them before the Debate concludes. What we propose to do in future, under cover of this Resolution, is to make 1908–9 a standard year, and to allot in future not a fluctuating amount dependent upon the yield of the Whisky Duty, but to assign to the education authorities £1,384,000, a considerable advance on what has been paid to them, and one which will cost the Exchequer no small sum.
§ Mr. JOHN REDMOND
Can the right hon. Gentleman give the Irish figures in respect of that item. We cannot discuss the matter from an Irish point of view unless we have the separate figures.
§ Mr. HOBHOUSE
With regard to the next alteration that we propose, the Committee will remember that in 1908 the Old Age Pensions Act was passed, by which persons of seventy years of age who had not been recently actually paupers were given pensions. A complete year's working of that Act showed there were something like 734,000 pensioners, who cost the country about £9,500,000. On the 1st January, 1911, 200,000 more pensioners came on the charge of the Exchequer. There is a normal increase of 40,000, and 160,000 were directly taken off the charge of the rates. The cost to the Exchequer of these 200,000 pensioners will work out at about £2,600,000. The total cost of the over 900,000 pensioners will therefore represent about £12,700,000, allowing not merely for the pay of the pensioners, but for the administrative expenses in connection therewith. Let me point out what a great relief to the rates this operation of the Exchequer has been. There is both the direct and the indirect relief. First of all you may take into calculation the potential paupers, if I may use that word, under the scheme of the original Act. Then there are the 40,000 who might have come upon the rates but for the intervention of the 1st January, 1911. Then there were the further 160,000 who were actually taken off the charge of the rates on the same day. The total relief thus given to the rates may be put at £1,500,000 for the actual paupers, and—it is very difficult to make any exact calculation, but certainly not less than £500,000 for the potential paupers.
§ Mr. HOBHOUSE
We take it that outdoor paupers cost about 2s. 6d. on the average, and that indoor paupers run up to something like 7s. 6d. It is very difficult to give exact figures, but I do not think that is an unfair estimate. It is certainly not an exaggerated figure to take, so far as the Treasury is concerned.
§ Mr. JOHN REDMOND
Has the right hon. Gentleman the Irish figures on that point? We cannot take part in the Debate without them.
§ Mr. HOBHOUSE
I am afraid I have not worked out the figures for the three countries. When the Old Age Pensions Bill 1592 was introduced I think the Prime Minister, and certainly the Chancellor of the Exchequer, gave the Committee very clearly to understand that the rates must come to the relief of the Exchequer in order that the operation might be carried out in its entirety. I need not quote the actual words, but there was no protest from any quarter of the House against the proposal. If there should be any departure from that principle I would ask the Committee to recollect that either there must be a reduction of the contribution to the insurance and invalidity scheme, which we hope to bring in this year, or a complete postponement of the measure. The only further alternative is the imposition of taxation. I do not think that any quarter of the House would desire for one moment the adoption of any one of those three alternatives. I think I shall be able to show that the relief to the ratepayer by our proposal is so great and so substantial that it is only fair that some portion of the burden to be borne by the Exchequer should be shared by the ratepayers. The question is in what way the ratepayer should be asked to contribute. The obvious, I will not say the easy, way is to claim from the guardians the repayment of their proportion of the charge taken over by the Exchequer, amounting to something like £2,000,000 of money. I think that would be clumsy, because of the complication of accounts, and also because you would pay over with one hand and claim back with the other. It would also be ungracious. We propose to revert to our original intention "with regard to the Land Value Duties—that we should, on the one hand, take over the whole cost of the pauper pensioners, and that we should, as some set off and only as some set off against that, retain the half share of the Land Value Duties. I think when I bring the figures together the Committee will see how satisfactory that is from the point of view of the ratepayer. What, after all, is the income expected to be derived from the Land Value Duties? In the first year £490,000, in the second year £600,000, and in the third year a sum probably larger than £600,000, but as to how much larger my right hon. Friend has always declined to commit himself. The Committee will remember that the local authorities were to get, not the whole, but a half of this sum. Their share in the first year would have been £245,000, and in the second year £300,000. Bringing the figures together the position is this. For extra whisky money we pay for the year 1909–10 to the 1593 local authorities £328,000. For the year 1910–11 we give them £260,000 or £270,000, making say £600,000 in round figures. On the other hand, we resume half the Land Value Duties for 1909–10, £245,000, and for 1910–11 £300,000. That comes to £545,000; so that there is a small balance in favour of the local authorities of £40,000 a year. In addition to that we take upon the Exchequer and relieve the local authorities of the whole cost of these pauper pensioners, amounting to £2,000,000 a year.
That is not an ungenerous contribution; indeed, if I may say so, it is a most generous contribution from the Exchequer to the local authorities. There is another fact to be remembered in this connection. I speak here as representing the taxpayer in the presence of those who represent not so much the taxpayer as the ratepayer. The House has given, by general consent, to the taxpayer for the purposes of road improvements £300,000 a year from motor spirit and £120,000 a year from motor car licences—£420,000 in all. [An HON. MEMBER: "There is £40,000 from the West Riding."] The amount I have mentioned does not, of course, go directly to the local authorities. It can only be claimed as an indirect, though substantial, relief to them of the charges which now fall upon them in connection with main roads. All these proposals must be taken together; when taken together they will show that we have tried to meet the heavy charges which do, at the present time, fall upon the local authorities.
§ Mr. HOBHOUSE
I have endeavoured to give them. You cannot put the relief to the local authorities at less than £1,500,000 a year. It may be said—it is almost sure to be said—and the charge ought to be met—that you are taking over from the local authorities a charge which will be a diminishing one in respect of paupers, and you are withholding from them a Grant which may be an increasing one. Yes, but, as a matter of fact, in the first year that these completed arrangements take place, you will have given the local authorities five times what you take away from them. It cannot be for many years that the amount, the increasing amount of the Land Value Duty, can approach the diminishing charge. There need, therefore, be no grumbling as to the imposition of the Land Value Duties. You will therefore really not have made an unfair bargain with the local authority.
1594 I will come to another readjustment of the Finance Act as it stands. I may say, in passing, that the alteration to which I have just spoken was to be found in the Finance Bill of last year. The Clause of which I am now going to speak is a new proposal of this year. It is imposed for the purpose of trying to get a contribution from a class of persons who did not contribute adequately, as we thought, for Imperial purposes, by placing upon them a duty in respect of property accruing to them from time to time, and for the receipt of which they had made no real contribution. It has been found that already reversioners are trying to shift that burden from themselves on to the lessees. [An HON. MEMBER: "Naturally."] Yes, naturally; and naturally we intend to try and put a stop to it. It was thought that the lessors ought to bear this tax. They have attempted to shift it on to the lessees. Although it is economically difficult to put a stop to this transfer of the burden, we are determined to do what we can to keep the tax upon the shoulders of those upon whom it was originally laid. I come to another new Clause.
§ Mr. HOBHOUSE
The House will have the Bill itself within a very short time. It will be in the hands of hon. Members in the course of a day. Perhaps the hon. and learned Gentleman will wait. I am only endeavouring to sketch the provisions.
§ Mr. HOBHOUSE
I mean Increment Duty, and I said Increment Duty. I am coming to the Reversion Duty in a moment. Oh, I am very sorry, I thought I had said Increment Duty. Well, I propose to deal for a few moments with a Clause which has been necessitated by what is known as the Channell Judgment in the Wrigglesworth Case. There has been a great deal of doubt, and there has been recent litigation as to whether increased Licence Duty should be taken into consideration when fixing the annual value of the house for Licence Duty. The Government desire to clear up the doubt which has been created by that judgment, and which was held previously to that judgment. They propose to adopt for the future, for the valuation of licensed houses, first of all (a) Inhabited House Duty, and (b) where that is not applicable Schedule 1595 A of the Income Tax Value. Then there remain a certain number of cases which may be outside either one or the other definitions, and the Government propose in those cases that the assessment shall be made by a Commissioner of Customs and Excise, but adhering to the principle that the Licence Duty should be deducted before the actual valuation is made—shall be taken into consideration.
§ Mr. HOBHOUSE
That the cost of the Licence Duty should be deducted. Take a value of £200, say, which, I think, is that in the Wrigglesworth case. The Licence Duty, I think, was there £35. The ultimate value was held to be £65. Therefore the Licence Duty was deducted from the gross value. In Ireland the valuation will be fixed as at the present, the operation of Section 43, Sub-section 7, of the Inland Revenue Act of 1880, being preserved, whereby the valuation cannot be more than 20 per cent. in excess of Griffiths's valuation. The benefit of the remission will be given in the case of any licence granted after the passing of the Act of 1909–10, and now in operation. The cost to the Exchequer will be very considerable, and I hope that will not be forgotten by the hon. Gentleman opposite when they criticise our proposal.
§ Mr. HOBHOUSE
No, no. It is to be confined, as I have said, to cases which are now in operation and in respect of licences which were granted after the Act came into operation.
§ Mr. JOHN REDMOND
The right hon. Gentleman will forgive me for interrupting him. The cost of the concession will be £400,000 to the Exchequer. Will any of that come in relief to Ireland? Will the concession be confined to England?
§ Mr. HOBHOUSE
Ireland suffers no penalties, and will not therefore get any remissions; but there are a great number of Resolutions on the Paper, and I desire to deal with them all, so far as I can. Another new clause has been occasioned by the fact that increased duties are payable under Section 75 of the Act, in the case of small properties and houses. In 1596 these eases, where premiums have been paid for transfer either by way of sublease, or in the case of leases which have been granted in consideration of premiums as well as of rent, double duty has had to be paid. The Government think that this was never intended by the original Act. If the transaction had been by way of conveyance, there would have been exemption under Clause 73. We intend to extend that exemption from the case of capital sums paid to that paid by way of premiums by way of transference in the case of leases and small houses, and the transfers of leases by sub-leases. I think the point is clear to hon. Gentlemen opposite. It is, I think, a substantial concession, not so much perhaps in the way of money, but in alleviation of a grievance to owners of small property. I hope, as such, it will be acceptable to many of my hon. Friends.
I now come to the case of Reversion Duty. There have been certain difficulties which have arisen there, as to the payment of duty on the merging of leases. I think the case has been either by way of question or discussion before this House quite recently. The same duty is payable at the present moment, whether there is an artificial termination of the lease or a natural termination—that is, where the lessee buys the lessor's interest or the lessor buys the lessee's interest. The present arrangement is clearly inequitable. The purchaser, whether he be the lessee or the lessor, has paid money for the value, and it is only fair that he should pay duty on the reduced value. The method at the present time is that, when the lease is merged and determined, duty is levied on the difference of value at the time of the grant, and time of merger, in both cases on the basis of the rent reserved. I will give an illustration: Supposing the capital value of property originally leased was £75; by effluxion of time and so on, the value has come to be that of £80 annual rent. When the merger takes place, say after ten years, the value of the annual rental, the £80, probably could not be put at less than fifteen or sixteen years' purchase, and would be something like £1,200. You deduct the original £75 capital value from the capitalised value on the rent, and you get the sum of £1,125. Ten per cent. upon that is £112. We propose to take the present value of £112 on a 4 per cent. basis and that works out at £15 17s., and that we propose shall be the duty in future in the case of the merged interest 1597 in rent. I hope the point is clear to the Committee. There have been many defects in connection with this, and we think this proposal is an equitable way of relief.
§ Mr. HOBHOUSE
I am just coming to that. The question arises who is to be liable for the payment of this duty. It is clear as the law stands at the present moment that the lessor is liable. I am so advised by my hon. and learned Friend the Attorney-General, whose opinion, I think, is not to be discredited on a matter of this kind. Where the lessor buys the lessee's interest the former, that is, the lessor, is liable, but where the lessee is the buyer, then he is the person liable. Hon. Gentlemen opposite and myself are in agreement that as the amount of duty must be an element in the price paid over by the lessor or the lessee, it does not really matter from the economic point of view upon whom you force the obligation to pay the duty. The two contending interests meet, the one will ask more and the other will ask less, because one or other has to pay; therefore, from the economic point of view, it makes no difference upon whom you place the obligation. You must put it upon somebody, and we think it is better that the duty should be recoverable, and I lay stress upon the words, should be recoverable from the person in whom the lessor's interest was vested immediately before the transference of the interest took place—before the merger was made. You must put it upon one person, and better, I think, put it upon the lessor, and we, therefore, do so in this particular case.
I should like to sum up my remarks upon these Resolutions. I supplied the right hon. Gentleman (Mr. Austen Chamberlain) and I think other Members, too, with copies of these Resolutions, and in order to make the explanation which I have given quite plain we altered a word or two in the Second Reversion Duty Resolution. Perhaps the right hon. Gentleman will follow me as I read it:—That it is expedient to make provision with respect to the Reversion Duty to be charged on the determination of a lease before the expiration of the term thereof, owing to the vesting of the lessor's interest and the lessee's interest in the same person, and with respect to the person from whom that duty is to be recoverable.1598 There is one other point with which, I am afraid, I have not dealt. We propose to deal with the case of a wife who at the present moment is not liable to make any return for Super-tax. I have had cases constantly put to me in Committee last year—at all events, they were certainly brought to the notice of the Exchequer—in recent months where the husband and wife both had separate incomes and were both liable to Super-tax, but the wife declined to make her return, for the perfectly good reason that she declined to make any statement to the husband as to what her exact income was. The husband was the only person liable, and he was unable to make a proper return because he did not know what his wife's income was. We propose to make the wife equally liable for making her return for Super-tax purposes with the husband, and so save a very considerable difficulty, and I hope we may have gone some steps towards establishing woman's rights in this matter. We make a concession in respect of Licence Duty of something like £400,000 a year. We make a concession to the local authorities in respect of the whisky money of something which cannot grow by less than £25,000 a year. We are going to give £1,384,000, but taking it on a. 2 per cent. basis we make them a concession of about £25,000 more each year. We make a further concession of anything between £1,250,000 and £1,500,000 in connection with old age pensions to the local authorities. By the Bill which my right hon. Friend will introduce we shall lay burdens upon the Exchequer of £1,625,000 a year. The wealth of the Exchequer is not inexhaustible, and it is very difficult to replenish it, as my right hon. Friend has found. We have got very large schemes of social reform in sight which I believe meet the wishes of hon. Gentlemen upon both sides of the House. We cannot possibly hamper this work as we should do if we force the Treasury to make further concessions to the local authorities than those which we propose to make. We do ask the Committee to accept the concessions already made both as final and, I hope, as satisfactory.
§ Mr. AUSTEN CHAMBERLAIN
It is no reflection upon the way the right hon. Gentleman has just discharged the duty thrust upon him if I say we all welcome the Chancellor of the Exchequer back to the Committee, and we hope he may soon be restored to such a state of health as will 1599 enable him to take the usual part in our Debates. The statement which the Financial Secretary has made on his behalf is one of very considerable importance, and necessarily of some complication, and, as happened when the Budget statement is laid before us in the ordinary way, the person who immediately follows is not in the very good position of dealing with all the effects of what has been announced, so I should not like to commit myself finally as regards some of the changes which the right hon. Gentleman has mentioned. But there are some observations which I may be permitted to make at once. Let me take first the general question of the promise to the local taxpayers. It is perfectly true that the House and the country were served with notice, so to speak, by the Chancellor of the Exchequer that if the pauper disqualification was removed a portion at least of the cost of its removal would fall upon the rates. Yes, but at the same time or about the same time, the ratepayers were informed that it was the intention of the Government to deal with the whole subject of local taxation this year, and I think the Chancellor of the Exchequer will find that there is very much disappointment that the only part of the Government's notice which has been remembered to-day is the part which is of disadvantage to the ratepayers and not the part that will give them any relief.
As regards the calculation which the right hon. Gentleman has made as to the actual relief afforded to the ratepayers, I confess I am very sceptical indeed. I do not quite understand what occurred in regard to the past. Let me say, in the first instance, putting aside the question of pauper disqualification altogether, there was certain money due to the ratepayers or the local authorities in compensation for the loss of the whisky money. That was promised. I am not making at this stage a controversial statement. There was, in addition, a promise of one-half of the produce of the Land Taxes. The Land Taxes, we are told, have produced practically the exact sum they were expected to produce.
§ Mr. HOBHOUSE
My right hon. Friend (the Chancellor of the Exchequer) reminds me that in connection with the Land Value Duty and the whisky money he said that one must be a set-off against the other.
§ Mr. AUSTEN CHAMBERLAIN
The Chancellor of the Exchequer is speaking from memory, and therefore I venture to 1600 set my memory against his with all due deference. I state frankly that I also speak from memory. The Chancellor of the Exchequer made statements upon this subject more than once. I think you will find that when he first promised half the Land Taxes to the local authorities, no mention was made of the Whisky Duty or that it was any set off at all. I do not think the question had even then arisen. If my memory serves me right the first promise was to give half the Land Taxes; the second was for compensation for the loss of the whisky money, and even when the second promise was made there was no mention of taking it out of the Land Taxes. I think that came Into the third statement. I speak subject to correction, but the right hon. Gentleman sees my point. I well remember at one stage he did endeavour to set off half of the Land Taxes against the compensation for the loss of the Whisky Duty; but I understand that originally both were promised independently, and, if that be so, then, of course, it would be a great disappointment to those counting upon that promise if anything less is done for them now. I will not say anything more about it until we have had an opportunity of referring to the Chancellor's exact words.
As to the future, I do not suggest for one moment the Treasury have over-estimated the cost to the Exchequer of dealing with the pauper disqualification, but I think they have very much over-estimated the relief to the ratepayers. I can only take the figures as the Financial Secretary gave them. I understood him to say that he arrived at the saving to the ratepayers by taking the average case of an outdoor pauper and an indoor pauper respectively and multiplied it by the number of paupers taken off the rates, and put on to the Treasury in the granting of pensions. If I am right the Committee will see at once that the cost of putting these men on to the Treasury is not at all the same thing as relief to the ratepayers.
When you come to indoor paupers, the large expenditure would go on. The cost would, of course, be reduced, because you would not have to buy so much food or clothing, but the maintenance of the big establishments already created will have to go on just the same; therefore, to assume that the ratepayers will be relieved to the full extent of what any individual pauper now costs is to make a great error, not, indeed, in favour of the Treasury, but against the local authority. I shall 1601 have to look into that matter much more closely. As I said the other night, I deplore the fact that the Government have not stood by the announcement made last year when they undertook to deal with the whole question of local rating this Session. I know it is a very difficult and complicated subject. Any reform in this direction must be costly to the Exchequer, and you can only deal with it when you have a great surplus. The Chancellor of the Exchequer is now in the fortunate position of contemplating a great surplus, and this is the time for dealing with the matter. If this opportunity goes by I am afraid the ratepayers will find their relief postponed indefinitely, because large surpluses do not fall into the lap of the Chancellor of the Exchequer every year, as unfortunately I know from my own experience.
I want to say one or two sentences upon the alterations which the right hon. Gentleman proposes to make. I am extremely glad to hear that he proposes to remedy the gross injustice of the law as we passed it, and as it has been declared by Mr. Justice Channell. If it takes a little time to do it, and the right hon. Gentleman hears some unpleasant things said as to why he is doing it, I cannot promise him any sympathy. This trouble arises out of the obstinacy of the Government when they were passing the Bill. When the measure was under discussion we pointed out again and again that the effect of the words which the Government were introducing into the Licensing Law for the first time must be exactly that which Mr. Justice Channell declared them to be. We pressed this point upon the Government again and again, and they persistently refused to take our advice. They brought forward learned authority in the shape of the Law Officers of the Crown to tell us we were all wrong in our interpretation of the law, and they declared that these words made no change and no alteration in the law. We ventured to suggest, when you introduced these new words into the statute, that the judges would find a new meaning for them, and we held at that time, that if your meaning really was the same as the old one, no new words were required. That is exactly what Mr. Justice Channell declared to be the case. As the judge had been excluded from any knowledge of what had been done in this House, he was obliged to assume that some irresponsible man had introduced those words against the Government's wish, and they 1602 had been accepted without knowing what the effect of them would be. If the Government are now going to legislate to undo that it is because of the blind obstinancy with which they persisted in sticking to words which were wrong from the first, in spite of all the arguments we brought to bear on the subject. I do not think those words would have been inserted if we had not been compelled to discuss the matter in the early hours of the morning. As the Government are going to deal with the matter, I hope they will not make two bites at a cherry, and if they have to own they are wrong, I hope they will make amends handsomely. I understand from what is being said that the Government do not intend to refund the money which they have unjustly got under that clause. I believe the Financial Secretary said the Government would not refund the money already received under those words which Mr. Justice Channell said were grossly unjust. I do not think any hon. Member has any desire that the Government should stick to the ill-gotten money which they have obtained already under those words. What they have got cannot be a very big affair. In any case it is ill-gotten by a course of great injustice and hardship to individual men, and when the Government are frankly admitting it is unjust, and when they say they are going to alter the law, I put it to the Chancellor of the Exchequer that it would be in consonance with that better nature of which he often gives us glimpses in this House, to declare that the Government do not intend to profit by those words, but repay what they never intended to take.
I come now to two points in connection with the Land Taxes to which the right hon. Gentleman referred. My first point is in regard to the Increment Duty, and my second is the Reversion Duty. Let me say that in this connection I was sorry to hear the Government, now that they have passed their Land Taxes after so prolonged a struggle, say that they were a very poor source of Revenue, and that they could not recommend them to the local authorities. I thought these Land Taxes were going to be an El Dorado when we first discussed them. Their beginnings were going to be small, but the Lord Advocate told us, as years rolled on, they would bring in a constantly increasing stream of wealth, on which Finance Ministers would batten and fatten. Now, in order to reconcile the local authorities getting no share, the Chancellor of the Exchequer 1603 puts up the Financial Secretary to explain that they will never bring in much Revenue for some years, and as they can only bring in a few hundreds of thousands of pounds, he says the local authorities will be well quit of their bargain. Somebody has been fooled. It may be the House of Commons or the local authorities who are being fooled now. I think the local authorities would be wise to stand by the bargain they made, and take pot-luck in regard to what comes out of these taxes. If the Chancellor of the Exchequer is right in his revised view, what a light it throws upon the general wisdom of his politics, when you think, in order to get so little, so much cost has been imposed, first upon the country for the collection of the taxes, and then upon individuals in ascertaining whether they have been righly assessed, or in making corrections in their assessments. The right hon. Gentleman does not propose to make any large changes in these taxes, but he proposes to make two little alterations. In regard to the Reversion Duty the Financial Secretary says the Bill makes no distinction between a lease which expires naturally and a lease which is prematurely terminated artificially, and he says that is clearly inevitable. We used to complain, when a famous Budget was under discussion, that it was managed in water-tight compartments, with no Minister kept continuously attached to it, and the Minister who managed a particular section never knew what was done by the other Ministers when he was out of the House. It must be surprising to the Financial Secretary and the Chancellor of the Exchequer to know that this question was raised by Mr. Joynson-Hicks, who pointed out, as the Financial Secretary now admits, that the proposals of the Government were clearly inequitable, and the case was dealt with by the Secretary of State for War, on behalf of the Government. I do not know at what hour in the morning the Debate on this point took place, but it was after the conclusion of the usual hour, and I believe there were some sixty pages of discussion after eleven o'clock. The Secretary for War said:—The point raised by the hon. Gentleman would have been very important as the law used to be, but now there is no merger unless it is intentional merger, and such cases should not be exempt.Mr. Joynson-Hicks, at the end of the discussion, asked:—Is the unfortunate tenant who buys his own freehold, which means the termination of his lease, affected? That surely cannot be the intention of the Government.1604 The Secretary of State for War replied:—The tenant in that case becomes the landlord.That means the moment he became a landlord he loses all claim for sympathy. The Government have come to the conclusion that after all that was said by the Secretary of State for War—who was managing for them at that time—and confronted with individual cases as I suppose they have been of gross personal hardship, as well as great impolicy, they have decided to make some amendment. Even in their amendment I asked them to reconsider the proposal they have drafted. They have to deal with two distinct cases, and, speaking on the spur of the moment, I think the Amendment proposed will meet one case, but will not meet the other case at all. The Financial Secretary said it is really of no consequence on whom you put the burden, because that will be arranged between the buyer and the seller. My point" is that everybody should know which of the two have to pay in order that those concerned may make their bargains with full knowledge of what the burden will be, and what each will have to undertake. I think that is true of future bargains, but the Chancellor of the Exchequer must remember there are a great many of these bargains already in existence. There are an immense number of leases already made with power to the tenant to enfranchise within a given time and at a given figure. Of course, there it is of vast importance on whom you put the burden. The bargain is already struck; there can be no adjustment as between them now, and I say the Chancellor of the Exchequer will work an injustice that he does not intend to work if he applies his new Amendment to that special case. I say no more about it at the moment, having drawn his attention to it, but we shall have to come back to it, as we shall to a good many other matters when we get in Committee on the Budget itself. I now come to the Increment Tax. It appears that in some cases of leaseholds, the lessor is endeavouring to place upon the lessee the duty which the Government intended the lessor to bear, and it is that state of facts with which the Government propose to deal. The right hon. Gentleman (Mr. Hobhouse) said it is rather difficult to provide by law against this shifting of the burden. I admit it is rather difficult, but I shall be interested to see in exactly what form of words the Government propose to do it. In the meantime, why does the right hon. Gentle- 1605 man confine his attention to the shirting of a burden from the lessor to the lessee? Would it not be desirable at the same time to see that the vendor does not transfer the burden to a vendee?
§ Mr. AUSTEN CHAMBERLAIN
I am glad to hear the Chancellor of the Exchequer say that, and I hope he will hasten his proceedings on that point as rapidly as possible. I have just had put into my hands the conditions of sale of a property called the Brumby Building Estate, the property af Earl Beauchamp, for sale on 21st February. I think Earl Beauchamp is not merely a distinguished landowner and a Member of the other House, but he is also a Member of the Government, and even a Member of the Cabinet. May I draw the attention of the Chancellor of the Exchequer to Clause 21 in the conditions of sale?Each lot is sold subject to all duties and taxes arising under the Finance 1909–10 (1910) Act, in respect of or in connection with the sale of such lots, and any payment of the same by the vendor shall be reimbursed to him by the purchaser of such lot, and also——not merely anything which the vendor has to pay in taxes, but alsoany expense which the vendor may incur or be put to.put to by his colleague, the Chancellor of the Exchequer, or anyone elsein or about the ascertaining whether any lot is subject or not to any such duty or tax, and in obtaining any assessment or assessments in respect thereof. And until payment all and every such duty, tax, and expense shall be a charge on such lot, and the conveyance to each purchaser shall, if the vendor so require, contain a covenant and a charge accordingly.Without further comment, I think I may say that I have stated enough to show the. Chancellor of the Exchequer that legislation is urgently needed in order that Members of the Cabinet may know what the intentions of the Government are, and with which they may be compelled, outside the Cabinet, to comply.
§ Mr. FRANCE
I believe this question of the Whisky Money and the amount to be paid to the local authorities was first raised in this House in April last year, and on that occasion the Chancellor of the Exchequer made a definite promise referring to that part of the Whisky Money to be made up from the Land Taxes. He then said he hoped it would not be a permanent expedient. Although a great protest has been made to-night by the right hon. Gentleman the Member for East Worcestershire (Mr. Austen Chamberlain), who 1606 keeps his watchful eye on the finance of the country, no protest was made on the other side of the House on that occasion, except by the ever-watchful Member for the City of London (Sir. F. Banbury). The Government, being somewhat used, and pleasantly used, to the objections of the hon. Baronet, did not take quite so much notice of his protest as it thoroughly deserved. Personally, I thought at the time and I accepted the assurance at the time, that it was a temporary expedient. I should prefer to see this money, which is to take the place of the Whisky Money, come in from the Treasury. The right hon. Gentleman the Member for East Worcestershire said just now that these Land Taxes are to produce only a few miserable hundreds of thousands, whereas in his own hearing only a few minutes before it was shown by the Secretary to the Treasury (Mr. Hobhouse) that in the first year it was expected they would produce £400,000, in the second year £600,000, and in the third year——
§ Sir F. BANBURY
I heard exactly what the right hon. Gentleman said. He did use those words, but did he say that was the estimate or the sum received?
§ Mr. FRANCE
I can accept no responsibility for any figures given by the right hon. Gentleman. I can only say what I heard. I think the figure was given, as he himself said, as a rough estimate; but my point is that it was expected to be £400,000 the first year and £600,000 the second year. He specifically and specially said it would be impossible to say as to future years. If the increase goes on in anything like the same proportion, I think it is unfair to say the Land Taxes only produce a few miserable hundreds of thousands. I confess I was unable to follow the right hon. Gentleman in his calculations on the subject of old age pensions and relief to local authorities. I gathered, however, that it is now definitely stated that the guardians are not expected to make any contributions to the sums paid either to those who have occupied workhouses or have been the recipients of outdoor relief. That item will be satisfactory from the point of view that it settles a matter of controversy and gives definite information to those who up to this point have been unable to frame their" estimates for the coming year. It is now known that no contribution is to be expected from the guardians. I could not follow the right hon. Gentleman, however, in his calculations as regards the amount. I under- 1607 stood him to say that about £1,500,000 would be saved to the rates in this way. I should be glad if the Chancellor of the Exchequer could clear up the difficulty, because it is a matter of real difficulty as far as the administration of the Old Age Pensions Act goes, and show us how that sum is arrived at. I understood the right hon. Gentleman (Mr. Hobhouse) to say that he calculated 40,000 potential paupers and 160,000 who had actually been in receipt of pauper relief and were now getting their pensions. I do not know how he arrives at the figure 40,000 potential paupers. He seemed to think that at a certain moment those who reached the age of seventy might be expected to become paupers, but, as they have not been paupers up to the age of seventy, I do not see how he is justified in describing them as potential paupers, and I do not, therefore, see how he arrives at his figure £1,500,000.
There is a point with regard to the Licence Duties and the question of assessment. I drew the attention of the Chancellor of the Exchequer to it in the last Parliament by means of a question, and he admitted the grievance and said he would be prepared to try and remedy it, if a remedy could be found. Perhaps I may be permitted, on behalf of those who sit behind the Front Bench, to join in the congratulations which the right hon. Gentleman the Member for East Worcestershire so gracefully made on seeing the Chancellor of the Exchequer in his place again after his illness. A free licence-holder who is paying a heavy rent to his landlord—I know of some cases where he is paying to the extent of £700 and £750—has to pay under the present law on the assessment, and it has been roughly laid down that the licence should be half the assessment, subject to certain reductions. In such a case the tenant, I maintain, is under a special disability. In the first instance, he is paying a heavy rent on account of the licence, and in the second place he is paying a heavy duty based upon the heavy rent. He is therefore paying twice over for the licence. Not only that, but in the trend of present events, of which we have heard something to-day, and of which we hear a good deal in the country, he is paying for a monopoly. As long as it was a monopoly no one in the House would be more prepared to defend the taxation than myself, but, in so far as it becomes less a monopoly by the competition of clubs and in other ways, then 1608 one is bound to say it is not taxation that anyone who wishes to see fairness done can support, that a man should be asked to pay twice over for the advantages given him in that way. I have called the attention of the Chancellor of the Exchequer to this privately, and I have received from him an intimation that he was always prepared to remedy the matter if a solution could be found. I do not think in these days it will be beyond the wit of the Government to frame words to pass a proportion of that taxation on to the person who is reaping the real benefit. I should like to ask the Government if they could make a little clearer their intentions as to the whisky money and their calculations with regard to the Old Age Pensions Act. and whether they could make the alteration with regard to the Licence Duties which I have ventured to bring before their notice.
§ Sir ALFRED CRIPPS
The matter to which I have to call attention is the relationship between local taxation and grants from the Imperial Exchequer. As regards the first point, I think it is better to have an assigned Grant rather than to devolute a certain charge, such as the Whisky Duty. So long as you have the matter of education, which ought to be a question for the Exchequer, partly paid for out of rates, you will have nothing but continual extravagance, and, until you decide which is the proper fund on which education ought to be charged, and until you charge the whole amount to that fund, instead of getting it partly from the rates and partly from the Exchequer, you will have nothing but increased extravagance in connection with the expenses of education. If you desire to have the money properly expended, the necessary sums must be provided from one source, and then you may be able to get the best possible system of education. I would like to say a word or two on the question of payment for Old Age Pensions. It was reported long ago by the Royal Commission on Local Taxation that poor relief was a national charge, and that it would be reactionary, under any circumstances, to place any portion of the charge for Old Age Pensions on the ratepayers. I wish to congratulate the Chancellor of the Exchequer and hon. Gentlemen opposite on having given up any notion of placing any part of the cost of Old Age Pensions in connection with paupers on the rates. I hope the Chancellor of the Exchequer will bear in mind, as regards the principle underlying questions of this sort, that any charge for Old Age Pen- 1609 sions could, under no possible circumstances, be properly placed on the ratepayers of this country, the reason being that when these charges were placed on the rates, a considerable number of persons who ought to contribute, escaped contribution. The principle which should be borne in mind is, that contributions should be made in proportion to the ability to bear the burden, and in this case, the whole charge should fall on the National Exchequer. I do not agree with the proposal with regard to the Land Taxes, seeing that the heavy contributions from these taxes, which were to go in favour of the local authorities, have been cut off. In my view, every farthing raised from land values, if properly used, should accrue for the benefit of the local ratepayers, and not of the taxpayers. Take the interest which is most heavily burdened by the rates—I might say improperly burdened. If you are going to place a particular charge upon land values at all it ought to inure to the benefit of the ratepayer; it should go to the locality from which the particular benefit has been derived. If you are to put a tax on land in proportion to the benefit received that charge should go to the benefit of the locality that has incurred the expenditure. If you have a man who is extremely wealthy and has a very large number of investments, either foreign or in this country, as a landowner he may have a very small interest indeed. On the other hand, you may have a comparatively poor man who is working industries in this country, and I say it is unfair to throw an exceptional burden on him when, at the same time, there are persons far more able to bear that burden.
One other point on which I wish to call attention is as regards the Reversion Duty in the case of a merger as between lessor and lessee. Suppose that when the new Land Tax was introduced there was fixed a sum for which the lessee might purchase the interest of the lessor. Suppose before the Land Tax had been introduced they had fixed an arrangement which placed a charge on the lessee and not on the lessor, I would ask on what principle the right hon. Gentleman would intervene in order to upset a contractual arrangement of that character. We ought, if possible, not to interfere with the existing contract, and where a fixed sum has been arranged as between lessor and lessee in a contract actually in operation before the introduction of this taxation, I think it would be extremely unjust to in- 1610 terfere with the contract in order to shift the burden from the lessee to the lessor. Much, however, would depend in that case on the contractual relationship, in particular cases, between the lessor and the lessee.
I wish also to refer to the case of agricultural land. There was a good deal said during the last election as to whether or how far taxation should be placed on land used for agriculture. There can be no doubt whatever under the proposals of the Government that an Increment Tax is placed on a very large area of land used as agricultural land. I should like to go even further, and say there is no land ready for development upon which such a tax has not been placed. The Committee will recollect there were various Amendments brought forward from the Unionist side seeking to exempt from the operation of this tax all land used for the purpose of agriculture. The position taken up by hon. Members opposite, a position which was justified, to a large extent, was if you are to have no benefit from the land, you cannot exempt it from taxation for agricultural purposes. What I find fault with is this, that after making a statement of that kind, and after a scheme of that sort has been founded on the Government proposals, that they should now attempt to suggest that they are not placing the tax directly or immediately on land used for agricultural purposes. See how heavy the tax is. Take the case of land used for market garden purposes in the immediate vicinity of ft large town. That land may have an enormous undeveloped value for building purposes, and it may not be possible to realise at once. That points to one of the hardships connected with this question of the Undeveloped Land Duty. I believe that the whole principle of the Undeveloped Land Duty is unfair and unjust from beginning to end. Take the effect on land used for agriculture at the present time. It means in the case of agricultural land now let at the rate of £2 a year an additional sum of no less than one pound a year in the nature of rental. Surely we may protest, and I should have thought both sides might have protested under the existing conditions of agriculture, against the placing of additional taxation of that kind upon land used for agricultural purposes. Might I in this connection make a suggestion to the right hon. Gentleman opposite. Supposing he were to say we cannot consistently with our scheme allow exemptions of all land used for agricultural 1611 purposes, but we might allow this; that in order to produce some fairness as regards the owner or cultivator of agricultural land under these conditions, we will leave it to the referees, who are to be fairly-appointed under the terms of the Act to decide. I think that the Government should consent that those referees should say whether this land was really land which was being held up or whether it was land which was being used for agricultural purposes until it could be developed for building purposes. If you take the case of land not being held up, you come back to land used for agricultural purposes merely, and nothing else. I will not say I appeal to the right hon. Gentleman, but I will ask him whether he will not consider the proposal which I now make in order that he may give some relief in regard to land used for agriculture which in my opinion ought to be exempted entirely from any new taxation such as that proposed by the Government at the present time.
I have calculated that there are some hundreds of thousands of acres of land used at the present time for agriculture in regard to which it can be said there may be some building value, and wherever that may be said the undeveloped land duty may be alleged to apply in all those cases. I think myself that the taxation is unfair, but at any rate you might raise this discrimination that where the land is not being used for building purposes there is no immediate demand for it, and therefore it can only be used for agricultural purposes, and that in such cases the matter might be referred to the referee in order that the suggested tax should be removed, and the industry of agriculture should not be unfairly and unnecessarily handicapped. We talk about land in this country as if it were some peculiar property, but as a matter of fact we use it as the raw naterial for agriculture, or as the raw material as regards the builder, and the two people hit by the Finance Act are agriculturists and builders. You inflict this injustice upon them when, as a matter of fact, they ought to have encouragement and not discouragement. Let me explain how the builder is adversely affected—because the building interest in this country is a very large one, that employs a very large amount of labour. In the first place suppose the builder makes a happy speculation, he finds this Increment Duty charged against him, but if he makes a 1612 bad speculation and the land he has purchased cannot be developed, it becomes subject to the Undeveloped Land Duty. So that whether he is successful or not he is under an exceptional tax. In addition to that, in order to raise money it is extremely important to him that the value of the reversion shall not be affected, because the builder raises his money on the average land valuation plus the reversionary value which can make the advance absolutely secure. Therefore, on every ground the builder is affected as a business man in the same way as the agriculturist. I think it is wise as regards the rating question always to deal with the capital charge for rates as distinct from the charge of the Exchequer, and I do deprecate there being put on the agriculturist or builder these exceptional charges which ought not to be placed upon exceptional interests, and which you may meet in the way I have suggested by giving a discretion to the referees under the Act.
§ Mr. YOUNGER
I agree with everything that my hon. Friend has said on the subject of these Land Taxes. I do not think, however, that I should have mentioned them except that I should like to express regret that in his speech the right hon. Gentleman took no notice whatever of many of the anomalies which have occurred under the administration of the Land Taxes and of the grievances which the Chancellor of the Exchequer has promised to deal with. There was the case of undeveloped land, and in regard to that point I know of an instance where the proprietor actually refused the very large offer of a coal company to work the minerals, in order that he might maintain the surface of the land in the hope that at some future time it might be used as it had at present a potential value for building purposes. That obviously was practically in the nature of a contribution to the maintenance of the existing land for a purpose for which it might be used in the future. But will it be believed that the authorities say he is not entitled to any consideration whatever for having forfeited a very large sum of money which he would have received as royalties for the working of these minerals. That is very hard when it is considered, moreover, that if these minerals had been worked under what is called the long-wall system, instead of being left in large pillars to support the land, the surface of the land would have been of no value, because it would have subsided below the level of a large tidal 1613 river, and would have been to-day at the bottom of a lake, and not potential building land at all. As I understand, however, the authorities say that they will not give any allowance for a negative act to preserve the land, although that negative act may have very positive results as far as the possibilities of that land are concerned. That is one of the points which might have been, and probably will be, submitted to the Government by way of an Amendment to the Bill again. It was pointed out during the discussions on the Bill, and indeed it would have been very difficult for the Government to have drafted their Finance Bill at all had it not been for the very great length at which we on this side discussed upon the Resolutions the alterations which should be made in their proposals. I think that discussion was a great mistake, as I do not think they would have been able to draft the measure at all except for it. I hope, however, what we did then may have some effect now in regard to alterations in the present Bill.
I rose to speak, however, in regard to that portion of the right hon. Gentleman's speech which dealt with the Licensing Taxes, and I was very glad to hear him announce that the Government intended to repeal the sentence at the end of the first Sub-section of Section (44), about which we had such very prolonged and almost acrimonious discussions in the House when the Bill was passed. It is very obvious why these words were inserted. They were inserted with the obvious intention of preserving the Revenue which the right hon. Gentleman proposed to get out of these duties until such time as the Inland Revenue authorities had completed the Register of the annual licensed values on which they intended to base the assesment. It is very difficult for me to believe that those words were not introduced intentionally with that view, as they certainly did carry it out by altering the law with the object of making it perfectly certain that the calculations should not be altered by the valuations for the purpose of local assessment. I do not want to labour that point. I do not care what reason existed for the insertion of these words, and I am very glad that they are now to be repealed. I think it is a very fair and just thing on the part of the Government to practically accept the judgment of Mr. Justice Channell and to restore the law to its former condition, as the Solicitor-General said that was all along their intention. The figures which the right hon. Gentleman gave were very interest- 1614 ing, and I am sorry if I interrupted him and asked a question which I wished he would answer so that I could get a reply from an authority on the subject. What he said was this, that the yield of these taxes in the year 1909–10 was £2,450,000. The question I put to him was this, was that sum the amount actually collected within that year with the arrears appertaining to that year which have since been paid, or did it not include the estimated arrears? What did this sum actually collected within the year include, or was it the sum actually collected in the year, plus the estimated arrears? I think it included the arrears collected only. I asked the question because I want to make this point. I will assume that it was the duty which was paid, but he got £2,450,000, whereas the estimate of the Chancellor of the Exchequer in regard to the yield of this duty was £2,100,000. [An HON. MBMBER: "An increase."] It is an increase, of course, but he therefore extracted £350,000 more than he intended out of these licensed houses, though that was only for a part of the year. The retrospective action of the Budget was not for the twelve months, it was nine or ten months in England and six months in Scotland, and they paid up a minimum of £350,000 over the estimated amount of the duties.
I do not know the number of cases in which the alternative basis of annual value has been settled, and therefore there may be a considerable sum of money which has to be obtained from these higher houses. Is the right hon. Gentleman going to pay it back? If he is not going to pay back what he has unfairly taken in the first year, he ought not to ask these people to pay any more. You cannot have it both ways. If you have no right to the money in the one case you should not extract the money in the other. If I am right in supposing that these figures, whether they include the arrears or not, cannot possibly include the extra duties on these higher houses, and when I point out that the retrospective action was not for the whole year, but for part of the year, then I say that the case is made out for a revision of the duties at the present time, because the concession the Chancellor of the Exchequer is going to make does not seem to me to bring down the probable yield of this duty to the exact sum which it was estimated by the Chancellor of the Exchequer that it should yield and a sum which he thought was quite sufficient. The acceptance by the Govern- 1615 ment of the Inhabited Souse Duty Valuation will get rid at all events of the grievance complained of under Section (44), Sub-section (1). But the very acceptance of that accentuates the hardship of the minimum charge of the Licensing Duty which the Government propose. The minimum was ruthless when the old basis was supposed to stand. It becomes still more ruthless if that basis is interfered with and a new and reduced valuation is accepted. Therefore I think they ought to consider whether or not they should not modify it. The difficulty of settling annual licensing value is apparently a very great one. The form which was issued by the authorities of the Inland Revenue called LL1 I think, which asked for a large amount of information is not framed, I believe, so that they will be able to arrive at the satisfactory application of any kind of principle. I think I said on the very first occasion when I spoke on this clause and the proposal contained in it that the then existing basis was an impossible and unfair one in many respects, and I think I then stated that if the right hon. Gentleman were to exact duties of that kind the only possible way he could get them equally was by charging them on the actual liquor sold in the house.
The longer I have thought of it, the more I believe that to be the solution of the difficulty, and I think the longer the Excise authorities worry over it the more thankful they will be to see some solution of that kind. If it were possible to come to some sort of arrangement under which the net amount of duty the Government propose to take in this way from the off and on retail licences, exclusive of course, of wholesale licences, if it could be fairly taken on the basis of the turnover, which would, of course, have to be regulated by a system of permits, there would be some sort of reasonable chance of fairness and of taking toll from a man in proportion to the trade which he does. To attempt to fix upon any sort of plain scheme to apply equally and fairly in England, Scotland, and Ireland, taxing licensed duties on figures and particulars in the possession of the Inland Revenue authorities is, I think, to expect something which can never possibly be satisfactory.
There are other very grave difficulties in connection with the administration of the Finance Act which ought to be brought to the right hon. Gentleman's attention, 1616 which I know have been brought to the attention of the Chancellor of the Exchequer, and which I should very much like to see some attempt made to deal with in this remainder Budget. There is, first of all the excessive stretching of the definition of the word "premises." I made a very strong appeal at the time the Bill was passing to the right hon. Gentleman to make a certain alteration in that definition, because I then foresaw, along with many others, that it was going to be an extremely harsh measure indeed to mete out to these unfortunate people who were already being charged very high licence duties if any premises that they used in connection with their business, however remotely situated from their business and not licensed at all in some cases, were brought into the general rental and 50 per cent. charged on it. What has happened? Exactly as we predicted, the unfortunate hotel keeper, perhaps with a hotel, say, in a street in the centre of the town, has a stable in the outskirts of the town, not licensed in any way, in which he cannot store or sell a drop of drink, and the Board of Customs and Excise have been told by their advisers, perfectly correctly, that they are obliged to rope into the hotel value the value of the stable, and to charge the licence duties on that—a monstrous scandal. What about the hotel keeper who has a cottage—I do not know how far removed from his hotel—to which he occasionally sends an unfortunate guest to sleep? The hotel keeper finds that his hotel rental and his cottage rental are lumped together and he is charged licence duty on the cottage, in which he dare not sell a drop of drink. That is a monstrous extension of the definition of "premises," and it ought to be put right. I only know of one case in which the Excise has been properly had—a case in the North of Scotland, in which they roped in large stables near a hotel. In that case the stables were separately let. I must give the Board of Customs and Excise credit that when they rope in the rent of a stable they are also willing to add the takings from the stable into the takings of the House, so that the man gets credit for his general takings. In this particular case the hotel did not come under the one-third qualification, and thereby had to pay the full licence duty, but the moment the stable was roped in—the hiring was rather a big business—the hotel came below the one-third, and he got off with a lower revenue than he had paid 1617 before—a very satisfactory ending. But one swallow does not make a summer, and, therefore, although that is one case in which I know the Excise did not make money by this extraordinary definition of the word "premises," it does not at all follow that that ought not to be put right at once in the general interest.
Then there is another case, the case of the seasonal hotel, in Scotland particularly. What has happened about that? There is no doubt whatever that when the Chancellor of the Exchequer made the concession he did to seasonal hotels he meant it to be an adequate and a very generous concession, and it was undoubtedly, but how has it worked? Again, we have not what the Chancellor intended, but what the legal advisers of the Customs and Excise regard as the interpretation of the law. They say a seasonal hotel can only be a hotel if it comes within the definition of "Hotel" in the Finance Act, which defines a hotel as a place where a traveller may be received or lodged, and where the liquor drawings are less than a third of the total. The old definition of "Hotel" has entirely disappeared for the purpose of the larger Licence Duty, and the only definition that remains is the one I have given, which, I think, is in Section 45 Here you have hotels which are open perhaps for two or three months in the year, which do not come within that particular definition, whose liquor drawings are a little more than a third instead of being a little less, and which may perhaps, at one season of the year, take considerably more than the third, while in the other time, they would not be over a third, but so long as they do not come within the definition in Clause 45 they cannot be seasonal hotels at all, and they do not get any advantage. It is a crushingly hard case, and I am sure it was never intended. There may be difficulties in getting a definition which would cover all these cases, and which would take away that hardship, but I think it is a case in which the right hon. Gentleman ought to consult his legal advisers, and see whether he cannot bring in a new Clause which will give due effect to what the Chancellor of the Exchequer intended, and get rid of this extreme unfairness, for which I blame no one, because I have no doubt that the Board of Customs are doing what is perfectly legal, though it is extremely unfair.
Then I was particularly interested in a remark made by an hon. Member opposite on the question of the landlords rackrenting free publicans. We have a 1618 splendid example of that in Scotland. I had a Clause on the Paper in order to-apply the principles of Section 46 of the Act to the landlords who exacted monopoly value in the shape of rent. Clause 46 compels the tied house brewer or distiller to share in the extra Licence Duty where he has a covenant with these people to buy his liquor. I say that where a landlord takes up the same position he is just as entitled to be roped in as the brewer, and I have figures, and I shall be glad to show them to the right hon. Gentleman, of a very large number of cases in Scotland, in which this has happened, and I have particulars of a considerable number of hotels having a gross rental of £15,411, of which the estimated unlicensed rental is £8,094, so that 47.4 per cent. of the rental now charged by the landlord of these premises is really in respect of monopoly value as licensed premises. That is a case in which these unfortunate people are paying twice over. They are paying the Government a percentage, assumed to be the monopoly value, though in many cases it is a great deal more, having, first of all, paid the landlord 47.4 per cent. in the rent paid to him. In the case of public-houses I have many cases, amounting in all to £32,903 a year. The estimated unlicensed value is £16,504, and the percentage, therefore, of the excess is 49.8 per cent. Even in the case of licensed grocers you find exactly the same. I have a certain number here of £9,882 gross rental as licensed with an estimated unlicensed rental of £6,581, giving a difference of 32.4 per cent. I admit this is a difficult matter to deal with, but I do not see why a man should be asked to pay twice over for the same thing, and I cannot see why an ordinary landlord who takes a share of the monopoly value, as a tied house brewer is supposed to take it, should not be placed in the same position. He ought to make his contribution towards the Licence Duty. I do not say whether it is right or wrong that he should, but if you do it in one case you are bound to apply it to the other. In one case a man supplies goods on which he gets a profit, and in the other he is taking a profit out of the monopoly value with which he has nothing whatever to do, and which the Government has now come in and entirely taken away. I hope the points which I have brought before the right hon. Gentleman will have some consideration, and I think they ought to be dealt with in this Budget. I have intentionally not raised 1619 any question of the Licence Duties themselves, or of the Spirit Duty. I do not think it would be of any use raising them now. The Government could not deal with them, and should not be asked to. The proper time to raise them will be on the Budget for next year. But, so far as these duties are concerned, there is plenty of time to put them right before the Licence Duty becomes payable again. I think some of these anomalies ought to be dealt with now, because I believe the law to be administered in such a way as to deprive these people of the concessions which the Chancellor of the Exchequer himself honestly intended to give them, and, under these circumstances, there should be no further delay in putting them right.
§ Mr. C. E. PRICE
I desire to support the application made by the hon. and learned Gentleman (Mr. John Redmond) that a separate Return should be presented to the House, showing how these Whisky and Licence Duties affect Ireland, Scotland and England. Unfortunately, these figures were presented as a whole, and we are quite unable in Scotland, very frequently, to trace fully the effects there and the benefits which we receive. I am very glad that the right hon. Gentleman has intimated that there is going to be a revisal of the Increment Duty. An advertisement was read by the right hon. Gentleman, showing the conditions of sale of Earl Beauchamp's Estate. As far as Scotland is concerned, since the Budget was introduced, many estates have been sold in the same circumstances as Earl Beauchamp's. Therefore, anything which can be done should be done to prevent men deriving income from the value of land towards which they have not contributed anything, and to keep the tax on these individuals. I sincerely trust that the Government will see that the owners do not transfer the tax. I was very glad to hear from the right hon. Gentleman that there was some chance of that being done. I am more than pleased that the Chancellor of the Exchequer has intimated, if I understood him correctly, that the Land Tax is not now to be divided, but that the whole of the proceeds are to be retained by the Imperial Exchequer. I think the Chancellor of the Exchequer made a great mistake when he agreed to divide it. We understand the reason which led him to do so. About 500 or 600 municipalities petitioned him to bring in a Land Tax and 1620 to allow them to share in the proceeds. To hand a portion of the proceeds over to the local authorities leads, in my view, to very great extravagance. I would also have a Land Tax which would be assessed by the local authorities themselves.
This Debate has been more or less on the lines of the Debate which took place the other night. The hon. Member for Buckinghamshire (Sir Alfred Cripps) referred to the tax on agricultural land. We have heard many statements from the other side of the House of a similar nature. Will he tell me where there is a tax imposed on agricultural land by this Budget. I defy hon. Members to show that there is such a tax. On the other hand special relief was given to landlords by allowing them to deduct from income double the proportion in respect of working the estate they were allowed before, and to say that an additional burden has been put on agricultural land is to mislead the public, and it is grossly unfair. What they call a tax on agricultural land was described by the hon. Member for Buckinghamshire: "Here is land," he said, "for which the proprietor wants £500 an acre, and if you put a tax on that, it will almost wipe out the money he receives from it as an agricultural subject only." But the reason why the ½d. tax is put on that land is not because it is agricultural land but because the owner is asking building land price. That being so, let him pay precisely the same tax as any other man would have to pay if he bought the land. There is at present a discrimination between individuals. One man has land for which he asks £500 per acre, but at present he is paying the tax on £40 an acre. He retains the land because he cannot get £500 an acre for it until a willing buyer comes along, and the moment that man buys the land he is taxed on £500. Why should he be asked to pay on £500 while the other man is taxed on the lower value? To describe this tax as one on agricultural land is wholly wrong. We want to see that one individual should not be taxed at one rate and another man at another rate. If one man likes to retain his land, using it as agricultural land, while he is at the same time demanding a price for it as building land, we say to him, "You can keep your land as long as you like, but you must pay the tax which the other man would have to pay if he took possession of it."
I am very glad that in this Budget we have at last an effort to deal with a matter which has been the cause of injustice to 1621 many people—namely, the holding up of land for a good price by men who call it agricultural land, while they themselves are free from the tax which is placed upon other individuals. I support cordially the proposal that the whole of the proceeds of this tax should go into the Imperial Exchequer. The hon. Member for Buckinghamshire said that the whole of these taxes should go to the local authorities for another reason. I think anyone who has devoted any attention to the matter will see that it would be impossible to carry that out. Take, for instance, the City of London, and apply the Land Tax there. Suppose you took the proceeds to pay old age pensions. You would have very few old age pensions in the centre of the City of London, while you might have a very large number in East Ham. Therefore I say we have a right to take the tax on land in London to pay the charges in East Ham. I would press the Chancellor of the Exchequer to do something to see that the tax on the increased value of land shall not be transferred to the lessee but maintained on the lessor.
§ Mr. EDWARD WOOD
I do not propose to follow the hon. Member (Mr. C. E. Price) in the last part of his remarks with regard to the justice or injustice of giving these taxes to, or withholding them from, the local authorities. That is a matter on which, I think, the local municipalities will no doubt express their opinions, and I do not discuss it now. I desire to refer to the remarks which fell from the hon. Member with regard to the tax in the case of agricultural land. I think he challenged anyone to say where there was a tax on agricultural land under this Budget. It would be quite possible to give a large number of cases in which agricultural land, properly so-called, has been very severely taxed under this Budget. I think part of the confusion in the mind of some hon. Members has arisen because they have fallen into the fallacy that it is possible to regard all land which may be called land with a building value as being in the market at one and the same time.
§ Mr. EDWARD WOOD
The hon. Member shakes his head, but I venture to think that is what is really at the back of his head. He says this land is being held up because the owner cannot get what he regards as a fair value for it. That is exactly the point. If the owner is prepared to give land away, he will have no land on his hand, but surely it is no answer to say 1622 that if the owner of purely agricultural land brought the price down low enough, he could sell it, and in that way cease to be troubled with the tax.
§ Mr. C. E. PRICE
I think the hon. Member has misunderstood me. If a man is asking a given price for a piece of land, he should pay the tax upon the price which he is asking, because if he sells at the price he is asking, the purchaser would pay the tax on the value. We ask why should the State discriminate between the two?
§ Mr. EDWARD WOOD
I can assure the hon. Member that I would be the last to stand for discrimination as to what should be paid by two different individuals. All I say is that it is unjust for the State to tax at a value that is not realisable. As an example of what I mean we will assume that there are two owners. One is the owner of what I will call an inside plot of land, and the other is the owner of a plot of land that is for practical purposes in the position of frontage to the first-named owner. It is practically impossible for the first owner of what I call the inside plot to develop his land until the man in front of him develops his. Until that has been done he is in the position of an owner of agricultural land, used for agriculture, that undoubtedly has got a prospective building value, but a value quite impossible to realise until the man who owns the frontage has developed his. Any hon. Member who has seen anything of development outside big towns knows it very often happens that you would have developments at one stage proceeding rapidly in one direction, and then there may come a change in popularity, or what you will, and all the land where development has been going on may be for the moment subject to a slump, and will be on the owner's hands. It will still retain its prospective building value in a sense, although that value is quite unrealisable. Under those circumstances I venture to submit it is quite wrong to ask the owners to pay a tax on the value which they cannot get, and if you do you will be bound to tax the only use they can put the land to—namely, agriculture. I should be quite prepared to admit that there might be certain cases, though it is extremely hard to define the principle, in which it might be proper for the State to ask the man who had made an enormous profit to contribute part of it to the State. That is an entirely different principle, because the whole foundation on which the Budget proceeds is, first of all, this fallacy that you 1623 can regard all this land as being on the market at the same time for the purpose of valuing it, and that if so, you can rightly regard it as carrying its prospective building value. If all those people outside who own building land were to sell it at the same time I suppose building land would be about the cheapest thing in the country. That shows the ridiculous result arrived at if you attempt to value it on that basis. I could easily add other points, but I think that what I have said should be sufficient to convince hon. Members on the opposite side that there are many cases in which with the best will in the world the owner is unable to realise what is called the prospective building value, and that for years to come the land cannot be used for the purposes of building, and, therefore, it should not be taxed as if it could be so used.
§ Mr. WALTER McLAREN
I desife to express my warm appreciation of the conduct of the Government in having taken back into the National Exchequer these Land Taxes. I never thought that they were suitable things for local taxation, and I am extremely glad that the project is a sign of a coming reorganisation and readjustment of our local and Imperial taxes. The Government are now keeping in the National Exchequer all this class of taxation. In doing that they are giving a great advantage to the local bodies in relieving them from the burden of contribution to old age pensions for those who have hitherto been paupers. The relief to taxation that will come from this will be very great indeed. I doubt if anything that the Government has done will be more popular in the country than the particular decision in regard to old age pensions. It would have led to an amount of friction and difficulty in every locality that would have been almost insuperable if boards of guardians had been compelled to contribute to the Exchequer the no doubt constantly diminishing amount for which the paupers now receiving old age pensions would have been chargeable to the union. Therefore, in making a clean sweep of the whole transaction, although at a heavy cost to the National Exchequer, there can be no doubt whatever that the Government have acted in harmony with the wishes of all the Poor Law administrators of the country. No doubt the country will have to pay more than £1,000,000 for this, but it does not make a very great difference in the end which class of pocket it comes out of. I hope it will be possible, 1624 perhaps in the next Budget, to have some general reorganisation of the Grants-in-Aid to local administrations. The whole system at present is in hideous confusion. There is no part of our administration that is so complicated and so totally devoid of any reasonable basis as these Grant-in-Aid of local taxation. I had a good deal to do with the giving of the grants for technical education years ago when I was in the House, but the system is bad, and the Government should tackle it boldly and comprehensively, and try to put the thing on a sensible and logical basis. Whether it would mean an increase in taxation or rates I am not prepared to say. Probably it would make a fairly even balance, but the whole thing as it at present stands is entirely indefensible.
I would like also to thank the Government for Resolution No. 3 with regard to the Super-tax on husbands' and wives' income. The right hon. Gentleman (Mr. Hobhouse) who introduced the Debate for the Government left the position rather vague. It is not quite clear from his statement what proportion of the Super-tax is to be paid respectively by the husband and the wife after the first £3,000. Suppose the husband has £3,000 a year and the wife has £3,000 a year is it the Government's intention that each of them should be assessed for half of the Super-tax, or does the husband's income get off scot-free while the whole burden is put on the wife's £3,000; or is it the other way round, and is the wife's £3,000 free while the husband pays the whole thing? As the law stands at present the husband has to declare the wife's income and pay the whole of her tax. That is distinctly a grievance. The wife equally has a grievance, because if she has trustees those trustees hold her income for her own separate use and maintenance, and if she has no trustees under the Married Woman's Property Act she holds her property equally for her own separate use and maintenance, and it is not a reasonable thing that the husband should be compelled to make a declaration on behalf of his wife. I understood, however, though I am not quite clear that in future they would be jointly bound to declare their own income. But it was not made at all clear which of the two was to bear the burden of the Super-tax and who was to get off. The Resolution says that where the rate of 6d. is chargeable on the joint income of the husband and wife a part of that duty proportionate to the wife's income may be assessed on and recovered from the wife. I take it that the 1625 meaning is that each income shall be assessed pro rata according to its amount, so that each will get the benefit of the non-Super-tax to a proportionate extent. I think that it would be much better if each had his or her own assessment. You might have a case of relatives who are living together, each with an income of £3,000. They might not have to pay any Super-tax, while the husband and wife with the same wealth between them would have to pay the Income Tax on £3,000. I trust that the Government will make it abundantly clear that this grievance is removed on both sides, and that the wife is made responsible for her own declaration and for the assessment of her own income. I think it is wise for the Government to do that, though I believe they have had some difficulty at Somerset House on the subject. It seems to me that the whole of the proposals now before us meet with general acceptance. With regard to licences, no doubt considerable hardship has been inflicted in the case of the many houses by the incidence of the increased taxation. I have not gone into the details of the proposals, but I sincerely trust that some adequate relief will be given to those hotels which have had their licence duty enormously increased without any adequate rebate in their local assessments. It seems to me that where a house has been increased in its valuation, therefore, it ought to get a reduction on the local assessment practically equal to the increased assessment. I trust that this grievance will be remedied, a grievance that undoubtedly was not intended.
§ Mr. GOLDMAN
I associate myself with hon. and right hon. Gentlemen on both sides of the House in their sympathetic reference to the right hon. Gentleman the Chancellor of the Exchequer, who I am pleased to see back again in his place, and recovered in health. It is of great importance and urgency that we should deal with these great financial questions, that are long over-due, and which have been allowed to drag on to such an extent that the public mind hardly realises to-day what Budget is actually under consideration of the House. The circumstances are aggravated by the fact that hitherto it has been the custom with regard to our finance to have one Finance Bill only in the year; but it seems now that the Gov eminent are not content with one Finance Bill, and they introduce two Finance Bills in one year. [An HON. MEMBER: "Who is to blame?"] The hon. Gentleman asks 1626 who is to blame. I know he would like to cast on the House of Lords the blame for our having had two Budgets instead of one. There have been complaints from all sides of the House, and not merely from one quarter, as to the condition of business, and the Prime Minister himself has spoken of the great congestion of public business, which is greatly aggravated by the accumulation of arrears with which we have to deal. It is hardly assisting the progress of public business of our financial operations, if at the very point of the completion of the Bill, or the passage of this measure, it is to be interrupted, as was the measure of last year. I do not desire to be hard on the Government, realising as I do, and as we all do, the great difficulties they have had to contend with in conciliating the various parties who compose their majority.
§ The DEPUTY-CHAIRMAN (Mr. Whitley)
I hardly think this is relevant to the business before the Committee of Ways and Means.
§ Mr. GOLDMAN
I submit to your ruling, Sir, and I pass on to the resolutions which the Chancellor of the Exchequer has submitted to the House. I would observe that the Budget has not produced an appreciable amount of Revenue, while it certainly raises interesting points of very deep concern. The Chancellor of the Exchequer is re-opening the whole question of the Super-tax. He means—I suppose that is the motive which is actuating him—to try and give a more equitable apportionment of this tax as between husband and wife, but in examining the suggestion he makes, I hardly think that he is arriving at a solution of the point with which he is dealing. For this reason: He suggests that the Super-tax shall be charged in proportion to the income of the wife or that of her husband. The Chancellor of the Exchequer, in apportioning the Super-tax, surely cannot be so inconsistent as to suggest that he will continue the Income Tax as it exists at present. Supposing the husband has an income of £4,000, and the wife one of £2,000, a total of £6,000—under the proposed adjustment of the Chancellor of the Exchequer, the Super-tax on the £3,000 would be allocated as £50 for the husband and £25 for the wife. But in the case of the Income Tax where the same position prevails—the husband having an income of £4,000 and the wife £2,000, making £6,000 in all—the husband will bear the whole brunt of the impost. In adjusting the Super-tax the 1627 Chancellor of the Exchequer does not mitigate the grievance which arises out of the whole circumstance, and that is this: whether in allocating the Income Tax it would not be fair to allocate to the wife only that proportion of the tax which ought to be imposed on her independent income, that is, income independent of that of her husband, or, if it is to be imposed at all, and to be added to for Super-tax, whether it should only be that proportion of her income which arises out of settlements she receives from her husband. That is a proposal which I should like to see carried out by the Chancellor of the Exchequer, for I think it is a fairer way of dealing with the whole matter. I should like to put it in this form. In dealing with the wife's income, that proportion only which she receives out of settlements from her husband should be subject, together with the income of her husband, to Super-tax. See the hardship it might lead to. Instead of an equitable adjustment, what would the Chancellor of the Exchequer be doing?—He would simply be relieving the husband and penalising the wife. Supposing the husband had an income of £3,500, and his wife an income of only £500. That is £4,000 in all.
§ Mr. GOLDMAN
Then I will put it up £1,000 for the purpose of my argument, and make it £4,500 the income of the husband, and £500 the income of the wife. In other words, they would be subject to a Super-tax. The wife, under these Resolutions, would be called on to bear a proportion of that Super-tax, whilst in reality if she were only taxed on the income which she has earned she would not only not to have to pay Super-tax, but would get a rebate under the Finance Act of 1909. To that extent she would be penalised. On the question of the National Debt the Government are also seeking to introduce a new departure. Hitherto any surplus that arose from the Budget was placed in reduction of the National Debt. Now the Chancellor of the Exchequer pro-poses to group two years together, a precedent which I think will be received with something like dismay in financial circles. If in one year a Budget shows a surplus, and in the following year a deficit, and if you are allowed to deduct the deficit from the surplus you are actually starving the Old Sinking Fund. That principle of deduc- 1628 tion of a deficit from a surplus is the very principle which we on this side insisted on, or tried to persuade the Government to accept, before the Increment Tax under the Budget became payable. There is as well the question of local taxation. Last Monday we had a very protracted Debate on the anomalies and disproportion that exist between our Imperial taxation and our local taxation. I must say, and I am sure the House agrees with me, that it was a great disappointment after that Debate when we heard, within five minutes of the adjournment, from the Financial Secretary to the Treasury that the Government had no proposals to make. On the contrary, although to a certain extent the Government were pledged to introduce a scheme of reorganisation as between local and Imperial taxation, they were not in a position to make any suggestions to the House; and it appeared that they were still considering the whole proposal. This question of local taxation is an urgent and imminent one. More particularly if you examine into the cause and realise and see that every year, not only are the burdens of local taxation increasing by leaps and bounds. In twenty years the total has increased from £38,000,000 to £74,000,000, or about 100 per cent., while the increase in Imperial taxation during the same period was 50 per cent.
§ Mr. GOLDMAN
Twenty years ago the total of local taxation was £38,000,000. Ten years ago the total was £51,000,000, and before the 1909 Budget the total was £74,000,000. Imperial taxes amounted twenty years ago to £83,000,000; ten years ago to £121,000,000, and before the 1909 Budget £127,000,000. The point I wish to make is as to the inequality that is growing up between local taxes, which are constantly bearing more and more, and the taxes of the country. It will be an interesting fact to some hon. Gentlemen opposite who have Socialistic tendencies to observe that the direct taxation of the local taxes is no less to-day than 92 per cent. of the whole taxes derived from local taxes. I made a calculation on this matter, and I accept full responsibility for all these figures. Twenty years ago direct taxes from local taxes amounted to 87 per cent. To-day they have increased to 92 per cent., while Imperial taxes have only risen from 38 per cent. to 49 per cent. I must assume that the Government have declared over and 1629 over again that their intention was to equalise direct and indirect taxation in order that there should be a moiety between the two. It may be that, in view of the fact that in Imperial taxes the direct taxes were only relatively small compared with the indirect, that they agreed and approved of the great increase of the direct taxes in respect of local taxation. I think that the country, and we have a great grievance that the Government are not prepared with a scheme of reorganisation of the whole question of the distribution of taxes as between Imperial and local taxes. The growth of local taxation presses on the industrial system, and, indirectly, on the working classes, because it is on the rateable value of every factory and of all the machinery that rates are paid. When you come to analyse the source from which local taxation is derived you will see that the working classes frequently pay one-quarter of their total income in this way. That is an undue hardship resting on them compared with the whole body of the people taxed under the local taxation system. Not infrequently you will find that one householder pays rates and taxes whilst six or eight people living in the house, although they are paying to the Imperial Revenue by smoking or taking sugar, or drinking tea, are absolutely exempted from all local rates. [An HON. MEMBER: "They are paying the rent."] Many lodgers pay rent, but they do not pay any rates. The rates may be included, or may not, but the question in my opinion deserves consideration. If you take direct taxation from the local taxation, and the direct taxation from the Imperial taxation, you "will find that the two combined show that direct taxes are paying no less than 65 per cent of the whole taxes of the country, or 15 per cent. more than the moiety contemplated as between direct and indirect taxes. There is as well the question of Motor Spirit Duty, which also affects the matter of local taxation. I understand that the Government are not in a position to-day to tell us how that revenue is to be allocated. I would suggest that the Chancellor of the Exchequer should take the licence fees received from motor cars as the equation for the purposes of establishing the amount that should go to particular centres from the Motor Spirit Duty. In every centre you can find the amount of licence money in respect of motor cars, and the proportion that that money bears to the total licence money should be the proportion in 1630 which the Motor Spirit Duty should be distributed. In conclusion, we on this side deprecate the undue delay in the passing of the Budget, the duplications of Budgets, and, above all, that the Government are not in a position to introduce a scheme for the reorganisation of taxation so as to-allow a readjustment of direct and indirect taxation and a better distribution as between Imperial and local burdens.
§ Mr. SHERWELL
I listened with great pleasure to the welcome announcement of the right hon. Gentleman this afternoon with respect to the Increment Duty, in which he promised to propose such an amendment of the Act as will prevent the transference by the lessor of his liability to Increment Duty and Increment Stamp Duty. Since the passing of the Finance Act this has been a very serious evil in certain districts. It has been a great disadvantage and hardship in the West Biding of Yorkshire, where there is in certain districts a close monopoly in the holding of land, where it is not possible to buy a single yard, and if lessees desire to obtain land for building sites they are compelled to take whatever arbitrary conditions the lessor chooses to impose with respect to the taxation that may fall on the land. I would therefore express my personal indebtedness to the Chancellor of the Exchequer for this promised amendment.
I think that perhaps the Committee does not understand the real significance and extent of the right hon. Gentleman's concession with respect of the deduction of the Licence Duty from the assessment for the purposes of annual value. There is one difficulty in connection with the matter which, to my mind, is a very real one. We are promised that the basis of taxation shall be the annual value as determined for the purposes of Inhabited House Duty. Theoretically, the assessment by the Inland Revenue for Inhabited House Duty is legally a distinct and separate assessment from that for the purposes of the poor rate; but while the theory underlying the two assessments is distinct, I believe that in fact the assessment for Inhabited House-Duty follows the assessment for poor rate. This raises a very important question as to whether the concession promised by the right hon. Gentleman will not carry him further than he anticipates. The assessment for the purposes of the poor rate, whilst scientific, very accurate, and close in the metropolis, is certainly very casual and haphazard in the provinces, and it is 1631 indisputable that in many districts the absence of anything like an authoritative principle of assessment results in the valuation for the purposes of poor rate being very often considerably below the mark. I know a district in the West Riding where, since the passing of the Finance Act, the brewers, who control a large number of licensed premises, instead of shouldering directly their proportion of the increased Licence Duty which the Act assigns to them, have said to their tied tenants, "We will make no deduction; we will shoulder no part of the increased Licence Duty; but we will reduce your rent. By that you will not only save the sum represented by the reduction of the rent, but also secure a reduction in local rates." If the burden on the brewer is to he interpreted in that way, it clearly follows that the assessment for poor rate purposes, which is the assessment in practice generally followed for the purposes of Inhabited House Duty, will result in the Tight hon. Gentleman losing a far larger sum than the £400,000 which he at present anticipates, and which I suggest is not an exaggerated estimate of the loss that will accrue from the concession.
Under this concession, what becomes of the new valuation for the purposes of the Licence Duty? How far has the new valuation advanced, and when may the licensees of the country expect to be assessed on the basis of the new valuation? This is a very urgent question, because it was understood, when the Finance Act was before the House, that the figure of 50 per cent. of the annual value was a purely provisional arrangement, and that when the new valuation was made the rate or percentage would be adjusted to the new figure. It is an open secret that the determination of the annual licence value has been found to be a very difficult process in actual practice, and in view of the anomalies which unquestionably exist—to some of which the hon. Member for Ayr Burghs (Mr. G. Younger) has called attention—I should like to put a very pointed question. Is the right hon. Gentleman prepared, even at this hour, to reconsider the question of the final basis of licence taxation? In view of the fact, which many of us believe, that the valuation which he proposes is likely to be an anomalous one when completed, and will be in actual fact an extremely difficult and complicated one to make, will he not see his way to reconsider the basis of licence 1632 taxation and consent to a new basis, which would secure that the amount of taxation shall be strictly proportionate to the value of the trade done on the premises? If he would consent to reconsider the matter from that point of view I think the difficulty might be easily overcome, and I do not believe there would be any serious difficulties in arriving at an agreement even with the trade itself. The hon. Member for the Ayr Burghs seemed to give a hint that, from his point of view, such an agreement would be possible. If the right hon. Gentleman is only concerned to obtain a certain amount from the trade, and if the trade will guarantee him that amount, will he be prepared to reconsider the basis of taxation, so that we may arrive at a basis that will be equitable all round; will secure the interests of the Revenue, and will also protect licensees from the anomalies under which they at present suffer. My own opinion, which I have ventured to express before on the floor of the House, is that we shall never obtain anything like a satisfactory scale of taxation until the charge made in respect of licences is as strictly as may be proportioned to the value of the trade done in the licensed premises. I make this suggestion in all good faith. If the Chancellor of the Exchequer should find it possible, even at this late hour, to consider it further, I think I can assure him that an arrangement would be possible, and, indeed, easily made inside a few hours, which would secure the value to the Revenue and at the same time satisfy those who suffer under some real grievance.
§ Mr. PRETYMAN
May I first say how very glad I am to see the Chancellor of the Exchequer again in his place, and to hear that he hopes on this occasion to be able to make a short reply. May I say at the same time that I hope he will understand that in the questions which I put to him I desire to impose no strain on him. If he feels that he has not sufficient strength to answer all the questions now it will be quite satisfactory to us if he answers them when the Second Reading of the Budget comes off. I think that the Chancellor of the Exchequer will agree that the most important statement that we have heard from his colleague to-night is that in regard to the arrangement which he proposes to make in adjusting matters between the Treasury and the local authorities. I must rather congratulate the Chancellor of the Exchequer at his agility in escaping diffi- 1633 culties. There is an old proverb that says that "nothing matters that you can get out of by paying." I think that the Chancellor of the Exchequer has got out of one or two very considerable difficulties by paying. One of them was a reserved matter. The Chancellor of the Exchequer does not usually find it necessary to reserve anything unless it is a very difficult question. This is one of them: As to how the product of these Land Duties was going to be divided amongst the different authorities in the country? I do not know whether the Chancellor of the Exchequer found any satisfactory solution to that, but I cannot help thinking that this solution is perhaps less likely to give rise to political difficulties than any other from his point of view. I remember when we were debating the point the Chancellor of the Exchequer said that although the bulk of this money was coming from building areas, the "men of the mountain"—I think he called them—were to have their share. I think the allocation of the product of the Land Taxes, large or small, between the "men of the mountain" and the people of the building areas would have presented a great deal of difficulty. That difficulty has now disappeared. There is another point which I think rather makes things easier for the Treasury. That is that the local authorities are beginning to find out how extremely little they would have got out of the product of these very much vaunted duties. When you come to divide the total sum of the produce of these duties—and the cost of the raising of this revenue was not to be a deduction—even, I say, if the gross produce came to be divided among the local authorities, it would have amounted to such an infinitesimal sum that the people concerned would have had unequalled opportunities of comparing in their own persons and in their own small community the relative importance of the whole thing—of the trouble, expense, worry and bother to which they were to be put in the assessment, and the levying of these duties, and in the return which their community was going to receive from the Chancellor of the Exchequer. I think that would have set up in the peoples' minds comparisons which the Chancellor of the Exchequer is very wise to try and avoid. In these two particulars he has simply, from his own point of view, taken a very wise course.
So far I congratulate him. But when we come to the question of principle, I 1634 think that we on this side of the House will differ from him. For the only possible ground, to my mind, on which this Increment Duty and Undeveloped Land Duty can be defended is that it should be imposed, as has always been advocated—the only ground upon which it has ever been advocated by really thinking men—on the ground that it is a repayment to the community for benefit received; that the recipient of that benefit has done nothing personally to earn it, and therefore should repay to the community, at any rate, some portion of it. Immediately the question arises, what should the benefit be? The reply is obvious—a local one. I think I can give good reasons why it should be the local community. It is obvious that the increment on all kinds of property is, I will not say the same, but similar in effect. Surely it is perfectly clear that the growth of the community affects all kinds of property. Any person may be at any time the owner of any kind of property—land, shares, business, anything you like. That business is always liable to be increased, and perhaps considerably increased, in value by the growth or action of the community as a whole. The thing is by no means peculiar to land. It may be said that it is more liable to happen in the case of land than any other kind of property. If that be so, and you apply your principle to all kinds of property, and the increase in the value of land is greater than any other kind of property, then you will get from land more than from any other kind of property you will maintain your principle, and nobody will have any right to complain. But should not land, which in regard to the local community has received a special benefit, on which the local authority expends the rates and money which it raises from the entire community in carrying out works, roads, drains, and other improvements, which are paid for out of the rates, and clearly have an effect in raising the value of the land in the district, specially benefit the people? That we have always admitted. [HON. MEMBERS: "Hear, hear."] I hope hon. Gentlemen opposite do not think I am opposed to the principle of a local community obtaining some contribution by any fair means which can be found for assessing it from increment on land in that particular locality produced by an expenditure of public money ! It appears to me to be a perfectly fair principle. I entirely agree with it. [HON. MEMBERS: "Hear, hear."] Have I ever said any- 1635 thing to the contrary? Never. But this tax does not do that. This tax does not do that, nor can a tax in this form do that. Never ! I go so far as to say this, that a contribution of this character to local rates is not a tax, and does not come under the same financial category of a tax at all. It is much nearer the category of rent. What is rent? A rent is a payment for something received. An owner of property has spent something upon that property, and somebody else enjoys the benefit and pays the creator of that particular form of user in the form of a rental. Why should not the local community that creates the value be paid by those who use that value? Where a private individual of the community or the local community creates value, that value ought to be the measure of his investment to the extent of which that value has been created by someone. That is a perfectly fair principle, and there is not a single Member on this side who would differ. But other persons must be equally rated according to what they create, and, so far as the community as a whole is concerned, surely Parliament has an absolute right to levy Increment Value Duty, just as it levies Income Tax and Death Duties, but it is not right to levy Increment Value Duties any more than it is right to levy Income Tax and Death Duty upon one kind of property and let all other kinds go free. That is the root principle upon which I take my stand.
§ Mr. PRETYMAN
I am very glad to receive that support from the hon. Gentleman. But surely he must see that by supporting the Government in their present proposals, or rather, in their recent proposals, now unfortunately translated into action, he is doing an injustice which he himself admits. I suppose he is doing so on the principle attributed, rightly or wrongly, to the old Jesuits. He is doing evil that good may come from it.
§ Mr. PRETYMAN
Partial good ! It may be partial, but I am afraid I cannot see much good coming from it. This, of course, is not really the occasion for going into root principles, but I want to put myself right upon that point, because on this question of allocating money to local authorities, it seems to me the Government has given clean away the only principle upon which Increment Value Duties, especially upon land, can be defended, and, 1636 therefore, in allocating to the State the whole products of these duties they are removing the only shred of principle upon which these duties can be defended.
I now come to certain points that arise in the working of the Act under present conditions. I want to ask some questions which I hope the Chancellor of the Exchequer will answer either now or upon the Second Reading, whichever is most convenient to himself. I do not know whether the Chancellor read the Debate which took place a few days ago in connection with this matter upon an Amendment to the Address. I very much pressed a question which is of the most vital importance to everybody concerned in the collection and payment of this Increment Value Duty, and that is as to the complete obscurity which exists as to what site value really is. I will bring this down to a concrete case, and I will put it again as I put it before. We all know what original site value is. That is the value attributed to the land by valuation. You simply take a valuation; you go through the process prescribed by Section 25 of the Act, and on that basis you arrive at a figure which leaves the value of the bare land upon which a building or any other structure may stand. That is the original value. Then you have got, at some subsequent date, to arrive at the assessable site value. You arrive at that in the case of a sale, which is the most important point, under Section 2, taking the consideration for the sale. And from that consideration of the sale you have got the duties—the assessable site value. By what process is that done? It is very obscure under the Act. I have a case given to me by a very large number of solicitors and builders, and nobody knows exactly where they stand. It arises in this way.
You have got an ordinary composite property—a house and a piece of land. The total value of the house and land is, say, £500, and is fixed by valuation, and the original site value £100. Then, on the occasion of sale, the property is sold for £600. That £600 becomes, under Section 2, the total value on that occasion. How are you going to deduce the site value from that. Nobody knows. Nobody knows how, on that occasion, you are going to deduce the site value from the consideration. The United Committee on the taxation of Land Values have published a book upon the subject. I have it by me, but I think my memory is sufficiently clear to quote the sense of it, which is this. It is that in this case the building 1637 cannot obviously have increased in value—bricks and mortar cannot increase in value, and therefore it is obvious that an entire increase of £100 must be an increase in the site value. In other words, you cannot have the site value increased in that case from £100 to £200. Still, if Increment Value Duty payable upon that increment of £100, less 10 per cent. in your original total value of £500 and your original site value of £100, you will have to pay 20 per cent. of £90 or £18. That is a simple case, as simple as you can possibly state the basis of calculation, where you have an increase in the total value of a composite property. How are you going to decide how much of that increase is attributable to the site and how much, if any, is attributable to the building?
I put that point further, as I did the other day. I am sorry to have to repeat it, but it is of vital importance, and I got no answer. If you are going to treat the whole of the increased value of £100 as the taxable increment, it is obvious you are going to do two things. First, you are going to tax occasional profits, and not site value at all; and second, you are going to have a row of houses absolutely identical standing upon sites of obviously identical value and area, but of totally different site values. That must be so. Everybody knows if you have a row of twenty small houses worth £300 apiece the chances of the market as between a willing seller and a willing buyer are a very large percentage of that value. Suppose the selling value of those houses is barely taken at £300 a-piece, and supposing a man living in one of them has to go to work somewhere else. He is obliged to put his house into the market, and at the moment nobody wants it particularly. As a matter of fact, it is a forced sale, and he will be lucky to get £250. Take as a further illustration another man who as no desire to leave his house, but some other man close by wants a house in the district, and he asks this man to sell. Is it not probable that in this case the owner will get £350 for a similar house. That is the ordinary chance of the market, and this is what I mean by occasional profit. If you are going to treat a profit of that kind as taxable increment, under Section (2) there will be a different consideration because one house may be sold at £250 and the other houses at £300 and £325. Are you going to have a different site value on all those different considerations? If you are, what becomes of the great national register of profit? The Secretary to the Treasury told his Con- 1638 stituents that the whole object of this valuation was not so much to obtain money as to get information about the land in the country. That will not be of much value if it is based not upon a genuine valuation of all the property, but on the chance occasional price at which any piece of land may be sold in the market. You are going to get into absolute confusion if that principle is followed. We shall not know where we stand. Take my example of a £500 sold at £600. Are you going to have another valuation the same as you had to get at the original valuation? If so, all you will do is you will value the site the same as before, and then where are you going to get your increment value? You will have both complete confusion and great injustice. If you are going to tax the occasional profit which the owner of any house or property makes on the chances of the market, what possible excuse is there for taxing those occasional profits, and not taxing occasional profits in selling stocks and shares or anything else. Under these circumstances am I not justified in saying, upon the ground which has been perpetually argued—and by no one more than the United Committee of the Taxation of Land Values—that you are not putting 1d. of tax on the work of men's hands, but on the chance value of his property. What respect will people have for our legislative capacity if two men who own houses exactly alike, standing side by side, are told that one man's piece of land is worth £100, and his neighbour's piece of land, which is absolutely identical, is worth £120, what becomes of your basis for rating? The Chancellor of the Exchequer himself said that this site value basis will very probably form a future basis for levying local rates. Surely he must have it equal to the real value of the property and not according to a value evolved for the chance of occasional sale in the market. These points are supremely important, and I hope we may get these points cleared up either now or later. I understood from what passed at certain conferences that the Chancellor of the Exchequer intends to deal with the twenty years' exemption. On that point, we do not quite know how we stand. My noble Friend who moved the Amendment to the Address made this point very clear. I hope the Chancellor of the Exchequer will tell us how he stands in the case of a property which has been purchased within twenty years from 30th April, 1909, where the purchase price was greater than 1639 the value fixed on 30th April, 1909. Will the right hon. Gentleman say whether that purchaser is to be entitled to have the purchase price substituted for the original value. I cannot quite reconcile the two statements made about it by the Chancellor of the Exchequer. The Chancellor of the Exchequer had three conferences—the first with the estate agents, the second with the builders, and the third with some hon. Members below the Gangway. At the first of these conferences he referred to this case, and said that:—No. In that case you can go back twenty years and if within twenty years the man had paid more for it there would be no increment.That is a statement which was reported and accepted. Nothing could be plainer than that. I contrast that statement with a letter signed "R. J. Hawtry," and dated 16th February, written on behalf of the Chancellor of the Exchequer in reply to an estate agent who wrote and inquired on this subject. He says:—In reply to your letter of the 2nd inst., I am desired by the Chancellor of the Exchequer to inform you that there is no provision in the Finance (1909–10) Act under which the purchase price of property sold within twenty years before the 30th of April, 1909, can be substituted for the 'original total value' as ascertained at the latter date. This does not appear, however, in any way to impair the value of the concession with regard to the 'original site value' in these cases.I should like the Chancellor of the Exchequer to consider those two statements at his own convenience. I think the right hon. Gentleman sees my difficulty, and it is the difficulty of all who have to deal with this question. Site value is an abstraction, and how are you going to deal with an exemption where the site value is greater than the original site value fixed under the Act? That would not fit the case, because there is no conceivable means by which this can be proved, except the case where the total value and the site value are identical. Where the land has got a house upon it, by what possible machinery are you going to ascertain what the site value of that land was when it was bought? I have not heard any suggestion as to how it is going to be done. We are told that:—If within twenty years he had paid more for it there is no increment.That is what we wish to see established, and if the Chancellor of the Exchequer will see that those words are properly carried out, that is all we ask for. When the Chancellor of the Exchequer introduces his actual Budget proposal in two days' time, I hope we shall find him making 1640 good that promise which he distinctly made to the estate agents. There is one point which arose out of the Debate the other day which I wish to mention. Hon. Members opposite twitted the Unionist party with not being prepared to repeal and deal drastically with these taxes, and reference was made to the Resolution passed at the National Union Conference at Nottingham. No one had a copy of that Resolution, and it is as well that I should read it, so that hon. Members may see how the Land Taxes would have been dealt with under that resolution. It is as follows:—That the valuation of land and all the Land Taxes imposed by the Budget of 1909–10 should be repealed so far as they affect land used for agricultural purposes, or affect persons dependent on the building trade, or small property owners, and that the proceeds of any land taxes——not these—levied upon Urban building land should be employed in relief of local taxation, and should not be paid into the Imperial Exchequer.
§ Mr. PRETYMAN
My opinion is pretty well known. I honestly cannot remember whether those exact words were used, but opinions very much to the same effect, or, perhaps, even stronger, were in my election address. It is only fair to the Chancellor of the Exchequer that I should indicate certain directions in which we think it would be desirable to amend the Act. The first is, that no Undeveloped Land Duty ought to be charged upon any land unless it is certified by some authority—and I am perfectly prepared to consent to any reasonable suggestion as to what that authority should be—that it is required for building land. No Undeveloped Land Tax ought to be charged unless the land can be sold and is really wanted. It is impossible to levy a heavy undeveloped land charge upon land which cannot possibly be used for years for any other than agricultural purposes and then to say you are not taxing agricultural land. Land of that description is agricultural land, and must be agricultural land for years. It has a prospective building value. Then let your tax be prospective. To demand a present tax on a prospective value is a proposition so extremely theoretical that I can assure hon. Gentlemen it has not penetrated the rural mind at all. We are practical people in the rural districts, and we look upon agricultural land as land which is being cultivated. That is what we call agricultural land, and it is pretty 1641 fair proof that that is the ordinary acceptation of the term, in English, because neither the Chancellor of the Exchequer nor anybody else would accept our proposal to put into the Bill a simple proposal that agricultural land should be exempted from these taxes. I do not see how hon. Gentlemen can reconcile refusing to accept an Amendment which clearly states that agricultural land shall not be taxed, and then going down to their Constituencies and telling everybody that agricultural land is not taxed. That is a refinement which I think they must see requires some explanation.
Land in actual course of building development ought not to be subject either to Undeveloped Land Duty or to Increment Duty. I do not mean land which the owner is selling for other people to build upon, but land in the occupation of a builder which he ought to develope, and which he or a developing company is actually in course of developing. The hardship imposed in that case is quite obvious. Under the Act, there is power to the owner to ask for an apportionment of any site, but there is no power for the assessment of the original site value. The Statutory Unit is an occupation, but the owner has a right to demand a separate valuation of any field, or portion of a field. He has no right, however, to demand aggregation. That is an important point, because you get a row of small houses where the value of the total site is much more than the multiple of small sites. That is a small point which I think the right hon. Gentleman will be probably willing to deal with. Then there is the forty years' clause in the Reversion Duty Where a property was purchased before the passing of the Act, before 1909, and where there were less than forty years to run, it is exempt, but there is no power of transferring that exemption to a purchaser. It is quite obvious, therefore, when the vendor sells, the duty will fall to be paid by the purchaser. Consequently, if the present owner is forced into the market, he has to bear, through the reduced purchase price he will receive, a full burden of the Reversion Duty which will fall upon the property.
I do not think a word has been said about the Mineral Rights Duty, and there are some very difficult and important points which arise on that. I have seen some very remarkable correspondence about it. The proposal, as I understand it, was to place this tax upon the actual value of the right to work the mineral, 1642 whether that right were being exercised by the owner, or whether it were leased by him to another person. I do not say whether the fault is in the administration or in the Act. It is extremely difficult to determine, and it is a matter which the Law Officers of the Crown will be able to deal with much better than I am. These two claims have been made. First of all, the duty is being claimed not only upon the rental value of the minerals—that is, what is paid for working them, but also upon surface rents of land which is let with the minerals to lessees who are working the minerals, and also upon shafts and other things. I do not, however, want to go into too much detail at this stage.
§ Mr. MARKHAM
The Government accepted from me an Amendment by which the mineral rights duty on shafts is not charged.
§ Mr. PRETYMAN
That is in reference to wayleaves. I think I am right in saying that what the hon. Gentleman did was this in reference to these taxes on the right to work minerals and wayleaves. When the question of wayleaves was under consideration the hon. Gentleman moved an Amendment under which shafts would be included. I am not quarrelling with that, but it is a different matter to charge duty on the cost of making shafts. When we come to the particular Amendment we shall deal with this; I am only indicating to the Chancellor of the Exchequer the direction which the Amendments will take. I think it was the intention of this House that this Mineral Bights Duty should be claimed only on the income received from mineral rights in any year properly received and attributable to that year. But it is now being claimed on any arrears—many years old in some cases—that happen to have been paid during the current financial year. There are cases where lessors, for the benefit of lessees, have allowed the royalties to remain four or five years in arrear, and it so happens that those arrears or instalments of them have fallen in to be paid during the current financial year, and Increment Duty is being claimed on those in addition to the duty on the profits of the year itself. That appears to me to be rather stretching the law. Will the Chancellor of the Exchequer also consider whether it is fair to charge Mineral Bights Duties without deductions for Income Tax. It is hardly fair to charge the owner of mineral lands first the full Income Tax, 1643 and possibly the Super-tax, amounting to 1s. 8d. in the £, and afterwards to charge him the Mineral Rights Duty at the rate of 1s. in the £ not only on that sum, but also on the 1s. 8d. he has paid to the State. That is felt by owners of minerals to be a very great hardship, and on that point we propose to put down Amendments which I hope the Chancellor of the Exchequer will give consideration. When I come to consider the amount of ground which this question covers my brain is absolutely fogged, and when I consider the innumerable hardships and troubles which have already risen in the initial stages of the administration of this Act I begin to think the whole thing is nebulous to a degree. I have tried to make myself as clear as possible, and I hope the Chancellor of the Exchequer, in answering, will not think it necessary to go over the whole ground, but will simply suit his own convenience.
§ Mr. LLOYD GEORGE
I thank the hon. and gallant Gentleman and the right hon. Gentleman the Member for East Worcestershire for the kindness they have shown to me personally, and I hope the House will extend its indulgence to any observations I may think it right to make on this occasion. I am afraid I cannot follow the hon. and gallant Member into all his points, but I will promise the most careful consideration for them by the time we arrive at the Committee stage. I agree with him that we are dealing with the most complex, puzzling, and perplexing land system in the world. Anything which touches that system is bound to partake of its complexities. I stated at the time, and I repeat it now, I knew perfectly well that no scheme which could be devised by the wit of man would be so perfect that in practice amendment would not be found to be necessary; and I undertook whenever any grievance was put to me in practice I would do my best to redress it without allowing any sort of pride of paternity in the Act of Parliament to interfere with my judgment. I promise, when I see the Amendments on the Paper, that I will do my best to consider them as fairly and impartially as possible. There are some points the hon. Gentleman put to me which I would rather not answer without consideration. He dealt with the site values and with the deductions one has to make, and he referred to the letter of 16th February. As far as I can see that is a different thing to the answer I gave to the 1644 deputation. I will look into it, and I promise that whatever I said to the deputation I will, as far as possible, carry it out in the Act of Parliament. I was pleased to hear the hon. Gentleman's clear and eloquent elucidation of the principle of land values. I could hardly believe that it was the bon. and gallant Gentleman who delivered that speech. It was a very clear defence of the whole principle, and a very convincing one, but, like most converts, he rushed to extremes; he was not satisfied with the modest proposals of my Budget; he wanted to go further with his Socialist allies, and he wanted to impose a duty on all classes of property. I am afraid he must be satisfied with what we have done with the land itself. The hon. Gentleman laid it down as a proposition that it was obvious these taxes ought to be applied in the community where they were raised. But that is not a defensible proposition, for the reason that it is difficult to define the area. What, for instance, is the London area? It is not the area of the London County Council, as the influence of London on the value of land extends thirty miles outside. That is the case also in Lancashire, and you will find that great cities like Manchester, Liverpool, and Oldham give a value to property in Cheshire. Under his proposition Manchester, which is responsible for an increase of site values in Cheshire, would derive no benefit at all from them. For that reason I have never been able to defend the local allocation of these taxes. I agree with my hon. Friend the Member for Morley, and I think it ought to be a temporary expedient. I do not think this ought to be the kind of work for the allocation of taxes, and I said the time. I think the right hon. Gentleman the Member for East Worcestershire (Mr. Austen Chamberlain) will be able from his memory to recall what occurred. I promised to make up the deficiency of the whisky money, and I made it clear that that deficiency would be made up by half the Land Taxes going to the local authorities. I said so last year, and in that statement I referred to a previous statement which I made on the same subject. So therefore this is not a new proposal on the part of the Government. The only new proposal which we make to-day is this, that instead of carrying out our original idea of levying a contribution upon the local authorities—upon the guardians—in respect of relieving expenditure under the Poor Law, we are abandoning that pro- 1645 posal altogether. I am sorry, and I do it with considerable reluctance, because it involves a very considerable addition to the burdens of the Exchequer, and is therefore a very considerable limitation of our resources for the purpose of insurance. It is a very considerable limitation of the resources at our disposal; there is no doubt at all about it. At any rate, we have decided that, on the whole, it is not worth while entering into a wrangle with the local authorities about it. The local authorities benefit, I think, to the extent of a million and a half by this transaction. It is a very considerable Grant-in-Aid for the local authorities, but we must ask the House to support us at any rate in securing the restoration of the half Land Taxes until at any rate we are able to consider the whole problem of local taxation.
The right hon. Gentleman the Member for East Worcestershire referred to pledges given by my Noble Friend Lord Crewe and by myself that we would deal with the problem of local taxation this year. I read the speech which the right hon. Gentleman delivered, and it was a very fair, although I do not think it altogether justifiable party retort. I do not say it was unfair, but it was not altogether justifiable under the circumstances. When I promised to deal with local taxation this year, it was the deliberate intention of the Government, and the considered intention of the Government to do so, and the announcement was made by Lord Crewe in the House of Lords and by myself in this House. But the whole conditions have changed. Could any Minister deal with that subject this year? How could he possibly having regard to the gigantic controversial task which is in front of the House—how could he undertake the readjustment of all the burdens of local taxation? So resolute were we to deal with the subject that we appointed a Committee of Local Government experts in order to create a scheme for the purpose, but in the month of November we saw exactly what was going to happen. We knew there was going to be a Dissolution and that the whole of this Session was to be devoted to the Constitutional contest, and I ask the House whether it was reasonable under the conditions of this Session to expect the House to plough through a great scheme of local and Imperial taxation? In fact, it would be physically impossible. But I can assure the House that it is the full intention of the Government to deal with it. In fact, 1646 I do not think that really any Government could go on very long without dealing with it. Because what does it mean? I pointed out before that it means that as long as it is not dealt with on some clear and definite basis the Chancellor of the Exchequer will have constantly to hand out hundreds of thousands of pounds, if not millions, to the local authorities in a thoroughly wasteful manner. I find myself as the result of being unable to redeem that pledge in the position of having to give another £1,500,000 to local authorities without exacting anything in consideration, and without making any bargain in the matter. My predecessor had to do the same thing, and Lord St. Aldwyn also had to do it when he sat here, and as long as the Chancellor of the Exchequer has not a final rearrangement of the relations between local and Imperial finance it will be ruinous both to the local and Imperial Exchequer. Therefore, right hon. Gentlemen may depend upon it that there is no keener advocate for settling this question at the first possible moment than any man who is responsible for the National Finance. I am extremely grateful to the House for listening to me.
§ Mr. DILLON
I merely rise on behalf of the Irish party to express our deep feeling of gratification and our congratulations to the Chancellor of the Exchequer on his return. As far as we are concerned we recognise to the fullest possible degree that the Government are debarred by circumstances over which they have no control from dealing with the great question of local finance in this Session. If they did so their own supporters in the country would be the first to condemn them, and we recognise fully that anything that is done in the matter of local finance during the present Session must be in the nature of a temporary expedient. There are a great many important points in connection with the Budget which will undoubtedly be raised in our future discussions which were not dealt with by the Secretary for the Treasury in his opening statement, and are not covered by these resolutions. I will confine myself strictly to those points which were dealt with by the right hon. Gentleman. First of all I desire to express our thanks to the Government for the decision not to ask for any contribution from the local authorities towards pauper pensions, a decision which will be received, not only in Ireland, but throughout Great Britain, with satisfaction tomorrow. The Secretary to the Treasury 1647 stated that, when the proposal was origin-ally made by the Government to make the local authorities contribute towards pauper pensions the amount of the relief which they had been previously given no protest was raised. That is not correct. I myself protested the very moment the announcement was made, and I pointed out to the Government many, as I think, strong arguments why that course would be most inconvenient and troublesome. I need not allude to them now, as the Government have fully abandoned the proposal. While, of course, some regret may be reasonably expressed at the loss to the local authorities of their share of the Land Taxes, I do not think the proposal of the Government is unreasonable. I think it most reasonable. In this arrangement the Exchequer has given far more than it has taken back from the local authorities, and I am satisfied that the local authorities, both in Ireland and Great Britain, will be completely satisfied on that particular point by the announcement of the Chancellor of the Exchequer.
The point on which I desire to speak most emphatically is the question of the whisky money and the condition of education in Ireland. That question affects secondary education in this country, but in a much minor degree to the extent to which it affects it in Ireland. I regret exceedingly that the Secretary for the Treasury has not been able to give us the figures for Ireland, and that we are still ignorant of the proposals, interpreted into figures, which the Government intend to apply to intermediate education in Ireland, but, as far as I can understand, the proposal of the Government is that in lieu of the whisky money, which has steadily decreased in the last ten years, and which almost entirely disappeared in the year of the Budget, they propose to take a standard year and to give to Ireland as a permanent and not a fluctuating Grant the amount realised by the Whisky Duties in the year 1908–9. The figure I have for that year is £49,504. I suppose the amount for 1909 would be approximately the same, or perhaps a little less. What has been the condition of intermediate education in Ireland? The whisky money, which was in my opinion from the beginning a most unreasonable and most unfair provision for intermediate education, was set up under the Act of 1891, and in that year the total amount was £39,000. In the year 1900 it 1648 reached its high water-mark, and Irish intermediate education got £71,400 of whisky money, the total revenue for intermediate education in that year amounting to £103,000, the balance being made up by the interest on the sum of £1,000,000 from the Irish Church Surplus Fund. Since then the whisky money has steadily declined. It went down from £71,000 to £64,000, £56,000, £50,000, £48,000, and then it was £49,000, in what I understand is to be the standard year—a fall of £22,000. Coincidently with that fall, the number of pupils in the intermediate schools of Ireland have increased from 5,332 to 6,972, an increase of about 30 per cent. Before the Budget was introduced, therefore, a very serious crisis had arisen in the condition of intermediate education in Ireland, the number of pupils increasing and the grant from the Exchequer decreasing year by year, and a state of great unrest, uncertainty, and discontent had arisen in the schools. In the year in which the Budget was introduced the whisky money fell to £17,000, and now the Chancellor proposes to take as a standard, and stereotype, the year 1909, fixing, we will say, roughly, the sum of about £50,000 a year, as well as I can make out, as a permanent Grant in lieu of the whisky money—£21,000 less than we had eleven years ago. That is an absolutely intolerable position. I am sure the Chancellor of the Exchequer has never applied his mind to the facts of this problem.
This does not at all convey the real extent of the grievance from which we suffer in this respect. Intermediate education in Ireland has an income derived from two sources. The first is the interest on the £1,000,000 of the Irish Church Surplus Fund, a purely Irish fund, amounting to £33,000 a year; and the second is the residue of that £78,000 a year which has been given to the Department of Agriculture from Ireland's share of the whisky-money, and that has fallen in the proportion which I have explained. But when we come to compare the condition of Intermediate Education in Ireland with the condition in England we find that in England, in addition to its share of the whisky money, there is a Grant on the Estimates of £630,000 a year, a Vote which is rapidly increasing. As against that Vote we in Ireland get not a farthing. We get nothing except from Irish sources, and we have for ten years been demanding that a Vote should be put on the Estimates in order that we might be able to discuss this all-important question of Irish Interme- 1649 diate Education year by year, and draw attention to the unfair discrimination against Irish Intermediate Education. If on the same proportion as the whisky money is distributed we were to get a Grant for Irish Intermediate Education from the Treasury, the Irish proportion would be £74,000 per annum, as against £650,000 for English Intermediate Education, and as against that sum we get absolutely nothing. I will not draw attention to this other fact that Irish Intermediate Education, as compared with England, is far more in need of State aid than English Education, because in Ireland in past generations, with very few exceptions, all the ancient endowments of education were confiscated and swept away, whereas in England you have in every county, I might almost say in every parish, rich endowments of Intermediate and Grammar Schools. Therefore England is in a much better position to do without this assistance from the Treasury than Ireland is, whereas, as a matter of fact, England is getting large grants for which Ireland gets no equivalent whatever. Therefore I would respectfully submit to the Chancellor of the Exchequer that this provision which he has made as a substitute for the whisky money granted to Irish education is utterly insufficient. Of course, we can discuss this matter at length when we come to the Second Reading, but I warn him that the Irish Members cannot accept this arrangement as satisfactory or anything approaching satisfactory. I would ask the Chancellor of the Exchequer to consider seriously the position of the unfortunate teachers in Ireland. The assistant teachers in England, although they have an association, are complaining at this moment of their insufficient salaries, and demanding increases. Let me draw attention to the contrast between the salaries of English and Irish teachers. Two English inspectors were sent over to Ireland some years ago to make an inquiry, and they reported that the average salary of male teachers was £83 per annum, and of female teachers £45 per annum. In London it is £150 to commence, increasing by £10 per annum to £300 or £350. In Liverpool the salary is £150, increasing by £10 per annum to £400; and in Birmingham it is £100 to £200. I am certain that an average in Ireland well under £100 cannot be allowed to continue. It is due to the poverty of the schools, the want of endowments, and the total insufficiency of the Government Grant.
1650 The next point I wish to draw attention to is the very important announcement that it is proposed to make a concession of £400,000 to the higher-rated English publicans in London and other cities. I think it will be impossible for the Chancellor of the Exchequer in connection with that concession to ignore the claims of the publicans of Dublin and Belfast, where the system of valuation is practically the same as the English system. It was said earlier that in Ireland we get concessions. It is true that we get concessions for the small publicans, but not for the highly rated publicans of Dublin and Belfast. I do not intend to go into details of this matter at this stage, but I warn the Chancellor of the Exchequer that we will put forward a claim, to which I cannot conceive there will be any objection, for the large publicans of Dublin and Belfast. I have been dealing with points to which the Secretary to the Treasury referred. But there was an amazing omission from the Irish point of view. The tangle of the relations between Imperial and local finance is so complicated that I doubt whether there are half a dozen men in the House who understand it. It has got into a deplorable tangle, and I think it will be most difficult for anyone to make the relations between Imperial and local finance simple.
I was amazed that the Secretary to the Treasury made no allusion to the state of the high local taxation account. This account, apart altogether from the question of more money, is in a state of bankruptcy. The Chancellor of the Exchequer must know that the grants for lunatic asylums, and that various poor law services which are maintained by the local taxation account in Ireland, cannot now be maintained, and the County Councils are urged to levy extra rates in order to make up the deficiency. That is an urgent question, the settlement of which we must press for in connection with the present Budget, because it is inconceivable that the Government, pending the general resettlement of local taxation, should refuse to make good these deficiencies. My own suggestion is that the Government should vote—it is not a very large-sum of money—sufficient money for this year and the year gone by to meet the deficiencies in the local budget and then leave the whole question of permanent settlement over until they tackle the general subject of local finance. This state of affairs arose under the Irish Local Government Act of 1898. When that Act 1651 by Clause 58 set up the Irish local taxation account the Irish Members of the day, repeatedly, at every stage of the passing of that Act, warned the Government that they were setting it up on a basis which would involve bankruptcy to the country, and that very soon. We were borne down. We warned the Government and the House that when that bankruptcy came we would insist upon a reconstruction of the present fund. What occurred was this. At that time these services were financed by annual grants from Parliament, which amounted the year that the Act was passed to £244,000, and were rapidly increasing. The Government took certain sums which amounted to £200,000, thus leaving a deficiency of £44,000, and then they gave us a fixed annual grant of £74,000 to make up that deficiency and give us a surplus of £35,000 a year. The Irish Members protested against that. They pointed out how, according to the lunacy reports, the charges were increasing so rapidly that the surplus would inevitably be swallowed up, and would be turned into a deficiency in a very short time. Here is an extract from a speech which I delivered on that point in Debate in this House. I said:—There is another point in connection with financial relations to which I wish to secure special attention and that is in reference to lunatic asylums. The right hon. Gentlemen has inserted a provision in the Bill for this purpose and he claims that it will give us a surplus of £35,000 a year. He says that would be more than sufficient to provide adequately for the cost of making more satisfactory and humane treatment of the lunatic poor in Ireland. Anybody who has read the reports in connection with the controversy as to Irish lunatic asylums will have great doubt about that. I notice that more stringent powers are conferred with the Lord Lieutenant to require the County Councils to make proper provision for the poor lunatics which must entail a great deal of building and expense for the lunatic asylums. The moment the cost is thrown upon the ratepayers the Lord Lieutenant—I sympathise entirely with him in this—and the Central Board in Dublin will increase enormously the demands upon the local asylums for proper treatment for the lunatics and larger accommodation for them——And then I proceed:—The present condition of lunatic asylums in Ireland, according to the report of the Royal Commission, makes it certain that they will throw in future on the ratepayers the burden of providing adequate accommodation for the continually increasing number of lunatic poor, and it is a cruel and most outrageous proposal, and I think it would he a foolish and hardly an honest thing, if we, the Irish members, were to leave the Government under the impression that the people or the Irish representatives accept without protest the policy of casting upon the ratepayers the increasing burden of supporting these poor people in Ireland.We made ample protest at the time, and proved beyond all question that the basis of this taxation was unsound, and that in the course of a few years the fund would 1652 be bankrupt. Last year the bankruptcy came, and we are face to face with a deficit The Government are bound to deal with the situation. I do not wish to detain the Committee; because we shall have ample opportunity for discussion on the Second Reading of the Bill, but I commend the point to the attention of the Chancellor of the Exchequer, and I conclude as I began by expressing our gratification at seeing him back in Parliament.
§ Mr. FELIX CASSEL
I ask the indulgence which is generally extended to those who address this House for the first time. One reason, perhaps, why I venture to take part in this Debate is that during the time while I was serving my apprenticeship, if I may so put it to this House, on the London County Council, questions relating to local taxation were prominently brought to our attention. I think that the statement which has been made to-night will not give satisfaction to the local authorities of Great Britain or to the ratepayers of Great Britain. In the first place, I think there will be intense disappointment that the hopes which have been raised both by the statement of the Chancellor of the Exchequer and the statement made by Lord Crewe in another place, have not been satisfied. We have heard it said that the reason why this cannot be done is because there is an important measure which will take up the whole time of the House this Session. Next Session we shall be told the same thing—that Home Rule is "so important." So it will be in one Session after another. But leaving that aside, at all events, I think the local authorities have every ground to feel dissatisfied that in the interim, until this question can be finally dealt with, their share of the Land Tax should have been taken away from them. That is a ground on which the Government can justly be blamed.
So far as the Old Age Pensions Act is concerned, and the removal of the pauper disqualification no additional claim is to be made on the local authorities. In the first place, it is essentially a national duty. If old age pensions are to be paid they ought to fall on National funds, and the local authorities ought not to be called upon to contribute at all. It can be no reason for depriving the local authorities of money to which they were entitled. It is a National duty which is being carried out, and it ought to be met out of National funds. But apart from this, there was already an admitted grievance—a grievance which no one has more readily 1653 admitted than the Chancellor of the Exchequer himself, and a grievance which existed at the time the Royal Commission reported.
The Majority Report stated that a sum of £2,500,000 per year was due to the local authorities and ought to be paid to enable them to meet expenses for fulfilling national services. Since then, during the last ten years, more and more burdens have been cast upon the local authorities. The Chancellor of the Exchequer, speaking to a deputation from the London County Council, of which I was a member, referring to the half of the Land Taxes going to the local authorities, said:—I never considered that the mere division of the yield of the Land Taxes between the municipalities and the Imperial Treasury was the final word in this matter. On the contrary I agree that it is too small a contribution with regard to the new burdens created by Parliament, more especially during the last ten years. That was really more an earnest of the intention of the Government to deal with the problem.What are we to think of the intention of the Government if the earnest of that intention is now to be taken away from us. The proposal now before the House is to take away what the Chancellor of the Exchequer declared to be an earnest of the intention of the Government. If that is removed then the faith of the local authorities as regards the intentions of the Chancellor of the Exchequer in the future as to completely doing them justice must be absolutely shattered to the ground. Incidentally, no doubt this legislation with regard to Old Age Pensions, which is a National matter and ought to be met from National funds, may benefit certain local authorities. On the other hand, there has been other legislation for National purposes and for the purpose of raising funds to meet the National expenses which has damnified the local authorities in respect of which it is not proposed to make any compensation. The effect of the Licensing Duties has been to decrease to an enormous extent the rateable value of the local authorities, and in that way to diminish their revenue. Thus, while on the one hand there is possible benefit to the local authorities by the Old Age Pensions proposals. Yet on the other hand for the damage done to them by the licensing legislation no compensation is to be given them. I have the honour to represent a Metropolitan constituency, and to the Metropolis this question is becoming extremely acute. For the first time since the Metropolis Valuation Act, 1869, the quinquennial rateable value of London is falling, while the burdens on the rates are increasing, especi- 1654 ally in the matter of education. The rateable value of London, as a result of the Licensing Duties, has been diminished to the extent of £370,000. That diminution has had rather a peculiar effect. The Chancellor of the Exchequer meant to tax whisky, but, incidentally, he has taxed water. The Metropolitan Water Board levies charges on rateable value, and as the rateable value has fallen the revenue of the Board has diminished. So that one result of the legislation of the Chancellor of the Exchequer has been that he intended to tax whisky, but that he has in fact taxed water, or, if I may put it more accurately, when he intended to tax whisky neat he has taxed whisky and water. We have often been told that it was not the intention of the Budget to tax necessaries, but only luxuries. There was a correspondence, which is becoming famous, between the Under-Secretary for India and the Leader of the Opposition on the point. I am sure no gentleman opposite would regard water as a luxury. The result of the Budget has been very serious for these local authorities. Before they are even in the position they were in before they had to levy a very large sum to make up the deficiency arising from that diminution of rateable value. If you are going to take something from them because, incidentally, you have given them a benefit why do you not compensate them when, incidentally, you have done them a damage? What I would urge upon the Chancellor of the Exchequer is that he might very well offset any benefit which the local authorities derive from old age pensions against the damage done to them by the licensing legislation. Is he going to leave the injury which has accrued to them entirely undealt with? Is he going to leave it undealt with at a time when, as he himself has admitted over and over again, the result of the burdens which, during recent years, have been imposed on local authorities has been unfair to them, and, when, as also he has admitted, that injustice has gone so far as to be likely to arrest and imperil municipal development? This is a question as between taxpayer and ratepayer. The money has to be raised, I admit, but the ratepayer, as a rule, is less able to pay than the taxpayer. The rates are, much less than taxes, levied in accordance with ability to pay. There is in rates a graduation in the wrong direction; the poorer a man is the larger the proportion that the rates with his rent bear to his total income. So that when you do an injustice to the ratepayer as 1655 compared with the taxpayer you do an injustice to him who is less able to bear it. I therefore urge on the Chancellor of the Exchequer that, although in this Session it may be difficult to deal with the whole of this complicated problem, it will probably be equally difficult in many Sessions to come, and that at least in the interim he would be doing insufficient justice to the local authorities if he allowed them to receive such benefit as they may get from old age pensions, even without taking away from them that share of the Land Taxes which was promised to them, and is actually allotted to them under an Act of Parliament.
§ Mr. NEILSON
It seems to me that on every occasion when the hon. Member for Chelmsford (Mr. Pretyman) has criticised the Land Clauses of the Budget of 1909, to support his case he has brought forward a series of exceptional cases. I want to object to the line of criticism that brings forward exceptional cases and exceptional cases only to condemn the whole of the Land Clauses in the Budget. I do not want hon. Members to think that I have not reason for the objection that I make. I have seen, I think, all the literature that has been published by the Land Union, and I have read most of the speeches that have been made by the hon. Gentleman, and when I say that he does not hinge his case upon exceptional cases, I think I can give good grounds for what I say. To-night he has brought forward several exceptional cases, and hon. Members are to infer, by the way they have been brought forward, that there is nothing right or just in the Land Clauses of the Budget. I know that the right hon. Gentleman speaks for those who do not themselves enter much criticism of the Budget either in this House or in the country. But I want to point out that the systems which are in vogue—the rating system particularly—is a system that every day receives more criticism than the hon. Gentleman has himself ever been able to bring against the whole of the Land Clauses of the Budget of 1909. This system which we are trying to bring into vogue—that is, by ascertaining the capital value of land and ultimately transferring the burden of the rates and taxes from industry on to the capital value of land—is just, we hope, beginning. Not even such an enthusiast as I am myself would expect that in working a change in what 1656 the Chancellor of the Exchequer calls "a land system which is more complex than any other on the face of the globe"; that really we can go forward without raising a case of hardship here, and maybe of injustice there. But the wonder of the thing to me is that it has worked so well—that the hon. Gentleman can only bring forward a few exceptional cases that we have heard before. But the criticism that is levelled against this system is nothing to the criticism that everyone of us has levelled against the system of Income Tax or the system of Land Taxes to-day. Why is it that we are so earnest in asking the Government to go forward with this Measure? It is that we may have a just basis for rating and for taxation. That it is a just basis surely has been proved to the satisfaction of hon. Members by the hon. Gentleman the Member for Chelmsford himself. He states: That so far as the first part—that the ascertained original site value is that part of the land which bears no improvement at all. That part of the total value is that, I should say, without any improvement, in contradistinction to products which are put upon or into it. We say land value not arising out of the skill of the individual, having no product value in it at all, is a value that is created by the community, and that value which is created by the community, no matter by whom it may be bought or with what money it may be bought, or from what source that money may have come, remains still land value created by the community. I want to prove that the basis of the Budget of 1909 in ascertaining the capital value of land is a just system for altering the present system of rates and taxes. The right hon. Gentleman the Member for East Worcestershire (Mr. Austen Chamberlain) presented the then Committee with the map of an estate of a Cabinet Minister, that is to be sold, and in reading one of the clauses, he told us that it was quite possible for the owner of that land to transfer the taxes and the expenses of sale and other expenses besides. It is perfectly true we are only at the beginning now, but what the United Committee on the Taxation of Land Values, and what every serious-minded land-valuer taxer advocates, is that when you have ascertained the capital value of land, and you begin in a just way, your system of taxation should be economic purely, not partially; that once you secure the value of all land in the country, and that you survey as far down as you 1657 should do, and once you ascertain and fix the value, you should do it in an economic manner. We do not care whether you begin with a farthing tax, or an eighth of a farthing. Begin as gradually as you like, taut so long as the tax falls up on the unimproved value of the land, I do not think any hardship arises. You do not tax merely for the replenishment of the Treasury. As the revenues come in you will remit to the people of the country the taxes that to-day fall upon the industry and products of their labour. I put these points, as we are so misunderstood. I do not say the hon. Member for Chelmsford (Mr. Pretyman) wittingly would do us an injustice; but then we are called spoliators and robbers. We are accused of advocating, as the hon. Member (Mr. J. R. Henderson) said the other day, a system of confiscation in advocating the principles of Henry George, who never made such allegations as were attributed to him. The hon. Member must have been reading something out of the Anti-Socialist League.
§ Mr. NEILSON
You can tear a line from "Progress and Poverty" or from "Social Progress and the Conditions of Labour" which will give hon. Gentlemen an opportunity of acquiring something on which to make a plausible plea that Henry George advocated confiscation and confiscation only. But you do not tell us that in reality his so-called system of confiscation is really a system of compensation. Surely it must be said if you are going to move the taxes and the rates to-day that fall upon industry and put them on the value of land there will be few people. I believe, in the end who will be able to say that they have been done injustice to. I am not talking, of course, of people who will not work. I say that, though Henry George does say what the hon. Member for West Aberdeenshire says, he lays it down particularly that his system is to be put into force gradually. We have always urged that this should be done gradually. I hope that after this the hon. Member for Chelmsford, when he challenges the United Committee or makes aspersions upon them such as he has made in recent Debates, will remember that we, who are connected with this reform in this country, are not really the kind of people he makes us out on the platform. I hope the criticisms which have been brought forward upon the Land Clauses of the Budget will bear 1658 fruit, and perhaps our discussions will bring home to the Chancellor of the Exchequer that it is all very well and good to adopt this method of starting a system by Increment Value Duties, Reversion Duties, and 5 per cent. mineral royalties; but if they do the Government will always have people like the hon. Member for Chelmsford, with his particular cases, until the matter is dealt with in an economic manner. Let me say frankly that we have not at any time gone on the platform and stated that we are not in favour of taxes upon the unimproved value of land that is used for agriculture. I, at any rate, have never done it. From the very first time I advocated land values taxation in public as a politician I have advocated taxes upon the unimproved value of land that is used for agricultural purposes. The point I wish to bring home is that I do not go before the public with one face one day and another face on another day. I have advocated for the last twenty years that if land is to be taxed the way to begin is to do it in an economic way. I hope these Debates will mean that once the capital value of land is ascertained the best course for the Government to adopt will be to abolish the 10 per cent. Reversion Duty and the Increment Duties, and have the courage to try that system which my hon. Friend the Member for West Aberdeen is so much afraid of.
§ Mr. HORNER
I wish to associate myself with every word that has fallen from my hon. Friend the Member for East Mayo (Air. Dillon) with regard to Irish intermediate education. It is wonderful what unanimity there is among Irish Members when money is wanted from the British Treasury. I am pleased to see the Chief Secretary for Ireland in his place, and I hope he will agree with me when I say that the £50,000 which has been promised for Irish education is not sufficient to redress the grievance under which we labour. The real reason for my intervention in this Debate is to elicit from the Chancellor of the Exchequer some information with regard to the mystery that hangs over the valuation in Ireland. Last year the Chancellor of the Exchequer—whose presence to-night we all welcome—was vehement in his assertions that no agricultural land in Ireland would be valued.
Irish representatives were again all agreed, because we thought we were getting some concession to Ireland, but in speech after speech—even as late as 21st November, on the eve of the Election—the 1659 Chancellor of the Exchequer said: "I have explained frequently that we have already two, three, or four valuations of land in Ireland, and we do not think it desirable in the public interest that an enormous sum of public money should be spent on another valuation." Last week I asked the Secretary to the Treasury this question:—Through what sources the Valuation Department in Ireland is endeavouring to gain the information, or any portion of the information, sought for in Form IV.?The right hon. Gentleman answered me:—Any necessary information not in the Valuation, Land Commission, or Local Registration of Titles Offices will be ascertained through Form IV. when the Valuation of the Urban Districts and land immediately surrounding them is being made. In the rural districts if any additional information is required it will be obtained by personal inquiry."—[OFFICIAL REPORT, 14th February. 1911, col. 886.]All property in Ireland is therefore to be valued on the basis of information to be derived from these five sources. As regards land, the Valuation Office has Griffiths' Valuation, a scheme which was resolved on as far back as 1825, and the results of which were published nearly sixty years ago. This valuation proceeded on the basis of prices of wheat, beef, mutton, and other agricultural produce as they then were. But will anyone say that that is a correct basis of valuation after sixty years, when the whole economic situation has changed, and when prices have entirely altered? The figures in the Land Commission can have no possible relation to site values or any other value for the purposes of the Finance Act. They only apply to cases of farmers who came into court to have their rents adjusted, as between themselves and their landlords, and at best they were only haphazard calculations for smothering discontent once in every fifteen years. The figures of the Registration of Titles Office can have no practical bearing whatever on the point, therefore we are having a valuation in Ireland at the present moment on the wholly erroneous basis and behind the backs of the parties affected.
But what were all the copies of Form IV. prepared for and ready for circulation? And why were they not issued, except m the case of 3,085 individuals? Why were these specially singled out? Was it to tax the Dukes? The only two resident Dukes we have were amongst the first to sell to their tenants, and the men in Ireland who either now or in a few years will take the place of your Dukes will be the men who, as owners, will occupy and till the soil. That is what your Land Purchase Acts 1660 have done for Ireland. Why has a second edition of Form IV. been prepared, and why is its issue kept back till after this Debate? Why have Inland Revenue officials, whose duty it is to stamp documents effecting transfer of land in Ireland, been told to elicit all the information which is asked for in Form IV. before they stamp the document? It is an abuse of their position, which is leading to great hardship, expense, and delay. I presume all this information is transmitted to the Valuation Office. If so, the whole thing is very discreditable. If you are going to tax us, at least let us know that you are doing so. But it is stated in the answer by the Secretary of the Treasury that in every case a provisional valuation giving details will be issued to the owner and he will have sixty days in which to object to such valuation before' the amended valuation is issued. What does that mean? It means that the Courts of Referees which are to be established under the Finance Act will have their hands full for years to come hearing the appeals. It means that in order to have a just and fair valuation the individual taxpayer will be put in the great majority of cases to the expense and trouble of bringing evidence, much of it skilled evidence, before the Court, and he will have to be represented there by his legal advisers. The Chancellor of the Exchequer said several times last year that no official from Somerset House or anywhere else would tramp over Irish land to ascertain its value. But what do I find? Dozens of men are at this moment tramping over Irish land to find its value. I see a sum of £7,000 is asked for for the cost of these extra surveyors and valuers of the last few weeks of the financial year. I began by saying that the whole matter of Irish land valuation is a mystery. I think there is more than mystery hanging over this: there is some political time-serving.
§ Mr. AUSTEN CHAMBERLAIN
Owing to what happened in the early stages of the evening the time allowed for discussion has been curtailed beyond what the Government could possibly have foreseen. I think it has become evident that we cannot conclude the discussion this evening. Cannot the Prime Minister make a suggestion for giving the House a further opportunity?
§ The PRIME MINISTER
I think it is a reasonable request. No one could have 1661 anticipated that so much time would have been taken up by the Privilege Debate. I suggest that we Report Progress now and continue the Debate on the Resolution on Thursday, giving the whole of that day to the Committee discussion. If we do that, I hope the Report stage will be taken pro forma on Friday. If that is the general understanding I will move to report progress.
§ Mr. AUSTEN CHAMBERLAIN
I think I may say that that meets us very fairly. We consider it would be for the convenience of the Committee that the discussion of these Resolutions should take place in Committee, where it can cover the whole ground opened to-night. On the understanding that we shall have a full day on Thursday, I think I may say on behalf of my hon. Friends who agree with me, that the Report statement shall be purely formal, and shall not be discussed in the House. Of course, I only speak for the party with which I am associated.
§ Adjourned at Six minutes after Eleven o'clock"