§ Mr. WEDGWOOD
I beg to move, "That, in the opinion of this House, the present method of raising local revenues ought to be changed, inasmuch as it unduly favours some ratepayers and unduly penalises others, obstructs industry, causes unemployment, and prevents the healthy growth of our cities, towns, and villages; and this House further declares that local authorities should be given the power of raising local revenue in such a way that the existing obstacles to the employment of labour and capital are removed, and rates imposed instead on the value of the privilege enjoyed by those who benefit from the performance of public services, namely, upon land values."
In moving this Resolution I am bringing forward one of the points emphasised in the memorial sent out by 177 Liberal and Labour Members to the Prime Minister and the Chancellor of the Exchequer last year. There were two main points in that memorial, one was to obtain relief for the local ratepayers in the bearing of these burdens, which are really national in character, by a uniform tax upon land values. That I do not wish to touch to-night, although it has an intimate connection with the Resolution on the 465 Paper, and the Resolution on the Paper would not be complete without some such general reference to land value for the relief of local rates. The Resolution gives to all local authorities the power, if they choose to exercise it, of levying rates upon land values instead of upon land and buildings together, instead of upon the annual value of the combined hereditaments. This question of giving additional powers to local authorities to levy rates upon land values is of exceptional importance at the present time, because the Town Council of Glasgow have recently passed a resolution upon this subject, and have circulated that resolution to all the local authorities in the country, including boards of guardians, with over 10,000 population, with the result that resolutions have been passed by local authorities here, there, and everywhere, and the resolutions have been forwarded to the Chancellor of the Exchequer and local Members of Parliament. The question, therefore, is very much alive at the present time in the local Press, and it is all-important that this House, too, should discuss the question with a view to seeing that the change is both just and in the interests of the public.
The resolution draws attention, in the first place, to the inequity of the present incidence of the rates, to the inequity of the present system of taxes, and you cannot have the inequity of the present, system more perfectly exemplified than by the case in the different parts of London at the present time. In the year 1910 the poor rate in Poplar amounted to no less than 3s. 5d. in the £, while the poor rate in the parish of St. James', Westminster, amounted to a penny in the £, as against this 3s. 5d., and in the City of London to decimal .41 of a penny in the £. There you have an extraordinary difference in the incidence of the present rates, the poorest districts having a heavy levy to pay, and the rich districts the smallest rate to pay. The fact is that these heavy rates borne by the poorer districts are becoming an overwhelming burden upon those districts. The people working in the city work in places where the rates are low and land values high, and they go back to sleep in these districts where the land values are low and the rates extortionately high. One of our chief objects is to readjust that, to equalise rates upon the only fair system by calling upon those to contribute who enjoy land value made by the people's work. Then as to the inequity 466 as between persons, we have another striking example from London. No. 7, Aldersgate, in the City, a site of 10,000 square feet, is rated at £2,677 a year, whereas the next shop, No. 4 and 5, a site of 12,700 square feet, is rated at nil, because there are no buildings upon it, yet the land value of both these sites, whether built on or not, is maintained and created by the expenditure of public money in the shape of rates and by the work of the community. We maintain that is inequitable as between both those owners, and that both those owners should contribute to the rates according to the benefits they receive themselves, according to the land value which the rates created for them.
Therefore, the proposal we put before the House is that there should be a change in the standard whereby rates are levied, and in making this proposal we are merely following out the Report of the Select Committee on the Land Values (Scotland) Bill, which reported in 1907, and which sat under the chairmanship of the present Lord Advocate. Upon that Committee there sat, not only the hon. Member for Holborn (Mr. Remnant), whom I see opposite, and who, I believe, is going to oppose this Resolution, but also the right hon. Gentleman the Member for St. Rollox Division (Mr. McKinnon Wood), who is now in the Cabinet, and several other distinguished men, such as the present Lord Dewar. The Committee reported exactly upon the lines that we are proposing this Resolution to-night. They desired to set up a new standard of rating, and I will read the exact words from the Report of the Committee:—The setting up a standard of rating whereby the ratepayer's contribution to the rates is determined by the yearly value of the land which he occupies apart from buildings or improvements upon it, the object being to ensure the ratepayer's contribution, not by the value of the improvements on the land to any extent, but solely by the yearly value of the land itself.And they went on to say that they were going—to select a standard of rating which will not have a effect of placing the burden upon industry. Hence the proposal to exclude from the standard the value of buildings, erections of all kinds, and fixed machinery. To include these in the rating tends to discourage industry and enterprise: to exclude them has the opposite effect.And they gave as a justification for the adoption of the new standard of rating the fact—that land owes the creation and maintenance of its value to the presence, enterprise, and expenditure of the surrounding community.So that they laid down quite wisely, not only the expedient results which were 467 bound to follow from the taxing of land value, but also the justification in that it was recovering for the public that value that public created. One other quotation from the Report:—If the value of bare land, apart from improvements, be chosen as the measure by which to fix contributions to local expenditure, the ratepayer will be merely restoring to the exchequer of the local authority part of that which he has derived from it.There you have in the clearest language the considered Report of the Select Committee representing both Houses, and presided over by a distinguished lawyer. I do not think that any words of mine can possibly improve or make clearer the objects they have in view or the justification of the Report they make. What I want to do is to get the House to endorse the Report of that Committee, and thereby urge upon the Government the adoption at the earliest possible moment of legislation which will have the effect of translating this Resolution into law, giving local authorities the power they do not possess to rate land values, and to exempt from rating all buildings and improvements upon the land. An Amendment is to be moved to this Resolution by the hon. Member for Holborn (Mr. Remnant), who has strongly opposed the taxation of land values, both in season and out of season, just as I have supported it. The hon. Member for Holborn opposed this system of rating of land values during the Conservative administration of 1906 just as he does now, but it is noticeable that under the Conservative administration of 1900–6 he had behind him by no means the unanimous support of the Conservative party of that day. A Bill was introduced Session after Session and was carried in that Conservative House by increasing majorities as years went on. I think no less than thirty-five Members of the Conservative party voted in favour of the rating of land values, and it was ably supported in the House and outside by the hon. Member for West Toxteth and the hon. Member for the Everton Division of Liverpool, by the late Sir C. Bartley and Sir Albert Rollit.
I do not think the Conservative party are solid in their opposition to the rating of land values, or of giving local authorities the option of rating land values. Ever since the purchase of 1909–10 we have had statements from responsible members of the Conservative party supporting the rating of land values as opposed to the taxation of land values. I hope we shall 468 have to-night from some Conservative Member representing the Liverpool district some support for the principle which the Members representing Liverpool supported in the old days, and which circumstances still demand they should support with even greater emphasis than they did ten years ago. If the conditions of housing were bad ten years ago they are worse now, and if the conditions of Liverpool was unknown then to the general public it is better known now. The only way to improve housing satisfactorily is to take the taxes off houses, and make the building of houses as free as possible. I wish to emphasise this appeal to Conservatives by putting to them the statement, first of all, of the right hon. Gentleman the late leader of the Tory party; and, secondly, a statement made by the Noble Lord the Member for Hitchin (Lord Robert Cecil). The senior Member for the City of London (Mr. Balfour) speaking on 17th November, 1909, at Manchester, after the Budget had been introduced, said:—Taxation of land values for rating purposes is legitimate if it can be shown that the land or the values which you desire to rate are values which are not paying their fair share of the local rates. … The taxation of land values is really no interference with security—it only means that that which does gain by the rates should contribute to the rates.At the present time we have before us a proposition to spend £875,000 of the ratepayers' money upon making the great new avenue to the west of London by the extension of Cromwell Road. It is true that the Government and the Road Board Fund is finding £875,000, and the ratepayers are also called upon to pay another £875,000. As every business man knows perfectly well, after declaring that such a road will be made and that the Government is prepared to find money for the creation of it, the immediate result is to increase the value of land not only along the line of route, but also over the vast district tapped by the new road at its extremity. This is an obvious case where the expenditure of ratepayers' money will increase the value of land, and surely, if ever there was a case for the rating of land values this is one. The Noble Lord the Member for Hitchin is known as an economist, and this is what he says:—You have already the principle that land contributes to the local rates, and the question is whether the rates should be levied upon the improved value or upon the site value. This is a fair subject for discussion, and I do not think anyone would suggest that the alterations from improved value to site value is Socialism, or any extravagant or novel proposition.I cannot, of course, claim the Noble Lord as a supporter of mine, but I can claim 469 him as a fair supporter of a system which approves of a change, and as a justification for a change. Both these points are made clearly in the Report of the Select Committee presided over by the Lord Advocate which I have read to the House. There are other Amendments down in the names of Members of the Conservative party voicing the usual Conservative way of shelving the issue by pleading urgency. Hon. Members opposite know there is no arguable case against this change in the basis of rating, but they argue very speciously that the valuation under the Budget of 1909–10 is not complete and cannot be complete until 1915, and, therefore, they say something should be done immediately to relieve the immediate difficulty, knowing full well that anything which is done will prejudice the case and make it more difficult to bring about this change in the basis of rating satisfactory when the valuation is completed. The only answer of hon. Members on this side of the House is that the valuation must be hastened and must not be allowed to go on until 1915. The valuation is going on at the present time, perhaps at a slightly accelerated pace, but no hope has been held out, and under the existing system I do not think any hope can be held out to us that there will be any great anticipation of the date which has been mentioned, namely, March, 1915.
The real point which I and the 170 hon. Members who signed that memorial wish to urge upon the Government is that this valuation should be simplified, and thereby the date when it should be completed would be anticipated. We do not want the buildings, machinery, and factories values, but we want to get the full site value, and if we only ask for the full site value, and if the valuers only seek to obtain that, we shall get it in six months instead of four years. You want to simplify the system of valuation, and if the Government are seriously going to support us in this question, the only satisfactory answer they can give to the ratepayers and hon. Gentlemen opposite is to show that they are going to hasten this valuation. We had a promise from the Chancellor of the Exchequer last year extracted by the hon. and gallant Member for Chelmsford (Mr. Pretyman) that there would be some sort of inquiry into the existing system of land valuation and land taxation to see if the present system could not be simplified. The present system can be simplified by leaving out all questions as to improvements. The question of taxation can be 470 simplified enormously if we drop these irritating and unsatisfactory taxes like the Increment Duty, the Reversion Duty, and the Undeveloped Land Duty, and go for one straight tax on land values. You are merely making difficulties and making hard cases by persisting in these extremely unsatisfactory half-way houses towards taxation. What we want, what the people in the Land Union want, and what all property owners want is a perfectly simple and straightforward tax, and for that we only want a simple and straightforward valuation. I want to remind the Government that any remission of rates whereby the money is found out of the Consolidated Fund, or out of the pockets of the general taxpayer, is really a present to the landlord at the present time. It is merely an extension of the Agricultural Rating Act of 1896. It is a reduction in rates coupled with the increased taxation of the whole community, and it is going to be of no assistance to the community in the long run. I will quote, in support of my statement, the view of Professor Marshall, after all the leading economist at the present time in the country, if not in the world. He says in his evidence, before the Royal Commission, reported in 1901:—Any remission of rates on agricultural land would be a present of public property to the owners, a small part being caught by the farmers on the way.That is the view of our leading economist, and it was the view also of every Liberal statesman in 1896, when this Agricultural Rating Act was before the country. I think it is necessary to remind the Government of it at this day, when all these different suggestions of assisting the ratepayer are being made. There is only one honest way of assisting the ratepayer, and that is by raising the money to provide the relief by a uniform tax on land values. I hope the Government will give the Resolution their support. I believe from the point of view of the Liberal party it is essential they should take up sound Liberalism such as this: the relief of industry from taxation and the breaking down of monopolies. Along these two lines Liberalism will prosper in the country, and so will the country prosper under such Liberalism.
§ Sir W. BYLES
I have risen to second the Motion ably moved by my hon. Friend and redoubtable advocate of the cause that he has been pleading. The subject is one not only worthy of discussion in this House, but one which calls for a speedy 471 remedy. There is a pressing need for a speedy remedy. In the borough of Salford, which I have the honour to represent, we have a population of 235,000 or so, mostly poor people, and our rates are 8s. 10d. in the £. There are many grosser cases than that. Our poor rate alone is 1s. 10d., although we are singularly fortunate, because, besides the benefit of old age pensions which we enjoy, we have the advantage of a very rich charity, Booth's Charity, which brings in £18,000 a year, and which is distributed to the poor of Salford. The land from which that income is derived was left by a Mr. Humphrey Booth two or three centuries ago.
§ Sir W. BYLES
The land then brought in £19 a year. Now our income is £18,000 a year. Notwithstanding this large charity and old age pensions our poor rate is 1s. 10d. in the £. This weighs very heavily on our poor people. Manchester, of which we are practically a part, have in one area demolished a lot of cottage slum property and has built large warehouses, which of course have a much higher rateable value. The effect of that has been to pull down the poor rate in that area 1s. in the £. It is at any rate 1s. in the £ less than we have to pay in Salford, but the poor who were housed in that area of Manchester have come to live in Salford. Therefore, we have not only a much lower rateable value, but we have many more poor to keep. The poor rate is only one of several national services which have been imposed by Parliament upon local authorities. The incidence of these charges, many of them new or increased charges, falls very unequally on different rating areas. The Royal Commission in 1901 distinguishes between national and local services, and quotes the poor rate, the education rate, and the maintenance of main roads as services which are national. The cost is thoroughly unequal owing to the fact that the rateable value of these different areas varies so much. This affects poor boroughs much more than rich boroughs. I may mention as one example the difference between Manchester and Salford. The rateable value per head of population in Manchester is 6.48 per cent., and in Salford it is only 4.26 per cent. The duties we have to discharge are practically the same in proportion to the population, but the effect upon the rates is very unequal as against Salford. One might take 472 another illustration, referring this time to education and not to the Poor Law. In Bournemouth the education rate is only 9¼d., whereas in Salford it is 1s. 7½d. This difference is due to the greater rateable value per head of population. There are far fewer children in richer towns like Bournemouth to educate than in poor towns like Salford. Therefore, we have greater obligations imposed upon us with a much lower rateable value, and the Exchequer Grants-in-Aid which we are supposed to receive should be in the inverse ratio to that which they are at present. They should be less to the rich and more to the poor district. The effect of a high rate on a borough like Salford is very serious. For instance, a large shop, or a large business establishment which is assessed at a very high figure, gets comparatively little value for the money it pays to the rates, because the municipal services, such as education, police, and lighting and cleansing, are in very much smaller proportion than those rendered for a row of cottages, where, for an equal assessment, much more has to be done. A business establishment has no children to be educated and the lighting and cleansing it requires are proportionately small. The result is that men who want to build up a large business establishment go outside the district in order to avoid the rates, and they go to some district where the rateable value per head is higher while the burden per head is lower. I maintain that the municipal services should be measured by some other standard than the rateable value of the premises. The professional man, the doctor or the lawyer, although they earn a very large income, are only rated on the value of their houses, whereas the large business establishment pays a much higher rate, although the income may be less than that made by the professional man. To avoid these inequalities and to mitigate the burden of the rates the municipality refrains from doing that which would be for the benefit of the borough. It is, in fact, deterred from making the improvements and advances which it is desirable should be made.
I know there is a Committee sitting on the question of local and Imperial taxation, and I am anxious that it should report promptly, but I do not think that that need deter me from suggesting some remedy. First of all, I will deal with certain services which I have mentioned, the poor rate, education, etc. These are essentially national, and ought to receive 473 help from the Exchequer on a much larger scale than they do at present. That is particularly so in the case of education. Parliament is putting upon us the medical inspection and feeding of school children, and this is imposing a burden on the ratepayers which in many cases is becoming positively unfair. I have always been in favour of much greater autonomy for the large municipal bodies in this country. Why should we not be permitted to try experiments? For example, why should Birmingham—which has very large sums to raise—not be permitted to try the experiment of imposing a municipal income tax. Other boroughs might profit by such an experiment, and Birmingham could drop it if it did not like it. Again, what harm would there be if Manchester, in order to carry out its more ambitious schemes of municipal development, should tap a new source of revenue in land values—values which its own municipal enterprise and expenditure have created? Town planning schemes, slum destruction, and extended educational advantages cannot be undertaken rapidly enough unless new sources of revenue are found, any more than the Chancellor of the Exchequer was able to frame his 1909 Budget without touching Licence Duties, Land Taxes, mineral royalties, and so on. The power to rate land values is most important. New sources of revenue are necessary. Very large sums are taken away every year from our borough: wealth which is created by local industries is taken away by persons who contribute nothing whatever to its creation. Tens and hundreds and thousands of pounds are taken away from the borough of Salford every year by large landowners, by noble lords and great ecclesiastics; it is wealth which has been created by the citizens of Salford, and it is taken away by those who contribute nothing towards the great municipal developments which are enriching them. This is a monstrous and gross injustice which Parliament ought to set to remedy. I do not want to speak ill of the landlords. I have no doubt, if I were fortunate enough to be a landlord, I should act in the same way as they do, but it does always seem to me that the system is wrong, and the rent receiver and the rent payer should in justice change places. We have to live on the land, and the man who takes a piece away and encloses it should pay for the privilege. But it is much less than that we are asking for to-day. At any rate, we are only asking for a contribution. I hope we shall go on. If you tax houses you make 474 them dearer; if you tax land you make it cheaper. The one leads to scarcity: the other to plenty. In proportion as you pub it on to the land and take it off the houses the result is more houses and more land. You get both an increase of houses and of land—I mean, of course, available land. I could give illustrations from New Zealand and New South Wales, where the thing has actually been put into operation, and where the official authorities are able to report upon it as a complete success. In conclusion, let me say that the nation is at this moment, and I am sure we are painfully aware of it, confronted by very grave perils arising from the discontent of its working population. May I tell the House the most solemn political conviction that I have arrived at at the end of a long life? It is that private property in land is the root of all these troubles. As long as the land is maintained by our laws, tied up by the lawyers' parchments, defended by our soldiers and sailors, it will ensure the serfdom or semi-serfdom of our population. If the land on which we live and on which we must live and must work—it is as necessary to us as the air we breathe—belonged to us instead of to a handful of us, each man would get the just reward of his skill and labour. There would be no need for Insurance Acts or Old Age Pension Acts, there would be freedom and plenty for all. Some day the nation will, in the favourite phrase of Mr. Henry George—[HON. MEMBERS: "Hear, hear"]—I am glad to hear my hero's name cheered from the other side—"see the cat," and then it will enter into its rightful heritage.
§ Mr. REMNANT
I beg to move as an Amendment, to leave out from the word "That" to the end of the Question, in order to insert instead thereof the words, "this House, while recognising the claim of ratepayers to substantial relief, is of opinion that such relief should be sought in the provision of new sources of local revenue, in accordance with the recommendations of the Royal Commission on Local Taxation, and not in increased taxation of that form of property which already bears an excessive share of both Imperial and local burdens."
All who have listened to the hon. Gentleman who Moved and Seconded this Motion must agree that they have put their case in more moderate language than the advocates of the single tax and the total taxation of land are accustomed to do. I do not propose to go too much into detail on reference to this important matter 475 because it would take too long, but if I may refer to one or two points mentioned by the two hon. Gentlemen, it would be to dispute what they have said rather than to enter into serious argument against it. The Mover of the Motion referred to the Select Committee on the Taxation of Land Values for Scotland, of which I was a member. I was one of four representing our side of the House, as against more than twice that number of hon. Gentlemen from the other side, nearly all of whom were members of what is now the United Committee for the Taxation of Land Values, which is the only Committee in existence which seems to carry out the principles laid down by the late Mr. Henry George. The report to which the hon. Gentleman referred was the report of the majority. I do not admit that I agreed with that report. If we had been allowed to introduce our report, the hon. Gentleman would have seen, what he can see now, what we thought upon the subject we were appointed to discuss. Coming to my Amendment I cannot help remarking that although one profoundly disagrees with the conclusions and arguments of the Mover, we cannot but admire the consistency with which the hon. Member always comes back to any attack on the rating system of this country. The hon. Gentleman will surely agree that this is a singularly inappropriate time to bring forward such a Motion. He knows perfectly well a Departmental Committee was appointed in April last year, and is still sitting, to deal with this matter. The terms of reference to that Committee were:—To inquire into the changes which have taken place in the relations between Local and Imperial taxation since the Report of the Royal Commission on Local Taxation in 1901, to examine the several proposals made in the Report of the Royal Commission, and to make recommendations on the subject to His Majesty's Government with a view to the introduction of legislation at any early date.We may disagree, as a good many of us do, with the composition of that Committee, but that is no reason why we should ignore its existence. This is not the first attempt of the hon. Gentleman to prejudge that matter. As recently as the Debate on the Address, my right hon. Friend the Member for Fulham (Mr. Hayes Fisher) moved an Amendment, to which the hon. Member tried to add a further Amendment, urging the Government to hasten the valuation of these site values. Surely the hon. Gentleman does not forget what the Chancellor of the Exchequer said 476 in reference to his procedure on that occasion. The Chancellor of the Exchequer said:—My hon. Friend will not expect me to express any opinion on the latter part of his Amendment as to the question of local taxation. I am anxious not to express any definite opinion until the Committee reports. It would not be fair because that would be expressing an opinion on the whole case before we have got the report of the Committee that has been appointed expressly to advise the Government on that particular subject.I do not say the hon. Gentleman did it intentionally, but surely he is now asking the House to take a course which has been condemned by the Chancellor of the Exchequer so recently as last month as being a course which was not fair under existing circumstances.
§ Mr. REMNANT
And if I could have done so I would have moved an absolute negative to the Motion. But we have this matter to deal with to-night, and it is an inappropriate time to do it. I agree with the hon. Member in desiring that some revision should take place of our present rating system, but upon entirely different grounds. The outstanding injustice is to-day that an unduly large share of our local, as well as Imperial, taxation is levied in respect of land and houses. The Royal Commissioners on Local Taxation, in their Report presented in 1901, pointed out that, while personal property subject to Imperial taxation is about three times as great as real property so taxable, yet non-rateable property contributes to local objects, if elementary education is excluded, only a little over 6 per cent. of the whole expenditure, and nearly 83 per cent. falls upon the rates. The Report goes on to say that in order to relieve this inequality the Commissioners propose that there should be an increased payment for Death Duties on personalty for local purposes, that the transfer of trading licences and of establishment licences shall be made complete, and that power shall be given to increase their amount while the assignment to local purposes of a fixed portion of the Income Tax is said to be deserving of consideration. That was the Majority Report. If we go a little further we shall see that the Minority Report on ground values proposes on owners site value rate only as a make-weight to accompany "increased provision made by the State in aid of services locally administered," and it goes on to justify such a rate on the ground that it would be "counter-balanced by the relief proposed to be granted in the shape of 477 increased subventions." I think I may fairly claim that both the Minority and the Majority Reports of the Commissioners in 1901 support the principle embodied in my Amendment. It seems to me that the theory on which the hon. Member proposes to reconstruct our rating system would by no means justify his own conclusions. The theory is itself unsound, and it has been abandoned by modern economists of repute. The theory of taxation now recognised as correct is not taxation according to benefits received but according to ability to pay. The fundamental principle of our taxation, if I may borrow the definition of a well-known economist, Professor Smart, would be that the present system is an equal sacrifice of payment by every citizen for general services rendered to him. The hon. Gentleman and his Friends propose, instead of taxing people in proportion to their means to tax some and to exempt others, for the simple reason that their money happens to be invested in different ways. The hon. Member who moved the Resolution said that all property owners want a straightforward tax. I agree. Those whom I know want a straightforward, fair, equitable and logical tax, and they do not see why one form of property should be practically free while another, which has always been considered commercially interchangeable with another form of property, should have most of the burden thrown on it. The owners of capital invested in land, according to some hon. Gentlemen opposite, however poor they may be, are practically to pay everything, while the owners of capital invested in other ways, however rich they may be, are practically to pay nothing. It would take a great deal to persuade the community that that is anything but a scandalous scheme.
May I give an instance of a man who, out of his savings, leaves to his three daughters £1,000 each. To the first he leaves a house of the estimated value of £1,000, half of which is supposed to represent the site value. To the second he leaves £1,000 in Consols, and to the third dEl,000 in foreign bonds. On what principle of right or justice can it be urged that practically half the value of what he gives to one daughter is to be confiscated, while the others are practically exempt. The two daughters who escape taxation enjoy a privilege which is enjoyed by every millionaire who happens not to have invested his money in land, but in other forms of property. A defence of such an 478 injustice would hardly be made outside Colney Hatch. The levying of rates according to benefits received would, if logically applied, instead of being illogically applied, as the hon. Gentleman proposes, produce results which he and his Friends would not desire. May I take the Education Rate, which is levied for the purpose of providing schools for the working classes. On this benefits theory the working class ought to find the whole of the cost. [An HON. MEMBER: "They do."] That is the first time I knew it.
§ Mr. REMNANT
If you take the Poor Rate, the same would happen there, and none of the owners of property would be in the employment of the so-called privilege. The adoption of this principle might indeed lead to one result which I should approve, and that is that we should get an end to the demand for the rating of vacant land. After all, rates are spent in satisfying the needs of the inhabitants of houses, and in so far as land is vacant there is scarcely any need for rates. Building land has no population requiring lighting or repair of streets, the provision of a police force, and the support of the poor. The hon. Member's principle, if correct, and if fairly applied, would tend to exempt a class whom he and his Friends were most anxious should not escape taxation. No doubt the hon. Member will say that vacant land owes what capital value it has to the existence of the neighbouring population. [An HON. MEMBER: "And the expenditure of rates."] Yes, Sir, and exactly the same thing may be said of any form of property. There is no form of property, existing or imaginary, which does not owe its value to the public. Without the public there could be no demand. I hope the House will reject the Motion on three grounds. In the first place, it is contrary to the Royal Commission Report of 1901; secondly, this is an inappropriate time to bring forward the Motion, while a Committee appointed to deal with the subject is actually sitting; and thirdly, the Motion is based, as I believe, upon a theory which is economically unsound and ethically unfair.
§ Sir ALFRED CRIPPS
I rise to second the Amendment proposed by my hon. Friend. If we were discussing rates as apart from taxation, we should have a very complicated question before us. But when we come to the views put forward by 479 the Seconder of the Motion, dealing with matters of taxation and singling out what he calls the restoration of public property due to the public, then we are dealing with an entirely different matter—a matter so different that if I were answering the Seconder only I should say, "You are simply bringing forward a method of confiscation, pure and simple, and not dealing with the principle of rates and taxation at all." I say so because exactly the same argument which he applies to land might be applied to a vast number of other sources of wealth in this country, with the result that you would seek to begin confiscation where you thought it was most popular, and you would have to carry on the process against others if you are to be in any sense logical at all. Suppose the State does take away all rates—I am taking the extreme case which the hon. Member desires to be the ultimate result of the Resolution—the effect would be to relieve capitalists and business people undoubtedly of a burden they are bearing at the present moment, and the inevitable result would be the raising of the argument that that benefit derived from the confiscation of landed property is a benefit not due to their action or energy, but to the action of the State, and the next step would be to confiscate this advantage, because it was not due to their action or energy but to the action of the State.
When we really come to the question as between land and other classes of property and deal with that, I ask hon. Members opposite what is the distinction? We are told that land is a monopoly, and that it is a limited quantity in the market. The answer to that is that you cannot have property of any kind without the element of monopoly and scarcity. That applies to what the workman earns by the labour he gives. It applies exactly as much to what the capitalist gains by his industry, because whether in the one case or the other, would it have value unless you have monopoly or scarcity? I ask any hon. Member to suggest any form of property which can possibly exist except when based on monopoly or scarcity. That is true of everything, and when these terms are used in relation to land alone, they are mere terms of prejudice. They might be used by the hon. Member for Blackburn (Mr. Snowden) as regards every class of property in this country, whether derived from rents or industrial occupation. When we come more immediately 480 to the question of rating. I agree that we are embarking on a very complex problem. It is a problem that ought to have been tackled long ago by one Government or another in this House. I am not passing any reflection on the present Government. The reason why it has not been tackled and dealt with by one party or another, is that it is an extraordinarily complicated problem. Directly you touch it, you deal with the principle of vested interests and matters of that kind. But we ought to have the courage, to deal with this complex matter on a scientific and economic basis.
A great deal was said by the hon. Member who moved the Resolution with which we might perfectly agree until we come to the remedy. He referred, for instance, to the equalisation of rates. I am strongly in favour of that as between the richer and the poorer parts of the town areas. That does not apply to the rating of rural areas. I am in favour of the Agricultural Rates Act, and I would point out to the hon. Member who referred to that measure that it was an Act not passed by one side only. Originally it was passed by the Unionist Government, and it was afterwards adopted and put in force by the Liberal Government Upon this point I think there was a mistake made by the Seconder of the Resolution. He raised a cheer on both sides of the House when he said you might have a professional man or a rich man occupying comparatively small chambers or premises and not paying an adequate contribution to the rates. I entirely agree, and one of the real problems as regards rating is the putting of a fair charge on a man under these conditions. But that is absolutely inconsistent with the Resolution now before the House. The Resolution would take away from that man even the comparatively small burden he bears at the present moment. I think that is grossly unjust and unfair.
When we were considering this matter on the Royal Commission, I do not go too far in saying that I believe we were all agreed, if we could do so, that a heavier and not a lighter burden ought to be put on business or professional men under those conditions. But how can the hon. Member say that this would be done when, under the terms of this Resolution logically carried out, the existing burden on the occupier of these premises or chambers would be taken away, and they would not pay a penny of burden as regards the rates 481 of the locality in future, though they might benefit to an extraordinary extent? They might be people who used the roads with motor cars, and possibly rich people, people who got an enormous advantage out of the town population as doctors or professional men; but I cannot conceive primâ facia any scheme more directly opposed to the true principle of spreading local taxation so that those who receive the benefit should share the burden than by seeking to put all these rates on one class of property only, namely, site values. When I come by and by to say what I have got to say on the constructive side, I want the House to remember a distinction which, in my view, must be borne in mind between taxation and rates. Taxation ought to be imposed in proportion to ability to bear. Rates ought to be imposed in proportion to benefit received. But where I join issue is that it is absurd to say that the only person who receives a benefit is the landowner or the owner of the site value. The hon. Member who moved this Resolution entirely gave the go-by to what is the principle, and, I think, the right principle, of rating at the present time—that is, you rate the occupier on the ground that it is the occupier who receives the benefit. And if we think what the benefit is which is received in Salford or any of these other large towns, it is directly received by the occupier. I would not for a moment say that the owner of the land or the site value should not contribute his share. But what I want to impress on the House is that, accepting the general principle of rates in proportion to benefit, you cannot escape the conclusion that the occupiers who live in one of these town districts are the people who immediately receive the direct benefit, and therefore so far from it benefiting them, in my view, if you are to put rates on a proper basis, you would increase the burden and not relieve the burden altogether.
§ Sir A. CRIPPS
I give this answer. It is the answer which Lord Goschen gave. When you are considering who pays the rate, it is utterly impossible to lay down the proposition that it is paid either by the occupier or the owner. All we can deal with is the person upon whom the law puts the immediate obligation. You may have a great demand for houses in a particular locality, but because of the bond 482 between the owner and the occupier the owner can probably put the burden on to the occupier. Now take the other case, where there are a great many houses and a small demand. I think it perfectly clear that in the bargain between the owner and the occupier the owner cannot transfer the burden to the tenant. There is another point to which I wish to call the hon. Member's attention. In taking site values alone he is diminishing enormously the assessable site value of each district. At the present time site values bear their proportionate share. As everyone who is cognisant with rating knows, and the Attorney-General will know, under our present system you rate the site value as well as the building. You rate the whole property. The result is that both interests must bear their burden. It may be well said, but you are to put a special burden on the owner of the site value. That, of course, is the argument that was used. I do not take that argument except to the extent which I am going to explain in one moment. But it must not be forgotten that if you tax the site values only the assessable value of a number of our most important boroughs would be enormously diminished, and in many of our country districts it would disappear altogether. In fact, that did happen in the old days in the case of a district in the county I belong to where the burden of the rates exceeded the whole site value, with the result that the whole parish became a waste. That is what happened before the reform of the Poor Law in 1832 and 1833.
I will give an illustration. The rentals were about 10s. an acre. I take the case of a farm I know of 120 acres let for £60 a year. The farm buildings alone cost £4,000, and if you were to add to that the value of bringing the land out of prairie into cultivable condition, there would be another £1,000. There was £5,000 spent, and the total income derived was £60 a year, out of which there were various outlays. What is the site value in cases of that kind, if you were imposing rates in a district were you have conditions of that kind or were going to impose them, and what is going to happen when you have rated all your site values up to the hilt and find you have not got enough? You have got to face that, and the notion of having either a single rate or a single tax, as soon as you come to close quarters, is manifestly and evidently unjust in the sense that it lets off persons who ought 483 to contribute. I think that is quite as unfair as putting on an undue burden on a special form of property, which in this country is very largely owned by poor people, because my experience is, as regards the investments of poor people, that there is nothing more popular than small plots or pieces of local property, as the case may be, and you will find that the result would be to put an enormous burden on some of the poorest owners of property who exist in this country at the present moment. That is not right. I think that every man ought to contribute in proportion to his means, but you do not bring about that result by isolating your charges to landowners. You bring about exactly the opposite result. You bring about the grossest inequality, both as regards rating and taxation, that you can possibly imagine. Everyone who has studied the question as between rating and taxation will agree with what has been said by one hon. Member opposite, that there is a large number of charges at the present moment placed on the rates which ought to be borne by the National Exchequer. We shall never get the proper reform of our rating law until that distinction is logically and scientifically followed.
I have seen more than once a criticism of what has been done by the Chancellor of the Exchequer, that so far from any step being made in the direction of logical scientific reform as regards our rates you have obstacles put in the way of reform by throwing upon the rates charges which ought to be borne on all principles by the National Exchequer. National charges are in the main more onerous in character, and a national charge is a charge to which everyone ought to contribute. I do not want to throw imputations on anyone, but what I put is this, that in the case of services of education, of course the limit of education is determined by the House; the extent of education is determined not by the local authorities but by the Education Board in Whitehall. More than that, education is not for the district, it is for the nation; it is to produce a good citizen, not merely a good local man. We know that 1d. Income Tax produces three or four times as much as the 1d. rate. I will take it at three times the rate. That means that if you put a charge on the rates you are letting off two-thirds of property which you could bring into your net if the charge were put on the Income Tax.
484 In a matter such as education, I should put it on the Income Tax, so that those who pay the Income Tax would have to contribute, because it is a question of a national charge. Where it is put upon the rates they escape, and that, surely, is grossly unjust. They may be getting their income from foreign investments, or settled funds, or non-industrial sources, yet, I say, as citizens they ought to contribute their full proportionate share as regards all national services, the charges for which ought to be put on the National Exchequer. I think if that principle is not recognised and completely enforced, the existing chaos, which leads to nothing, but extravagance and unsatisfactory results, cannot but continue. Just the same principle applies, according to what was said in the Report of the Royal Commission, as regards Poor Law, Police, and Main Roads. Supposing the proper charges were made on the National Exchequer, you would immediately get an enormous relief as regards the ratepayers, of this country—a relief to which they are immediately and properly entitled. If, instead of a wild-goose chase, as I call it, after land values or site values, hon. Members opposite joined with us in enforcing upon the Government the immediate necessity of carrying out the reform indicated in the Report of the Royal Commission as to local taxation, then you would put the burdens on the right shoulders and give the relief to the ratepayers to which they are entitled at the present moment. There is only one way of dealing with this question: if it is true that land values are specially advantaged by particular local expenditure, then let them pay in proportion to the benefit they receive. I do not dispute that proposition for one moment, and I never have disputed it. But outside and beyond that, do not specialise rates, but make them as equally as you can in proportion to the benefits received, and, when you come to charges of a national character place them on the National Exchequer, which, after all, is intended to obtain revenue raised in proportion to the ability to bear the charges made.
§ Mr. RICHARD LAMBERT
I desire most heartily to support the Motion. I was very much struck by a sentence in the speech of the hon. Member for Holborn (Mr. Remnant), who moved the Amendment. He seemed to think that under the scheme of taxation of site values vacant land somehow or other would escape taxation.
§ Mr. R. LAMBERT
I am sorry I misunderstood the hon. Gentleman. At all events, the very reason why I am anxious to support this Motion is because vacant land will not escape taxation under this scheme. If I may be allowed to refer to what is happening in my own Constituency, I think perhaps the House will see that there is a good deal of room for reform in this direction. I represent the constituency of which the principal town is Swindon. That town, as everybody knows, is the seat of the works of the Great Western Railway Company, who employ about 10,000 or 12,000 men. It has been the custom of the company in years past to allow their employés what are called "requisition cards." That is to say, the workmen who live at a distance of some eight or nine miles from Swindon can get tickets enabling them to go to and from their work at a very cheap rate. Recently it has dawned upon the railway company that they are very large ratepayers in Swindon, and with a view of preventing empty houses in Swindon, and I suppose with a view to lightening the burden of the rates upon themselves, they have decided in future not to allow requisition cards to be issued to their workmen. That is a very great hardship to the men, because it prevents them from living with their families outside the town where they can live more cheaply and obtain small holdings of land. I wish to be perfectly just to the company, for it is quite true that they have not taken away the privilege from those who already possess it. I understand that those who already have the privilege are to be allowed to retain it, but outside that limitation no more requisition cards are to be issued in the future. Supposing we had a system under which site values were taxed instead of houses, the result would be that there would be no temptation at all to the company to refuse these requisition cards. It would not make any difference to the company whether the houses were occupied or not. It would not make any difference to them whether the land was built on or not. All would pay an equal amount on site values according to the value of the land. When we know the way in which, in some of our towns, the rates at present inflict injury upon commerce and trade by the taxation of machinery, and putting a heavy rate upon industry, I think we ought to consider 486 whether the taxation of site values would not be a fairer and a juster way. It was said just now that we ought to tax according to means. I agree with that partly, but I think you want to add something to it. You want to say you must tax not only according to means but according to opportunities. I think when you find people getting a monopoly, as they do get it in a piece of land which cannot be taken away, that you are entitled to say they ought to pay their full share towards the rates for the privilege which they obtain from the community. All wealth is derived from land, labour, and capital. Capital is nothing more or less than stored up labour working on the land, and if you have no land you cannot have labour to work upon it. The one essential for the production of wealth is land. Land is the foundation of everything, and therefore when people obtain privileges which leave them monopoly rights over the land, in common fairness we are entitled to go and ask them to pay more than those who are deprived of that privilege.
§ Mr. PERCY HARRIS
The hon. Gentleman who moved the Resolution spoke as if the only question before the House was whether the present basis of assessment should be changed from the present rateable value to that of site value. That, of course, is a perfectly arguable question, but it is impossible to ignore the fact that the hon. Member and his friends are not seeking such a reform of local taxation as the municipalities have asked for and the Royal Commission has approved. They are seeking the more or less complete confiscation of land values. The contention of the municipalities has been twofold—first, that the ratepayers are unduly burdened in respect of services which are of national rather than of local importance, and that owners ought to make a direct contribution towards local expenditure. The first of those contentions was unanimously approved of by the Royal Commission. The other contention, though not approved by the majority of the Commission, undoubtedly was recommended by an important minority, of which the chairman of the Commission was a member. All who are interested in local government hoped that the way was paved for reform, but the hon. Member and his friends have taken in hand a very different policy. They are agitating, and it is idle to ignore it, for the confiscation of land values. Their object is clearly stated in a leaflet published by the English League for 487 the Taxation of Land Values in these words:—Since land values are the outcome of the presence and energy of the community, by taking them we shall be securing for public use what is essentially a public fund.That is an absolutely different policy from the proposals put forward by the municipalities or those approved of by the Royal Commission. As I understand, the ultimate object of the hon. Member and his Friends is to put all rates and taxes upon land values. The immediate proposal, as the hon. Member said, is to be found in the memorial which was presented to the Prime Minister by a considerable number of Members of this House. That proposal was first to place all rates upon land values; and, secondly, to levy upon land values a Budget Tax for two purposes—first to provide a Government Grant for such matters as education, Poor Law relief, and the like, and to provide a fund equal to that now provided by food taxes, which it is proposed to abolish. I believe the Lord Advocate goes even further, and proposes to abolish all Customs Duties. There occurs to one the happy thought that that might relieve the Government of one Irish difficulty, because if it is right that all Customs Duties should be abolished then there is no need to discuss who shall control them in Ireland.
What do the proposals put forward by those Members in the memorial to the Prime Minister mean? A leading surveyor (Mr. Saville), in a recent lecture at the Surveyors' Institute, tried to answer that question. He pointed out that it is not possible to get reliable figures as to the unimproved value of land, but he estimates it at three thousand millions. The local rates amount to £69,000,000, Government Grants £25,000,000, and food taxes £10,000,000. If you assess those on land values you get a total of £104,000,000, and in order to raise that sum on three thousand millions, as Mr. Saville points out, you have to levy your rate of 8d. in the £. That does not sound so alarming at first, but when you realise that it is an annual tax to be levied on capital value then 8d. in the £ means, as Mr. Saville stated, that it is equal to an Income Tax of 16s. 8d. in the £. It must be perfectly clear that that is not a proposal for taxation in the ordinary sense of the word, but that it is a proposal, as the hon. Member no doubt would put it, for the absorption by the State of what is considered a public fund. 488 How is that justified? I find that the leading proposition by which it is justified by the United Committee for the taxation of Land Values is that the land comes from the hands of the Creator. I do not know whether the hon. Member ever bought a piece of land, as it is against his principle. I bought a piece of land lately, but in extenuation of my crime I may say it was only a little one. But I did not receive it from the hands of the Creator. I received it from the hands of a man who obtained many sovereigns for it. I want to know why my investment in that land is to pay an Income Tax of 16s. 8d., while if I had invested the money in Colonial stock, or something of that kind, I would have got off with 1s. 2d. in the £, or something less.
I hope the cause of the reform of local taxation is not going to be prejudiced by this wild and predatory scheme. There is urgent need for reform, and to simplify the present system of taxation, and to put it on a sound and permanent basis. The broad lines, I do not say the exact lines, on which reform must proceed are to be found, I believe, in the Report of the Royal Commission. They are not to be found in the recommendations of the hon. Member who moved this Resolution. The Royal Commission held that services which were locally administered, but national and onerous in character, ought to be assisted out of national funds. The reason they gave was that Imperial taxation presses upon all classes of property and persons less than by any contribution from, and works more evenly than by, local taxation. The Royal Commission indicated the national services which ought to be assisted out of Imperial funds, but the hon. Member and his friends reject the findings of the Commission and propose to put on one class of property—namely, land—the whole burden of national services locally administered. That is surely to ignore altogether ability to pay. As regards local services, the Report of the Royal Commission shows that funds for purely local services have to be levied upon property which is localised and rateable. Opinions differ as to whether the basis of assessment should be the present rateable value, or whether site value should be partially or entirely substituted for it. The minority of the Royal Commission were of opinion that site value might be introduced, not for all rates as the hon. Member proposes, but only for a special rate of a limited character.
489 The Minority Report pointed out that to confer upon occupiers, even indirectly, in their capacity as voters the power to impose or increase a rate payable by owners is a measure which ought to be accompanied by stringent safeguards, and they proposed various safeguards, such as limiting the rate and dividing it half and half between owners and occupiers. But the hon. Member proposes to place at once upon site value the whole of the rates, with no safeguards whatever. The effect of substituting site value for rateable value would be to increase the amount levied from premises where the site value is a large proportion of the rateable value, and to reduce the amount levied from premises where the site value is a small proportion. That is not a change which can be effected suddenly without gross injustice. As Mr. Harper, the late statistical officer of the London County Council, who is now adviser to the Government, has very soundly said in one of his reports, a change of that kind must be carried out by prudent and well-calculated steps. But the hon. Member proposes to carry it out by one rash step. It is perfectly true that he does not propose to interfere with existing contracts, and so the first result of his proposal will be a gross injustice to the existing occupiers and ratepayers, for which they will not thank him. The final result would be as leases expire to place the great mass of municipal electors in exactly the position in which compound householders are at the present time. They would in no sense feel that they were putting their hands into their pockets to meet the rates. Even if site value were adopted as the sole basis of assessment it would be essential to make those who call the tune in municipal elections feel that at any rate in some measure they pay the piper. Otherwise you would get the most hopeless extravagance in local administration.
Really the fallacy which underlies a good many of the arguments of the hon. Member is that the interests of owners and occupiers are absolutely divergent. Mr. Harper, who has written very much of an extremely sound character on these subjects, in one of his reports, says:—The relief of the occupiers at the expense of the owners was no doubt originally the main object——that is, of the scheme of taxing land values—but this idea has been shown to be largely a mistaken one. Owners and occupiers thrive alike in industrial centres and suffer alike in neighbourhoods which are deteriorating. Their interests in the sense of taxation are parallel rather than the opposite.490 10.0 P.M.
I object to the hon. Member's proposals because they are contrary to the interests of owners and occupiers alike. It is not fair to place upon property which is localised and rateable not only large burdens of local expenditure, but large burdens of national expenditure. It is not in accord with any fair principle of local taxation. The question whether site value should be introduced as a basis of local taxation is a perfectly arguable one. I may not agree with it myself, but it is an arguable question, and one upon which no doubt the Government will be advised by the Committee of experts now sitting. Provided no interference with existing contracts takes place, I see no objection in principle; but if that valuation is introduced, and if a direct levy is made upon owners, it is absolutely necessary to introduce some such safeguards as have been recommended by the minority of the Royal Commission. Otherwise you will get a system of local taxation which will be grossly unfair and lead to monstrous; extravagance. For these reasons I hope the Resolution will not be carried, and I cannot help thinking that it would be better that this House should not pass any Resolution on this subject until the Committee of experts have reported.
§ Mr. ALBERT SMITH
The hon. Member for Holborn (Mr. Remnant), in moving his Amendment, rather complained of the time being inopportune for raising this question, because a Committee is now sitting in reference to the subject. I would remind him that a Royal Commission on Local Taxation sat in 1901, so that there have been eleven years in which to shape the recommendations of that Committee. The Seconder of the Amendment (Sir A. Cripps) and the last speaker (Mr. P. Harris) spoke about confiscation. I claim that in this Motion we are seeking, not confiscation, but restoration. We may agree that rating ought to be for those who get the most benefit. But what do we mean by benefit? Simply the benefit of the local services that are given. There are benefits of quite another character. If an owner lets his land for building purposes, for the erection of either factories, workshops, dwellings, or business premises, and as soon as it is built upon goes away with the money, leaving the other people herded together in the town to pay all the expense, who will receive the most benefit—those who have to [...]ive in the town, or the man who goes away and 491 perhaps lives amid surroundings far better than those of the people he has left behind? Like many other hon. Members I have devoted a good share of my life to the service of the community in which I live. More than once I have attended in this city conferences on the subject of local government when resolutions in favour of the rating of land values have been passed by large majorities, and I have often wondered how it was that those resolutions, passed by the great local authorities by such large majorities, have not been carried into effect.
I am inclined to think that at the bottom of it all, apart from the benefit the community will receive, there is too much selfishness or else too much political partisanship. In my career as a member of a local governing authority I have often been struck as to how it was that this system of rating under which we have been living for years and years has been allowed to continue. I just wish to draw the attention of the House to a very humble authority, because its history is not long, and this borough, which is in my Constituency, shows my case perhaps better from my point of argument than any other town. I know there are in great cities abnormal instances of land values. These are greater, perhaps, than the ordinary working man or working woman can understand, but they can understand, and do understand, their local conditions, especially when their rates are getting pretty high.
In 1850, in the borough to which I refer, the gross rental received from the whole of it was about £14,000. Just over £7,000 came from agricultural land and farm buildings. In December, 1911, the gross rental from that township was £206,800. Out of that area 604 acres only are built upon, leaving 2,791 acres unbuilt upon. The approximate gross rental of that 604 acres was about £200,000, and the 2,791 acres unbuilt upon accounted for the £7,000 remaining. I think that that gives a considerable illustration of what that 600 odd acres is worth, compared with what we may practically call agricultural land. The whole income for the government of the town, practically speaking, is borne by those people who either own factories, business premises, or live in humble houses. The main factors of the contribution of this £200,000 are those who have shops, houses, banks, offices, etc. Those over a £10 rateable value contri- 492 bute £93,266; houses of £8 and under rateable value contribute £33,204; weaving shops contribute £41,107, this bringing the total up to £167,570, out of the £200,000 from the whole area. I am not mentioning this town because I think there is something exceedingly abnormal about all this. I believe there are other towns in this country which can equally show my case as well as this town. But I am sure that hon. Members will agree at any rate that those 604 acres must be worth tremendously more per acre than the 2,791 which is being used for agricultural purposes.
In arguing this point I do not for a moment advocate any process of rating that will hinder at all the progress of agriculture. I do not think that the system of rating suggested by the hon. Gentleman the Member for Newcastle-under-Lyme will in effect do any harm to the farmer or his fellows; rather the reverse. Out of all the money I have mentioned the town does not receive one penny from the ground landlords by way of relief to the burdens of nearly £59,000 which the occupiers have to find in rates. I believe honestly that this system of rating is neither just nor defensible. It is a system which the working classes particularly and occupiers generally are finding to be unbearable. We are seeking some system of rating whereby these community created values will pay their share towards the local governing services. In the borough to which I have referred there are approximately 8,000 houses. The average ground rent for these houses is 30s. Thirty houses, I suppose, will be built on an acre of land—perhaps more. This means that in ground rent £45 per acre is being paid for the ground landlord. At twenty-three years' purchase that is over £1,000. Employers of labour and their men put into their industry a great deal of work to attain these financial results.
This value is one which has been created by the industries of the people and the community, and it is that value that we think ought to pay its share to relieve the local services of the borough, of the urban authority. That land, as agricultural land, would not fetch any more than, say, £1 to £3 per acre in rent. The difference is very remarkable. It is inconceivable that some system has not been devised whereby it can contribute its fair share. The hon. and learned Gentleman who spoke on the other side referred to the difficulty of the situation. I am aware certainly 493 that there will be difficulties to surmount in the readjustment of these rates. These difficulties of readjustment are not to be compared with the difficulty of these poorer people in the towns in meeting their rates. The worst of it is the more the property is improved the more you have to pay in rent, and the more you pay in rent the more you have to pay in rates. Whether it be by means of a dwelling-house, a shop, a factory, or by any other business premises, the occupier has got to be penalised for the improvement he puts in, and at the same time the whole value underneath his building is to be swept away by another man who escapes rate free. There is another peculiar feature about this. When we have discussed these matters with various representative people from various local authorities at our meetings, we have found a universal opinion that these difficulties are difficulties that all have to contend against. Practically, too, all have always agreed on the remedy to be applied to them: something has to be done by Parliament before very long. This system is becoming too glaring.
It is very hard on people who are day after day, week after week, and year after year saving what money they can to buy their own homes. There are a large number of people in this borough who have bought their houses outright, and who are paying ground rents for these houses; they have to pay from the centre of the front street to the centre of the back street; they have to pay to keep in order flags, channels, sewers, both in front street and the back street. When the street is made to the satisfaction of the borough surveyor to the local authority he may report it is fit to be taken over as a public street, and then to pay 7d. in the £ for the upkeep of the public streets for ever and ever. Surely the man who is drawing the ground rent for the ground upon which these houses are built and through which those streets run ought to pay his quota towards the burden of taxation. As soon as ever that street is paved and made good you will see another builder marking out another plot of ground for another street in the same way. All that tends to increase the value of the land every time. If ground rents were subjected to the same basis of rating as houses they would yield in this borough a 1s. 3d. rate, which would be a very great consideration indeed to the local authority where rates are getting up to 7s. or 8s. in the £.
494 There is something else of importance in regard to houses and land which applies not only to this local authority, but to others as well. Houses are being put up just in sufficient quantities to demand sale, and the occupying tenant who has got the house into comfortable living order will some day suddenly find the landlord suggesting that he had better buy the house because someone else is inquiring after it, and the result is that the builder gets a good price or houses have to be taken at heavy rents. If the tenants cannot see their way to buy, their rents are increased, as we have had several examples recently. The great harm in that is this that once the rent is increased it is increased practically for all time, whether the house is worth the rent or not. I cannot help but think if there was a system of rating land values of this kind it would give the people in the community a really fair chance of buying a house or of renting a decent habitable house. It would open up, especially in rapidly extending boroughs, work, and it would provide labour, and you would hear very little about outdoor workers being unemployed, because it would encourage people to extend their factories and workshops. In the long run, although they may have to pay a proportion of the rent received from the land in rates, there would be more land let out, and the owner would be a financial gainer rather than a loser. It is quite feasible that, by adopting some plan of that sort, you would draw agricultural rent for the same land. Those of us who have had experience of corporations know how these values go up. Only recently, in the very same borough I have mentioned, the corporation wanted to buy for street-widening purposes a certain strip of land, and it is within the memory of living burgesses there that that land was sold for a few shillings. The corporation had to pay £27 per yard for it for making that land more convenient for the public, and after that they were asked to pay again for it. Besides this, there is all the expenses of the fire brigade, town hall, lighting, educational services, main roads, and policing, and if they are not fortunate enough to be a county borough they have to meet the county charges as well. Whatever else may happen I feel sure that the poor ratepayers of the borough, the people who are creating continually this wealth, have certainly a good claim to it. This is a feasible system of rating, and if it is adopted will not only lead to the extension of employment, but 495 tend to relieve the burdens on industry and also the burdens of those who have to work very hard day after day for a living.
§ Mr. ROBERT PEARCE
A good many of the subjects for which rates are now paid are national matters. For instance, education is paid for half by the rates and half by the taxes. The total expenditure upon education is something like £14,000,000 from the rates and £14,000,000 from the taxes. Those who bear that burden pay taxes according to their means, and, as to the rates, they pay according to their rental value. What can be more absurd than to pay for education on two plans—one according to your means, and the other according to the value of the house you occupy, which is no criterion of anything. With regard to Poor Law administration, it has been hinted that that is a matter of national concern, because some £6,000,000 are contributed in the way of Grants by the State. There is, however, £17,000,000 besides which is paid out of the rates, and no one will pretend now to argue that Poor Law administration is not an entirely national matter which ought to be provided for by the taxes. There is another matter or two. Who will pretend now that the parishes ought to pay for the main roads which go through their districts? A road goes from London to Edinburgh, and motors rush over it at fifty miles an hour, or at the legal limit of twenty-five miles, and it is paid for in sections by towns and parishes in the most unequal and foolish manner. We all recognise the roads ought to be paid for on some national plan. Then how can it possibly be supposed that the registration of voters is a matter which is not national? I venture to say those four subjects ought to be taken wholly off the rates and put on the taxes. I have been at some pains to get some figures from the kind-hearted officials at the Education Office and at the Local Government Board, and I total it up, roughly, that £30,000,000 has been spent on those subjects which ought to come out of the taxes. A penny on the Income Tax represents £3,000,000, so that you would be able to pay for them by an Income Tax of 10d., and the burden would be in proportion to the means of those who paid. The rateable value of the whole Kingdom for these purposes is, roughly, £220,000,000 per annum, and, if £30,000,000 came out of the taxes, it would give a relief 496 to every rate in the Kingdom of 2s. 10d. in the £. You thus see how equitably it would deal with the matter. The rates vary in the most distracting way. They vary in towns, as in Poplar and the West-End of London, from 11s. 4d. down to 4s. in the £, and in the rural districts from something like 16s. 8d. per head of the population down to 11s. In the towns and cities, county boroughs, and urban districts generally the average rate is 6s. 10d. in the £—exclusive of the Exchequer Grant. You take off that 6s. 10d. the 2s. 10d. and you have the rate reduced to an average of 4s. all over the urban districts. The rural districts are under a burden of rating averaging 4s. 3d. in the £. If you take 2s. 10d. off that it leaves 1s. 5d. in the £ as the average rural rate all over the country. Let me point out one curious effect of that. The Agricultural Rating Act of 1896 was passed by a Conservative Government and we have been waiting our chance to do away with it altogether. But why should we? The average rural rate is 4s. 3d., and of this the farmer pays only 2s. 1½d. on his agricultural value. But instead of having to pay 2s. 1½d. he would only have, under my plan, to pay 1s. 5d., and he would then stand on a level with his fellow ratepayers, and there would be fair play all round. The Chancellor of the Exchequer has suggested that if this burden were put on the taxes, instead of there being an inclination on the part of the local authorities to keep expenditure on economical lines, it would lead to extravagance. The local authorities must necessarily be used in this matter. But this scheme would have something like the effect of making an internal and external budget. You would have the budget divided into two heads—one dealing with the ordinary services of the country and the other dealing with education, Poor Law, and other matters of that kind, which would be the internal burden of the taxes. If the Chancellor of the Exchequer saw any difficulty in dealing with such a plan it would be the first time, I should say, he saw a difficulty in anything. A Minister who has had the courage and endurance to pass an Act like the National Insurance Act surely is not likely to be defeated by a proposal such as this. Under these conditions you would use your local authorities. You would establish under the Local Government Board and under the Education Department an average expenditure reasonably right and economical for all these 497 matters of internal taxation, and if any local authority in sending in its requisition for money is found to have exceeded the average it can be called upon to pay the excess out of the rates, or, if if it has kept within the amount of the average it will be entitled to keep the saving in reduction of the rates. I want to say one word as to the effect this would have on local authorities in their administration. What would remain to be paid for by rates would be street improvement, sewage, gas, water, and other things, which bring in revenue, but there will be a margin, which will amount to about 4s. in the £ in the urban districts. What remains to be paid for out of the rates in rural districts are comparatively small matters which will not average more than 1s. 5d. in the £. If local authorities have spent more than they ought out of the taxes they will have to pay out of the rates. I have said enough to indicate that there is a plan and a system by which local taxes may be fairly and squarely adjusted without the necessity of doing what is called for by this Resolution, namely, dealing with site values, except in relation to local matters. The taxation of site values will be a fair subject to be exploited for local matters after Imperial matters have been disposed of.
§ The ATTORNEY-GENERAL (Sir Rufus Isaacs)
Those who have been in the House during the course of this Debate, as I have been, from the beginning, must have realised the magnitude of the subject with which we are dealing, and also its vast complexity. I was struck during the course of the Debate not only by the thought in the speeches delivered to the House, and the amount of study that has been given to the subject, but also by the diversity of opinion expressed on both sides of the House. What has particularly impressed me is that I have not heard one speaker express the same opinion as any other. The hon. Member who moved the Motion did so in a speech of great force and great moderation. He has always brought to this subject much zeal and enthusiasm. He put his case briefly and well. He was followed by my hon. Friend the Member for Salford (Sir W. Byles), who during the course of his speech, was, if he will permit me to say so, carried away by his own enthusiasm, and travelled, I think, farther than the Motion which he seconded. I do not find fault with him for 498 that. The speech that was made by the hon. Member for the Holborn Division (Mr. Remnant), at once struck a different note. He found fault with both the Mover and Seconder of the Motion for bringing this matter forward at this particular time, and he said it ought not even to be discussed in the House, because there was at present a Committee sitting—a view with which I cordially agree. Then I find the hon. Gentleman himself proposing an Amendment, which, if carried, would go much further to negative the effect of the Committee's deliberations than this Resolution. He was followed by the hon. Gentleman (Sir A. Cripps), who has considerable knowledge of rating. He certainly did not agree with all that had been put forward by the Mover of the Amendment. Here, again, it seems perfectly natural, because the moment you begin to discuss this subject there are so many ramifications and so many complications in it that it becomes almost impossible to limit it to one particular theme only. The real problem which we are discussing, which is at the root of this controversy, is how to raise revenue for local purposes, subject to local control, so as to induce efficient but economic administration, and without penalising local enterprise, and once we understand the various points which have to be taken into account in arriving at a conclusion, again, I think, it only explains how natural it is that there should be so many varieties of opinion upon the subject.
The hon. Member (Mr. Wedgwood) bases the whole of his proposition upon the principle that you must charge those who benefit by the public service, and that you must not adopt the principle which was advocated by others, to charge according to the ability of the person to pay. That, again, strikes very vitally at a root principle in economics. This question has formed the subject of many inquiries and of the Report of a Royal Commission in 1901, but since that time much has happened. A complaint was made by the hon. Member (Mr. Albert Smith), who made a most useful contribution to the Debate, that we have been waiting eleven years since that Report and nothing has been done. That is perfectly true, but there has been a variety of causes for it. It amounts to this, that in 1912, as the Chancellor of the Exchequer discovered in 1911, having travelled very far, as we have, in that period along the path of social reform, we have realised that in almost every step that you 499 take in social reform you impose necessarily a further burden upon the ratepayers of the locality. It has been stated rightly that the burdens have become almost intolerable, and that something must be done to relieve them. I think I am speaking for the whole House when I say we are all agreed that some change must be made, that we must pass from the old system which has done duty so long, and that we must have some new system, and probably, I should imagine—of course I do not profess to speak for anyone who may have to decide this hereafter—a combination of systems will have to be brought into play in order that we may have a full new system to take the place of the old system. A Committee has been and is still sitting inquiring into the subject. It is a Committee of experts, appointed for the express purpose of giving the House and the country the benefit of its assistance in arriving at a conclusion as to the new system, or combination of systems, which you are to substitute for the old system at present in existence. That Committee had to be nominated for the reason that since 1901?so much had been done that before you could legislate on such a vast subject as this you must have some further assistance and some further information in order that we may have a scheme founded on greater expert knowledge. Evidence has been called, both of well-known experts on the subject-matter of the Motion before the House and equally of those who take the opposite view, and who put forward their particular version of taxation and rating. The result is that you have on the Paper to-night a whole series of different proposals, every one of which would form the subject of inquiry, and some of which are already forming the subjects of inquiry, before the committee of experts appointed to assist the House. I would ask my hon. Friends, how is it possible under these circumstances for the Government, which has nominated this Committee, to accept the proposition put forward by my hon. Friend, however much they may agree with him in principle? How can it accept this Motion, which declares not only in favour of the principle, but of a system of getting money for your local revenue by rates upon the land value, and put that forward as a system to be adopted? If the Government were to accept that it would be really pronouncing its view and giving its judgment before it could have the report of the experts.
500 The view we are forced to take as a Government in this connection is that it is impossible for us to support the Motion brought forward by my hon. Friend. But I do think the House is indebted to him for having brought forward that Motion. However much we may find ourselves unable to support him, it has given us a very useful Debate. Certainly a number of points have been discussed and considerable light has been thrown on the subject. Speaking for myself, and I think for the Government, I can say that it is very useful to have had this discussion. I think that at the back of my hon. Friend's mind is the thought that this Committee will take some time to report. I think I am right in saying that valuation is proceeding, though slowly. With the view of hastening it, my hon. Friend would desire to substitute some simpler and different system of valuation. That hardly enters into the motion we are at present discussing, but I agree that it is desirable that there should be a hastening of the valuation in so far as you possibly can, provided, of course, that you have a proper valuation.
I am in a position to tell the House now that the valuation is being accelerated and will be more accelerated. March, 1915, was put forward, I think, as the earliest date on which the valuation will be completed. I am now in a position to tell the House, from the information of those who can best know, that we fully expect the valuation to be completed before that date, and at the rate at which we are progressing now it may be considerably before that date. [HON MEMBERS: "When?"] That is asking a little more than I can possibly tell. So far one-fifth of the task has been completed. The first part of the valuation is far the most difficult and takes the longest time. We have had the forms, and all the information from the forms has been tabulated and is available for the valuers and will enable them to work very much faster. Further, every day the valuers acquire more knowledge and are in a better position to determine as a result of their experience what is market value without making so many inquiries as when they first started. It stands to reason that the longer they are at it the more information they get, and the greater the experience they bring to bear in a particular town or agricultural district the more quickly they will be able to make the valuation. That is what is now happening. Another point to be 501 taken, into account is that the valuer in a particular place or town is able to standardise deductions. He gets to know without making particular inquiries as to each house in the town what is to be deducted for water rate, parish rate, and so on, and consequently he can make his valuation, very much faster than he has hitherto been able to do. I hope that my hon. Friend will feel that he has got some information with regard to valuation which will satisfy him, though I quite agree that it does not give him anything like the full extent of his demand. I doubt very much whether there is anything further that I can say to the House on behalf of the Government, because I do feel, however one might be tempted to take part in the discussion and put forward views in answer to some of the arguments from both sides of the House, that there is always this difficulty confronting us, that this question is now being inquired into by this Committee. We do feel that as a Government we have no right to declare any opinion, and we have no right to take any view in this House when we have appointed that Committee, and are awaiting its Report. I cannot help thinking that the result of this Debate has shown how necessary it was to have a Committee of that kind and how impossible it is to come to any conclusion without going into a vast body of evidence, and without making full inquiry and bringing expert minds to bear upon the subject. For these reasons, I am afraid, on behalf of the Government, I am unable to support the Motion proposed by my hon. Friend.
§ Mr. PRETYMAN
I am sorry I was unable to be here during the Debate, having had a long-standing engagement to speak in the country. I only want to make one or two points on the Attorney-General's speech. I cannot help thinking the Government must recognise that the legislation of 1909–10 was the very kind of legislation which the Attorney-General has just told us ought not to be undertaken until the Report of this Committee has been received. What is the legislation of which this valuation forms part except legislation in anticipation of any expert opinion upon the whole question? What would be the use of this costly valuation if the Committee issues a Report in which they do not advocate this particular form of taxation as suitable for the purpose. It does not seem to me at all improbable, from the way in 502 which this legislation is being carried out, that that will be their Report. I do not know whether we are entitled at this time even to go so far as to assume that this valuation would be for that further purpose. With regard to the acceleration of the valuation, I think the Attorney-General has left out of account one or two facts. It is assumed very often by the valuers, and by the Government that they have to value according to what the value is to-day, but the valuers are not set to value the property according to what it is worth to-day, but according to what it was worth on 30th April, 1909, and that, of course, increases the difficulty of making a fair valuation as at that date. Further than that, as the methods of valuation proceed they are being constantly subjected to investigation by referees and by Courts of Law, and, so far as these cases have been heard, they have almost invariably resulted in a change of the proposed valuations now being adopted. I assert that the valuations or the methods of valuation must be subject to very considerable change, and the Attorney-General must recognise that one-fifth of the valuations which are stated to be completed are all subject to alteration as these cases come before the Courts of Law and are decided, and it is a very sanguine statement to make on the part of the Government that any of the valuations may be regarded as really settled.
§ Mr. WEDGWOOD
rose in his place and claimed to move, "That the Question be now put," but Mr. Speaker withheld assent, and declined then to put that Question.
§ Mr. WEDGWOOD
rose in his place, and claimed to move, "That the Question be now put," but Mr. Speaker withheld assent, and declined then to put that Question.
§ And it being Eleven of the clock, the Debate stood adjourned.
§ Adjourned at One minute after Eleven o'clock.