HC Deb 17 July 1930 vol 241 cc1569-82

I beg to move to leave out the Clause.

I move this Amendment for the purpose of asking the Financial Secretary to the Treasury what this Clause really means, and further of asking him whether he proposes to give any concession at all on this matter. I presume that the later Amendment in my name, which proposes to insert the words: Provided that the provisions of this section shall not affect any right of appeal given by the Valuation (Metropolis) Act, 1869. will not be called, and I suggest that the question arises on the present Amendment of whether the Government are going to allow, in this case, the right of appeal which at present exists under the Act of 1869. I think this Clause is an example of ill-considered legislation. It proposes to apply to London the very obscure and difficult phrasing which was put into the Finance Act of 1924, without any discussion whatever, and without the Chancellor of the Exchequer even understanding what is meant. The Section which it is proposed to apply in this case is one of the most obscure and difficult Sections that has ever appeared in an Act of Parliament. When this Clause was discussed during the Committee stage the Chancellor of the Exchequer entirely misconceived its meaning and made a fundamental mistake as to its terms and purpose. The columns of the OFFICIAL REPORT record the mistake of the right hon. Gentleman. When he was challenged by me at considerable length to tell the Committee what the words meant and what their purpose was he said: I have been asked what benefit this Clause will confer. At the present time in London there is no appeal. I suppose there is an appeal for a person assessed in regard to a local assessment, but that is taken as the basis for Licence Duties and the Customs and Excise must take that as a basis."—[OFFICIAL. REPORT, 27th May, 1930; col. 1140, Vol. 239.] The Chancellor of the Exchequer was entirely wrong in stating that there was no appeal. His whole case for this Clause was that there should be some new kind of appeal for the licence holders of this country to the Commissioners of Income Tax and he ignored the fact that in the Valuation Act of 1869—which gave one valuation for the purposes of Income Tax, of rates and of Excise Duty—there is an appeal and if the Financial Secretary wishes to challenge my statement I can refer him at considerable length to the relevant Section of the Act of 1869. If the hon. Gentleman consults that Act he will see, without the shadow of doubt, that through all these years the licence holders of London have had the right of appeal first to the assessment committee and then an entirely new appeal to quarter sessions. They had these two old rights of appeal and I may inform the Financial Secretary that the society which has been formed for the protection of the interests of licence-holders in London is unanimously of the view that these old rights of appeal should be retained.

We want this matter to be considered as part of the much more general question of the single valuation for London which will arise on a later Clause. We would like a concession on this matter to be part and parcel of the concession which we hope will be made by the Financial Secretary in regard to this whole question. We know that it is probably useless, in spite of the combination of the Liberal party and the Conservative party in the Lobby, to ask for a single valuation for London, but what we are asking for is a right of appeal to some court of law on these valuations when they have been assessed by the Income Tax Commissioners. We say that it is only right that there should be the old rights of appeal to a properly constituted court of law and not to experts appointed because they have special knowledge of the values involved. If the Financial Secretary is prepared to make us any concession on this matter I need not argue it further. There should be this right of appeal for which I ask, both in regard to the licence-holders of London and the ordinary property-owners of London. The Chancellor's own excuse for this obscure Clause was that it offered a right of appeal which did not exist before, but, in fact, it substitutes for a good right of appeal to a court of law, where experts can be cross-examined in order that the truth may emerge, a new form of elaborate appeal to Revenue officials.

8.0 p.m.

In order to get at the true meaning of this Clause we have to go back to Section 12 of the Finance Act of 1924. When we come to consider that Section we are involved in obscurities. Anybody who consults Section 12 will be entirely at a loss as to what it means unless he gives it very careful study. First we have to consider that there are three values for this purpose. There is the Income Tax value of the premises, the rating value of the premises, and the Excise value of the premises. Those are three different considerations. The old Act of 1869 provided that there should be one valuation which would be inclusive, that there should be one appeal on all these questions to one court, and that, therefore, there should be one decision. But when we look at Section 12 of the Act of 1924 we find that The annual value of any premises for the purpose of the duty on any excise licence charged by reference to the annual value shall be in Great Britain:

  1. (a) the Income Tax value, if there is such a value applicable; and
  2. (b) if there is no Income Tax value applicable"—
it shall be the value which any free tenant might give for the premises. We are told that the Income Tax value is only applicable where the licence value corresponds with the value of the premises for Income Tax purposes. By a definition in a previous Act premises used for purposes wholly unconnected with the licence do not correspond with the premises for the purposes of Income Tax. But all this is very difficult and complicated. Then when we come to Subsection (2) of Section 12 of the Act of 1924 we find that it is provided that apart from London the person applying for any such excise licence as aforesaid may, if the income tax value applicable to the premises is the amount of a rent paid for the premises, require the Commissioners of Customs and Excise to assess the annual value of the premises for the purposes of the duty to be charged on the licence as if there were no income Tax value applicable. Can anything be more absolutely obscure than that? I took the Financial Secretary and the Chancellor of the Exchequer, on the Committee stage, through all the difficult stages of the meaning of this particular provision. But I myself was completely bewildered by the words: if the Income Tax value applicable to the premises is the amount of a rent paid for the premises. I have since made inquiries, and I find one rational explanation out of many explanations. Apparently, the purpose of the framers of this sentence was that where there was a tenant, for example, of a public-house in which he had acquired a special interest and where he was being asked an exorbitant rent by the landlord—the brewery—and the Income Tax authority took his rent as the Income Tax value, then it was thought that it was very unjust that that should be so and that he ought to be able to go and ask the Commissioners of Customs and Excise to assess his premises on the true value and not on the rent which he had to pay. All this, again, is very difficult, and this provision was forced through Parliament in 1924 by the representative, I understand, of the licence holders outside London. It was never understood by the Chancellor of the Exchequer at the time and that is applicable to this whole Budget. A particular branch of officials asks him to put what they say is a harmless provision for their protection into his Budget, and to puts it in, lock, stock and barrel, without any discussion at all.

The absurdity of the situation is increased when it is pointed out that the whole of this Section 12 could not possibly he applicable to Great Britain because the Metropolitan Valuation Act was still in force, but it is made to apply to Great Britain although licence holders are protected by the terms of a previous Act of Parliament. It is thought to set that right and to incorporate the whole of these provisions in regard to London. I will ask the Financial Secretary to say whether I am right, and if he has followed me in my definition of the meaning of this particular section. One can only understand it if one studies it very carefully and I would ask the Financial Secretary to explain the meaning of that sentence. I would like to appeal to him to maintain the old rights of appeal which his chief said never existed but which have existed for 70 years—the right of appeal to Quarter Sessions. I shall urge this at a later stage on a much larger question. But I would point out here that the evil of a double valuation would be considerably decreased if we had the same court of appeal dealing with the two valuations. It is almost inconceivable that a court of law, when an appeal comes up, should decide on the value of the premises for two different purposes. It would be much more beneficial to the taxpayers and to the ratepayer, and the injustice would be much less, if the safeguard of the court of law existed, as it will not exist if you have two parallel courts of appeal. I am sorry if my arguments have been obscure, but, if they have, they are not one-half as obscure as this Section.


In rising to second the omission of this Clause which has been so ably proposed by my hon. and more or less learned Friend—[Interruption.] I am not questioning my hon. Friend's legal knowledge. I was going to come to that in a moment, but it appears that the only possible way in which one can speak without offence is to use the words "more or less" in this case. But I congratulate him on having made an exceedingly clear and a very able speech in favour of the rejection of this Clause. That is an example which might well be followed by many of the other legal Members of this House; they might well adopt the clarity with which he has explained a very difficult Section. May I ask the Chancellor of the Exchequer, or the Financial Secretary to the Treasury, or whoever is going to reply for the Government, one or two questions? Supposing this Clause is omitted, what would the Treasury do, because we can only really gauge the value—


The Treasury would gain.


Well, that is exactly what I want to know. I am sorry I did not put my question more clearly. I wanted to know what the Treasury would lose by dropping this Clause. But now the Financial Secretary says that the Treasury are going to gain by dropping this Clause. Surely, something very queer must have come over the Treasury Bench if they propose to insert a Clause on which they admit they are going to drop a certain amount of money. Perhaps the Financial Secretary will tell us exactly what he is going to lose. In fact, he has promised to do so.

My next point is that my hon. Friend has referred to the fact that Section 12 of the Act of 1924 is one of the things which has to be cleared up to-day. I am not going into the whole Finance Act of 1924, but I would like to put this one point as an illustration of the perpetual trouble which has arisen because of the incompetence of that particular Act. Year after year, one provision after another, we have had to amend bits of that particular Act. Let this be a warning to hon. Members and, before we accept this Clause, let us be sure and obtain a very clear and adequate explanation. The other point I want to put is this. We have been told by my hon. Friend that ever since 1869 in this matter of rating and licensing there has been a definite appeal to the Quarter Sessions in the area which we are now discussing. That is an old right to which these people are well accustomed and under which they know exactly where they stand. Surely, before it is taken away from them we ought to have a very strong case indeed. Nothing appeals to the people more than rights which they have had for a very long time, and the Government, who are now proposing every form of oppression, intend to take away this particular right, but we ask that it may be preserved. I have no particular interest in this district. I do not represent a London area, but when I hear of old rights that have gone on almost from generation to generation being brutally abolished by the Chancellor of the Exchequer then I do say that the House should be given some adequate explanation.

When I used the word "brutally" in connection with the Chancellor of the Exchequer I noticed that it caused almost a smile of mirth to appear on the face of the Financial Secretary. That is the first gleam of mirth that has appeared on his face since his troubles of last. Friday, and if I have caused him mirth and have lightened some of his burden I am glad. It has been pointed out that the different valuations of licences exist for different purposes. However it may stand as far as this Clause is concerned, the greater simplification you can get in the whole of these matters in connection with the making of an assessment the better it is for the industry. I know that simplifiaction is not welcomed by the Treasury, but it is liked by business and in this connection you should take the interests of business before the interests of the Treasury and before you indefinitely expand the amount of work to be done by the Treasury. Perhaps, before the Financial Secretary or the Chancellor of the Exchequer definitely turns down this Amendment and enforces the Clause on unwilling people, one of them, will give the matter full consideration on the points that have been raised by my hon. Friend and myself.


This is a very complicated matter, and I am not at all surprised that the two hon. Gentlemen who have moved and seconded this Amendment have somewhat failed to appreciate what we are doing in this Clause. The Clause is for the benefit of the taxpayer, and it is rendered necessary by Clause 29, which alters the method for Schedule A in London. If we did not put in this Clause 3 the effect of Clause 29 would be to put the London licence holder at a disadvantage compared with his fellow in the provinces. The object of this Clause is to give the London licence holder the same right that his fellow in the provinces already possesses. The hon. Gentleman who moved this Amendment, though he appreciated the law in one way, missed the point in another. At the present time in London, the valuation for purposes of rates and for Income Tax is one and the same, and there are certain rights of appeal attached thereto. By Clause 29 we separate the assesments for rates, which remain on the same basis as before, and the assessment for Income Tax, which ceases to be on the same basis as it has hitherto been in London., and is put on a basis similar to that which it has now in the provinces. Section 12 (2) of the Finance Act, 1924, provides a certain relief to licence holders in cases where it is necessary, as in the provinces.

It sometimes happens that the rent paid by a licence-holder is above the real annual value of his premises. I need not into the reasons for that. In consequence of that, if the licence duty were charged on that excessive annual value, he would be put to an undue cost, and therefore in the provinces, where alone that would happen in times gone by, Section 12 (2) gave him a certain relief. It is not necessary in London, because, the valuation for rating being the valuation for taxing, he was already safeguarded in that respect. But the moment you withdraw that and put London in the same position as the provinces, the licence-holder might be put to an undue burden of taxation unless he had this provision. Therefore, in common fairness, in assimilating the procedure for assessing for taxation in London with that already in existence in the provinces, we have naturally thought it only right and proper to give the same opportunity to the London licence-holder that is already given to the licence-holder in the provinces.

The hon. Member who moved this Amendment wants to secure that there shall be an appeal to quarter sessions. If that is his object, this is the wrong place to do it. I notice on the Order Paper an Amendment in his name to Clause 29—in page 29, line 9, at the end, to insert the words: Notwithstanding anything in this section or any repeal effected by this Act all rights of appeal given by the Valuation (Metropolis) Act, 1869, with regard to any property to which that Act applies shall continue to remain in force. When we come to that, it can be argued on its merits, but the Amendment which the hon. Member proposes to insert into this Clause—in page 3, line 34, at the end, to insert the words: Provided that the provisions of this section shall not affect any right of appeal given by the Valuation (Metropolis) Act. 1869. even if it were carried, would not have the effect which he desires. The only way to achieve his purpose is to carry the Amendment which he has put down to Clause 29, which will secure the appeal to quarter sessions, not only for licensed premises, but for all premises that are dealt with there. I do not want to trespass on the Amendment which the hon. Member is to move next, but I will only say this—and I will deal with it in greater detail when he moves it—that an appeal to the General Commissioners of Income Tax is provided already, and we think that that appeal meets the case. The licence-holder is given a special right in this Clause, a right similar to that which he already possesses in the provinces, and if he is not satisfied with what is given him, he will be able to bring his case before the General Commissioners.


The Financial Secretary has made use of the expression that this is the wrong place to do what we are proposing to do—


This is an Amendment to leave out the Clause.


Without expressing any opinion on the merits of the Clause, I say that this is a wrung time to do it, and I will give my reasons why I desire to leave out the Clause. So far as I understand Clause 3, it is a twin Clause to the old Clause 26, which is now Clause 29. That Clause, as I read it, means that assessments under Schedule A in London are in future to be based on the valuations to be made by the Inland Revenue, as elsewhere in England, and this is to apply to licensed premises in London. Clause 3, if passed in its present form, means that after April, 1931, Section 12 (2) of the 1924 Act will apply to London, as it applies to the rest of Britain. That is all very well. I have no objection to that, but why tinker with the law and why bring this Clause in and deal with licensed premises in London at a time when we have the Licensing Commission sitting? I am not going to find fault with the merits of the Clause, or controvert any of the arguments set forth by the Financial Secretary. But I say the Clause is inopportune and should be left out now.

I remember, when I was Minister for Overseas Trade, that one of the greatest difficulties we had in putting forward the "Come to Britain" movement was the shortcomings of British hotels. We found that we could not get the number of tourists here that we required, men and women who could spend vast sums with us without taking very much away from the country, except what they saw here, because of that fact. At that time endeavoured to get the hotel people to recondition their buildings and hotels, and I had some correspondence with the then Home Secretary. They pointed out to me that the means and methods by which licence assessments were carried out—the thing with which we are dealing here—were so faulty, that no differentiation was made between what were purely hotels and inns, restaurants and bars in various types of buildings. The licences of those type of buildings, which look to the greatest proportion of their profits to come from alcohol, ought in their opinion, and in my opinion too, to be dealt with on lines entirely different from the lines on which the licences of hotels are dealt with. Yet we have this Clause. There are a number of hotels that depend to a very small extent, upon the profits from the sale of alcoholic drink. They must be licensed, because there are a large number of people who like a teaspoonfull of cheap claret and a little soda water and do not care to go to hotels where they cannot obtain that form of innocent drink; but the mere fact that these hotels are licensed places them upon a basis which involves them in an expenditure which renders them powerless to spend the money on improvements which otherwise they would do. And now we are confirming that practice.

Mr. DEPUTY-SPEAKER (Mr. Dunnico)

The hon. Member is travelling very wide of the Amendment. The subject before the House is whether a system of valuation already in existence in all other parts of the country shall be applied to London. That is the sole issue before the House.


I would be the last man to disobey your Ruling, and I will bring myself into order. Whether this Clause applies to London or elsewhere, I think it is a very foolish thing to bring it in at all. In view of the need for reorganising these hotels this Clause ought not to go forward and should be withdrawn. I do not say that because of any hostility towards the operation of the Clause, not because there is anything inherently wrong in it, but it is inopportune to bring it in when the Licensing Commission is considering the position. The Chancellor of the Exchequer ought not to put a millstone round his neck by passing legislation which may hamper what may be done as a result of the report of that Commission. I am advocating this course in support of the Come-to-Britain movement and of getting hotels built in London without the hampering conditions as to licences which now exist.


The hon. Member is transgressing the Ruling I have laid down.


I am sorry if I have offended, but for the reasons I have given and not for anything that is inherent in the Clause, I feel that the House ought to oppose the Clause.


I accept every word that the Financial Secretary has said by way of explanation on this Clause, and I think it was very simply and clearly put. I cannot see that anything is to be gained by omitting the Clause. If we were omitting Clause 29 I should support whole-heartedly every word that has been said from this side of the House, but if Clause 29 is to stand then, in my opinion, this Clause 3 is necessary. As, however, there is no indication that the Government will vary their attitude on Clause 29, if they now said, "We will accept this Amendment," and were to cut out the Clause, we should be getting something we should not like.

There is a point I want to make leading up to the Amendment I have down later. What Section 12 of the Finance Act of 1924 did was to lay down not merely for the country apart from London, but for the whole of the country the principle that the duty on any excise licence charged by reference to the annual value should be based upon the Income Tax value. It operated differently in the country from how it operated in London. In London the Income Tax value was fixed under the Act of 1869, and appeals were allowed to the special sessions and the general sessions; but in the rest of the country appeals lay to the Commissioners of Customs and Excise and the general commissioners of Income Tax. But there was one exception created in that Section. Prima facie the Income Tax value was the rental value, and what Sub-section (2), the one that is incorporated in this Clause, did was this. It said, "It may very well be that the authorities have taken as the value a rental value which is really unfair"; and in that one event, and in that one event only, the licence holder had a special appeal. He could appeal to the Commissioners of Customs and Excise to adopt a different value for assessing his Excise Duty than the value taken for Income Tax purposes. The Income Tax valuation remained but he was not bound by it in this particular case if he could get the Commissioners to say, "It is quite true that it is the value taken as the basis of assessment for Income Tax, but it is excessive, and for the purpose of calculating your Excise Duty we are going to re-value on a fairer basis." That right was given to him, and when by Clause 29 we say the licence holder is to pass out of the scope of the Act of 1869 we ought to put him on a level with the rest of the country. Unless we give him this special provision in Sub-section (2) we are going to put him in a worse position than other licence holders, and of course he protests that it would be unfair to do so. If we are going to interfere with the present position and put him in the position of other licence holders then as the Parliamentary Secretary says, logically we must give him the benefit of this Sub-section (2).

In Committee I ventured to point out that although we give him the benefit of Sub-section (2) we do not give him the benefit of Sub-section (3). Sub-section (2) give him the right of requiring the Commissioners of Customs and Excise to assess the annual value of the premises for the purpose of the duty, and Subsection (3) says that if he is dissatisfied with the annual value of the premises fixed by the Commissioners he can appeal to the General Commissioners of Income Tax. Unless we give him the benefit of Sub-section (3) as well as the benefit of Sub-section (2) we are not putting him in the same position as other licence holders throughout the country. I could have understood the argument that we did not need to incorporate Sub-section (2) as it might be implied.


Sub-Clause (3) of Clause 12 is for the whole country, including London, and therefore it is unnecessary to specify that it shall include London, because it would do so automatically.


The difficulty in my mind was that in Committee I understood the hon. Gentleman did agree with me that it would be wise to incorporate Sub-section (3). I can see a very interesting argument upon it. The argument which he would put up would be to say, "Is it not implied?" I am not sure that a very good answer would not be this. "After all, you have only incorporated Sub-section (2). If it was really meant that there was to be an appeal from decisions given in Subsection (2) why do you not also incorporate Sub-section (3)?" I do not want to be dogmatic about it, but those who have had much to do with construing these rather abstruse Sections a court of law know that a worried tribunal says, "Why could not Parliament say what it meant? Why has it left it in doubt? Would it not have been very easy to put after the (2) 'and (3)'?" if we are told that the opinion of the Government represents the considered opinion of the authorities I will not trouble to move my Amendment. At any rate I have this assurance, that so far as intention counts for anything—though, of course, it does not count for anything—it is intended that Sub-section (3) is to apply to cases arising under Sub-section (2). If that is the result of the debate, then I shall not move my Amendment, and, so long as Clause 29 stands, it is all to the good.


As far as I can gather, this Clause is a concession to certain individuals in London. Could the Financial Secretary tell us the extent of this concession?


This proposal simply gives the justice which these people are entitled to under Clause 29. With regard to the point raised by the hon. and learned Member for Altrincham (Mr. Atkinson), may I explain that Subsection (3) will apply to London the moment you have done away with the limitation in Sub-section (2) which excludes London. In that case Sub-section (3) will apply to London.

Amendment negatived.