§ Having examined these statements, we have come to the conclusion that they are justified by the facts and call for redress, and immediate redress. We do not propose to adopt the whole of the Reports of those Committees. We have exercised our judgment upon them. In some respects we propose to adopt the Report of the Minority, and in others the Report of the Majority, but we intend to proceed with the consideration of the problem of local taxation upon that foundation and recognising that we are doing our best to redress all these grievances alike. To attempt to deal with one or more without at the same time grappling with the others, might very well create greater evils than those we have gone out to redress.
§ What are the main principles upon which we intend to proceed in endeavouring to redress existing anomalies, and to relieve the municipalities from their present desperate plight? We have come to the conclusion that further aid, and sub- 69 stantial aid, from the Exchequer was inevitable and imperative to save the municipalities from bankruptcy. We must spread the area of contribution, and, above all, ease certain changes which we propose to make in local taxation. We consider mere subsidies, however liberal in themselves, unless accompanied by certain definite and urgent safeguards and conditions, would be indefensible and pernicious. In the first place, as an essential part of a scheme for further State aid, we are of opinion that a national system of valuation for local taxation must be set up—a system which is fair and more equitable and more impartial between classes and localities and persons than the present. We propose that this valuation should be the valuation of the real value of the property, separating the sites from the improvements; and, to prevent any misconception, let me say there is no intention to transfer the whole burden from the composite subject to the site. But we do intend that the taxation of site value shall henceforth form an integral part of the system of local taxation. That was what I meant by broadening the basis of taxation. I was very glad to hear that cheered by hon. Members opposite. Last year in the discussion, I think, on the Finance Bill, I announced the intention of the Government of adapting the valuation of the Finance Act of 1909–10 for the purpose of local taxation, and I pointed out then that it would have the advantage of being a valuation free from local and personal bias. That does not mean that we eliminate the locality out of the preparation of the valuation.
§ It has the advantage of obtaining the capital value of the whole subject, separating sites and improvements, and also the advantage of getting the real annual value as well as the capital value, so that it will be adapted to the present method of taxation upon the annual value of the composite subject, as well as taxation upon the basis of the capital value of the site. It would not be a very considerable task to adapt the present valuation to a system of local taxation. The machinery has been set up, the staff has been organised; a very able staff in every centre. The vast majority of the hereditaments of this country have already been surveyed and inspected, all the necessary information with regard to them has been collected, and boundaries have been ascertained for the first time. The annual 70 values and the total values have been assessed, and in urban sites the value of the improvements has been ascertained. It will be necessary with regard to agricultural land to ascertain the value of the agricultural improvements, as otherwise it would be unfair to the agricultural interests. And, after this is completed, it will be a more equitable valuation really than any that is now existing in this country. It is proposed that the additional relief which will go to the ratepayer as the result of the Grants we propose, should go in reduction of the rates upon the improvements. I will take a very simple illustration of what I mean. It means that the more the improvements upon the land the greater the relief, and the less improvement upon the land the less the relief. I will take three very simple cases of an annual value of £50 per year each. In one case the land value is £10, and the improvements are worth £40. In the second case the land value is £25, and the improvements £25; and in the third case the land value is £50, and no improvement. Let us assume that the reduction which we propose would be equal to a 1s. rate on improvements; what would be the result in those three cases? The first case would receive a relief of £2 off the rates, because the improvements were £40.
§ Mr. PRETYMANDoes that mean all improvements that have ever been made, or improvements after the passing of this Act?
§ Mr. LLOYD GEORGEOh, no!—it is the improvements which have been made upon the property, and certainly everything but the site; and in a farm it would include, not merely buildings, but drainage and everything that has been done to bring the land to cultivation.
§ Mr. WEDGWOODMay I ask for how long back?
§ Mr. LLOYD GEORGEI hope it will not be necessary to go into that. But I must say that the interruption of the hon. Gentleman opposite (Mr. Pretyman) is a very important one, and I am glad he elicited the answer I have given. We have some very remarkable examples. Landowners have been good enough to assist us by allowing us to make a valuation of their estates on this basis, and it shows that the proportion of improvements upon agricultural land is extraordinarily high. It also shows—and I think this is very important—that there 71 are cases where landowners, sometimes, perhaps, from lack of capital, and sometimes for other purposes which ought not to be encouraged, have completely neglected the land and have not spent money upon it. The relief that they will get will be very small; but, taking the landowners who spend very heavily upon the land, the relief will be very substantial. That is the advantage, I think, of this system, under which you give the relief to the landowner in proportion to the amount of money he has spent upon his property.
§ Mr. CHAPLINIs it intended to include reclamation of land, and things of that kind, upon which millions have been spent?
§ Mr. LLOYD GEORGEThe reclamation of land is an improvement, of course—an enormous improvement.
§ Mr. CHAPLINThat is all included?
§ Mr. LLOYD GEORGEOh, yes, subject, of course, to some question of time limit, otherwise we might go back to the time of the Romans. But I was giving three cases. In the first case, where the improvements are high, representing £40 out of £50, the relief on the shilling basis would be £2. In the second case, where the improvements on the land are of equal value, the relief would be 25s. In the third case, where there are no improvements, not a penny of relief would be given. This will be a guarantee that the relief will not go to the owner of the site as such. But where the owner of the site has spent money upon it he will get relief. In fact, it represents a percentage of deduction upon improvements. It is more or less the system which is working uncommonly well in British Columbia, where, I believe, there is a deduction in respect of improvements.
Now I come to the next principle: we mean to distribute the relief in such a way as to give the greatest proportion of help to the most hardly-pressed areas—
§ Mr. WEDGWOODHear, hear!
§ Mr. LLOYD GEORGEI can hear a cheer from a hard-pressed area. The greatest proportion of help will be given to the most hard-pressed areas where the services are heavy and the rateable value is low. Not merely the poorer districts, but the districts which have shown the greatest public spirit in carrying out their municipal duties will receive the largest 72 share of the relief. The fourth principle is that instead of being fixed Grants, the Grants must bear a direct relation to the expenditure. The present system of assigned revenues will be abolished—and that, of course, will include the Agricultural Rates Grant. But that does not restore the old basis of assessment of farms; the farmer will still pay upon the basis of half of, I think it is, the poor rate. The last and most important stipulation is that the central Government will insist on an efficient service as a condition of the receipt of these Grants.