§ MR. SAUNDERS (Hull, East)
, in rising to move—That no system of taxation can be equitable unless a direct assessment be imposed on the owners of Ground Rents, and on the owners of increased values imparted to land by building operations, or other improvements, as recommended by the Royal Commission on the Housing of the Working Classes,said: Mr. Speaker, since I gave Notice of this Motion it has come to my knowledge that a large number of hon. Members are interested in the subject, and I sincerely wish that it had devolved upon some hon. Member of more experience and ability than I possess to bring it under the attention of the House. Relying, however, upon the kind indulgence of hon. Members, I will do my best to make my observations as clear and as concise as possible. I think it will be admitted that the time is opportune for the discussion of this subject. Local Government is a subject which is about to be considered—with regard to the Metropolis the Coal Duties are about to expire, and it will be necessary to determine whether they should be renewed, or some less oppressive mode of taxation be introduced. With regard to the National Exchequer, we are informed that the Expenditure having been very large it will be necessary to devise some means for supplementing the present taxation. A Royal Commission, which has recently made a Report upon the Housing of the Poor, says—Your Majesty's Commissioners are of opinion that until some reform is introduced which shall secure contribution to local expenditure from other sources of income received by residents in the locality, in addition to the present rateable property, no great progress can be made in local improvements.There cannot be a doubt that the present mode of assessment for local improvement leads, in a large degree, to a paralysis of industry. That has been referred to in the extract from the Report of the Royal Commissioners which I have read; and I may illustrate the fact more precisely by a reference to the case of Dublin. In that city, as in many other places, a large scheme of drainage is necessary in order to preserve the health of the locality. At present a large amount of disease and death results from the absence of that system of 1000 drainage. It is estimated that £400,000 would be required to put the system into good order. The expenditure of such a sum of money would add to the value of property in Dublin to a much greater extent than the amount of the expenditure. Abundance of capital awaits employment; numbers of labourers are desirous of work; and why, therefore, should a difficulty arise in carrying out so desirable an object? The difficulty comes in this way—that one class of people would have to pay the cost, while another class of people would benefit by the expenditure. The ground landlords of the City of Dublin will not be called upon to make any contributions to the improvement; and, therefore, the cost of doing it falls upon the working classes and the tradesmen, who have merely a temporary interest in the houses they occupy, and the whole advantage comes to those who contribute nothing to the rates. In one instance, a landlord in Dublin receives from land something like £20,000 per annum, in the shape of ground rents, and yet he will not be called upon to contribute a single farthing to the expense of this main drainage, if it is decided to carry it out. I have been surprised, in the investigation I have made, to find to what an immense extent the cost of houses in London has been increased by the enormous sums which are paid for ground rents. Ground rent generally begins, as we know, in the suburbs, by the builder desiring to erect houses upon a field, which the landlord graciously permits him to occupy, if he consents to pay something like five, or, perhaps, 10 times the amount of the previous rent; in such cases I believe it will be found that, on the average, the ground rent is about 15 per cent of the total house rent. As we approach the centre of London the proportion increases with very great rapidity; and I find within the City itself the ground rents are, in some cases, three or four times as much as the house rent. In one instance which has lately come under my notice, a ground rent paid for a small plot of land, within a stone's throw of the Royal Exchange, is £1,300 per annum. The total expenditure which could be made on that plot of land with advantage did not exceed £7,500. The position, therefore, is this—that the expenditure of £7,500 is charged with a ground rent of 1001 £1,300 a-year; in addition, the rates amount to £450; thus there is an artificial burden of £1,750 per annum. I think it would be difficult to find a corresponding instance of such an enormous burden being placed upon industry; and it is no wonder that the Royal Commissioners inform us that improvements cannot be carried on unless this system be altered. A lease which will fall in in the course of a few days in the West End will, I am told, increase the income of the present landlord from £40 per annum to £8,000 per annum. The evil, therefore, is practically increasing, because the ground rents are coming into fewer and fewer hands as the leases fall in; and consequently the arrangement becomes more and more burdensome, and more and more disturbing of that condition of society which we should like to see prevail. It increases the depression of the poor and adds to the wealth of the rich. I will not trouble the House with any details, and unfortunately there are no statistics — official statistics — available which will enable me to state the amounts of ground rents throughout the Metropolis as compared with the total rents. The rating of the Metropolis amounts to £32,000,000 per annum, and I have taken some pains to ascertain what proportion of ground rent is paid in various localities. The result of the investigation convinces me that something like one-half of this £32,000,000 represents ground rent—£16,000,000 per annum represent, I believe, the value of ground rents in the Metropolitan area. That amounts to £16 per annum per family as a burden of taxation for the benefit of a small number of landowners. I know it may be said that the working classes pay but a small proportion of this taxation. But such is not a correct representation of the case. The fact is that the working classes bear an undue proportion of this burden. We must not measure it by what is taken from the working classes. We must measure it by what the working classes are prevented from obtaining; the enormously repressive influence upon industry which this system entails subjects the working classes to a severe competition, which altogether prevents them from realizing those earnings and those wages which they might obtain if industry were not so bur- 1002 dened and restricted. It is, as I said, what they are deprived of we have to consider more than what they have actually to pay. Now, Sir, various measures are proposed for lessening these evils, which have long since been recognized. We have a Leasehold Enfranchisement Bill and also a Town Holdings Bill, both excellent measures in their way, and both necessary, I believe, for the due adjustment of the difficulties we are considering. But unless these measures are accompanied by a readjustment of taxation the evils of which we complain cannot be removed. Even if you make the occupier of the house the freeholder of the ground rent the difficulty still remains, because the burden of the cost of the land under the present system goes with it. I think these points are always better illustrated by reference to facts, and I would mention what has happened in a case in East Hull, where the opening of the Hull and Barnsley Railway and Dock has added very much to the value of the land, and made it necessary to build working-class dwellings in the neighbourhood of the dock. This land, which a short time ago was worth only £100 per acre, has now been sold for building purposes at the rate of £3,000 per acre; and, of course, the builder has to add that cost to the rent which he extracts and must obtain from the working classes. The working man, therefore, pays that amount; and it is almost as burdensome in the shape of the freehold as in the shape of ground rent, although by having a freehold he may be able to prevent some future evil. We have recently had brought before us the case where the construction of a harbour has increased the value of rent from £10 per acre to £1,000 per acre, and it seems reasonable that these values, which are so rapidly increased by the exercise of industry on the part of others, should be made to contribute to taxation. Fortunately I am not dependent on any opinion I might express or any argument which I might use, for this case has been dealt with most ably by a Royal Commission, who have expressed their views as follows. They say—Land available for building in the neighbourhood of our populous centres, though its capital value is very great, is probably producing only a small yearly return until it is let for building. The owners of this land are rated, not in relation to the real value, but to the 1003 actual annual income. They can thus afford to keep their land out of the market, and to part with only small quantities, so as to raise the price beyond the natural monopoly price which the land would command by its advantages of position. Meantime, the general expenditure of the town on improvements is increasing the value of their property. If this land were rated at, say, 4 per cent on its selling value, the owners would have a more direct incentive to part with it to those who are desirous of building, and a twofold advantage would result to the community. First, all the valuable property would contribute to the rates, and thus the burden on the occupier would be diminished by the increase in the rateable property. Secondly, the owners of the building land would be forced to offer their land for sale, and thus their competition with one another would bring down the price of building land, and so diminish the tax in the shape of ground rent, or price paid for land, which is now levied on urban enter-prize by the adjacent landowners; a tax, be it remembered, which is no recompense for any industry or expenditure on their part, but is the natural result of the industry and activity of the townspeople themselves. Your Majesty's Commissioners would recommend that these matters should be included in legislation when the law of rating comes to be dealt with by Parliament.It is a very common contention in reference to ground rents that a bargain has been made between the landowner and the builder by which the builder on taking the land is to pay all the rates; and it is said that the landowner lets his laud cheaper than he would otherwise do in consequence of that condition. Exactly the reverse is the fact, as the Commissioners clearly point out. Being altogether relieved from the burden of taxation on the enormous values which arise from the exercise of the industry of other people, the landowners are enabled to demand the extreme prices they obtain. If a man were called upon to contribute to the local taxation as the value of the property rose—and I would say also to Imperial taxation—instead of getting a higher price he would be content to obtain a much lower price. It is because the landowners can hold their land without taxation under the present unjust conditions that they are enabled to impose on the community these tremendous burdens in the shape of ground rents. Now, it may be very fairly asked, What is the proposal that underlies my Motion? If I correctly understand the disposition of this House, they are not very much inclined to be influenced by abstract principles; and legislation is governed, and, perhaps, properly governed, rather by average 1004 opinion than by abstract ideas. At the same time, it is a fair question what principle underlies my Motion, and it is clearly and distinctly this—that the value of property imparted by the community should be taxed in preference to taxing the value created by the industry of individuals. I am quite aware that in reference to land extravagant propositions are made, and, no doubt, extravagant propositions will continue to be made; but I think no proposition could be so extravagant as that we should allow things to remain as they are. I know perfectly well that in making the proposed change difficulties and hardships will arise. It sometimes happens that it is easier for the moment to continue upon a wrong course than it is to correct it. When the Irishman fell down the ladder, he said it was not the fall that had hurt him, but the stop which he got; and so it frequently happens that a continuance in a wrong course is much easier for a time than to put a stop to the evils it brings about. There must be occasional instances of injustice; but does no injustice arise from the present system? Is there no hardship to the working man? No hardship to the tradesman? Only this morning I had a case brought under my notice, in which a gentleman, being obliged to extend his business premises, and to add very much to the building, was called upon to pay, on the expiration of his lease, instead of £350 per annum, a rent of £950 per annum; and it is not always within the option of a man as to whether he makes additions to his building or not. Necessity often compels him either to relinquish his business or to make additions for which he has no legal claim on his landlord, and in that way landlords obtain enormous sums, altogether beyond those which we discover in any Returns. Then, again, they are continually receiving fines for renewal of leases; and it is not an uncommon thing for a landlord to take over a large sum on account of repairs, and then to leave the repairs to be done by the incoming tenant; so that, as a matter of fact, the landlords actually receive a very much larger amount than appears in any shape or form upon the record. I should like to mention an instance in reference to these improving values to which the Royal Commissioners have referred. The point is one of very great 1005 importance in connection with this question. Within four miles of this building, at Herne Hill Station, there is an estate of 100 acres, which, I find, has improved in value during the last 25 years at least £75,000. It is worth now twice as much as it was then, because a railway has been opened alongside of it, and the neighbourhood has been developed. The owner has done nothing whatever, nor has he any intention of doing anything. He excludes everybody from these lawns, or fields, and even the rate-collector is not allowed to enter his gates unless he has a written order. I have passed that field nearly every day during the last 12 years, and I have never seen a single soul upon it. The pale children peer through the railings when the grass is green, and gaze wistfully upon it; no tiny hands ever gathered buttercups from those fields; the cowslips which grow there perish where they grow. Under what circumstances is that man allowed to make a desert in the midst of the Metropolis? Why, Sir, he has a profit of £3,000 a-year in doing so. That property has increased in value, as I have said, at the rate of £3,000 a-year. I applied to the rate-collector to find out what contribution he makes towards the rates, and I find that the proprietor pays £76 per annum out of his £3,000 profit towards the rates. Now, why is he allowed to make that profit? Why is he allowed to exclude the whole world, and to do so on terms entirely different from those imposed upon other people? Supposing that ground were occupied by labourers' cottages or tradesmen's houses, the tiny gardens and small courts they would occupy would be charged upon the rates £2,500 a-year instead of £76. Why should that differ-once arise? In politics patience is not a virtue, and I hold that we have no right to submit to this state of things, nor is it likely that as the public become more enlightened and intelligent—as education is extended—it will be submitted to with that degree of patience with which it has been borne hitherto. The Prime Minister has spoken of this patience as ignorant patience, and it is a correct description of it. With enlightenment that patience will no longer continue. We have therefore to discover some method by which we can correct these evils, and we find very great difficulty in 1006 all the suggestions which are arranged or intended for their cure—the cure of these evils of poverty and want which stare us in the face on every hand. Let us see if something cannot be done to prevent them. I believe that if that £16,000,000 which is now taken from the industrious classes and given to the idle classes were properly subjected to taxation we should find a recovery of industry and an improvement in the condition of the people far beyond our most sanguine expectations. My proposition is simply this—that we should make a separate valuation and assessment of land and buildings. The two things exist, and the value of each arises under totally different circumstances. The value of the land arises from the enter-prize of the community, by the industry of the community and the progress of the population. The value of the house arises from the labour which may be exercised upon it, by adding brick to brick and plank to plank; and it is my opinion that we should tax chiefly that value which arises independently of the industry of the owner. Instead of that we tax exclusively the value which the builder imparts, and to the creation of which the owner, who gets the ground rent, usually contributes nothing whatever. I know it is asserted that that value bears rates and taxes; but the owner does not pay rates or taxes, with the exception of the Income Tax. If an illustration were wanted, it would be found in the fact that if a house is destroyed—if a house is burnt down—the rates and taxes cease, and yet the ground rent goes on. The ground landlord gets his payment under all circumstances, and yet the taxation depends entirely on the building. That is a state of things which I think ought to be altered. The remedy I propose is one which cannot be called a violent remedy, and it would remain with practical politicians to consider how it should be introduced. It would be unreasonable for me to weary the House with suggestions in the shape of details. We must first of all recognize the necessity of applying the principle. The introduction of this principle would, I believe, very speedily bring about that amelioration in the condition of the people which we all so much desire. I am quite sure it is not necessary for me to appeal to the feelings of the House by narrating the 1007 sufferings of the working classes in the Metropolis and elsewhere, because we are all more or less acquainted with those sufferings, and have all of us a sincere desire to remove them. We are desirous, if possible, to discover some method by which they may be removed without the dislocation and disturbance of society. I believe the method which I have suggested may be as gentle as the sunrise and as beneficent in its results. I beg to move the Resolution of which I have given Notice.
§ MR. MOULTON (Clapham)
, in rising to second the Motion, said, it was much more far-reaching in its object than anything contemplated by the Royal Commission on the Housing of the Working Classes. The principle he wished to press upon the House was one that went to the root of the incidence of local taxation, and must, he thought, commend itself to the sense of fairness and love of justice of all who considered the condition of our town population. He traced the growth of the evil to the tendency of population to leave the country districts and become congested in the towns. No one could study the statistics on the subject without coming to the conclusion that the rise in value caused by the congestion of population was many times as great as the increased expenses necessitated by that population. In other words, the owners of the land in towns reaped advantages far greater than any expenses to which they were put in order to render tolerable the life of the community in those towns. The conclusion followed that that rise of value which was solely due to the presence of the population on such land should bear a fair share and a large share of the necessary expenses of the community in respect of their towns. He submitted that the present state of bur large towns was only paralleled by the condition of a farm in Ireland under the worst possible tenure, where the landlord refused to do one single atom of the improvements, where the tenant had to do them all, and had no fixity of tenure. What they proposed was a very simple and, he thought, practicable remedy. They maintained that the value of any property in a town was due to two sources—it was due partly to increased local value given to the land on which the houses were built, and partly to the value of the houses. He contended 1008 that it was fair that a percentage of the increased value given to the land by the population itself should be taken by the locality in order to pay the expenses of the community necessary to make the town habitable and comfortable. The enormous streets made through London at the cost of many millions that had been paid for by the loans that still pressed upon the City; the cost of artizans' dwellings rendered necessary by the very fact that the rents were so high that the artizans could not purchase the land to build their houses upon—aye, and even such expenses as lighting and water supply, and others which tended to make it possible to live in the town—he maintained that all those might fairly be taken out of the increased value given to the land by the presence of the town itself. It was necessary that there should be some simple method of collecting these taxes, and the system of separate assessment of land and houses afforded the means. The rate on the land would be paid by the occupier and deducted by him from his rent. There were several objections which would probably be put forward as to this proposal. In the first place, it might be objected that it was not justice. He maintained that not only was it perfectly just, but that it was the only just method of dealing with the question. Then there was the question of existing contracts. It was true that the proposal involved an interference with freedom of contract. Up to this time it had not been illegal to make a covenant that all rates and taxes should be paid by the occupier, except with regard to the landlord's property tax for Imperial taxation. He maintained that it was necessary to apply the same principle to these land taxes as was adopted in the case of this last-named tax. It was of no use passing an Act of Parliament which could be rendered futile by a clause in a deed, and the power of compelling a landlord to pay the taxation should be made absolutely inalienable. Although such a covenant between the landlord and the tenant in the future would be invalid, they could not render it invalid in the past; but there was no reason why any land in the future should be settled on any other principle; the only difference would be that in any tenancy settled after the passing of the Act the tenant would be able to deduct the tax 1009 from his rent. In that way the landlord would be made to pay the tax out of the rent which he would receive for the land. He was aware that even this proposition had been disputed, and it had been said that even supposing that the principle were enforced the landlord would recoup himself by overcharging the tenant, and that, therefore, the thing would come to the same as at present. That was not so; there might be a readjustment of the present rents; but if the landlord were thus to be made to pay directly, it was impossible that any increase of taxation could be got out of the pockets of his tenants. Another objection was upon the opposite line—namely, that the present state of things worked very well, and that the landlord ultimately paid the taxation. He had thought over this point very carefully, and it seemed to him to derive its origin from that happy sort of confidence that many people had that things shaped themselves all right in this world, and that ultimately the person who ought to pay did pay. But that was only a pleasant delusion. They should consider the case of the great ground landlords of London, who, during all the time that such vast improvements had been made in London, had been receiving undiminished the ground rents for which they had stipulated in the beginning. It might be said that these improvements were of benefit to the occupiers of houses themselves; but when their leases fell in they would not in any way be recouped for the expenditure. The money which was being paid for the permanent improvement of London had come out of the pockets of the present occupiers, and in no way out of the pockets of the present ground landlords. The argument was sometimes brought forward that, on the whole, under the present incidence of local taxation, the rich paid their share and the poor paid theirs, inasmuch as the amount of a man's rent afforded a rough but practical criterion of his wealth. There was no more cruel fallacy than this with regard to tradesmen. The position of a shop was part of a tradesman's trade-plant; it was necessary for him to have his shop in a place which customers would be likely to frequent; and it was, therefore, grossly unfair to take the rent of his shop as a measure of his wealth. But this present system 1010 of taxation also had the effect of stopping expenditure of a useful nature. This had been shown in the late School Board election. No money was bettor spent than that spent upon education; but one could not help feeling a deep sympathy with those who had said that London was crushed with rates, and that however good education was they were unable to pay the rate required for it, because they, as occupiers, were bearing on their shoulders the whole weight of taxation. The present system, again, tended to leave the land of towns in the hands of selfish non-resident landowners, who had nothing to do with the locality and no immediate interest in its improvement, and who only looked forward to a future when they would get swollen rent-rolls for which they had done nothing. Surely land in the towns ought to be held by people in real touch with the wants of the community. He was quite willing to give those ground landlords full representation in the expenditure of the rates; and he thought that as soon as they had got out of their present unwholesome frame of mind and their habit of thinking that others were to work and expend for their benefit they would be quite willing to make their fair contributions and thus assist in improving their properties. There was a strong feeling in the country that the present system was most unjust. It had lately been shown, from the Returns of Imperial Taxation, that the Irish people were unduly taxed; but that was not because they were Irish, but because they were poor, and poor in England were also overtaxed in precisely the same way. But this inequality was a matter only to be proved by the careful study of statistics. It was otherwise in the case of ground rents. Working men might find it difficult to understand the exact effects of direct as compared with indirect taxation; but they could see that millions were annually going out of London untaxed, and that those who were reaping the greatest benefits from the improvements in London were just those who paid nothing towards them.
Motion made, and Question proposed,
That no system of taxation can be equitable unless a direct assessment be imposed on the owners of Ground Rents, and on the owners of increased values imparted to land by building operations, or other improvements, as recom-
mended by the Royal Commission on the Housing of the Working Classes."—(Mr. Saunders.)
§ MR. ADDISON (Ashton - under -Lyne)
said, he could not discover from the speeches of the hon. Members for Hull (Mr. Saunders) and for Clapham (Mr. Moulton) the real meaning of what they actually wanted — whether they complained of the enormous value of land in the great towns as a grievance, or of the system of apportionment of taxation between owners and occupiers, or whether they desired to relieve the occupier altogether at the expense of the owner. He (Mr. Addison) thought they could not mean the last of these, because the revenue to be derived under the changes they proposed were to be enormously increased. There was only one way in which the revenue from local taxation could be increased, and that was by the taxation of vacant land which was kept in hand by the owner in order to increase its value; and in that he thought they might all agree. The Motion, however, dealt with the land and the houses combined, and he maintained that every penny received as ground rent paid its full share of local taxation, and it came to a mere matter of convenience of collection or apportionment. But there would be an enormous difficulty in assessing these values. To attempt to apportion all the values between the different owners would be to work out as difficult a sum as could possibly be found. It was the same thing as to collection. One of the greatest advantages in taxation was that the rates should be collected easily and simply. Then there was some extraordinary grievance of the working man referred to. It was really irritating to hon. Members on his side of the House, who were really the friends of the working man, to listen to the assumption of hon. Members opposite that they were doing any good to the working man by this wild, unjust, and impracticable scheme. Not only had the working man been brought into this question, but the hon. Members who proposed and seconded this Resolution actually appealed to hon. Members from Ireland, that in some mysterious way this question of the apportionment of ground rents affected them. The remarks of the hon. Member for Hull (Mr. Saunders) with regard to apportionment of 1012 taxation were merely an oratorical device to support a proposition which was practically unsound. He was quite sure that if in any mysterious way hon. Members from Ireland were affected they were very well able to take care of themselves; but not one of them had yet brought forward a Motion for the taxation of ground rents in the City of Dublin and its suburbs. The fact was that the entire Motion seemed based upon a misconception—namely, that the full taxes were not paid upon the product of the land which was covered with houses. He thought they were fairly and properly arranged under the present system.
§ MR. M'CULLOCH (Glasgow, St. Rollox)
said, the hon. Member who had just sat down (Mr. Addison) spoke as if the subject resolved itself into a question of the incidence of taxation. They had heard a good deal about the incidence of taxation from the landlords on the other side, whose champion the hon. and learned Member had made himself. What hon. Gentlemen on that side of the House wanted was an exchange, not from industry to land, but from land to industry. There he differed very materially from the hon. and learned Gentleman, and he was bound to say the intelligent working men of Scotland knew well the incidence of taxation; they knew that as long as the owner of feu-duties escaped taxation their industries within the cities would necessarily be more heavily taxed. He was surprised to hear economists say that the law of supply and demand could thoroughly rule rent and taxation of land, because, first of all, they had a narrow and fixed area in the land, and while a further monopoly had been created by handing it over to a few, they found the remaining population every day expanding, and feeling every day more and more the pressure of that land monopoly. They need not tell him that it did not affect the people of London or the people of Glasgow. He could give them the instance of one hon. Member who sat on the other side of the House who drew £50,000 a-year in feu-duties from the City of Glasgow, and who did not contribute one penny to the rates. Did they mean to say the working men of Glasgow did not know enough of political economy to decide that the less this feu-owner paid the more they had to pay? Was not that 1013 a proposition which the simplest workman could understand? He asked what was the true feature for taxation? It was not the works of man's hands, nor the necessaries, nor even the luxuries of life; but land itself was, to his mind, a far more feasible feature for taxation, because it was not due to man's efforts, but to the Creator's. He believed it was urged that this was a matter of free contract, and he admitted that the over-lord and the owner or occupier who bought might make a contract; but they could not anticipate the taxation which the Legislature could impose upon any class or description of property. Consequently any such contract must of necessity be one that would not hold, because it did not take into consideration the legislation which imposed all taxation, and thus that freedom of contract could at any time be attacked. He could give one instance when it was so dealt with by that House. That was when the school rate came into operation in Scotland. Many holders of land were in the middle of their leases, and they asked how this tax could affect them. The Legislature said—"We tax you or your holding, independent of any contract you may have had in the past." Hon. Members asked why people congregated in the towns? They come to towns to take advantage of the division of labour, the co-operation of capital, and the application of the invention and discovery with which the 19th century teemed. And what was their reward? They were more heavily taxed. Their little bits of land on which their houses stood were burdened by taxation, until the population became congested in the centre of the towns. Those who held land outside took advantage of the pressure within, and held on by the land outside, because it would become more valuable. Thus the pressure was intensified; thus they required a Royal Commission to inquire into the housing of the poor. In his opinion there was not the slightest logical objection to the taxation of these grounds rents, and he could assure hon. Members that the working men had their eye upon this as one of the sources whereby not only Imperial but the local Exchequer could be relieved. The hon. and learned Gentleman (Mr. Addison), who last spoke, stated that the true friends of the working men were on the Conservative 1014 side of the House; but he would ask, if that were so, how was it that the 12 Members who had been returned to represent the interests of labour sat on the Ministerial side, and why was he (Mr. M'Culloch) himself there representing an industrial division of Glasgow? It was because he knew something of the Land Question, how it pressed on the working men, and because he was not afraid to attack these feu-duties and other injustices under which the industrial classes of the City of Glasgow were at the present moment borne down. In this, as in many other aspects of the Land Question, they had to begin, and they could begin, at no better place than the ground rents; and when they had thoroughly studied the Land Question, and brought their wisdom to bear upon taxation, then he believed, and not till then, would industry and labour have their true reward.
§ MR. PICKERSGILL (Bethnal Green, S.W.)
said, that he supported the Motion, not on the ground that the Local Authority lost anything, but because the rates were most unjustly divided between the owners and occupiers. It had been suggested that the ground landlord and the occupier were able to make an arrangement among themselves. What was meant, he supposed, was that the exemption of the ground rent from rates was taken into account in fixing the ground rent. But the net result of the evidence taken by the Committee of 1870 was that the rates actually existing when the lease began were taken into account in fixing the ground rent, but that there was no margin left for any increase of rent. The great hardship of the case, and that which had occasioned the present outcry in a large degree, was the enormous increase of rates which had taken place within a comparatively recent period. But here it was important to distinguish between rates which passed under the denomination of "non-remunerative"—that was, rates which went towards relieving the poor and supporting the police—and rates of a remunerative character, such as drainage rates and general improvement rates. It was only in this remunerative expenditure that the ground landlord was directly interested. If they compared the year 1841 with the year 1868 they had this result—that in 1841 the rate in the pound was 2s. 7d., 1015 and in 1868 it was 2s. 6¼d., showing a difference in favour of 1868. That meant that, with regard to the relief of the poor and other expenditure of a non-remunerative kind, the burden on the ratepayers was practically the same in 1868 as it was in 1841. But if they took into account the remunerative expenditure, and compared the two years he had mentioned, it would be found that there was a difference as against 1868 of 9d., which meant that the ratepayer in 1868 paid 9d. more in the pound for local taxation than the ratepayer in 1841. The point to which he wished to draw attention was that this difference of 9d. in the pound was mainly devoted to remunerative expenditure, which was to be met by the increasing value in property. That remunerative expenditure had gone on increasing since the year 1868 even to a larger extent than it did between 1841 and 1868. Having regard to the arrangements made between a ground landlord and his lessee, the latter bound himself to pay all taxation. But the rate for remunerative purposes was not really a tax at all. If, therefore, the remunerative rate was not in equity, whatever it might be in law, in the nature of a tax, then it did not fall within the covenant by which the lessee bound himself to pay all taxes. The principle that the ground landlord should pay at least a portion of the improvement rate had been admitted by our laws as being just; but the law did not, unfortunately, prevent him from contracting himself out of his liability in this respect. He contended that a fair share of the local taxation should be borne by the ground landlord. Under the existing arrangements a considerable portion of the burden fell upon the shoulders of the working classes. He should like to illustrate this by referring to the state of things in his own constituency. In Bethnal Green there were enormous blocks of model dwellings, reaching almost as high as Babel in the futile effort to escape from the rapacity of the ground landlord. Sir Sydney Waterlow had taken 819 cases of tenants who lived in these model dwellings, and had found that their average earnings were 28s. 8d. per week. The average rent of these tenants, he found, amounted to 5s. 8½d. per week, of which no less a sum than 8¾d. was local taxation. He wanted to impress upon the conscience 1016 of the House that there were thousands of his constituents, bread-winners, earning wages in many cases not more than 20s. per week, who were contributing 2½ per cent of their entire livelihood to local taxation. He submitted that there was no section of the community better able to bear the shifting of taxation than owners of ground rents such as the territorial magnates of London, who, in the language of Mr. Mill, had grown rich in their sleep. He quite agreed that it was not desirable that ground rents should accumulate in a few hands; and he wished to direct the attention of the House to the fact that the great Insurance Companies had of late years been buying up London ground rents at a very rapid rate, one to the great extent of £1,100,000. These Corporations had neither a soul to be saved nor a body to be kicked, and it was very undesirable that ground rents should accumulate in their possession, and that they should become the owners of the land we live in. He did not think it was consistent with public policy that owners of land should be able to contract themselves out of liability for local taxation for a period of 99 years or any other period, while they continued to draw an annual revenue in the shape of ground rents. He should vote for the Motion, because he believed it would strike a blow at the leasehold system of building. It seemed to him that, by exempting ground rents from direct taxation, the law did as much as it could to encourage the system of building leases, which he believed to be a most mischievous system. He urged all those who wished to secure the enfranchisement of leaseholds to support the Motion.
§ MR. PETER M'DONALD (Sligo, N.)
said, that he believed it would be well that some expression of opinion should be given upon this Motion from the Irish side of the House. In Ireland they felt even more keenly than did the hon. Member (Mr. Saunders) and his Friends the grievance which existed in regard to this matter. In introducing the Motion, the hon. Member (Mr. Saunders) had referred to the necessity which existed in Dublin for an extended system of main drainage. The difficulty which stood in the way of its being carried out was the very large sum necessary, which, it was stated, would be 1017 £400,000. Now, he (Mr. P. McDonald) was of opinion that the sum necessary would be nearer £500,000. It was also stated that though this main drainage was necessary, the Dublin Corporation were not in a position to carry it out, as it was only the so-called ratepayers—in other words, the occupiers—who were liable to pay the rates, while the landlords would have got off scot free. As a member of the Dublin Corporation, he might be permitted to explain to the House that this was only one of the difficulties. The area of taxation was limited to within the narrow ring of the canal which surrounded Dublin; and the outer districts, which would be still more benefited by the extended system of main drainage than even Dublin, would not have to pay one penny contribution to this much desired work. On the outside of Dublin, and immediately adjoining it, was a very large and important urban district called Rathmines. Those who resided there, although participating in all the benefits of Dublin, paid nothing whatever towards the rates of the city, and would pay nothing whatever towards the drainage of the city. There was another district, also, adjoining to which he wished to draw attention—the Pembroke Township. The hon. Gentleman had alluded to the justice of the ground landlords paying their share towards any improvement that might be made within their district or upon the estates they held. Now, he was personally aware that in that township very large drainage works had been directed to be carried out; but who would have to pay for them? Not the lord of the soil—the Earl of Pembroke—but actually the very persons who were building houses and residences on the land. He considered—and he was sure that many hon. Members opposite (the Radical Members) would agree with him—that this was a state of things which should be altered. This could not be denied, more especially when it was considered that the lord of the soil took all the advantages of the improvements at his disposal by enforcing exorbitant terms upon those building upon his property. The agent of the lord of the soil, Mr. Vernon, who was also one of the Land Commissioners, was Chairman of the Pembroke Local Township Board. In that capacity, as Chairman, he had a powerful voice in directing the im- 1018 provements to the township, all of which, as a matter of course, resulted in increased value being given to the land, increased rents being charged, and Mr. Vernon, of course, obtaining a largely increased amount from the percentage accorded him by the Earl of Pembroke for collecting the rents on the estate. He would like to tell the House how the predecessors of the Earl of Pembroke obtained this property, which brought in to the Earl of Pembroke £30,000 per annum, and for which he only paid the Corporation of Dublin £10 a-year. It was obtained under a lease granted by the old rotten Corporation, now, he was happy to say, replaced by a Corporation which was not purchasable. The lord of the soil invited the lessors, the members of the old Corporation, to go and dine with him. A draft of the lease was then read to them, and immediately after the reading dinner was announced, and all other business was stayed for the time being. After dinner, when of course it was not expected that the diners would be in a very clear state of mind for the transaction of business, another and a different lease was submitted to them, which they signed in ignorance of its real character. He did not state these facts simply on hearsay, as any hon. Member would find the whole matter embodied in the official Report submitted to the Corporation by their late law adviser, Mr. Morgan. This was the manner in which the citizens of Dublin had been defrauded of their property by the substitution of a spurious lease. There was another suburban district near Dublin known as Kingstown. He had been a member of the Kingstown Township Local Board. He might say that while a member of this Board he had done his best to oppose the consideration of certain main drainage works, but unsuccessfully. They might ask why he obstructed these works? The reason was that he saw the improvement would benefit the owners of property; but it would have to be paid for by those who built upon the lands. This he considered exceedingly unjust. If the owners of ground rents or lords of the soil had their property improved by the construction of such works, why should they not pay a certain due proportion in the shape of rates for the improvement of their 1019 estates? There was no reason why the entire amount of the taxes should be borne by the leaseholders and occupiers. He, therefore, quite agreed with the Mover of this Motion that the lords of the soil should be, in justice and equity, obliged by law to contribute a certain portion of the rates. Lord De Vesci and Lord Longford held property in Kingstown, where a large number of buildings had been erected on comparatively short leases. These leases were now expiring, and within 10 or 15 years they would fall in to the landlords, and all that had been expended would be confiscated. He denied the right of these ground landlords to rob the people in this way. He entirely agreed with the hon. Member who moved the Motion (Mr. Saunders) that such a thing had no justice or equity in it, and should be reversed by law. He believed that in London the same interest was felt in this question as was taken in it in Dublin. Great ground landlords, like the Duke of Westminster, the Duke of Norfolk, and others, were doing in London what Lord De Vesci and Lord Longford were doing in Kingstown. The law, therefore, in his opinion, should be changed, and the lords of the soil compelled to contribute a certain proportion to the local expenditure, and take their share in the payment of municipal rates.
§ MR. LAWSON (St. Pancras, W.)
said, he was of opinion that the Resolution was closely bound up with the question which he had taken up in place of his hon. Friend the Under Secretary of State for the Home Department (Mr. Broadhurst). It was also connected with the whole question of town dwellings; and he considered that it ought to be referred to the Committee which was to investigate the terms of occupation and the compensation for improvements in town holdings. His hon. Friend the Member for Hull (Mr. Saunders) had only asked for a juster distribution of fiscal burdens, and he had not shrunk from attacking the whole system, which was fraught with grave danger to the moral and material condition of the great urban populations of this country. In most of our industrial centres the system of leasing houses was mere legalized spoliation. It was known in no other country. From inquiries which had been made he was led to think that Sir John Wal- 1020 sham's opinion was open to doubt, and that even in France the system had no existence. In this country, at the expiration of a lease, the whole of the improvements and every penny spent by the tenant in adding to the comfort and the convenience of his holding went necessarily into the pockets of the ground landlords. Again, in London, it was the practice to mulct the tenant of the goodwill of his business. He knew of a tradesman in Bond Street who sunk the whole of his capital in a prosperous business which it was impossible for him to remove to another place, and the landlord, on the renewal of the lease, obliged him to rebuild, fined him £ 1,000, and doubled his rent. In effect, the landlord said—"I will blackmail you to the extent of your goodwill." In Regent Street a tradesman of older standing was lucky enough to own the house adjoining his place of business, and consequently he was able to resist successfully the attempt of his landlord to share his trade profits. Neither the landlord nor the ground landlord paid a single penny for the improvement of the neighbourhood in which their property lay. It was said that the lessee willingly took upon himself all the burdens which might in time be imposed; but hon. Members who used that argument forgot that of late years the rates had sprung "by leaps and bounds" beyond all possibility of forecast. The main drainage rate, the School Board rate, and the Fire Brigade rate had all been imposed without it being possible for the tenant in many cases to have foreseen, on entering into his contract, that he would have to meet those demands; and it should be borne in mind that the whole incidence of the rates had been on the occupier only. The evidence given before the Royal Commission on the Housing of the Poor pointed to the iniquities committed by the jerry builder and the middle-man; but he thought it was to be regretted that the vials of the wrath of the Commissioners should have been poured on those classes alone. They were only the outcome of a bad system. The men who ultimately benefited by the extortion of the middle-man, and who put into his pocket all the money spent by the ratepayer, was the ground landlord. He regretted that the Resolution of the hon. Member for Hull was not confined to the fact that ground rents were alto- 1021 gether exempted from local taxation. He thought that the two matters mentioned in his hon. Friend's Resolution were more or less distinct from each other. The London Vestries, which were not, as a rule, very go-ahead Bodies, had been forced to face the actual facts of things. In St. Pancras they had an instance of a borough which was entirely mapped out into great estates, and on one or two of those estates the rights of the landlord were exercised harshly and cruelly. One man was in possession of property in that parish, the annual rateable value of which amounted to £200,000. A century ago St. Pancras was a mere tract of fields, and hon. Members could realize the enormous difference when these fields were covered by 25,000 houses, and remembered that the whole of the improvements in the roads, drainage, and public works had been effected by the labour and the money of the occupying inhabitants. Yet the whole of this unearned increment was shortly to go into the pockets of the ground landlords, who probably went into the borough but once in their lives. The question would also be found to be a burning one in most of the great provincial towns. It was said that they wished to violate freedom of contract. He was willing to admit that, literally and formally, these people took upon themselves the obligation. By the terms of an ordinary covenant a tenant agreed to pay all charges existing or hereafter to be imposed, except landlords' Property Tax. He should like to know whether freedom of contract was anything better than a phrase when the whole land of a place was in the hands of one man? The would-be occupier had often no option, because the conditions of his life compelled him to live in one place; and, therefore, he had to take land on the terms which the ground landlord chose to exact. Leaseholders were grateful to the noble Lord the Member for Paddington (Lord Randolph Churchill) for his speech which he made on the second reading of a Bill in 1884, when the noble Lord declaimed against the bloated estates of the Whig Dukes, and said that the concentration of land in a few hands was a great cause of Communism and discontent. It was said that ground rents had become a frequent form of investment. Matters of taxation were settled by the balance of convenience; 1022 but it was impossible not to see that the balance of convenience had been all through on the side of the owner of ground rents. Those who said that tenants would in the end pay all rates forgot that the great increase of local rates had occurred within the last 30 years, and that no remissions of rents by ground landlords had been recorded. No ground landlord had paid his share of the School Board rates that had come into existence in 1870. It had been said that there ought to be an entire re-assessment; but the ground landlord might be called upon to make a return similar to that required from the tenant under the Valuation Act. There was nothing revolutionary or abnormal in saying that they ought to contribute, in proportion to the interest they had in the soil, towards local charges and local improvements by which their property was benefited. Trade and industry suffered from the present system, and it would continue to suffer so long as they continued to allow men to reap where they had not sown of the fruit of other men's labour. In the hope that the House might come to an unanimous conclusion, he submitted an Amendment that the question of imposing direct assessment upon ground rents be referred to the Select Committee on Town Holdings.
To leave out from the word "That" to the first word "on," in line 2, in order to insert the words "the question of imposing a direct assessment,"—(Mr. Lawson,)
§ Question proposed, "That the words proposed to be left out stand part of the Question."
§ THE CHANCELLOR OF THE EXCHEQUER (Sir WILLIAM HARCOURT) (Derby)
said, that they had had a most interesting debate upon an important subject. He did not think that he ever heard a question of equal difficulty more aptly and satisfactorily discussed. The speeches of the the Mover and the Seconder of the original Resolution were full of knowledge and of argument; and the House had heard with great satisfaction the contribution just made to the debate by one of its youngest Members (Mr. Lawson) in a speech of great ability and knowledge. He was not going to discuss the general subject at any length; but he rose for the purpose of support- 1023 ing the Amendment, which he knew would not be unacceptable to the Mover and Seconder of the original Resolution, They had established a strong primâ facie case for inquiry into the rating of ground rents, as distinct from what they had called house rents. They had contended that those who derived large benefits from great and populous communities should themselves contribute to the cost of promoting the well-being of those communities. No man of common sense or justice could deny that proposition. Some might assert that the ground landlord did contribute to the payments made by the tenants; but if it were true that the landlord did contribute—of which he had a doubt—it would be very much better that everybody should know it, and especially the tenants themselves; and it would be extremely advisable that the rate should be separated, so that they should have a separate rate upon the ground and another upon the house rent, and so the distinct liability might be clearly known. He could not see how people could contend that if a rate was settled upon a long lease of 60, 80, or 99 years, and that after that ground rent was settled, and during a greater part of the period—perhaps during half-a-century of it—the rates were immensely increased, that that increased rate did not fall upon the tenant, and was shared in any degree by the ground owner. Having said that much, however, he did not desire to pronounce a definite opinion upon the general question or the method of dealing with it. In truth, the matter really fell within the province of his right hon. Friend the President of the Local Government Board (Mr. Joseph Chamberlain), because it did, and must, form part of any plan which would have to be dealt with in a Bill on the subject of local government. The hon. Member for Hull (Mr. Saunders) did not want to commit himself to any plan of dealing with the question; he was more concerned to lay a foundation of general principle than to undertake the responsibility of recommending any particular scheme. That in itself was an argument in favour of the general question going into Committee. He hoped it would be a strong Committee, on which would be men competent to deal with questions of this character. They would then be able to discuss the whole question, and 1024 consider and take evidence upon the various schemes for meeting and dealing with it. Though he had heard that night very vehement and strong condemnation of ground rents, he thought the House should remember that there were some circumstances of convenience attached to the system. In parts of the North of England people did not like ground rents, and would not be satisfied without the freehold, or something like it; but in the South of England people had been willing to accept the responsibility of building houses on long leases. In the House the provision of house accommodation had been favoured by the possibility of builders—he spoke not of jerry builders, but of men who built reasonably good houses—only acquiring land upon terms which would enable them to build houses. There were many builders who would not be able to find the capital to buy land as well as to erect houses; and thus populations were accommodated by the ground-rent plan upon terms which were convenient to the commercial conditions of the builders. Therefore the argument was not entirely one way upon that subject. But all these were matters which he thought might be very fairly considered before a Committee. He could not, and should not, advise the House to arrive at the conclusion that the system of ground rents was one which ought to be absolutely and unconditionally abolished. He hoped that the House would be disposed to adopt the view of the hon. Member for St. Pancras (Mr. Lawson), and agree to refer this matter to the Committee already appointed to deal with a cognate subject.
§ MR. GREGORY (Sussex, East Grinstead)
I cannot help regarding this proposal as an indirect attack upon landed property. If the whole subject of the burdens upon real property were to be gone into, there would be no indisposition to meet the question on this side of the House; and if both personal and landed property are to be subjected to a fair treatment of taxation, I do not think that the landed interest will fare the worst of the two. With reference to the Motion immediately before the House, perhaps the House will allow me to point out what ground rents are and how they arise. They form the subject of an ordinary bargain—one man possesses 1025 landed property, and another man desires to build upon it; they enter into an agreement, and the one man parts with the possession and control of his property for the purpose of enabling another man to build upon it, who assumes absolute control and dominion over it, subject to the payment of a rent distributed over a certain number of years; he may be said, indeed, to pay a certain sum of money down, but for his convenience it is discounted into annual payments. Now that is what a ground rent is, and a ground rent is not subject to any contingencies. It is an exacted payment for absolute dominion over property extending over a term of years, on the condition that after the lapse of that number of years the whole of the property is to revert to the landowner. On entering into an agreement, the man who makes it contemplates all the conditions of it, and the man who contracts with the landowner for the building of a house and the payment of a ground rent knows perfectly well the number of years during which he will be required to pay that ground rent, pure and simple, and that he will also be liable to pay the rates and taxes during the period he has possession of the property. The man who builds also provides for similar contingencies if he sub-lets the house, and he contracts equally with the subtenant to reimburse him for the responsibilities he has incurred. This arrangement is a great convenience to a person building, because it saves him from having to pay down at once the full value of the land. The sum to be paid in the way of ground rent is to be paid free of all rates and taxes; and if any tax is to be levied in the future upon the ground rent agreed to be paid, the House may be sure that the landowner will take it into account in fixing the amount of the ground rent, and that eventually such tax will have to be paid by the tenant of the house. Nor is there any injustice in this. If a new drain be laid down, or water supplied, or cheaper gas, it is to the benefit of the immediate occupier of the house much more than to the benefit of the lessee, or of the ground landlord; and every ground landlord, or lessee under him, is perfectly aware that improvements of that kind, although they will benefit his property, will benefit to a much greater extent the occupying tenant. Ground rents are subject to 1026 Imperial taxation. They are subject to the Succession Duties, like all other property; and it is merely in respect of local burdens that they are exempt. I stand upon the terms of the Motion of the hon. Member for Hull (Mr. Saunders), and I maintain that, according to those terms, it would be a mere shifting of the burden pro tanto from the lessee on to the owner of the land. As I have already stated, it is entirely a matter of contract. All the contingencies are taken into consideration; and if the ground landlord had to pay rates and taxes there would be an additional charge in assessing the amount of ground rent. The value of the house is not affected by the ground rent or the rate-ability of the house, because the rate is on the house as it stands, and is altogether independent of any consideration with regard to ground rent. The rates are levied on the letable value of the house. So far as the owner of the ground rent is concerned, if he understood that he was to pay rates and taxes he would make provision for them in his contract. Something has been said about ground rents being absorbed into a few hands; but, in considering this question, it must not be forgotten that, as a matter of investment, ground rents are equally as valuable as Consols, and that large sums have been invested in the purchase of them at a low rate of interest. They are bought for the reversion which the purchasers are to acquire, and it would be most unfair to place an additional tax upon persons who have been encouraged to buy ground rents under the law as it now stands. Mention has been made, in the course of the debate, of the Prudential Office as a large absorber of ground rents. I do not know whether the hon. Member who mentioned the fact is aware that that is an Office which has been specially established for the benefit of the humbler classes. I believe that the Prudential has the largest number of small policy holders of any Office in the world, and they have invested considerable sums in the purchase of ground rents for the benefit of the working classes. Thousands of working men have become, through this Office, proprietors of ground rents; and to tax them now for the purpose of shifting the burden from the person who is now liable in order to place it on the 1027 shoulders of the owner would result in great hardship upon a most deserving class of people. Now, with regard to the present leasing system, I know a good deal, both by tradition and experience, as to how property is managed. Let me take property in my own immediate neighbourhood—I mean the Bedford Estate. I believe there never was an estate laid out with greater benefit to a large city. It has been laid out in large squares with short streets, and a great deal of the ground has been sacrificed for the purpose of securing the health and comfort of those who live there. And what is the result? The Bedford Estate forms one of the lungs of London, greatly to the benefit of the adjoining properties. The result of the building operations upon it has been that the houses now existing upon that estate are nearly as good as when they were originally built; and they have been re-let for a certain number of years, the tenant doing the necessary repairs, which are rather of an ornamental character than for the purposes of the fabric. Hon. Members talk of the abuses of this system of ground rents; but they ought also to remember the advantages which it confers. Other estates—such as the estate of the Duke of Westminster—have been laid out in a similar manner, with large open areas; and I venture to say that a good deal of that property would never have been built upon in the manner that it has if it had not been for the personal assistance given by the late Marquess of Westminster. If this assistance could not have been obtained, the consequence would have been that houses of an inferior description would have been erected, and the land would have been laid out in a manner prejudicial to the health and comfort of those who have to live upon it. I do not think that sufficient reasons have been given to induce the House to assent to the Motion, or even to send the proposal to a Select Committee. The Committee to which it is proposed to refer it has a large enough amount of work upon its hands without being required to consider this question. It is a question relating to a great principle, for it really involves the principle of taxing the unearned increment of property, as it is called; and, therefore, in the strongest terms, I protest against it.
§ MR. FORWOOD (Lancashire, Ormskirk)
Perhaps the House will allow me to say a few words on this matter from an entirely different point of view from those with which the question has hitherto been approached. I have the honour to be the Chairman of a Municipal Committee which has charge of, perhaps, the largest estate owned by any Corporation in this country, hardly excepting London. The Corporation of Liverpool is the owner of the reversion of nearly one-third of the City of Liverpool. It has some 5,000 leases on that property, and its income in the shape of fines, and income from renewals and rents, amounts to something like £100,000 a-year. Perhaps the House will allow me to state the experience I have have had in reference to the administration of that large estate. That property, where it is leased, is all leased under obligation by the Municipal Corporation Act of 1835 for terms of 75 years. We have no option; we cannot sell the reversion out and out; we are compelled to let it only on leases not exceeding that term of 75 years. The leaseholders are given by the Corporation the option of either paying cash for the extension of, or a full lease of 75 years, or of paying a sufficient sum of money cash down to secure the Corporation, and pay an annual ground rent as a commutation for the balance. If I understand the effect of the Resolution now under discussion aright it is that that commuted fine, which is commuted at something like 4 or 4½ per cent into an annual rent, should be made liable to local taxation. It would be clearly and manifestly unjust to the owner of that ground rent—for it really is a ground rent—to tax him on the annual value for local rates. He has given to the leaseholder the opportunity of paying the fine in cash or of commuting it into a ground rent. The leaseholder has found it more to his interest to keep his capital money in his pocket for building or other trade purposes, and to borrow, so to speak, the money from the Corporation, the owner of the fee simple, and to pay them a rate of interest on it. Where can be the justice of laying local rates on that which is really interest on the fine, any more than in laying local rates on the proceeds or revenues derived from Consols or Railway Stock or anything else of that kind? The advantage to the 1029 public in the matter is that if there is any unearned increment in that case, and there has been a large unearned increment through the growth of the town and the increase of its trade, it goes to benefit the ratepayers; whereas, if the Resolution were adopted and leaseholds compulsorily enfranchised, you would take that unearned increment from the ratepayers and hand it over to private individuals. Then we come to the advantages which are derived by the town from this system of leaseholding. Under the system the owners of the property—the Corporation in this case—are able to exercise a control over the character and the class of buildings erected in the town, and, further, they are able to secure that the buildings shall be a credit to the place, and that no tenant on the estate shall do anything to injure or depreciate the property of another tenant. Moreover, there are covenants in the leases by which certain trades are restricted to certain localities, or are prohibited in other localities, and we are thus able to assure to the holders of those leases that they shall remain in the quiet enjoyment of their properties without having a nuisance created next door to them. As to the value of the property, within the last 12 or 18 months, so much is that leasehold property esteemed by those who occupy it that the owner of one of the leasehold lots, having purchased the adjoining freehold, went to the Corporation and asked them to take the freehold off his hands and grant him a 75 years' lease of it. He preferred one leasehold tenement under the Corporation to having one-half freehold and one-half leasehold; and he put on that property buildings which cost him over £60,000. Let me give another instance. The Corporation of Liverpool desired to promote the improvement of the town and the erection of comfortable homes for the working classes. Two years ago they purchased an estate of 55 acres, and gave £150,000 for it. They ran streets through it which were broader than the bye-laws required. They carefully considered the selling terms of the estate. They considered it better first to offer the estate on lease on a fine for a sum of money to be paid down; but those who were experts in the matter of building houses said they would much prefer to buy the property if the Corporation commuted their fines into 1030 ground rents, as they could put up a better class of house if they had not to invest so large a proportion of their capital in the cost of the land. They preferred to put it in the house. Now, under the proposal made to-night, that system would be penalized by a local taxation that has not hitherto been imposed. If I had closed my eyes while listening to the tenour of many of the speeches delivered by hon. Gentlemen opposite, I should have imagined myself to have been in the midst of a German Socialistic Debating Society rather than in the House of Commons. I have heard a great deal this evening about persons reaping where they do not sow, and about balances of convenience. I want to know where the line is to be drawn between a man making a profit of the increment of value from shares or speculation in Stocks, and the natural increment of the value of his land? I have ventured to trouble the House with these observations, because I feel that if this matter is relegated to a Committee specially appointed to consider certain questions in regard to another and a different subject, much inconvenience will arise. I certainly think that this is a question which should not be brought to a Committee formed to consider another subject; but if it is to be dealt with at all, it should be dealt with in a different spirit from that in which it has been approached to-night; and I am strongly of opinion that there are larger interests?—namely, the general interests of the public—involved in the matter.
§ MR. T. H. BOLTON (St. Pancras, N.)
The question is not the leasehold system, but whether a large amount of property in London and other towns which escapes local taxation should bear its fair share of local burdens. The Motion of my hon. Friend the Member for Hull (Mr. Saunders) is that no system of taxation can be equitable unless a direct assessment be imposed on the owners of ground rent. My hon. Friend goes still further, and proposes that the owners of increased values—meaning, I suppose, other interests in property—should also be made amenable to local taxation. Now, Sir, at present local rates are imposed upon annual value, and not upon capital value; and the question is whether capital value should not also be taxed. While there are improvements and public works 1031 which benefit the present taxpayers and occupiers, who contribute in respect of annual value, there are also permanent and substantial and long continuing improvements which inure to the benefit of the property itself. The owners of property should, therefore, contribute to local taxation. It has been questioned whether the Committee appointed to deal with compensation for improvements and leasehold enfranchisement, will be able to consider also this question of the re-adjustment of local taxation. I think the Committee should be authorized to do so. There is a strong feeling in London that as long as local burdens are thrown entirely upon annual value and upon the present occupiers, it will be impossible to attempt those great improvements of which the Metropolis stands so much in need. If any authority were required for the proposition that ground rent and other property should be taxed, I would refer hon. Gentlemen opposite to an authority which, I believe, they, at all events, will not question. The noble Marquess who leads the Conservative Party, in his statement upon the Report of Her Majesty's Commissioners for inquiring into the Housing of the Working Classes, said—Taxes from which outlay is drawn should be of a kind which all sorts of property should join in paying. There was no ground for charging such expenditure on the occupiers of land and houses only. Incomes of all kinds, whether they come from Consols or from Foreign Stocks, or debentures, ground rents, or mortgages, ought equally to bear such burdens.That authority, which, I am sure, hon. Gentlemen will admit the force of, strongly bears out the contention which I am putting before the House—that the ratepayers of London who contribute in respect of annual value, have a right to call on the owners of property to contribute towards those permanent improvements, which are not only for the benefit of the present occupiers, but also of present owners and of future generations of owners of property—the landlords of the future who will inherit property of enormous extent and of enormous value. I cordially support the proposition of the hon. Member for Hull (Mr. Saunders), and I concur also in the Amendment of my hon. Colleague the Member for West St. Pancras (Mr. Lawson), to refer the matter to the Committee 1032 appointed to deal with improvements in towns and the leasehold question. I hope it will be a strong and representative Committee, and that hon. Members who are technically acquainted with the subject will be placed upon it. I trust that we shall obtain from the Committee a full and comprehensive Report, dealing with the whole question of local taxation.
§ MR. DWYER GRAY (Dublin, St. Stephen's Green)
I am of opinion that by far the most valuable contribution to this debate has been the speech delivered by the hon. Member for Lancashire (Mr. Forward), who has given us the example of that great town. In that case, the Local Authority has been fortunate enough, according to his account, to secure the ownership of one-third of the City of Liverpool. I do not know, however, whether it amounts to one-third in area or one-third in value—probably one-third in value; but the hon. Member has explained to us what has occurred in Liverpool. There, the Local Authority, representing an entire community, has been able to ensure for the community what is called the unearned increment of increased value of land due to the industry of that great and progressive community. We have been told that the revenue derived from that one-third of the value of Liverpool now represents £100,000 a-year, all of which is devoted to the public purposes of the town. I would ask hon. Members and the House to consider what would be the condition of Liverpool to-day if the Corporation of the town had not, by accident, been landlords to this large extent, and what would be the condition of Liverpool if, instead of owning one-third of the land of Liverpool and getting one-third of the unearned increment due entirely to the industry of the people, they had owned the entire property, and had secured for the community the increased value of the whole of the land. The hon. Member quoted the example of Liverpool as a reason why the House should not entertain the proposition of the hon. Member for Hull (Mr. Saunders); but I think the lesson to be derived from it is a totally different one, and the logical conclusion we obtain from the facts so clearly laid before us by the hon. Member for Lancashire (Mr. Forwood) is that we should consider the 1033 suggestion in the sense of my hon. Friend the Member for Hull (Mr. Saunders), or in the sense proposed by the hon. Member for St. Pancras (Mr. Lawson). There is, to my mind, a certain amount of vagueness in the proposals of the Mover and Seconder of the Resolution. The hon. Member for Hull, with very great clearness, presented before the House the evils of the present system; and although I am extremely conscious of them, and, although as a Member of the Commission on the Housing of the Poor, my attention was drawn to the grievous suffering inflicted on the working classes by the existing system of land tenure in towns, I do not think it at all necessary for me to add anything to the force of what has been stated in that particular direction. But the hon. Member for Hull confines himself to the proposal that ground rents should be subject to taxation; but when the Seconder of the Resolution came to make his speech, he, with the instinct of the learned Profession of which he is a distinguished ornament, qualified the proposition of the hon. Member for Hull by saying that existing contracts must be respected, and it is only when the lease falls out that we must have an amended system of taxation to which ground rents are to be subjected. Now, I venture to say that if you adopt that principle the vote of the House will go for nothing, and it will be a mere nominal change signifying nothing. There may be two houses in the same street, side by side, one of which is held on a lease which is acquired after the amendment of the law contemplated by the Resolution, and the other with 75 years still to run. The occupier of the one would be relieved of his proportion of taxation, which would be transferred by the change to the ground landlord, while the occupier of the other, probably a competitor in trade, would be subject to taxation for 75 years. The hon. Member still further qualified his proposition; and I venture to think that if the proposal contained in the Resolution were carried out, the anticipations of its bringing about any considerable amelioration either in the condition of taxation, or of the working classes, would not be realized by the results. Except so far as existing leases are concerned, I do not believe that the proposed taxation would have any effect 1034 whatever. Of course, as far as existing leases are concerned, in the event of new taxes being proposed, the ground landlord, either in part or in whole, would have to pay them, You would relieve the existing occupier from new burdens that were not contemplated when the lease was granted, but when a new lease came to be made the sum which the lessee would be called upon to pay for the land would be made up of two factors—the rent and the taxes. Therefore, if you simply make an alteration in the law requiring the ground landlord to pay a certain amount of taxation, it would have no effect whatsoever except as regards existing leases. The moment those existing leases expired the ground landlord would be able to recoup himself for whatever portion of the taxation had been put upon him, by increasing the rent, because it is only fair to assume that this taxation of ground rents would only be in relief of taxation that would otherwise be paid, and, consequently, the existing evils would not be permanently touched. It was because I had convinced myself, although I am afraid that I failed to convince any other Member of the Royal Commission on the Housing of the Poor, that no such piecemeal legislation as that contemplated could be of any permanent effect in removing the evils which all of us acknowledge to exist, that I ventured to suggest a more radical remedy. The remedy I suggested was that every town should be placed in regard to the whole of its lands in the admirable position which Liverpool, by a fortunate accident, occupies with regard to one-third of that town. The arguments of hon. Members who have spoken in favour of the Resolution, if they are worth anything at all, go a great deal further than their conclusion. The kernel of the question is, who is entitled to the unearned increment? Who owns it all? Either the ground landlord owns none of it and has no right to take any part of it, or he holds the whole of it, and you have no right to take it from him. What I say is, that he who has created the unearned increment should own the whole of it, and that any shifting of taxation can be but temporary in its effect, and will give no permanent relief whatever. The hon. Member for Hull (Mr. Saunders) has quoted numerous cases of the enormous increases in the value of land which 1035 have been made while the ground landlords were asleep. Some hon. Member has mentioned the Duke of Westminster's estates. I believe that that family came into the possession of those estates owing to a fortunate alliance on the part of an ancestor with some person who had a quantity of land then used for dairy farming. What was then worth a few shillings, or at the most a few pounds, is now worth as many thousands of pounds. But is his Grace the Duke of Westminster entitled to that increase of value? Does it not belong to the community who created it? I think it does; and the only way in which the question can ever be finally settled is by what is called a municipalization of the land—giving to the community represented by the Local Authority of the district the reversion of the property in the locality. Every town would then enjoy the same advantages which Liverpool now enjoys, and it would enjoy, for the benefit of the people, the unearned increment of the land. The Local Authority would then have a facile and effective means, not merely, as in Liverpool, of preventing disagreeable trades being established in undesirable localities, but of securing that the working classes should be housed in reasonable comfort and under conditions which would give them a chance of preserving their health and life. This House is frequently asked to pass laws to enable the Local Authorities to improve the sanitary condition of towns and make provision for the better housing and comfort of the poor. These two facts have been incontestibly proved — that there are hundreds of thousands of the working classes who are housed under circumstances in which decency, propriety, and even any approach to comfort, are practically impossible; and side by side with this fact, is the additional fact that there has been an enormous increase in the value of the land. This increase in value has been exactly in the same ratio as the increase of the misery and helplessness of a large proportion of the working classes. At present the landlords are actuated by no other motive than the capacity of the working classes to pay the rent imposed upon them. There is no doubt that rents do rise, and, therefore, the nominal increase in the earning power of the wage-earning class is completely neutralized by 1036 the power of another class to abstract so large a portion from them. I cannot see the reason of this question being exhaustively investigated by a Royal Commission, seeing that no action whatsoever has been taken by Parliament in reference to this portion of the subject, and I fail to see what result the hon. Member anticipates from a second investigation of the same facts. The Order of Reference must be wide to enable the question to be properly considered. It must not be confined only to the incidence of taxation, but must go deeper down into the question, what has been done with the unearned increment? And I think that the best plan, under the circumstances of the case, would be to refer it to an independent Select Committee. If the hon. Member restricts his Reference simply to the question of taxation, it is to be feared that the House will have two or three more voluminous Reports signifying nothing, or very little. I am perfectly ready to support either the original Motion or the Amendment, because, as has been stated by the hon. Member for Bethnal Green (Mr. Pickersgill), I believe we shall not in any way strike a blow at the system; and when we show that the community is entitled to this increase, and the system is shaken a little, people will come more and more to the conclusion that the community are entitled to relief in this matter. It is not so much that I anticipate any great result either from the original proposal or the Amendment that I shall support the general proposition, but because I believe that the ventilation of the subject will do an enormous amount of good. I am certainly surprised that no hon. Member has put the question upon a broader aspect—namely, whether any mere shifting of the burden of taxation can effect the object desired.
§ MR. A. C. CORBETT (Glasgow, Tradeston)
I did not intend to intervene in this debate to-night, and I should not have done so if I had not noticed that so very little prominence has been given to the part of the Resolution which I specially favour—that part in which it is urged that a direct assessment be imposed "on the owners of increased values imparted to lands by building operations and other improvements." I believe that if permission were given to the lessee to deduct the local rates from 1037 the ground rents paid to the lessor, it would do nothing to reduce the amount of rents. I know this—that when I invested money in leasehold houses, I did so on a distinct understanding and on the distinct contract that those houses should bear all the local burdens. Those who have invested in ground rents have gone into their 4 per cent investments on the distinct bargain that those ground rents should be subject to no local burdens. I hold that there is no call for this House to intervene between us, and to relieve me of burdens upon which I distinctly calculated in paying the price, and putting upon ground landlords a burden which their contract distinctly excluded. A good deal has been said to-night as to the relief which such a proposal would give to the working classes. I deny that it would give them such relief. I know that if I were permitted to deduct the amount of local rates out of the ground rent I pay to the ground landlord it would not have any necessary effect whatever upon the amount of rent which I should exact from my tenants. If you are to have the reduced rents you must affect supply or demand, and the one measure by which you can increase the supply of houses is by the tax which has been proposed upon vacant land. Now, I happen to hold about 30 acres of vacant land in the neighbourhood of London, and upon that vacant land I pay not one farthing of local assessment or of Imperial taxation; and when I sell it at a profit I am told that it is not necessary for me to return it under the Income Tax. Now, I contend that this is an unfair immunity from taxation, and is a distinct premium offered to landowners to keep their land out of the market. I contend that if the State were to tax this land it would give to me and other landowners a great inducement to bring our land early in the market at lower rates than would otherwise be secured. I, for one, should not feel that the country or the Local Authorities were doing me any injustice whatever if they compelled me to say what I held to be the real annual value of the land, and to assess me upon it. I hold that it would be no injustice to me for them to say—"You have put a certain value upon your own land; we take it at your own valuation;" in the event of my assessing it at too low a price. By this means, a large additional amount 1038 would be brought into the Local and Imperial Exchequers; and the result would be that the owners of land would be induced to bring their property into the market at an earlier period and at lower rates.
§ SIR RICHARD WEBSTER (Isle of Wight)
I do not intend to ask the House to divide on the Amendment of the hon. Member for St. Pancras (Mr. Lawson) as to whether this matter should be referred to a Select Committee; but I should like the House to understand before they adopt the Amendment what it really is that is proposed to be referred to the Committee. We have had several very interesting and somewhat discursive speeches; but upon a question of so general and far-reaching a nature it would be well that the House should understand what amount of substance there is in the proposition put forward. I will not detain the House longer than I can help, and not longer than a few minutes; but before I sit down I think I shall be able to satisfy the House that the real question which lies at the root of the Motion of the hon. Member for Hull (Mr. Saunders) is the question of the incidence of taxation in general, and not of the taxation of ground rents. I must say that this debate has been amusing as well as instructive. Several hon. Members—notably the hon. Member for St. Pancras (Mr. Lawson), who made a very interesting speech in which he ran full tilt at the landlords—appear to have spoken chiefly for the purpose of arousing the feelings of the House with regard to landlords. In the course of the debate we have heard such words introduced as "legalized spoliation." I want to bring the House back to the terms of the Motion of the hon. Member for Hull, and to see that we do not, under cover of this Motion, remit to a Committee a much larger subject, and one which is not within the fair scope and purview of that Motion. The Motion consists of two parts—the first having regard to the question of the direct assessment of ground rents. That question has been fully debated by hon. Members on both sides of the House, and I will point out what the outcome of it is. The hon. Member for Hull has suggested some scheme, the details of which he has not unfolded to us, whereby by taxing ground rents in 1039 the hands of the receivers of those rents the amount is to flow into the coffers of the Public Authorities. No doubt, that is a most desirable result for the Local Authorities if we could achieve it. No one can deny that ground rents are taxed; it must be admitted that ground rents do contribute to the local taxation; but it is complained that by the terms of the bargain between the landlord and the tenant the burden is borne by the occupier or by the person who pays the rack-rent. Now, I contend that the proposal of the hon. Member for Hull is simply an alteration of the burden by taking it from one person and putting it upon another; and if the House will bear that matter in mind for a moment I will endeavour to criticize the Motion in a friendly spirit. I have, on more than one occasion, had occasion to deal with these matters from a practical point of view. Let me, then, ask the House to consider the case of a man who is about to grant a building lease—say for 80 years—on an estate in London for which he gets £20 a-year in the shape of ground rent. So long as he receives that £20 a-year it is a ground rent. But suppose the ground landlord requires money, and he goes to the tenant and says—" Redeem the ground rent because I should like to have the cash." Supposing in that case the tenant bought the landlord's interest at 30 years' purchase, and the money was then invested in Railway Stock, or Debentures, or in Consols, surely in that case the hon. Member for Hull does not suggest that those investments are property which, under the terms of his Motion, is to bear its burden of local taxation; and yet it is equally a sum of money that has arisen out of the transaction between the landlord and tenant. Let me put another case. Take the case of a ground owner who is able to build a house on land which is worth £10,000. The ground rent would be, at 5 per cent. £600 a-year, and a building worth £10,000 upon it would bring in an annual return of £700; or 7 per cent against 5 per cent on the ground value, the united rents being £1,200. It is not denied that that would be a fair rental, and taking one property with the other, that it should contribute to local burdens, and berated at the full amount of £1,200. At the present moment the Local Authorities get that full amount, 1040 but instead of being in two hands it is in one. It is said that there ought to be some increased assessment upon it in order to cover the ground rent. Now, suppose the owner himself, had the land which was worth to him £10,000, and suppose he spent £10,000 to put a house upon it, would he not be fully taxed, if he were called upon to pay rates on a rental of £1,200 a-year? The Local Authority would have no right to charge him any more, and yet, because a man is not fortunate enough to build his own house upon his own property, but builds one on the estate of somebody else, in some way or other this land is to be further taxed, although the occupier is at present paying upon the full rent of £1,200 a-year. In the case of a man living in his own house, and upon his own land, you would put both the land and building together, and the occupier of that house and land, if the overseers did their duty, would be rated to the full amount. On what ground of justice could any difference be made? Why should that property be required to contribute towards local burdens if it happens to be occupied by the owner who gets the benefit of all public improvements, but lets somebody else live in it? I think that many hon. Members have not seen the difficulty, because they have not put the concrete case. There was one matter alluded to by the hon. Member for Ashton-under-Lyne (Mr. Addison) of which hon. Members opposite did not see the point. Not only in Lancashire, but in other places, a man who has knowledge of what land is likely to grow into takes it for building purposes—say at £5 an acre—when it is only just emerging from agricultural land. He keeps it for five or ten years, and then lets it off for, perhaps, £15 an acre; and I know that on many plots of land there are ground rents which vary from £5 up to £100 or £200, which they become worth when the estate has been developed and is covered with buildings. Then on which of these ground rents is this taxation to be imposed? Is it to be upon £5, or £50, or £100, because in each case benefit has been received out of the increased value of the property? The hon. Member for Hull (Mr. Saunders) has, no doubt, very excellent motives in his mind for increasing the income of the Local Authorities; but I am afraid that he has, to a certain extent, been 1041 bringing forward a subject for taxation which already is or ought to be fully taxed. I desire on this occasion to draw the attention of the House to the real way in which this question ought to be regarded. A great deal has been said by the Mover and Seconder of the Motion about a man getting the advantage of other people's money; and one proposition formulated by the hon. Member for Hull has been lost sight of in the more recent debate—namely, that the value of the property to be taxed is imparted by the community, and ought to be taxed in preference to the value imparted by the individual. I have not the smallest objection to the proposition in general terms; but let us endeavour to see what it means. I may put a test case which I challenge hon. Members to dispute. I will take the case of a Stockbroker in the City of London who takes a place in the neighbourhood of the Stock Exchange, and lets it out in very small rooms indeed—somewhere near Hercules Passage, or Moorgate Street—and he pays £70, or £100, or even £150 a-year. His sole contribution to local burdens consists of poor rates and general rates, and he pays them either directly, or, more commonly, indirectly, because all rates and taxes are borne by the people who let the house. That man gets the full advantage of residence in one of the urban districts of the Metropolis; but he is able to come up to town and keep his City premises in the neighbourhood of the Stock Exchange, and yet, while his receipts may amount to £5,000 or £6,000 a-year, he does not contribute either to the local burdens there or anywhere else in respect of them. He pays nothing except the Property and Income Taxes; and money made in that way contributes in no way to local burdens. Hon. Members desire to embark in an inquiry as to whether the incidence of local taxation fall in the right direction now; and I agree with the hon. Member for Sussex (Mr. Gregory), whose experience is as great or greater than that of most hon. Members. He told us that if there is to be an inquiry as to whether these burdens are fairly borne by the owners of real property or of personal property, he does not think the owners of real property have much to fear. If it were feasible or practicable, I should welcome 1042 any inquiry into the question whether local taxation is fairly borne by the occupiers of land, and whether personal property does not escape to a degree to which it ought not to escape, and whether it should not bear its fair share of the burdens of taxation. The second part of the Motion suggests that there should be a direct assessment on the owners of increased values imparted to land by building operations or other improvements. That question opens up an entirely different point, and is scarcely a matter to be referred to the suggested Committee. Almost all taxes are based on the value of the occupation, which is considered a way of getting at the income of the occupier. Of late years the tenant is supposed to be rated at the fair annual value of the house. If he occupies that house he is supposed to pay the rates himself; so that, at any rate, he gets value for the payment he makes. If a man continues to occupy land and enjoys it with his residence, leaving it vacant, and not placing upon it anything which would naturally bring it up to a fair rateable value, I think the overseers would not be doing their duty if they did not assess it to the local rates; and although the hon. Member for Glasgow (Mr. Corbett) may have escaped scot-free he certainly was in occupation of the land, and he ought to have paid the rates. If you think fit to pass a law which will establish another basis or another standard of rateable value on which these taxes would have to be assessed, very good; but let it be considered on its merits. But the law, as it now stands, is this—that the occupier of the land is to be rated at the fair value of his occupation. If the hon. Member for Hull means more than this, he is departing altogether from the present system of rating. I do not say that he may not have fair grounds for departing from it; but he is bringing in a system of rating, not by virtue of the value of the occupation, but to some capital value which a man is supposed to have in his pocket, and of which he is not earning the income. Surely that is a somewhat curious question to remit to the investigation of a Select Committee. I have no wish to follow hon. Members in the wholesale attack they have made upon landlords. I dare say there are many others who agree with the language which has been used in the course of 1043 the debate; but although some of it might have been expected from the right hon. Member for Birmingham (Mr. Chamberlain) in the course of platform speeches, I do not think it advances a discussion of this kind to speak of "legalized spoliation." These leaseholders took their leases with their eyes open; many others are quite willing to take them up; and the persons who have entered into these building speculations, have frequently made, as hon. Members are aware, large fortunes. Indeed, some of the largest fortunes which have ever been made have been made out of these speculations; and it is ridiculous, therefore, to speak of the legal tenure by which property is held in the Metropolis as "legalized spoliation." I would remind hon. Members that there are sitting in this House, on both sides, the descendants of gentlemen in the highest position who have made enormous fortunes by taking up land and speculating with it honestly, and not, as the Chancellor of the Exchequer said, as "jerry builders." I scarcely think that some of the terms which have been applied to these persons are at all warranted, or can be justified. It has been pointed out by my hon. Friend the Member for Sussex (Mr. Gregory), and other hon. Members, that there is much to be said in favour of ground rents, and for this reason—that a man may only be able to take a small plot of land from the ground landlord, and it is of great advantage to him to know that, by a restricted covenant, people leaving property adjoining that which he holds will not be able to put up a public-house, for instance, or some other building that would be an eyesore. But for the restrictions imposed by the ground landlord this might be done; and if the House will consider the question from an impartial point of view it will be seen that there is a great deal to be said in favour of the present system. It must be of great advantage to those who wished to build houses or shops to know that, by virtue of the controlling power of the ground landlord, he would be protected against having opposite plots used for objectionable purposes that would destroy the value of his own plot. An hon. Member who spoke on this question excited some laughter when he said that there were persons in Liverpool who preferred to be lessees of the Corporation of Liverpool rather than 1044 freeholders. All I can say is that I am able to endorse that statement, not by my personal knowledge of Liverpool, but of London. The Corporation of London have been letting their land on 80 years' building leases—not a very long term, indeed a comparatively short one—and, Sir, when even a considerable sum of money has to be spent on the buildings upon the land, it is yet a fact that the 80 years' leases, so long as there are 40 years of them unexpired, command a higher price in the London market than London freeholds do. Therefore, I point out that it is by no means a disadvantge, but possibly an advantage, to occupy property held by lease from such a body or landlord as a Local Authority. A great deal has been said about the separation of the rating of ground and the rating of houses; but I think I have shown that this would produce no beneficial result. A good deal has also been said by certain persons as to there being a supposed increase of taxation which can be gained by the adoption of some such plan. I think I have been able to show the House that this could not arise from the mere separation of the assessment. Having heard every word of this debate, and listened with great interest to the speeches of hon. Members, I have to say that, while I do not desire to trouble the House by dividing to-night on the Motion of the hon. Member for Hull, and while admitting that the question may go as a sort of adjunct to the Committee, I think it is important, before coming to that determination, that the House should understand that, by referring the terms of the hon. Member's Motion to this Committee, they are referring what is only the limb of a much larger question, and that even if the Committee were to enter upon that inquiry, and extend its deliberations to the length which the Motion of the hon. Member would demand, the probable result would be that their inquiry would be abortive. Perhaps some apology may be due to hon. Gentlemen who have spoken in favour of the course proposed, because I have not dealt with all their arguments; but I believe I have shown that no really beneficial result can be obtained by leaseholders, landlords, or owners, by referring to the Committee the terms of the Motion of the hon. Member for Hull.
§ MR. DUCKHAM (Herefordshire, Leominster)
Sir, I have been much interested in the debate upon the Motion of the hon. Member for Hull; but, as far as I have heard, it has only been upon a part of the question. The hon. Member for Glasgow (Mr. A. C. Corbett) has boasted of having 30 acres of land on which he pays no rate and no taxes. I must confess that he is very differently situated from myself, or anyone else whom I know. It has been said by the hon. Member for St. Pancras (Mr. Lawson) that a great grievance is experienced in London with regard to local taxation. Sir, I must tell the House that we agriculturists have felt a great grievance for many years in connection with this subject; we feel that there are many interests on which this great question can and should be brought to bear very differently to the system at present practised. As a farmer, I am taxed on the improvements which I effect on the soil, and which are for the general benefit of the nation. Sir, I hope, if a Committee is appointed to inquire into the question of the local taxation of the country, that they will have such Instructions as will enable them to make inquiry into the whole question, and not merely into what really is no more than the fringe of a very great question, and that, from their inquiries, legislation will result that will do something to relieve the burden which we have so long laboured under, and which has been repeatedly brought before the House of Commons. And, Sir, not only do I trust that the Instructions to the Committee will be such as to give them power to inquire into the whole incidence of local taxation, but that they shall have power also to inquire into the desirability of establishing a better system of valuation by which local rating shall be regulated. Lord John Russell, when he introduced the Bill for the repeal of the Corn Laws, said that inquiry into and re-adjustment of local burdens would be necessary and must take place. I will not detain the House further than to remind it that a great interest is now being taken in the extension of the number of small holdings and in the extension of peasant proprietorship in the country, and to repeat the hope I have already expressed that the Instructions to the Committee will be such as to bring about an exhaustive inquiry into the grievance under which 1046 the farming interest now labours in respect of local taxation.
§ MR. FLYNN (Cork, N.)
Sir, I have no desire to stand for any length of time between the House and the division which hon. Members are anxious to take upon this very important question. But there have been some observations made by the hon. and learned Gentleman the late Attorney General (Sir Richard Webster), with regard to which I may say that the short time which I desire to devote to them will not, in my opinion, have been wasted. The hon. and learned Gentleman informed the House that it is extremely difficult to come at this question of ground rents; he says that there are many shopkeepers and others in the City of London and large business centres who have made considerable fortunes in the businesses in which they have been engaged; and he asks how you can discriminate between the taxation levied on those profits and the taxation put on the ground rents of the houses where those businesses have been carried on? I wish to point out the fallacy of the hon. and learned Gentleman's observations. Shopkeepers in any locality or district cannot expect to maintain a monopoly of profit for any long time; if their profit goes beyond ordinary trade profits, there comes an influx of capital into the business, there follows an increase in the number of shopkeepers and the profits get distributed over a larger area. I wish to point out that, in the case of those particular localities in which large fortunes are made, it must, in the long run, be apparent to anyone who gives the subject a moment's reflection, that large profits must attach to the ground rent. Profits will not increase beyond a certain point in whatever business you may take, on account of the tendency of capital to flow in, and on account of the increased ground rent in the localities in which the businesses are carried on. The hon. and learned Gentleman brought forward an instance of a Stockbroker in a certain part of London, occupying small premises at a certain rent. Now, Sir, it is perfectly obvious that in the rent which the Stockbroker pays for his offices is included the ground rent as well as the rates and charges payable by the owner of the entire premises. If it be true that Stockbrokers, as a rule, make such large profits, there 1047 can be no doubt that the number of persons engaged in the business would be very largely increased; but the hon. and learned Gentleman should set against this imaginary case the large number of cases of Stockbrokers who lose all they possess in their endeavour to get a share of the profits which are made in the Stockbroking business. Be that as it may, it is a well-known law in economics that profit, when it goes beyond a certain point, becomes divided. But it is not so with ground rents. We find that the profit of Stockbrokers in the City of London is one of the reasons why ground rents have run up in London and other large centres; and I say that the contention of hon. Gentlemen on this side, as well as upon the opposite Benches, that it is fair and equitable that ground rents should bear a just proportion of municipal and local taxation, is a proposition which has only to be stated to be believed by everyone who gives it a moment's consideration. Sir, Irish Members are very largely interested in this question. I myself know the hardship and injustice that is done in the town of Kanturk, in Charleville, and in other towns in the county of Cork. The town of Kanturk is in the district which I have the honour to represent; it is the centre of a populous district where a large amount of business is done, and where much more might be done but is not, because the noble Earl who is the owner of the entire town contributes nothing towards the expenses of the place, although he derives an immense revenue from the ground rents. We could multiply instances of this sort, Mr. Speaker; but it is not now necessary to do so, because I believe that the experience of hon. Gentlemen on both sides of the House will furnish many confirmations of the truth of what I say. I have only to add, with regard to the Motion of the hon. Member for Hull (Mr. Saunders), that it meets with the approbation of Irish Members on these Benches, as it will meet, I believe, with the approbation of all those who are interested in the improvement of the condition of the industrial community throughout the Kingdom.
§ MR. SAUNDERS (Hull, E.)
I cordially assent to the Amendment proposed, by the hon. Member for St. Pancras (Mr. Lawson), and I think that the submission of the two ques- 1048 tions to the Committee is the best course to be adopted.
§ Question put, and negatived.
That the words, 'That the question of imposing a direct assessment on the owners of Ground Rents, and on the owners of increased values imparted to land by building operations, or other improvements, as recommended by the Royal Commission on the Housing of the Working Classes,' be there inserted.
§ SIR MICHAEL HICKS-BEACH (Bristol, W.)
I understand that the scope of the Reference to the Committee will be widened to a considerable extent by the Resolution which the House is about to adopt, and also by the decision which has been taken, as I think, rather in contradiction of a statement made by the right hon. Gentleman the Secretary of State for the Home Department, that the Committee should inquire into the relations between ground landlords and lessees. I now ask what is the intention of Her Majesty's Government with reference to this Committee? Names of the proposed Members of the Committee appear on the Paper, and I believe they were to be nominated to-night; but, I think it would be advisable, looking at the great importance of the question which the Committee has to consider, that some measures should be taken for increasing the strength of that Committee by the addition of the names of a few hon. Members who may be competent to deal with the subject. I do not know what are the intentions of Her Majesty's Government with regard to this; but perhaps the right hon. Gentleman the President of the Local Government Board will be able to give us some information.
§ THE PRESIDENT OF THE LOCAL GOVERNMENT BOARD (Mr. JOSEPH CHAMBERLAIN) (Birmingham, W.)
Sir, I think the House will feel that there is a great deal of weight in the observations of the right hon. Gentleman opposite. There is no doubt that the original scope of the Reference to the Select Committee has been considerably extended, and that the Committee will have to perform functions of a very important character. Under the circumstances, we think it desirable to strengthen the Committee by the addition of certain names of weight in this House. I am glad to say that it has 1049 been already arranged, in view of this proposed extension, that the Motion for this Committee shall not be made tonight, but be postponed to a time when it will be more conveniently brought forward. On that occasion I have every hope that the names proposed will be found to have the confidence of the House.
§ MR. GREGORY (Sussex, East Grinstead)
Would it not be better, Mr. Speaker, that when the names of the Committee are proposed, the terms of the Reference should also be settled? We shall have to make the Reference sufficiently wide to include within its scope the Motion of the hon. Member.
§ Question put, and agreed to.
Another Amendment proposed,
To leave out from the word "improvements," to the end of the Question, in order to add the words "be referred to the Select Committee on Town Holdings,"—(Mr. Lawson,)
§ Question, "That the words proposed to be left out stand part of the Question," put, and negatived.
§ Words added.
Main Question, as amended, put.
Resolved, That the question of imposing a direct assessment on the owners of Ground Rents, and on the owners of increased values imparted to land by building operations, or other improvements, be referred to the Select Committee on Town Holdings.