HC Deb 26 June 1893 vol 14 cc13-40

Bill, as amended, considered.

*MR. BRODIE HOARE (Hampstead), in moving, as an Amendment, in page 30, to leave out Clause 41, said, in asking leave to move this Amendment, he had to explain that the clause was one which was commonly known as the Betterment Clause. The question of betterment has been brought forward on two occasions, but the proposal made had been rejected. For the third time the proposal was now before the House; and he asked the House to reject it, notwithstanding that the Committee upstairs bad passed the clause—a Committee though useful for looking into the circumstances and the results likely to be arrived at, was not to be regarded as a deciding authority in so important a matter. There were nine Members of the Committee, and five voted for and four against the clause, the Chairman of the Committee being decidedly against it. He could say, without disrespect, that an hon. Member opposite, who was deeply interested in the question, was disposed to have a natural partiality for a proposal of his own, but he did not expect any Member of the London County Council to vote against the clause. He wished, however, to direct the attention of the House to the narrow majority by which the Committee agreed. They had been favoured with a Memorandum giving the views of the County Council in support of the clause. In this Memorandum they were told that the Bill did not enter into the general law, but related only to particular improvements. He was quite willing to accept that position, and to base his argument upon the Bill as it stood. He had no intention of going into the wider field as to the principle of betterment. He simply wished to take the Bill as it was before him, and he would call witnesses of the London County Council to give reasons why the House should reject the clause. An abstract theory might be very plausible; but when it was found to be inconsistent with equity, there must be some flaw in the argument. He supposed it was incumbent upon him, in dealing with the matter, to explain the provisions of the Bill. It was a Bill providing for four improvements, to which there was no objection whatever—at all events, no objection was offered before the Committee. The first improvement was at Tower Bridge, and then there was the widening of Vauxhall Bridge, The Tower Bridge Scheme would involve a cost of £436,000, and the Vauxhall Scheme £484,000. There were two smaller schemes, upon which this question did not arise, and upon which he need not trouble the House. They only came to £8,000 altogether. Upon the two larger schemes the betterment question arose. The County Council proposed to take powers to assess the improvement value of the property due to the making of the new street, and should the property-holder not agree to the assessment of the Council, he was to become entitled to have an arbitration, the arbitrator to be appointed by the Local Government Board. That seemed a fair and reasonable proposal; but it was a proposal that would not work in practice, and, therefore, he was justified on that ground in asking the House to reject the clause. He would lay it down as a proposition, with which, he believed, every Member of the House would agree, that it was not right for the House to inflict hardship on individuals unless there was some adequate benefit to be conferred on the community; and it was not right, in any circumstances, to do so without full and careful consideration. The property to be bettered was property within the lines of deviation. Within those lines any property not taken might be subject to a betterment charge. The position of the property-holders was that they were to hold their property for a period of years—say, seven years, as it would take about that time to carry out the improvements, subject to a charge which was at present unknown, but which would be, he supposed, 3 per cent. on the estimated capital value—

Several hon. MEMBERS:



said, he should say one-half. Well, there were 43 small properties at the Tower Bridge. The holders would hold during those years subject to a perfectly unknown liability, and they would have to secure an arbitrator. That he considered a hardship; it was a burden imposed upon the holder because of an improvement being made which he did not want, and because he would have to resist according to a process of law which was tedious and costly. Whatever the result to the holder, the gentlemen of the long robe would gain by the Bill were it passed in this form. He thought the House would see that there was good reason why this hardship should not be inflicted upon the 43 persons holding in that district. He had a large body of evidence; but he would only trouble the House with a few elegant extracts. Mr. Charles Harrison, Vice Chairman of the Council, said before the Committee, in reply to the question whether the Council expected to get money out of these improvements— Yes; they think it will be an equitable principle from which they will get substantial relief from those who get substantial improvements. How much do they expect to get?—I cannot tell you, but I think a very substantial sum. It is impossible to work it out. £100,000?—I should think not nearly so much. £30,000?—More than that, I think. £50,000?—I daresay. Then Mr. Young, a surveyor to the London County Council, said, they expected something approaching £20,000 as a capital sum—they would get it as a moiety, and upon it they would get 3 per cent.; but he admitted that, in an official report, he had mentioned £10,000. Mr. Young afterwards disobeyed what he (Mr. Hoare) believed was one of the first maxims in a Court of Justice. He explained, and attributed his mention of £20,000 to confusion of mind, saying that he meant to have said £10,000. Someone asked to see the official document, where the moiety would be found to be £5,000. So that Mr. Harrison had in his possession an official document from his own surveyor giving only £5,000. Mr. Young came back again, and produced a written Memorandum, with pencil marks, elaborating another estimate, in which he made out the moiety at £9,000. Which of all these were they to accept? Would the proper way not be to take the official document, and say £5,000? With that they could see that the net result to the ratepayers of London was that they were to get 3 per cent. on £5,000 after fighting 43 law suits seven years hence. A portion of the property was occupied by vinegar works, and this was not to be liable to betterment so long as these works were carried on—and there was a lease attached to them for 40 years. So that fully one-third of the estimated amount would not come for that period. He could only say that this was the most contemptible way that had ever been adopted of getting the House to assent to a principle of such importance. Were there any Members enthusiastic about the rates of London 40 years hence? Very few, he thought. In regard to Vauxhall Bridge, he found that Mr. Cripps, Parliamentary Agent, did not look for any betterment; but Vauxhall Bridge had been left in order that the Council might run through their fad, which would have the effect of leaving the people there subject to this liability for the term of, he supposed, seven years, although the County Council admitted that they would not be bettered He was not desirous of detaining the House, but he thought he had shown that there was hardship in a proposal of this kind. He had proved his case from the evidence of the County Council. The London County Council gave them an example in order to prove their case, and cited, as an instance, the raising of the value of property from £1,000 to £1,200 by reason of certain improvements carried out at the public expense. In such a case the owner would become liable for an annual payment of £3. Of course, if the man bought for £1,000 and sold almost immediately for £1,200, the difference in value being solely due to the formation of a new street, it was quite conceivable—but he did not say it would be just or politic—that such a charge should be imposed on him. But, as a fact, he was not the man who would be subjected at all to the charge under the proposal of the London County Council. He would get his profit of £200, and go away and invest it probably out of London, while the unfortunate purchaser of the property at the enhanced price would be the victim, for within seven years a betterment charge might be assessed upon it. Again, how were they going to estimate the exact proportion of the enhanced value which was due to the formation of the new street? Might it not be the case that in the course of the seven years new trades might spring up in the locality? Might it not also be the case that the increased value would be attributable to the erection of the Tower Bridge? He believed that it was absolutely impossible for anyone to estimate the exact amount; and, giving all credit to the London County Council witnesses for sincerity, he submitted that on their evidence the House was not justified in subjecting these 43 unfortunate people affected by this particular scheme to the chance of having this heavy burden thrust upon them at the sweet will of some future London County Council, without any hope of getting any return whatever or of benefiting anybody except the lawyers.

MR. KIMBER (Wandsworth)

, in seconding the Amendment, said, his hon. Friend had moved the excision of the clause because it was inapplicable to the proposed improvement, and even ridiculous in its nature. It was proved before the Committee that while the estimated increase on which the charge would be put amounted to only £5,300, the cost of the investigation involved in apportioning the charge would amount to much more, and it was, therefore, possible to gauge what would be the benefit to the general community by putting the owners, lessees, and occupiers of the 43 private properties to the alternative of either submitting to the assessment or of fighting the question out, with learned counsel, before an arbitrator. He wished to draw the attention of the House to the principle of betterment. The meaning of it was that a man should be taxed in respect of the benefit which his property received. There was some ground for that principle. He would not like to class himself among the opponents of the principle, for he held it was right that persons who had property improved in value by the expenditure of public money should contribute to the cost of the improvement. The great difficulty, however, was in finding the quantum, and also in finding the machinery by which the assessment was to be made. He submitted that our present system of local taxation was one which really adopted the principle of betterment. It was a system of taxation according to benefit, and was the product of experience of three or four centuries. This principle was, after all, elementary; his excuse for stating it was to be found in the fact that there was a great deal of darkness in regard to it, not only in the Metropolis, but in all Municipalities. Our Local Taxation had, almost without exception, proceeded upon the principle that the actual annual value of all property should bear the local burdens of the year in propor- tion to that annual value. By the application of that principle every person interested in property was reached. There had been an idea on the part of the Progressive Party in the London County Council that owners of property under the existing system escaped scot-free. But that was an error, and an error which very generally prevailed, as had been proved before two Committees appointed by the House. The Committee on Town Holdings reported that, as a matter of fact, ground values were taxed. Yet the London County Council, in regard to this particular London improvement, were following up this erroneous idea; they were suggesting that this was not a proposal to impose a tax for the benefit of the general community, but that the idea was, to use their own euphonious phrase, the interception of increments. This was really the first step towards the Henry George principle of appropriation of all increment to the service of the public. By what machinery did the London County Council propose to enforce this tax or charge? They denied, in their Memorandum, that it was either a rate or a tax, and to a certain extent that was so. It was more than either, being really a perpetual charge or annuity upon a man's property which was supposed to have been enhanced in value by the improvement. It would remain in perpetuity unless he preferred to redeem it at 33⅓ years' purchase. He would take the example cited by the London County Council itself. A property valued at £1,000 was estimated to be bettered to the extent of £200. The half of that increased value was at once charged by way of mortgage on the property in the form of an annuity at the rate of 3 per cent., or, as might as well be said, at the rate of 1½ per cent. on the total enhanced value. The charge was registered. What was the effect? He would admit that the property might have been increased in value to the extent of £200; that was equivalent to an increased annual rental of £10. £3 rent charge on £10 represented 6s. in the £1, in addition to the ordinary increased ratal, which would be ascertained at the quinquennial valuation. Did not the fact that that charge would remain in perpetuity, unless the owner of the property chose to redeem it at 33⅓ years' purchase, violate the great principle to which he had alluded—that the local burdens should be proportionate to the actual value proceeding from the property in the particular year in which they fell due? Let them realise what the position of the owner of the property would be. In many parishes the ordinary rates amounted to 6s. in the £1, so that the owner of the property on this enhanced value would, as a matter of fact, be paying double rates; and, in respect of one of such payments, there was no provision for an abatement of the burden in case the enhanced value, through diversions of trade or migration of population, passed away. Indeed, it might happen that the value of the property would so far disappear that the annual charge put upon it under this kind of betterment would eventually swamp the owner's interest. This proposal was really a red herring drawn under the noses of the ratepayers, for while pretending to be fair it utterly failed to tax everybody interested in the property. The annuity charge might be deferred by the arbitrator for a number of years. It was actually admitted, in the case of a firm of vinegar manufacturers, whose property would be affected by this improvement, that as they had a lease for 40 years, and as their interest could not be increased in annual value for that period, the Act as against that property would not be enforced until the landlord again came in possession of it. Another indication that the real object of the London County Council was to attack by a side wind the ground landlords was that it was only by great exertions it was found possible in Committee to induce them to recognise existing contracts, and that was even now not done in the most effectual manner, for the clause read thus— Where the incidence of the annual charge as between any persons interested in the property is regulated or affected by any contract or covenant, the arbitrators shall have regard to such contract or covenant, and this Act shall not be taken to alter or affect such contract or covenant. What was the arbitrator empowered to do? He was empowered very properly to have regard to all the circumstances of the ease of any particular improvement, and to consider the several interests involved, and to have in mind when such interests expired, but he was to deal with them as he pleased without appeal; and that, in itself, showed the animus which pervaded the Bill, and which sought to over-ride the existing system of taxation. The Town Hodings Committee of 1892 reported that existing contracts must be respected. And what, under the present Bill, would be the effect if people were to be free to contract between themselves? Obviously all future contracts would have regard to, and contract out of, this particular law. It was an erroneous notion that ground landlords were not taxed at present. They paid in this way: that they gave a consideration to the lessee for the covenant which he entered into, that consideration taking the form of a low ground rent in return for the lessee paying all the taxation which might be assessed upon the property. This Bill was an attempt, notwithstanding that covenant, to impose taxation on the ground landlord. Under the limits of deviation—the limits of betterment charge set forth in the Bill—property would, for seven years, be under the ban of uncertainty, liable at any time to have a mortgage charge placed upon it. This would amount to condemning the property unheard. Indeed, the improvement might not be completed under seven years, during which no one would be able to assess the enhanced value given to the property by the improvement. Then, although the enhancement might pass away, the betterment charge would remain in perpetuo, irrespective of the annual value. More than that, lands now vacant were being subjected to this liability, which was in direct contravention of the principle laid down by their forefathers in their wisdom, that local taxation should only be provided for out of the immediate rental production of property. Again, the Bill only proposed to tax one class of capital; it was following an example set in the United States, by which millionaires escaped taxation; and it would enable great mercantile incomes in this country to avoid contributing to these improvements. Again, the Bill constituted an attempt to introduce a new principle of exception to the general law—a principle in itself evil and dangerous. It was a proposal for the confiscation of increment; a proposal to take the increment for the Municipality, merely because the capital of the owner had not produced the increment. He would like to know how they were going to distinguish between increment arising from a public improvement and that attachable to what was going on in the country generally, and what was due to a man's own industry and perseverance? Why should they not, in the same way, seize upon the increased value of a daily journal? That increment might be claimed as the result of the owner's talent; but he doubted if that alone would be admitted to account for the whole of the increased value. It would hardly be believed that, while the Bill provided for the raising by loan on a 60 years' term of all the money needed for the improvement, it did not appropriate to the improvement the money received by the County Council in respect of the increment. This was a great blot on the Bill. There was no provision to oblige the County Council to write off the cost of an improvement as the money came in, or to reduce the term of 60 years over which the Sinking Fund was spread. He was in conversation in the Lobby the other day with a distinguished member of the London County Council, and he (Mr. Kimber) drew attention to this point. The member of the Council replied very naively and very honestly, "Well, we must have money somehow, and I do not care how it comes." So the money obtained in respect of the increment would not go to pay the cost of the improvement, but would go into the pockets of the London County Council in such a way that it would escape the observation of the ratepayers; though it was, virtually, taxation wrung out of them. There were some other injustices in the Bill. It would hardly be believed that the London County Council, before they made their assessment, were not bound to hear anybody at all, or even to give people notice that they were going to be specially assessed. People might behind their backs have their names put into a document called an assessment, which, when registered, would have the effect of a land charge upon their property. When the County Council had by resolution adopted this precious assessment, then, and then only, were the persons affected to have notice. Even then it was only to be a month's notice. A man might be abroad, or sick, or in a lunatic asylum. To give him a month's notice of putting a mortgage upon his property in perpetuo was an absurdity amounting almost to an abomination. If a man did not get the notice, or was not able within a month to consult his surveyor and his lawyer, and to give notice of objection to the County Council, he would be shut out for ever from objecting; but if he received the notice and objected within a month, he could go before an arbitrator. He would, however, be subject to the peril of costs. For the first time in the history of our legislation respecting a compulsory interference with the rights of property the House was asked to put a man who wished to defend his rights under peril of costs. There was still another injustice. The County Council of to-day would not be the County Council of seven years hence, and it was one of the many astonishing things in this Bill that the Body who, by their assessment or award, were to declare that Mr. A. B.'s property in the year 1900 was worth £200 more than in 1893, would consist of men who had probably only been elected one year previously. He confidently hoped the House would reject this clause, not only because it would be absurd to apply it to the case to which the Bill made it applicable, but because it was a deviation from those just principles which from centuries of experience we had arrived at in this country.

Amendment proposed, to leave out Clause 41.—(Mr. Brodie Hoare.)

Question proposed, "That Clause 41 stand part of the Bill."

SIR J. LUBBOCK (London University)

said, it would not be necessary for him, in supporting this clause, to trespass for more than a few minutes upon the time of the House, because he thought the House would feel that the admissions made by the Mover and Seconder of the Amendment with regard to the principle of the proposal really cut away the ground from under their feet. The hon. Members had argued the question with all the fairness and all the candour that might have been expected from them; but, at the same time, he thought they had been a little unjust to the witnesses of the London County Council. He (Sir J. Lubbock) had been in conflict with Mr. Charles Harrison on many occasions, but he had always been bound to acknowledge the transparent sincerity of his objects. As regarded Mr. Young, it was admitted that in his estimates he had mentioned, first one sum, and then a larger amount; but there was no doubt the reason was that when he came to look into the question, he found that the sum would be larger than he at first supposed. In fact, he actually said so before the Committee. It was quite true that this question of betterment had been twice before brought to the attention of the House; but in neither case had it been decided on its merits, the Committee having been of the opinion on each occasion that the principle of betterment was not applicable to the particular improvements to which it was sought to apply it. The Select Committee, however, had now taken a different view. The hon. Member opposite had spoken of the poor, unfortunate property owner, and the clause seemed to be opposed under the impression that in some mysterious way it was an attack upon property. That was not so. The only question was how, when expense was incurred, the funds were to be provided?—not whether property should pay, but only which property. Under previous Acts of Parliament the Metropolitan Board of Works, as the Central Authority of the Metropolis, carried out particular improvements, partly at the expense of the Metropolis at large, and partly at the expense of the parish in which the work happened to be situated; and—although in some special cases a similar course had been followed by the Council—it appeared to the Council that the arrangement proposed by the present Bill was more equitable than the system adopted in those cases. The adoption of a particular geographical area in those cases—such as a parish—to form a basis of special taxation for the purpose of an improvement led to obvious inconveniences and anomalies, for a contribution was required from all property within the parish in which the improvement was situated, irrespective of whether it was improved, injured, or not affected. In the case of a long, narrow parish, such as Lambeth, the ratepayers at one end of the parish might be specially contributing to an improvement at the other end, six miles distant, from which they would derive no special benefit, while the ratepayers in the other parishes immediately adjoining, and de- riving special benefit from the improvement, would pay no special contribution. In the present case it was not proposed that any special contribution should be required from any parochial area—except in the case of one small and purely parochial improvement to which the provisions of Clause 41 did not apply—but that property within a defined area in the immediate neighbourhood of the improvement, specially and incidentally increased in value by the public expenditure, instead of taking the whole, should give up as a contribution part of the value of such increase. Some confusion had been imported into this matter by the suggestion that if persons who were specially benefited were to contribute, persons who are specially injured ought to be compensated, or, in other words, that worsement as well as betterment should be recognised. This suggestion—though specious—would not stand examination. Under the system which had hitherto prevailed, if it happened that a particular property received any special injury from an improvement, the unfortunate ratepayer was required to contribute, along with the other ratepayers, the full share of expenditure which, in making the improvement, specially benefited others, while it specially injured himself. It was one of the effects of the present scheme to lessen this unfairness. If the principle were generally applied in the future, a share of the cost of improvements would be provided out of the special enhancement in value which such improvements created in property; and the actual amount to be contributed by any of those ratepayers who might happen to be injured by the work would be, pro tanto, reduced. Then the House was told that if an improvement benefited a property it would pay more rates; and, consequently, the Council would profit to that extent. That was a complete fallacy. If a man improved his property himself, say to the extent of £1,000, he would pay more rates; if it was improved to the same extent by the money of the Council, his additional payment would be the same. Therefore, the contention of those who opposed the clause was that it made no difference, and that the increase of payment should be the same, whether a property was improved at the expense of the owner or at the expense of the ratepayers. He submitted to the House that if a property had been benefited at the expense of the ratepayers, the ratepayers should derive some advantage from the effect of their own expenditure. It was said that the Council had submitted no exact estimate of the amount they expected to receive. Nor was it necessary. If the principle was right it was equally applicable whether the amount was £5,000, or £50,000, or £500,000. What the House had to decide was the principle. This would surely not be denied. If it had been a question of detail, he was sure that the decision of the Committee would not have been questioned. That being so, he hoped the House would not be led away into irrelevant points. The principle had been carefully considered by the Committee upstairs. It made no difference to the County Council how the point was decided, because they would in any case collect the same amount. The only question was how the amount should be collected. He submitted, on behalf of the County Council, that the plan in the Bill was right in itself and just to the ratepayers generally. On behalf of the ratepayers, therefore, he hoped the House would support the County Council and their own Committee, and pass a clause which had been drawn in accordance with the principles of equity and justice.

MR. STUART (Shoreditch, Hoxton)

said, he thought the attention of the House ought to be drawn to the remarkable character of the course that "was being pursued by the minority of the Select Committee in debating over again the details of the Bill. It was, at least, unusual and it was certainly inconvenient—for the minority of a Committee to bring forward in the House of Commons the contentious which they had failed to establish in Committee. He did not think it was worth the House's while to devote attention to the amount of money involved in this particular clause. The amount was quite irrespective of the principle. The sum involved was of much less importance in the present case than it could be in almost any case, because no one was to be affected by any particular charge who had not been adjudged by the arbitrator to have incurred a corresponding benefit. The charge would be in proportion to the amount of benefit conferred. The hon. Member for Wandsworth (Mr. Kimber) had admitted the principle of betterment, as the minority of the Committee had done, by voting in favour of the Report, which was thrown out, such Report having conceded the principle of betterment. The principle of betterment, for which the London County Council contended, had been admitted over and over again. It existed in the latest Housing of the Poor Acts, because it was provided in those Acts that where obstructive buildings were removed, and neighbouring property was benefited by such removal, a specific charge made by an arbitrator should be put upon the owner or other person interested in the building to pay for the cost of removal. It was no argument against this clause that it was not a general clause, because most of the legislation affecting Private Bills had been built up through specific cases being dealt with in specific Bills. Most of the principles of the Lauds Clauses Act were built up in that way. The principle of betterment was admitted, not only in the Minority Report of the Committee on this Bill, but in the unsuccessful Report brought forward in 1890 by the President of the Local Government Board (Mr. H. Fowler). In the Report the following passage occurs:— That the Committee are of opinion that where it is clearly shown that property adjacent to or in the neighbourhood of a public improvement carried on at the public expense is substantially and permanently increased in value by such improvement, it is just that the proportionate contribution of the cost of such improvement should be equitably levied on the property so improved. The difficulty that attached to the Betterment Clause of 1892 lay principally in the proposal to establish a fixed sum, which was to be divided amongst the persons whose property was bettered. It was pointed out that it would be extremely important to show what would be the limit of the betterment area, because additional charges were thrown upon those who were included by every omission from the number. That difficulty did not exist in the present case, because if the area were not sufficiently extensive, whilst the town would not profit sufficiently, no individual would suffer by the fact that other property was left out of it. It had been said that there would be an uncertainty for seven years as to whether the mortgaged charge would hang over the owners of property in the district. That was not, however, a fair way of putting it. The fair way of putting it was this—that there would be an uncertainty as to how much particular properties would be increased in value without any expenditure on the part of the owners; and whilst that uncertainty existed there would exist a corresponding uncertainty as to the proportion of the value that would have to be paid to the community. For many years, in London and elsewhere, it had been the endeavour of the House of Commons to make those who were specially benefited by public improvements bear part of the cost, and also to intercept the special benefit derived from individuals from the improvement, and to hand it over to the community. The rough-and-ready method of making the parish in which the improvement took place pay a special rate had no particular recommendation. He had previously referred to the much more specific method under the Housing of the Working Classes Act, 1890, and he now came to another point wherein the State had for many years endeavoured to intercept this increment. By this method with which he was dealing a town, when it had reason to believe that property would be improved, could schedule it, purchase it, and sell it again. The object of that was that the town should become the inheritor of the particular benefit arising to the property from the improvement. But it was pointed out by the Committee that that plan had entirely failed from a financial point of view in securing the end at which it was aimed. It had resulted in the predecessors of the London County Council, when carrying out a great improvement scheme, purchasing a great deal more property than was absolutely necessary, and actually losing money by so doing. The transaction was destroyed in a pecuniary sense by the immense expenses attached and the immense compensation required. It was proved to the Committee that the heavy loss incurred in attempting to carry out this recoupment scheme had arisen largely from the necessity of having to purchase trade interests which the improvement annihilated and abolished. For that system the London County Council now wished to substitute the betterment system, and they had in this case an opportunity of applying the principle, which did not possess in it any remarkable feature. The principle could be easily applied; it could be tried alongside the recoupment system; the Bill would enable a fair judgment to be formed upon its working, and upon the result of that experiment the Municipality of London would in the future have to decide whether or not to apply the principle to more extended cases. He denied that this proposal in any way touched the general law, other than to afford an opportunity in this particular instance of initiating one of these movements constantly made in Private Bills. He hoped the Government would consider the people of London in this matter, because many great improvements were at the present time being carried out at the expense of the occupying ratepayers. They had been labouring many years to realise in London a portion of the London programme, which contained as one of its principal features that taxation for the improvement of London should be borne by the property interests which directly benefited by it. This Bill was a small beginning, and he claimed from the Government support for a measure most urgently needed in Loudon, and most urgently supported, not only by the Progressive majority of the London County Council, but also by not a few of the Moderate Members who sat opposite to them both in the Council and in the House of Commons.

SIR J. FERGUSSON (Manchester, N.E.)

said that, as Chairman of the Hybrid Committee which dealt with this Bill, he felt it incumbent upon him to say a few words, because, although the matter in itself was small, the principle involved was a very large and far-reaching one. He had always been in favour of supporting the decisions of Committees upstairs, and especially those of Committees on Private Bills. They all knew why the consideration of such Bills was taken out of the House. But the Committee on this Bill was a rather peculiar one. It was not like the Select Committee ordinarily appointed to deal with Private Bills. His experience was that such Committees heard the evidence and listened to the addresses of counsel before the opinions of individual Members could be ascertained. But this Committee was avowedly formed on Party lines. Members of it—as could be seen from the printed papers—did not disguise their opinions; they acted as advocates of their respective principles; and the result, as far as they were concerned, was a foregone conclusion from the very beginning to the end, when it was seen that, omitting the Chairman, the majority was five to three. He felt it his duty to point out what a very unsatisfactory tribunal this Committee proved to be. Members of Committees on Private Bills were bound to attend the sittings, and if they absented themselves were reported to the House; but in the case of this Hybrid Committee Members were not so obliged, and one hon. Member was only present one day and a half, and did not hear the address of a single counsel. The Division Lists showed, too, that only a fraction of the Committee voted on several occasions. Therefore, he submitted that a Committee so constituted was not entitled to the same respect for its decisions as an ordinary Select Committee on Private Bills. It was said that this was only a small matter. So it was; but, as the Bill was originally read a second time, it included a very much larger improvement scheme, for making, at a cost of something like £3,000,000 sterling, a great central street north of the Strand. The London County Council, for reasons best known to itself, saw fit to withdraw that scheme, which also involved the adoption of the betterment principle, and to limit its fighting to the comparatively small and unimportant improvement now dealt with by the Bill. This was a proposal to make a street about a mile long from the southern end of Tower Bridge to the Old Kent Road, and passing through a large and populous parish, the industries of which were somewhat decayed. It might be hoped that these interests would be revived by being brought on to the flanks of a great arterial communication, and one witness for the London County Council expressed an opinion that all the industries of Bermondsey would benefit by being placed on a main thoroughfare. But surely that only increased the difficulty of judging where the betterment principle could properly be applied. One hon. Member had stated that this Bill differed from its predecessors, inasmuch as it did not include a considerable area to which the principle should be applied, but clearly laid down the limits of deviation, and confined those limits practically to the properties abutting on the proposed street. The hon. Member for Hampstead, in moving the omission of the clause, said that he had expressed a decided opinion on the matter. He did not do so, however, until the evidence had been received and counsel had addressed the Committee. He certainly had a very decided opinion, and it was that the principle would be most unfairly applied in this case. The Committee of 1890 on the Strand Improvement Scheme—a Committee presided over by the President of the Local Government Board—reported in that case that the principle could not be properly applied. The hon. Member who had just spoken said that Committee came to the conclusion that that was not a proper case for the charge to be imposed. But the Committee set forth very much what he stated in his draft Report to the Hybrid Committee, that it was alleged a great improvement would be conferred on a very large area; but the Committee thought that only one side of the Strand would be improved, and that the adoption of the betterment principle was neither expedient nor justified on the evidence produced. Objection had been made to the principle of laying half the cost of the improvement on the parish. But that principle was precise and accurate compared with the betterment principle. Here they had a proposal to render property on each side of the new street liable to assessment, while persons living two or three doors up a side street immediately adjoining the new arterial road would not be liable to the charge. How could they say that a house 10 yards away from the new street would not be benefited by the improvement? This was a point on which it seemed impossible that the betterment principle could be fairly applied, except in the well-known way of the house being rated according to the quinquennial valuation. By the principle adopted in this Bill there was an arbitrary prophecy that a certain property would be benefited, while no allowance was made for any possible subsequent depreciation. It seemed altogether inequitable that a property should be charged increased assessment on account of a problematical or perhaps temporary enhancement of value, while another property, which might be lessened in value by the proposed improvement, was to have no compensation. Evidence, indeed, was given in this particular case to the effect that properties in the present road would be lessened in value if the traffic was taken into the new street. On what ground of justice was a man to have his property peremptorily taxed on an estimated increase of value if his neighbour a few yards away was to be deprived of his custom through the diversion of traffic, and to have no compensation for his loss? Now, there was no way in which the principle of enhanced value or lessened value could be determined otherwise than by the old-established method of periodical assessment, by which rates were laid on according to the value of the house. The hon. Member for Shoreditch stated that the Lands Clauses Act provisions were built up by separate decisions, and on that ground the House might now come to a decision which would constitute a most important precedent, and enable other Bills of the same kind to be passed with greater ease. But the reference was, he thought, an unfortunate one, for under those clauses no man's property could be taken without his being afforded an opportunity of defending and maintaining his rights. But in the case of this Bill one of the parties to the bargain was to make an assessment, and that assessment was to be final unless the owner of the property assessed chose to go to law. The hon. Member for Shoreditch spoke of going before an arbitrator as a very light matter. But was it so simple a matter for a man owning property of the class mainly affected by this improvement? Take the case of a man owning a house rented at £20 or £30. An assessment of £3 on the betterment principle was placed on the property. Would it not be a serious thing for the owner to have to instruct counsel and go before an arbitrator simply to upset the assessment? Yet he would have to do that, or submit to the extra charge in silence. Reference was made earlier in the Debate to the Committee of 1887, which dealt in a very comprehensive manner with this principle. It was one of the strongest Lords' Committees that could have been appointed. It was presided over by the Duke of Richmond, and included among its Members Lord Salisbury, Lord Ripon, Lord Cowper, Lord Stanhope, Lord Eversley, and other well-known Peers. It examined into this principle—that was to say, whether the benefit to be derived by individuals should be recouped by special rate—and it reported that the principle of rating exclusively according to the benefit received was difficult of application, and was frequently found to work unsatisfactorily in practice. He relied upon the very exhaustive Report of that Committee, and he submitted that the evidence in this case was totally insufficient to make out any case for the particular proposal brought before that Committee. The scheme seemed to him to be full of injustice, and most unlikely to result in any recoupment at all in comparison with the injustice that would be done to individuals. He hoped the House would consider the enormous hardship this would inflict on the owners of small properties by compelling them either to submit to an arbitrary assessment, or expose themselves to an expensive kind of litigation.


I quite agree with the right hon. Gentleman who last spoke in deprecating the appointment of Members to Committees of this House upon, I will not say Party, but interested, lines, and I also very much deprecate the view that Members of the Committee should be fairly chargeable with being advocates on one side or the other. The rule the House has laid down with reference to Private Bill Committees is that Members appointed thereon shall make a declaration that neither they nor their constituents are interested in questions coming before the Committee, and I think that is a very salutary provision. As far as these London Bills are concerned, I should be wanting in my duty if I did not express the opinion that Metropolitan Members, either on one side or the other, ought not to be put upon Committees in which they are called upon to consider questions promoted by the Metropolitan Authorities, and in reference to which strong feeling exists on both sides. Now, I do not propose to ask the House to deal with questions of detail; indeed, nothing could be more ludicrous than the spectacle of an hon. Member reading disjointed passages of a witness's evidence without reference to his cross-examination or re-examination, or explanation, and then asking the House to express a judicial opinion on a question which had occupied the attention of a competent Committee presided over by a competent Chairman for many days. The House cannot decide such questions of detail, and I think I am justified in quoting the statement made by Sir Robert Peel many years ago with regard to Railway Committees—that it was the duty of the House to support the decisions of these Committees although they might not concur in them. If the House is dissatisfied with the decision of the Committee on this Bill in matters of detail, those difficulties can be dealt with in another place. Now, the House has been challenged to pronounce an opinion on the principle of betterment, and it is upon that I ask the House to support the maintenance of the Betterment Clause in the Bill. I am prepared to abide by certain carefully considered words which I submitted to the Committee to which reference has been made by the right hon. Gentleman opposite— Where it is clearly shown that property adjacent to or in the neighbourhood of a public improvement, carried out at the public expense, is substantially and permanently increased in value by such improvement, it is just that the proportionate contribution towards such cost should be equitably levied on the property so improved. That I believe to be a fair statement of the betterment principle, and I submit that there is nothing unjust in it. Hon. Members have suggested that the contribution is already made in the form of increased rating. But let us take a concrete illustration. A man owns some houses in a cul-de-sac. By public money and at the public expense that cul-de-sac is converted into a broad, wide, and much-frequented thoroughfare, and the property in it doubled in value at enormous cost to the general ratepayer. Is there anything unjust in asking the owner of the property to pay a legitimate share of the expense of the improvement that has doubled the value of his houses? The share proposed in the Bill is but one-half of the enhanced value given to his property, and it is not demanded in a lump sum, but is taken in the form of a charge at 3 per cent. until the owner chooses to redeem. The right hon. Gentleman who last spoke alluded to the Lands Clauses Act, and seemed to forget that under that Act there is a provision that where land is injuriously affected, but not taken, compensation should be paid to the owner.


The power of giving compensation is closely guarded, and is granted only in special cases.


I think it should be closely guarded, and I do not object to any fair and reasonable restrictions in this case. The hon. Member who moved the rejection complained of what he called the slang parlance of betterment, and the hon. Member who seconded the rejection complained of the introduction of an entirely novel principle, and of a deviation from all the established rules relating to dealing with property. But "betterment" is not slang parlance. It is a very good phrase in the English language. In the Act of Parliament which was passed after London was burned down, to provide for the rebuilding of the City, I find on the margin the phrase "houses that should be bettered in value." Indeed, there can be found no better illustration of the principle than in this Act which was passed 250 years ago in the time of Charles II., for there is in it a provision that any house which received from the rebuilding of the City any advantage in the value of rents by reason of "free air, free intercourse for trade, and other convenience" should have a charge levied on it by the Corporation towards the expenses of rebuilding the City. Pepys, in his Diary, tells an anecdote of having met some man in the City who told him about a project for building a street from the Guildhall to Cheapside. It was said that a man was in possession of a piece of laud lying in the middle of the intended street, and that after it was cut through sufficient land would be left on each side to enable him to build houses on each side of King Street. He wanted £700 from the Corporation for the land taken, and to be excused from "melioration" on the remainder which he kept; but the Corporation declined the terms, and eventually the man accepted an agreement by which he received nothing in consequence of the improvement in his property. This principle has also been adopted in America. It is part of the law of the State of New York.


That anecdote from Pepys was told at the Committee on behalf of the County Council, and they were asked to set worsement against betterment, but declined.


I do not see the relevancy of the hon. Gentleman's remark. The hon. Gentleman said this is a new principle. I say it is an old principle. It is a principle centuries old that property which has been improved by the expenditure of public money should pay something. I ask the House to accept that principle. It has been said that this is a small matter; that it involves the expenditure of only £5,000; but that, I think, strengthens the application of the principle in this case. The hon. Member for Shoreditch said that betterment and ground values contain the same principle: but I do not agree with him. I consider that the question of betterment does not in any way touch the question of ground rents. I think they are totally separate and distinct questions. The principle of betterment stands by itself. If improvements be carried out at the public expense, and private property thereby be enormously increased in value, that private property ought to be required to contribute towards defraying the cost of the improvement. I, therefore, beg to support the clause.

MR. BIRRELL (Fife, W.)

said, he heard with astonishment the right hon. Gentleman the Member for North-East Manchester refer to his conduct as a Member of the Committee in having voted, though his attendance at the meetings of the Committee was not regular. Before he voted he stated to the Committee the reasons for his absence from the meetings, and mentioned that he had made himself acquainted with everything that had taken place before the Committee. He stated also to the Committee that in voting he felt certain his conduct would be referred to in the House of Commons, whereupon the right hon. Gentleman said with some heat—"You may rely upon it will not be referred to by me," and yet the right hon. Gentleman had thought fit to refer to the matter. He wished to inform the House that he was not an original Member of this Committee at all. He was not added to the Committee till it had had two of its most important sittings, when the whole case for the County Council was opened, and when its principal witness, Mr. Charles Harrison, was examined, cross-examined, and re-examined. He accordingly found himself at a disadvantage; but having been supplied with a full verbatim account of everything that had taken place before the Committee—of every word uttered by counsel, witness, and the Members of the Committee, he read it as carefully as if he had been paid for reading it, and, consequently, made himself honestly acquainted with the proceedings of the Committee. On subsequent occasions he attended the Committee for the greater part of two days, and heard every witness except Sir John Whittaker Ellis; but he read that gentleman's evidence, and, having often seen him in the witness-box, he was perfectly acquainted with his demeanour, and he did not think there was any harm in saying that there was nothing whatever to be learnt from the demeanour in the witness-box of Sir John Whittaker Ellis. The Committee were satisfied with his explanation, and the general impression was that he was as well qualified to vote as if he had sat out the meetings of the Committee eating penny buns or writing letters during the progress of the proceedings. At all events, he gave a perfectly honest vote, and he thought he was as well qualified to do so as the Chairman himself.

MR. MACDONA (Southwark, Rotherhithe)

said, the whole of London would be benefited by the Bill, but the benefit that Rotherhithe would get from it would be very small; and he thought it would be very unfair and very unjust, whether they did it by betterment or by worsement, that Rotherhithe should have to pay for the benefit of London at large.

MR. GOSCHEN (St. George's, Hanover Square)

That this question is important is acknowledged by both sides of the House, and by no one more than by the hon. Member for Shoreditch. The fact is that into this Private Bill a principle of the very highest importance has been introduced; and I venture to say that if it had been introduced as a Resolution on a Tuesday or a Friday night, as to whether the principle of betterment should be applied to the Metropolis, it would not be considered too much to spend half a night considering a matter which, both to ratepayers and County Council, is of the greatest moment. Therefore, I say that no apology is needed for the time we have devoted to this question. The right hon. Gentleman the President of the Local Government Board has acknowledged that, so far as this particular case is concerned, there are reasons, partly due to the constitution of the Committee, which do not place us in a thoroughly satisfactory position. I will not allude to the non-attendance of the hon. Member opposite, except to warn the House not to be carried away by the example of the hon. Member. The hon. Gentleman considers that if one is at all acquainted with the demeanour of a witness, it is just as well to save the time of attendance at the Committee when you can inform yourself by the printed evidence.


I beg the right hon. Gentleman's pardon. I did not say that. I said I regretted I was unable to be present, and I did the best to inform myself of the facts of the case.


The hon. Gentleman said more than that. I do not mean to attack him, but the principle is very important. The hon. Gentleman said that though he was not present at the meeting of the Committee he was as well qualified to pass an opinion as hon. Gentlemen who had attended the Committee from day to day. I venture to make what I trust will be accepted as a good-humoured protest against the idea that to read the proceedings of a Committee is sufficient if an hon. Gentleman cannot attend its meetings. As regards the principle of betterment, I frankly say, speaking for myself, that I accept in general terms the principle as laid down by the right hon. Gentleman in the words which he read out. But there was one very important word in it—the word "permanent"—that the improvement is to be considerable, and is to be permanent. To decide whether an improvement will be permanent is one of the great difficulties which surround this subject. Nothing has left a greater impression on my mind as against the application of the principle than the utter absence in all cases—and certainly in this—of a remedy in the future against any injustice that has been inflicted on the owner of property by the decision of the arbitrator. The right hon. Gentleman gave an instance of property that might be improved by the removal of a cul-de-sac. But suppose a heavy charge was put upon the houses in that particular locality—a mortgage, as it has been described by my hon. Friend behind me—and suppose that in 10 years a new street which had not been thought of at the time was opened close to this particular street, down would go the value of the houses upon which—not owing to any act of the owners, but owing to a public act—a mortgage had been placed for all time. Will the right hon. Gentleman say that what is a permanent improvement to-day may not be the reverse 20 years hence? I draw from that the moral that in this scheme there shall be, at all events, some machinery for remedying any mistake that may be made. If a permanent charge is imposed on houses which afterwards turns out to be unjust, some machinery should be devised for remedying the injustice. My right hon. Friend the Member for the University of London said that these improvements should be paid for in part by the owner of property, because he was relieved of the cost of making the improvements himself. Perfectly true, if they are improvements from which he himself will derive distinct and permanent benefit. But what is a benefit to the owner of a house in one street may not be an improvement to other houses in the same street, and after some years it may turn out to be no improvement at all. The whole question is surrounded by difficulties in its application; but the principle itself has a great deal of force. When the Second Reading was debated the Leader of the Opposition said that when the Bill came again before the House it would be necessary to examine very carefully whether the principle was so applied as to relieve apparent injustice. The result of the discussion has been not to remove the doubts from my mind. Further than that, I think it is most inexpedient to try so big a principle on so small a scale. I think that is a legitimate reason for rejecting this clause. If the principle is to be applied, let it be applied not on this limited scale, which may blind us to the many defects which are inherent in the matter, but on a scale which will enable the House to judge of the merits of the principle. The principle, as I have said, is just; but the House should see that there is proper machinery, and that proper precautions are taken to insure that the application of the principle shall not involve a greater injustice than its absence.

Question put.

The House divided:—Ayes 216; Noes 118.—(Division List, No. 170.)

Bill to be read the third time.

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