LOCAL TAXATION IN URBAN DISTRICTS.

HC Deb 08 March 1895 vol 31 cc700-39

MR. A. D. PROVAND (Glasgow, Blackfriars)

said, he rose to propose the Motion, notice of which, stood upon the Paper. Nothing he could say would add to the importance of the subject. The question of local taxation must come before the House every Session in some form, and the House was likely in the near future to hear more about it in the form he proposed to deal with it than had been heard in the past. Local authorities and municipalities had had to deal with a large increase of urban taxation during recent years, and the Government had recognised the importance of the question, inasmuch as they included the taxation of land values in the Newcastle Programme. He intended to deal with a part only of what was included there, his Motion being framed to exclude taxation dealing with agricultural land. There were several reasons for that, one of which was to simplify the question so as to enable the House to deal with it within the limits of an Evening Sitting. The urban question was of enormously greater importance than the rural question, as the amount of rates raised was so much larger, and the amount of money borrowed by urban authorities to carry out improvements represented nearly the whole of the local indebtedness. In a few words he would state the grievance of which he had to complain. It was that occupiers paid the rates, and that the maintenance of the city, and the public improvements paid for out of those rates raised the value of the whole of the land under each town or city; and this increased value was realised by increased rents. Occupiers were, in fact, rented for advantages arising out of improvements and works paid for almost entirely with their own money. The increase in the value of town land went to the owners who, in England, paid almost no rates at all, and in Scotland and Ireland only a part of them. He could not state the matter more briefly and pertinently than by quoting to the House the words used by the right hon. Gentleman the Member for St. George's, Hanover Square (Mr. Goschen), when President of the Local Government Board, On 3rd April 1871, in introducing his Local Taxation Bills, the right hon. Gentleman said:— The result of the present stale of things has been that many great improvements in the Metropolis, in Liverpool, in Manchester, and in other large towns, have been made in the last ten years exclusively at the cost of the occupiers without the landlords contributing a single shilling towards the expenditure. That which had gone on for ten years prior to 1871, had continued for more than 20 years since on a larger scale; urban rates had increased faster during the past 20 years than they increased before the time when the right hon. Gentleman addressed the House on the subject, and were increasing faster now than ever. So the time had come for putting before the House a reasonable and equitable proposal, which would have the effect of making a fairer adjustment of taxation where land was built upon, and would open a new source of taxation altogether where land is vacant and unoccupied by buildings. The rise in the value of urban land had been altogether created by the increase of population, the consequent wealth arising from their industry, and the public improvements carried out, and there could be no doubt of the equity of the public taking for the public use as much as was practicable of that value which had been created by themselves. The expenditure in urban districts from rates was enormous, but beyond this, urban authorities had borrowed largely, and the present debt of local authorities exceeded £200,000,000 sterling; of which only about £4,000,000 were owing from rural authorities, £13,000,000 from authorities partly urban and partly rural, and nearly £184,000,000 were owing by urban authorities. Our local debts were increasing faster than our National Debt was being paid off, and the purposes for which this money was borrowed and expended had been directly the means of increasing the value of the land upon which the towns were built —such improvements as new highways, streets, sewers, markets, bridges, libraries, drainage, harbours, docks, &c., all of which increased the value of the land in towns. In reference to the present rating in urban and rural districts the President of the Local Government Board said, in the Report issue I last year:— At no time during the century for which statistics are available had the average rural rates in the £ been so low or the rates in London been so high. And the rates in London had since increased. As illustrating the increase in urban values he instanced Glasgow and London. In the twenty years between 1871 and 1891 the increase of rental value in Glasgow had been £1,330,000, or 62½ per cent., and the capitalised value of that was not less than £20,000,000. In London, during the same period, the increase in ratable value had been about £17,700,000; the capitalised value of which would be quite £250,000,000. No doubt the greater portion of that represented the value of new buildings, but, after allowing for those, there must have been an enormous increase in the value of the land, and that had gone directly to the owners of it, who had contributed little or nothing to create it. Two objections had been urged to the taxation of land values. It was said land in cities was taxed locally now, and that was true, as it was rated with the house standing upon it, but the rates were rarely paid by the landlord. Then, further, it was said it was impossible to discriminate between the value of the land and the value of the buildings on it, and that, separate assessment was, therefore, impracticable. In their Report of 1892, the Town Holdings Committee said that, in their judgment, separate assessment was not practicable; but there were different ways in winch the land under cities could be taxed. It might be rated separately from the houses or it might be taxed in a way similar to the Land Tax, or a municipal death duty might be imposed. The grievance and the necessity for redress being shown, no doubt, in some way, a method of taxation could, be discovered. Though that Committee considered separate assessment impracticable, they said nothing of any other method of taxation; they did not report anything against the plan of municipal death duties. No doubt there would be difficulties in connection with carrying it out, but they were not insuperable. Other Committees had sat and reported on the subject besides the Town Holdings Committee. The London County Council had given great attention to it, and had passed a resolution to the effect that land might, and should be, assessed separately from houses. A Corporation Committee had been appointed in Glasgow to deal with the taxation of future unearned increment. They had received an interim report from the City Assessor proposing a plan, but had come to no decision. Various schemes had been propounded for the taxation of land separate from houses, and the equitable adjustment of the amount amongst those liable; the whole of which seemed to be based on a sub-section of Clause 1 of the Report of the Select Committee on Local Taxation of 1871, of which the right hon. Gentleman the Member for St. George's, Hanover Square (Mr. Goschen) was chairman, to whom the House was indebted for much valuable information in reference to local taxation. The subsection was— That, subject to equitable arrangements as regards existing contracts, the rates should be collected as at present from the occupier, except in the case of small tenements for which the landlord can now by law be rated, power being given to the occupier to take from his rent the proportion of the rates to which the owner may be made liable, and provision being made to render persons having superior or intermediate interests liable to proportionate deductions from the rents received by them, as in the case of the Income Tax, with a like prohibition against agreements in contravention of the law. Let the House then consider what would be a new source of taxation—vacant land. It was true that the Report of the Select Committee three years ago said that the land where there was a building upon it could not be separately assessed from the building; that to do so was impracticable. But there was nothing impracticable in the assessment of vacant land; however, the Committee objected to it on the ground that it would be taxation of capital. They concurred in the view that by far the most effective cause of increased value of vacant land was the growth of the neighbouring population, which created a demand for land, and that that increase was what was known as "unearned increment." But they thought that if vacant land were taxed separately, it would be a tax on capital value, and that would be a departure from the existing basis of local taxation, and would be difficult in operation. He saw no difficulty as to its operation, and with respect to its being taxation of capital value the Committee reported that the principle appeared to be one of a far-reaching character, and if adopted its application might have to be extended to other forms of property. But, they added, it was a principle upon which economists of high authority entirely differ. Therefore there were two sides to the question. But the capital value of land was created by the increase of population; and their fears of the principle being extended to other kinds of property were groundless, as there was no other kind of property in which value was created in the same way. If population did not come, there could be no increase of value to the land, and if population did come, an increase in the value of the land necessarily followed. The Royal Commission on the Housing of the Working Classes in 1885 reported quite differently from the Select Committee on Town Holdings in 1892, and with the permission of the House he would read a few lines from the Report:— At present, land available for building in the neighbourhood of our populous centres, though its capital value is very great, is probably producing a small yearly return until it is let for building. The owners of this land are rated no in relation to the real value, but to the 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 occupiers would be diminished by the increase in the rateable properly. 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 enterprise 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. Quite so. They pointed out that the whole value was created by the townspeople themselves, while it passed into the possession of the few who happened to own the land. Indeed, so little was the enhanced value due to the owner of the site that he might be an imbecile or an infant, it was not necessary that he should do anything, the increase in the value of the land would go on steadily with the aggregation and industry of the surrounding population. If vacant land were taxed, it would certainly make an enormous difference to the municipalities. In the case of Glasgow— the only city he would refer to, as it was a representative city, and the others were all in a like position—Glasgow, with a municipal area of 11,861 acres, had 3,500 acres still available for building purposes, and the whole value of this 3,500 acres was derived from those who lived in the city, their industry and expenditure, while the owners of the vacant land contributed nothing to the maintenance of the city. He might give many illustrations of the hardships arising from the inequitable methods by which urban rates were assessed at the present time; and it was undoubtedly the case that a remedy was necessary which local authorities required the assistance of the House to provide. The London County Council introduced a private Bill two years ago to reform the system of rating, because, in their judgment, they thought it would be best to proceed by private Bill. But the right hon. Gentleman the Member for Thanet put a Motion on the Paper which prevented them from proceeding with it, and nothing had been done. To say that a private Member might introduce a public Bill to deal with the question was to dismiss the question to a future which it was impossible to estimate. No private Member as they all knew, could bring forward any Bill except by the chance of the ballot, and he might be many years before he was fortunate enough to secure a place. They must either have the assistance of the Government in that matter, or a private Member must be given an opportunity of dealing with the question. Otherwise it might be shelved for a long time to come. The Government had already recognised, not only the necessity of rating urban land values with which he had dealt, but the whole question, inasmuch as they had put it down in their programme as a reform with which they would deal as soon as an opportunity was given to them. He was sure that that question appealed more directly to the majority of the inhabitants in towns than almost any of the other questions which so far had not been dealt with by the Government since the programme referred to was issued. He, therefore, hoped they might reasonably expect some Member of the Government to state what their intentions were on the subject. Meantime, he would content himself by moving— That no system of taxation can be equitable unless it includes the direct assessment of the enhanced value of land due to the increase of population and wealth and the growth of towns.

MR. J. FLETCHER MOULTON (Hackney, S.)

in seconding the Motion, said, he felt that in bringing the subject before the House no apology was needed from the nature of the subject itself. They all knew that the local Budget of this country was assuming such gigantic proportions that already it was something like two-thirds of the Imperial Budget; and that already the Local Authorities had run up a National Debt of some £200,000,000, which far exceeded the extent to which we had paid off the national indebtedness of the country during the last few years. It was also well-known that the sources of revenue for local authorities were necessarily restricted in their nature, and that we could not admit any source to be availed of that would limit the free circulation either of persons as residents or articles of commerce. The revenue must come from something local, the putting taxes upon which would not cripple the community; and those who had given their attention to local revenues knew how very great and pressing such restrictions were. There were, therefore, but few sources, and beyond all contest the great source of local revenues now and in future must be local rates. At the present time they were the source of nominally one half, really far more, of the whole of the local revenues of this country. To put them on a proper foundation was a task worthy of any statesman, however great. We had certainly got the principles of Imperial taxation settled to a very great extent. Our taxes were few; they were based on great principles, and there was no wish to add to them. When the House turned to local taxation they found that the great burden of local taxation was borne by a source which, in the opinion of both sides of the House, was radically wrong in its present incidence, and that it should be left in that state was a disgrace. He did not want to make a speech that would arouse opposition. He believed that if in this matter they could banish conventional hostility, and talk on this subject without passion, they would find that the points of difference between the two sides of the House were far less important than was believed. He thought he could show that the principles which had been accepted by those who sat on the other side of the House led in their logical consequences so near to the reform which they on the Ministerial side of the House advocated, that but little would be required to accomplish it, and unless and until it was accomplished no great reform in local taxation could take place. The present condition of rates was such that, until they disentangled the two types of taxation that lurked within it, no one could consent to the rates being made more burdensome. That part which it was safe to tax more heavily was so mixed and covered by the other, that he felt sure public opinion would be against rates producing their proper return to the community, until they had accomplished the reform which would disentangle the two conflicting elements. He had said that he did not believe that the difference between the two sides of the House was so great as was supposed. If they looked at the Town Holdings Commission Report of 1892 it would be found that they gave two recommendations. One was—that half the rates ought to be borne by the occupier and half by the owner; and the other was— that any contract altering that incidence of rates should be declared invalid and void in law. What did those two recommendations mean? The second recommendation was really the more important; it was that people should not alter the incidence of taxation by contracts between themselves. What a farce it was for Parliament to discuss what should be the incidence of local taxation when they knew that every lease set at defiance their decision, and that by leases the landlords of London had carved out of London's revenues the most valuable portion, and had sheltered it from the burden of municipal rates. The state of things was as bad as it was in France in the old days, when the greater part of the property was owned by the clergy and the nobility, and they paid no taxes. By their contracts the landlords of our towns had completely sheltered all the best portions of the revenues of those towns from any contribution to the burdens of the municipalities. In fact, throughout all the towns of England it was the persons who paid the rents who also paid the rates, and not the persons who received the rents. When persons insisted that London could easily bear the burden of its rates, did they reflect that the £8,000,000 of rates did not come out of the £33,000,000 of rental value, but that the £33,000,000 passed into the hands of owners without contributing a penny to the rates. This recommendation of the Town Holdings Committee showed that they were of opinion that this shielding of revenue from rates ought to cease, and that the incidence of rates ought to be determined by law, and not altered by contract. But almost as important was their other decision that rates ought to be borne one half by occupiers and one half by owners. He did not accept that division, but the recommendation might be accepted for argument's sake. It showed that in the opinion of opponents a portion of the rates ought to be borne by owners. How was this to be levied? No two classes of property could be more distinct than buildings and land. The land could not wither; it could not become useless; it could not have to be replaced; it remained, and was enhanced in value by improvements to the cost of which it contributed nothing. Buildings were the direct outlay of capital, and required to be maintained; they decayed and became obsolete, and so the capital spent upon them was lost. Therefore, you could not apply to both the same measure of annual value. Surveyors knew that the capital value of land is something like 30 times its annual return, while the capital value of buildings is only 16 times their annual return; and, therefore, under our present system we really tax buildings twice as heavily ay we tax land. It was marvellous how some people deluded themselves by fancying that land in towns obtained increase of value from some mystic source which cost nobody anything. Stop our Municipal expenditure on streets, cleansing, lighting, and the land in Belgrave Square would have no value. That value was as much the direct consequence of municipal expenditure as a crop of coffee was the result of the upkeep of an estate. If we were going to draw municipal taxes from these two classes of property, we must separate them and apportion different rates of; taxation to each. If ever there was a property that ought to contribute largely to municipal revenue, it certainly was land which so greatly benefited by it. Two of the most remarkable features of social life were the enormous rise of expenditure in towns, and the enormous rise in the value of town land; the two went together, and one followed the other, and furnished the source from which the necessary expenditure might be supplied. It was said it was impracticable to separate the value of land from that of houses. Well, he had had some experience in compensation cases, and he never knew a case, certainly not in London, in which the witnesses on both sides did not value first the land and then the buildings upon it. It was almost the universal custom to separate the two elements. What was practicable in valuation was practicable in assessment, and he could not understand the alleged difficulty in tracing the annual value of land to the hands that received it. It was a fundamental principle with those who advocated the reform in local taxation, that not a pound should come into the hands of any one from the land of towns, but it should pay its tax. They had got to find out where the revenue went to, and there they must get the tax. If the return from any piece of land was, £100, and if the person paving it deducted the rate as he did the landlord's property tax, they would accomplish what they desired in taxing this revenue. Antagonists divided themselves into two classes, one alleging that the landlords paid all the taxes, and the other that the tenants did so. The truth was, that under the present system we did not know the incidence of taxation. The burden of rates was a terror to dwellers in towns. During the last six years in London the London County Council had deliberately, with the approval of the ratepayers, refused to carry out improvements because of the great and ever increasing burden of the rates. The most serious wants of the towns were going unsatisfied because taxation was imposed in such a way that the occupier had to bear the burden, and until the rates were separated into that which ought to be borne by the land, and which ought to be borne by the buildings, and that which ought to be borne by the occupier, those wants could not be satisfied. It was their duty to see that the incidence of taxation was fair. Everyone, whatever his views on the subject were, ought surely to see, and the first duty incumbent on the House was to make local taxation take its true shape, and to take care that those people should pay who ought to pay. He called upon all in the House who desired that the taxes should not be an unnecessary burden on the people, and who would not allow their eyes to be shut to injustice, to take care that local taxation should be placed on a basis by which its incidence could be told, and by which the fairness of its incidence might be secured.

MR. LEES KNOWLES (Salford, W.)

, who had on the Paper an Amendment to leave out from "no," and add— Legislation which may he proposed to this House on the subject of the direct assessment of the enhanced value of land due to the increase of population and wealth and the growth of towns is expedient, unless it is based upon the recommendations of the Select Committee on Town Holdings, which, after an investigation extending over nearly seven years, presented a Report to this House in May 1892, said, that he rose with some diffidence to address the House on this question, but his excuse must be that for five years he had had the honour of being a member of the Town Holdings Committee, and he hoped he might be able to talk without passion, or conventionality on a difficult and complicated question. In the first place, he would like to point out that the hon. Member who opened the Debate brought forward no definite proposal. The hon. Member for South Hackney, however, brought forward a definite proposal, but he hoped to be able to show the House that it was an objectionable proposal. He would remind the House of a notice which appeared on the Paper on Tuesday last in the name of the hon. Member for the Tower Hamlets (Mr. Macdonald), dealing with the subject matter of the present Motion. That Motion went one step further than the one under discussion. It was at first definite but misleading; and then it was altered, and became like the Motion of the hon. Member for Glasgow, indefinite. It was, he thought, desirable to call attention to that matter in order to show the House how these would-be Reformers and Progressives were unable to agree among themselves on the proposal that ought to be adopted with regard to the question of the taxation of ground rents. That Motion asked the House of Commons to commit itself to a definite misstatement of fact. Its terms were:— No system of taxation can he equitable, unless a direct assessment he 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. In point of fact, the recommendations attributed to the Royal Commissioners were not to be found in their Report. The Royal Commissioners reported that the present system of local taxation was unsatisfactory, but that they were not authorised by the terms of their Commission to "go generally into the question of local taxation." They did make a recommendation with regard to the rating of vacant building land (on which subject they had heard no evidence); but, with regard to the "direct assessment" of "owners of ground rents" and "of increased values imparted to land by building operations and other improvements," they made no recommendations whatever. The hon. Member for the Tower Hamlets seemed to have copied the terms of the reference to the Town Holdings Committee, and to have put down as findings of the Royal Commission proposals into which the Town Holdings Committee were directed to inquire. It was difficult to resist the Conclusion that the hon. Member for the Tower Hamlets had taken his facts at second-hand, for precisely the same mistake was made in a pamphlet prepared by Mr. Sidney Webb for the United Committee for advocating the taxation of ground rents and values. But he passed on for a moment from these indefinite, and, as he hoped to show, objectionable, proposals, and would take some of the points raised in the Debate with regard to the question of the unearned increment of land. On that he would quote the words of Professor Fawcett. Speaking on the proposal that the State should appropriate the unearned increment of land, he said:— It seems to us that it can neither he defended on grounds of justice nor expediency. If the State appropriated this unearned increment, would it not be bound to give compensation if land became depreciated…..If the State in prosperous times appropriates an increase in value, and if in adverse times the falling off in value has to be borne by the owner, land would at once have a disability attached to it which belongs to no other property. The Chancellor of the Exchequer, speaking some time ago at Oxford, said:— I shall not discuss with you the 'unearned increment of land.' That is an idea so illogical, so unreasonable, so perfectly unjust, and so absolutely 'philosophical,' that it does not require a refutation.

AN HON. MEMBER

When was that?

MR. LEES KNOWTLES

In 1874. Since the Report of the Royal Commission was issued, the proposals embodied in the Motion had been exhaustively considered and reported on by the Town Holdings Committee. That Committee arrived clearly at the conclusion that ground rents were already rated. The following were extracts from the Report:— The idea that ground rents are a class of property which at present escapes assessment for the purposes of local taxation is, of course, quite erroneous. The basis of all rating is the whole annual value of the building and of the land on which it stands, regarded as one entire property. In the ordinary case of a house subject to a ground rent, and let by the owner to the occupier at a rack rent, the several interests of the ground landlord, of the owner of the house, and of the occupier, constitute together the subject-matter of an assessment which is made upon the property as a whole. There appears to have been a popular impression that ground rents constitute a subject-matter of assessment hitherto untouched, and that a new and fresh source of revenue for local purposes would be 'tapped' by imposing a direct assessment on such ground rents, in addition to the present assessment of the whole property. Hut this view was found not to hear examination. It was soon seen that the assessed value of the house includes that of all the various interests above enumerated, and that to put a direct assessment on the ground rent, in addition to the existing assessment of the house, would be to rate a certain portion of the value twice over. Upon the whole, the conclusion we have arrived at is that in the inception of tin ground lease, allowance is made un account of the existing and contemplated rates, and that the amount of such allowance is deducted from the ground rent, which might otherwise be charged, and that to the extent of such allowance the owner of the ground rent indirectly bears the burden of rates, in the sense that if this burden were remitted he would be able to obtain a ground rent increased by the amount so allowed for. The Town Holdings Committee took Scotch as well as English evidence, and found as follows:— Ground rents and feu duties are already taxed as being included in the rateable value of the town holding on which they are secured. They do not constitute a fresh matter of assessment hither to untouched, as is often supposed. The imposition of a direct assessment upon such ground rents and feu duties as distinguished from the assessed value of the house itself, as at present rated, would lead to anomalies; and inequalities, and has been generally abandoned. With reference to the incidence of taxation, the Town Holdings Committee said— The real, its opposed to the apparent incidence of local taxation in towns, falls partly upon the owner of the land, partly upon the householder, and partly upon the occupier. The proportions in which the burden is distributed are difficult to determine, and depend upon a variety of circumstances, among which the demand for and supply of houses is the most important. Therefore, it would appear from the findings of the Town Holdings Committee, that the lion, and learned Member for South Hackney was wrong when he said that the rates fell upon the occupier. But, if further evidence were wanted, there was the statement made by the right hon. Member for Midlothian, at Ormskirk, in 1868. The right hon. Member said— We all must agree that the ultimate burden of the rates comes upon the landlord. Whether they be parochial rates or borough rates, they will at last find their way to the landlord. Then, as to the landlord's having a voice on the subject of expenditure, the right lion. Member said— The sole power of voting in the parish vestries is with the ratepayer, and if the landlord happens not to be an occupier he has no control whatever over the rates. If this proposal for the rating of ground rents were agreed to, whom would it benefit and whom would it injure? If the right hon. Member for Midlothian and the Town Holdings Committee were right, and ground rents were already rated, it would be unjust to rate them over again. If this were done the people who would be most injured would not be the great ground landlords, but the vast class of small investors in ground rents, who were, perhaps, the most deserving class in the community. The aggregate property of these persons probably exceeded by far the aggregate property of the great owners, who were attacked so violently. In his evidence before the Town Holdings Committee, Sir Thomas Farrer, now Lord Farrer, stated that he had received the following letter from a correspondent:— I should like to put before you the following case, which is typical of tens of thousands in this country:—I am trustee for a lady whose whole income consists of £157 2s. 6d., derived from leasehold ground rents near King's Cross, bought for her by a thoughtful, thrifty husband some time back. She receives £194 2s. 6d., and pays the freeholder £37. She has only a nominal reversion of three days to the rack-rents. In 16 years she loses her income entirely, as the property reverts to the freeholder. Can you tell me upon what principle of right or justice this poor lady is at one swoop to be deprived of 20 per cent, of her income: Is it because the Thames Embankment and other distant improvements are supposed to have improved her property The answer is, her property has depreciated in gross annual value during the last 25 years, but even if it could be demonstrated that these distant improvements have benefited her property, they could not possibly benefit her. If you made London a city of palaces, and paved the streets with gold, she would not be one penny the richer. Her rents were fixed 82 years ago for all her term, and as far as she is concerned they are absolutely unalterable. Sir Thomas Farrer admitted that this letter contained a very strong case, and could not deny that there were many others like it.

MR. J. ROWLANDS (Finsbury, E.)

asked whether Sir Thomas Farrer did not read this letter in illustration of some of the difficulties which would have to be met, but not in support of opinions which he held himself. What he wanted the House to hear was Sir Thomas Farrer's own view.

MR. LEES KNOWLES

referred the hon. Member to Sir evidence. The letter witness when answering question 1,326 of 1890. Other illustrations which he wished to bring before the notice of the House were given in the evidence of Mr. George Beken, a surveyor and land agent, who said— There are hundreds of thousands of the industrial and middle classes who have small savings invested in ground rents through the instrumentality of benefit and insurance societies, besides innumerable private investors and trustees who purchase ground rents as a safe investment, and can ill afford to be victimised by extra taxation.

Mr. Beken

quoted the following cases taken from the business transactions of his firm:— (1.) A messenger for many years to a firm in the City has purchased £16 per annum for £360, and £29 per annum for £650. He referred to these two investments as his "little all." (2.) A photographer invested about £500 in ground rents, part freehold and part leasehold. Has been several years in business. Has three or four children. (3.) A barmaid recently invested £368 in buying £15 15s. 0d. per annum. Mr. Beken was informed that this was all she possessed except £50 or £60. (4.) A small grocer, been about 15 years in business in the City, made four investments in ground rents. The first was for £244, the others about £500 each, giving a total income of about £80 per annum. Speaking to Mr. Beken on the question, he ended by saying that he had worked for all he had got. (5.) A spinster recently invested a small legacy of £300 in the purchase of ground rents amounting to £15 per annum.

Mr. Beken

also quoted the cases of two Benefit Societies, and of one Insurance Company:— (1.) The "Hearts of Oak" Benefit Society consists of working men, and has over 120,000 members, with assets over £1,000,000. Of this, £200,000 invested in ground rents. (2.) Another society (a small temperance body) had, in 1889, 4,700 members, with assets £33,000. Of this, £19,800, or more than half their capital, was invested in ground rents. (3.) The "Prudential" Insurance Company, according to their balance-sheet of 31st December, 1890, have 220,000 policies in force in the ordinary branch, with a capital liability of £4,400,000, also 900,000 policies in force in the industrial branch, with a capital liability of £7,900,000. They have assets of £12,500,000, with £2,040,100 in freehold ground rents and Scotch feu duties, or nearly 16 per cent. of their capital. A large proportion of the policy holders in this society are working men. So much for the case of existing ground rents. As regarded future ground rents, the Town Holdings Committee recommended a division of rates between the occupier and all the ownership interests, including rack rents as well as the various forms of ground rents. This proposal did not appear to to meet with the approval of the London "Progressives," for at a meeting of the London County Council on November 3rd, 1891, Lord Hobhouse, on behalf of the Local Taxation Committee of that body, having presented a Report in favour of a division of rates, Mr. STUART (Hoxton Division of Shore-ditch) moved and carried an Amendment which shelved the Report. The London Progressives had hitherto hopelessly failed to agree among themselves as to the scheme by means of which taxation of ground values was to be carried out. The town Holdings committee said— We observe that there is little agreement among those who concur in thinking that the present system is unjust, and that reform is urgently required. The plan of assessing reversions proposed by Mr. Harrison is rejected by Sir Thomas Farrer, and is incompatible with the scheme for the separate assessment of ground and building values advocated by Mr. Moulton (South Hackney), which Sir Thomas Farrer also disapproves of. Mr. Moulton's plan is inconsistent with the proposal for the division of rates between occupier and owner approved of ay many of the witnesses. The imposition of municipal death duties is supported by Sir Thomas Farrer and Mr. Costelloe, but is at variance with the views of Mr. Harrison and Mr. Moulton, while the proposal to tax vacant land was not accepted by Sir Thomas Farrer or Professor Thorold Rogers, and is only adopted in a very qualified form by Professor Munro. The fact that Mr. Moulton gave evidence strengthened this Report. That the Progressives were still unable to agree among themselves was obvious from the proceedings of the London County Council last year. On 16th January, 1894 (nearly two years after the second "Progressive" Council had been elected), a scheme for the taxation of ground values was at last presented to the Council by its Local Taxation Committee. The framework of the scheme was set out in sixteen recommendations. The fate of the Committee's unhappy Report might be stated in the words of Mr. Charles Harrison, the Chairman of the Progressive Party— Not one of the recommendations was carried or adopted by the Council. A resolution was, however, carried, to inform the Government that it was imperatively urgent that "a measure" (what measure was not stated) should be passed in the next Session (1894) for the taxation of "ground values," and to forward to the Government a number of documents, including the Committee's Report, a conflicting scheme prepared by Mr. Harrison, and other papers. The hon. Member for South Hackney having particularly alluded to the subject of different scales for the taxation of land and buildings, it. was only fair he should read just one passage in the Report of the Town Holdings Committee in which this subject was dealt with:— It is said that the only way to effect the taxation of land and buildings on different scales is by the separate assessment of each. This system does not, however, seem to us to possess the advantages claimed for it by its advocates. In the first place;, the feasibility of splitting up the value of an entire property consisting of a house and its site, so as to assign to each element its proper value, is disputed, not only by such witnesses as Sir Thomas Fairer (now Lord Farrer) and Mr. Thorold Rogers, but by men eminent in the very profession whose duty it would be to make such valuation. It is admitted that the valuation would have to be made by professional experts, and it is the almost unanimous opinion of the surveyors who gave evidence before the Committee, that to adopt the plan suggested by Mr. Moulton, viz., to estimate the value of the land as if it were a vacant site, and that of the buildings at a certain percentage on its cost, would not necessarily give at all an accurate estimate of the annual value of the whole subject-matter. That which has to be valued is, alter all, the property as it actually exists in its entirety, in which all the parties, whether occupier, lessee, intermediate lessee, or freeholder, are interested. So much for that part of the subject. He would touch briefly the question of taxation without representation. This was an aspect of the case that was ignored in the speeches of the Progressives. They talked of the direct taxation of owners, but they forgot the correlative question of the representation of owners. Before owners were asked to contribute directly to local expenditure they ought at least to have some voice in deciding whether the expenditure should be undertaken, but this motion would place them at the mercy of bodies upon which they, as owners, had no representation whatever. Further than that, two Select Committees of the House of Commons had emphatically affirmed that local taxation and local representation must go together. Mr. Goschen's Committee of 1870 reported— That, in the event of any division of rates between the owner and the occupier, it is essential that such alterations should be made in the constitution of the bodies administering the rates as would secure a direct representation of owners adequate to the immediate interest in local expenditure which they would thus have acquired. The Town Holdings Committee, in their Report, stated that they were "clearly of opinion" that, in the event of a division of rates, "the, claim for such representation must be met." He believed that, by the rules of the House, he should not be able to move his Amendment; but the case against the Motion might be briefly summed up thus: It asked the House of Commons in effect to ignore the finding of its own two Committees; the ground rents which it proposed to assess were already assessed, and if assessed again would be rated twice over, and the chief sufferers by this injustice would be the vast class of small investors in this form of property. It was impossible to gather from the motion what scheme for the taxation of ground rents the mover favoured, and would-be reformers, including the London "Progressives," were hopelessly at variance with one another on the subject. In any case, the direct assessment of owners could not properly be expected without corresponding provision for their direct representation on local bodies in accordance with the recommendations of the two Committees of the House of Commons.

MR. H. E. KEAKLEY (Devonport)

desired the indulgence of the House whilst he stated the evils resulting from the present system of local taxation, of which those who supported the Motion complained. The borough of Devonport, which he represented, was essentially a landlord's town, and he should endeavour to point out the evil effects the holding of land by the Manorial Lord had upon the locality. The area of the borough was 1,760 acres, of which only 460 had been built upon, leaving 1,300 acres in the centre of the town which were let out by the manorial landlord for accommodation purposes. The effect on the town was most remarkable. Overcrowding existed in Devonport to a greater extent than in any other town in England, with one or two exceptions. As an evidence of this he might state that 60,000 people were housed in 5,000 dwellings. Although there had been repeated attempts by agitation and other methods to break down the land monopoly, no success whatever had been achieved until within the last few months, when, owing to pressure of public opinion on this matter, and the fact that the Medical Officer had pointed out the great evils which resulted from overcrowding, the manorial landlord did at last agree to sell two acres of land for the purpose of erecting workmen's dwellings. On the occasion of the handing over of the land for this object there was a great ceremonial, the event being regarded as the dawning of a better era for the locality. These two acres were probably the worst in the whole place, and yet the price at which the land was sold was something like £1,300 an acre. But outside the few houses that had been erected for the working classes on these two acres, the system of housing in Devonport was the most pernicious of all, namely, the system of tenement houses. He had seen as many as twelve families residing in one house, and the census returns set forth, in a very pronounced way, the terrible effects accruing from this overcrowding. They gave the percentage of the population thus overcrowded in tenements in the various towns. Gateshead had the dishonour of heading the list with a percentage of 40.7; Newcastle came next with 35.8; Sunderland third with 32.85; and Plymouth and Devonport were fourth on the list with 26.27. The last on the list was Portsmouth, a town exactly similar in all respects, save that it was built on freehold soil, to Devonport. In Devonport the figures were 26.27, while in Portsmouth they were only 1.74. Under the head of the number of tenements of less than five rooms it was proved by the census that Devonport was worse than London. In England and Wales tenements of one room only numbered 47 per thousand. In London the number was 184 per thousand, and in Devonport and Plymouth it was 244 per thousand. The cause of this overcrowding was nothing else but the hoarding up of land by the landlord, which was suitable for the erection of habitations for the people. The landlord of Devonport drew an income of £60,000 a year from land values, which practically escaped taxation altogether. He had in the midst of the town three-fourths of the land which was not built upon at all, but which was let out as accommodation land, and brought in a rental of £3,700 a year. There was no difficulty in arriving at what the land would bring in to the Municipality if it were taxed for local purposes and assessed at its true capital value. Hales of land which recently took place in the immediate vicinity of Devonport showed that the value of this particular land for building purposes was 18d. per foot, or £3,200 per acre, and so its capital value was £500,000, and it required no effort of tin imagination to arrive at the opinion that if that land were taxed at its true value not only would the local rates be enormously relieved, hut such taxation would cause the land to come into the market, and the people would Vie properly housed. But the manorial landlord of Devonport not only hoarded up land in this fashion, but he actually taxed the people on entering and leaving the town. He had erected bridges over which the people must go to get into and out of the town. There was no possibility of any other highways being opened, because the landlord was the owner of the land at each side of the water crossed, and which those bridges presented fret access between the Three Towns. A Committee of the local governing bodies was formed in 1880, and they approached the manorial landlord to see if they could not purchase their freedom by buying the bridges, but the landlord refused to quote a price. However, in 1887 the landlord did quote a price, which was £125,000, and considering that these bridges could only have cost £8,000 to erect, this demand represented an additional imposition on the community. It was obvious that the yearly increasing revenue of the bridges arose from the growth in the population of the district, but if there were a proper system of taxation of land values there would be no encouragement of these actions of landlords which were so detrimental to the interests of the, people.

Mr. G. W. BALFOUR (Leeds Central)

said, that the circumstances of Devonport, judged from the lion. Gentleman's account, seemed to lie that the land in the neighbourhood of the town was monopolised by a single landlord. He was not the slightest inclined to deny that where land in the neighbourhood of a town was monopolised by a single landlord who did not desire to develop his land, a cast; existed for legislation, but the case quoted by the hon. Member for Devonport had nothing to do with the particular form of local taxation advocated in the motion. The hon. Member said that this landlord, who owned the entire land in the neighbourhood of Devonport other than the land held by the Government had an income of £3,700 a year.

Mr. KEARLEY

said his point was that the income of the land not built upon was £3,700 a year.

MR. G. W. BALFOUR

said, that as the capital value of the same land, if built upon, would be £500,000 a year, it was quite clear that the landlord must be losing very large, sums every year. If the facts were as the hon. Member for Devonport had described, he thought it was owing to the idiosyncrasy of the landlord and not to a defect in the system of taxation. The hon. Member for South Hackney had expressed the opinion that the differences between the two sides of the House in regard to this question were perhaps not so great as they appeared to be. He hoped that might prove to be so, but he could not altogether follow the reasoning by which the hon. Member sought to sustain that that position. The hon. Member had described two recommendations of the Select Committee—first, that rates should be divided between the occupier and the owner; and, secondly, that any other arrangement than this should be considered illegal—as being decisions of the House.

MR. J. FLETCHER MOULTON

said, he certainly did not intend to use that language, if he had done so.

MR. G. W. BALFOUR

said, in any case the hon. Member was very severe upon landlords who, not with standing the recommendations made by the Select Committee, continued to grant leases in the usual form, by which leases, he said, a certain proportion of the landed property was shielded from taxation. It was true that the Select Committee made the recommendations which had been quoted, but, when the hon. Member went on to say that, according to the view of the Committee the incidence of rates ought to be determined by law and not by contract, he must permit him to say that there was a distinction between the real and apparent incidence of rates, and that he had contrived, unintentionally, no doubt, altogether to misrepresent the reasons which actuated the Committee in making these recommendations. The Committee were of opinion that whereas, as a matter of fact, the real incidence of local taxation was partly upon the owner and partly upon the occupier, the occupier of average intelligence could not be got to understand this, and was continually under a certain sense of hardship. That sentiment was not justified by the Committee, but as it existed they thought it would be desirable to assimilate the law to the facts, and to divide the rates between occupier and owner in law, just as already the actual incidence of local taxation did fall partly on the owner and partly on the occupier. Then the hon. Member drew a distinction between land and building, and asked how the imposition of taxes at equal rates upon property so dissimilar could be defended. He would point out that the real incidence of taxation upon land and buildings was not the same, even at the present time. This was an exceedingly difficult and complicated subject, and the hon. Member had told them that under the present system they did not know what the incidence of taxation was. How, then, was he justified in saying that land and buildings were taxed at the same rate? He was prepared himself to say that a larger proportion of local taxation, in propor- tion to values, was at present laid upon land than was laid upon buildings. According to one argument which the hon. Member had put forward, it might be reasoned that because a town could not exist without water it was to the water companies alone that the increase in value in towns was to be attributed. Surely the hon. Member must see that such an argument could not be sustained, however ingenious it might sound when put in the plausible manner he always commanded. The reform advocated by the hon. Member was rejected by the Committee appointed to examine into the case. But the hon. Member who proposed the resolution was much more cautious. It was true that he said he had a proposal which would be fair and equitable where land was built upon, and would be a new source of income where it was not built upon; but he looked in vain for any such proposal in the Resolution. Under the present system the enhanced value of land was subject to direct assessment, and, so far as the, Resolution went, any hon. Member who voted for it would be voting in favour of a system that already existed. It contained nothing to which anyone could take exception. But if he passed from the Resolution to the Speech of the hon. Member he admitted that, though the hon. Member did not bring forward any very definite scheme, it was possible to judge the general lines on which he wished to proceed. Apparently he would assess land or landed property not on its annual, but on its capital value, and would add to that proposal the separate assessment of the various interests concerned. But if the hon Member would proceed on those lines there were, it seemed to him, two objections which he had either not dealt with at all or very inadequately. In the first place, did he mean to alter the real as well as the apparent incidence of taxation, and did he propose that this change should be applied in the cases both of existing contracts and future contracts? If the hon. Member sought to alter the present incidence of taxation and to apply the burden he shifted to existing contracts he could only express the hope that tin House would resist any such unfair proposal, for it was obviously and clearly unjust. The proposal to relieve the occupier at the expense of the landlord had assumed many forms. Taxation of ground rents was one of them, but to tax ground rents specially would be to tax them twice over. Another proposal was that an arbitrary portion of the rates should be thrown upon reversions, but the effect of that would be to tax, not annual value, but capital values. It would be extremely unwise for the House to adopt, after a discussion of only two or three hours, proposals that would lead to a complete revolution in the whole system of our local taxation. But the hon. Member for Hackney thought he had discovered a way out of the difficulty by suggesting the special taxation of ground values at a different rate from building values. The hon. Member had not told them whether he, would apply that proposal to existing contracts or not; but, if so applied, and it altered the real incidence of taxation, it would be unfair. If it applied to future contract it would not be fair, and he saw very grave practical objections to it. A great deal had been said about the question of justice to the occupier in this matter. Surely justice required that those should pay the rates who derived advantage from their expenditure; and no serious attempt had been made to show that the landlords derived any appreciable advantage from them. It was hardly fair to describe, rates which were levied and expended for securing advantages to the ratepayers as a burden. The rates were paid for services rendered. He quite admitted that in the case of permanent improvements the ground landlord derived a certain advantage from the expenditure of rates for which he did not pay. But it was incumbent upon those who brought forward this motion to attempt at least some estimate of the amount of advantage so derived by the landlords in proportion to the rates. The Select Committee did endeavour to arrive at some conclusion on this subject. That conclusion was that, supposing all the burden was thrown upon the ground landlords that in this connection could be legitimately thrown upon them, it would not represent more than 2d. in the pound to the ratepayers. Therefore, the House would see that while considerations of abstract justice might recommend the throwing of this burden upon the ground landlord, the relief to the ratepayers would be so small and the inconvenience in many respects so great, that it really would not be worth while to make the change. There was a wide discrepancy between the grievance described by the hon. Member in his speech and that set forth in the Resolution. The hon. Member only referred to the enhancement of value due to the expenditure of rates, while the Resolution referred to enhanced value due to the increase of population, and the wealth and growth of towns—in other words, the whole of what was commonly known as unearned increment. If they were discussing the larger question, he must ask whether, if the community locally or generally was entitled to any increment of value that might accrue without exertion on the part of the owner, the converse proposition would also apply, and the owner would be compensated for any decrease that arose in the value of his property for which he was not responsible. It seemed to be universally assumed that land would always go up in value. As regards agricultural land they knew by painful experience that the reverse was the case; and he wished he had the confidence that some hon. Gentlemen possessed that urban land would always go up in value. Even supposing this country could count with confidence upon the indefinite increase of wealth and prosperity, was that true of particular localities? When trade left a town, the property in that town would probably depreciate, and that consideration alone was sufficient to prove that the hon. and learned Member for Hackney was wrong in ascribing the enhanced value to the expenditure of rates, for in a town where trade was leaving, the rates might actually be increased while the values were diminished. If the House was prepared to lay down the broad proposition that the increment in value arising from the increase of the wealth and prosperity of the locality or of the nation ought not to belong to the individual owner, but ought to go to the locality or the nation, then the converse proposition also was true, that decrement of value arising from corresponding causes should not fall upon the owner, but should be borne by the locality or the State as the case might be. And yet nobody could say that that was not the reductio ad absurdum of the whole case. The value depended upon the demand and supply—a proposition which was not likely to be disputed. Anyone who purchased land, and ultimately made a profit by doing so, was entitled to that profit, because he had shown greater foresight than other men who had had equal opportunities; and how were they going to distinguish between the increment which arose from causes beyond the human ken, and those which were the consequences of a development in a particular locality foreseen by a particular individual, who took advantage of his foresight and secured the enhanced value of the land? If land was certain to rise in value, why should not the State or Local Authorities purchase, and so secure it for themselves? If a community, whether local or national, was to get the advantage of the unearned increment it should be by purchase, and in no other way, because that was the only way in which the unearned increment could be fairly secured to the community without injustice to individuals. But very few Local Authorities would care to venture upon land speculation, and that, to his mind, showed that they could not count with safety upon this increased value, so that if any individual purchased land, surely he was entitled to all the advantages he could get, partly by reason of his greater foresight, and partly by his taking the risk of a fall in the value of the land. He thought that the new system of taxation which had been suggested was highly objectionable, and trusted that the House would not, after so short a discussion, indicate its willingness to change the existing system after a Select Committee had investigated the whole subject, and had arrived at a conclusion diametrically opposed to the object of the Resolution.

MR. WALTER HAZELL (Leicester)

, as a new Member, asked the indulgence of the House while he addressed it upon this difficult and complicated subject. That it was a difficult and complicated subject no one could deny, but they were there to solve important questions, however complicated they might be. If the proposal of the Royal Commission on the Housing of the Working Classes had been acted upon, by which building land was to be rated upon its capital value, our towns would have had opportunities of growing in a way they had not had hitherto, and with many advantages to the poorest members of the community. The hon. Member for Central Leeds had pointed out how injustice might be done, but surely they might so arrange the tax that if the income rolled away the tax would be adjusted to the diminished value of the property. As an instance of the way in which people were benefited by the unearned increment, he might point out to the House that a friend of his had recently sold a house in London for £7,000, for which his grandfather had paid only £700. The same gentleman sold a property in the City for £20,000 for which his grandfather paid £1,200. He would venture to ask whether under the system these owners would pay 100th part of what they ought to pay. Might he remind the House of what happened at the great health resorts, where laud which had been standing waste was sold at an enormous price because the growth of the population made such places great health centres. As a matter of fact, the landlords of the great towns were getting increased profits out of the difficulties of the country. When unfortunate farm labourers flocked to the towns, unable to gain work in the country, they increased the ground value, and, whether they would or no, they had to pay their share of the increased ground rents. Do what they might, the towns were growing in extent. There were tens of thousands of little children who had never seen the country, such was the growth of some of their large towns. He held that it would not be unfair to use the taxation of ground values for the purpose of making the tramways into the country free to the poorer classes. Every kind of improvement, no matter what it was, all tended to the profit of the ground landlord. Were they rightly informed that in 1920 one of the ground landlords would be in receipt of £5,000,000 a year from London alone? If that was so, the time was coming when they would have to deal with the question in a serious and determined spirit.

THE PRESIDENT OF THE LOCAL GOVERNMENT BOARD (Mr. SHAW-LEFEVRE, Bradford, Central)

said the speech of the lion. Member for Glasgow and the Motion which he had placed before the House were not dissimilar from those which he made in 1892. The Motion on that occasion, however, covered a wider ground. His lion. Friend then dealt with the whole subject, agricultural land as well as urban land, Imperial as well as local taxation. In the interval the present Government had met his views with respect to Imperial taxation, and by the Act passed last, year had redressed inequalities in Imperial taxation as regarded land throughout the country. He thought therefore, his hon. Friend had done well on that occasion to confine himself to urban property instead of including agricultural land. Whatever might be said in favour of extending the motion to agricultural land, the present would not be an opportune time to do it, for nobody could doubt, looking at the recent depression of agriculture, that this would not be a proper occasion on which to deal with the taxation of agricultural property. The evidence laid before the Agricultural Commission, of which he was chairman, showed that the true economic rent had almost disappeared, and that the rents now paid throughout a great part of the country did not amount to more than the interest on the capital expended in the last 20 or 50 years by the landowners. None of these arguments applied to urban property. As to that, there could be no doubt that there had been a continuous increase in its value. The growth of the population, the competition for land, the competition for favourable sites, all had tended to the growing increase in the value of urban property; and the result was that, while the value of urban property had been constantly increasing in a large number of cases, owing to the terminable leases in their towns, the landlords did not bear any share in the taxation, although they derived great benefit from the increasing value. That he took to be, in the main, the grievance pointed out. Then, as to agricultural land and the rates, he must point out that it was now admitted that the rates fell on the owners of the land. Now, this was not the case in towns where the occupier of houses and buildings was unable to shift the burden of the rates upon the owner of the land. It was now admitted by everyone who had looked into the matter that a large proportion of the burdens of local taxation fell on the occupier, and could not be shifted by him on the owner of the houses or of the land. The increase in the burden of rates in recent years had been heavier, moreover, in the case of urban property than in the case of rural property. In rural property during the past 25 years there had been a decrease of rates rather than an increase. He found that the average rural rate in agricultural and rural districts during the last 25 years had decreased from 2s. 7d. in the pound to 2s. 4d. in the pound, while in London the rates had increased from 4s. to between 5s. and 6s. In other urban districts the increase had been in the some proportion. It could not be denied, therefore, that the question raised by his lion. Friend was a very serious matter in respect of the urban districts of the country. His hon. Friend had looked at the question from the point of view of Scotland, but the case of Scotland was not nearly so strong a case as that of England, and especially the case of London. In Scotland the great majority of local rates were divided between the owner and the occupier; in Scotland there was not the system of terminable, building leases was the case here. The land in Scotland was let on perpetual feu leases, which were more in the nature of perpetual rent-charges, and therefore did not raise the same grievance in the minds of the community as in the case of terminable leases in London and other large towns. It was therefore in London that the House could find the best illustration of the effect of the present state of the law, and of the practice arising under terminable leases. He pointed out that the system of terminable building leases was almost universal in London. The great bulk of the houses had been built under that system; he believed that at least five-sixths of the whole of the houses and the buildings in London had been erected under terminable leases. The owners had, in these cases, contracted themselves out of local rates. In leases from 60 the local to 90 years the owners were not subject to the increase of the local rates. Though there might be new rates not contemplated when the leases were entered upon, it was found that at the end of the lease the owner came into possession of the property not only improved in value by the buildings erected upon it, but by the great public improvements which had been created out of the taxation which had been imposed during the interval on the ratepayers generally, and to which the owners of the land had not contributed a penny. That was the main grievance which was considered to exist in the present state of the law. He reminded the House that in 1825 there were in London 200,000 houses. In the interval that number had been quadrupled; and all these houses had been erected under the system of terminable leases. There had been four principal increases of taxation during the interval in respect of new duties undertaken by local authorities. In the first place there was the police, a new duty undertaken in 1829, and which now imposed a tax of 6d. in the pound on the ratepayers. In 1865 the Metropolitan Board of Works was constituted, and the rate now imposed by its successor, the London County Council, amounted to 1s. 2d. in the pound. In 1867 the Metropolitan Asylums Board was constituted; and now a rate of 4d. in the pound was imposed on all ratepayers on that head. Finally, in 1871, the School Board was constituted with the expectation that the rate would not be a heavy one, but the rate was now 1s. 3d. in the pound. During the same interval the debt of London had increased from zero to £40,000,000; and the money necessary to redeem that debt was levied by contribution on the ratepayers, on the leaseholders and the occupiers of the land, to the exclusion of the owners; yet the owners at the termination of the leases would find that the debt had nearly been paid ort, and that they have derived the full benefit of the improvements which had been effected by this great outlay. The Equalisation Bill of last year had the effect of imposing upon the ratepayers of the wealthier parishes a rate for the purpose of relieving the poorer parishes. The City of London, under that Act, had to pay a rate of 5d. in the £, and St. George's, Hanover Square, a rate of 4d. in the £. That was a wholly unexpected charge, levied for the first time; but it fell entirely upon the occupier. No one who had looked into the question could deny the injustice of the present condition. It was a burden which ought to fall equally upon the owner, who received rent under a lease, and the occupier. Until he heard the speeches of the hon. Members for Leeds and Salford he thought that there was a general consensus of opinion as to this injustice.

MR. G. W. BALFOUR

said, that he had admitted a theoretical injustice to a certain very small extent, amounting only to part of the sinking fund on loans raised for permanent improvements. That was the conclusion of the Committee which sat on this subject.

MR. SHAW-LEFEVRE

said, that he had not misrepresented the hon. Member, who described the remedy suggested by the Committee of 1892 as of no great importance. The case had never been better stated than by the right hon. Member for St. George's, Hanover Square, in 1871, when introducing the Local Government Bill of that year. The right hon. Gentleman said at that time:— The Government have become more and more convinced that both justice and public policy require that the owners shall pay a certain portion of the taxes. At present, through the nature of the contract made between the occupiers and the landlords, by which the former engage to pay the whole of the rates, any increased rate which is not foreseen by either party falls entirely on the tenants. This is a question more seriously affecting the towns than the country districts; but it is genefally inexpedient that the landlords should be allowed to contract with their tenants that the local authority should impose no taxation on them. With respect to Imperial taxation, such a practice is not permitted, for if it were legal to make contracts that the whole of the income-tax should be paid by the tenants, the House of Commons would be hampered in its legislation, knowing that in any increase in the income-tax the payment would fall, not on the landlords who ought to pay their fair proportion, but exclusively on the occupiers. The result of the present state of things has been that many great improvements in the metropolis, Liverpool, Manchester, and other large towns have been made during the last ten years exclusively at the cost of the occupiers without the landlords contributing a ingle shilling towards the expense. The Government have decided that such an anomalous state of things shall no longer exist; and a provision rendering void any engagements by which owners contract themselves out of local taxation is embodied in this Bill. Again, in 1892, the right hon. Member for Midlothian, speaking on the Motion which had been referred to, said:— It appears to me beyond all doubt that under our present system ground rents enjoy undue exemption, and in the metropolis, in particular, the owners of property have long enjoyed, at the expense of the ratepayers, privileges which are really unjust. I do not now speak of the manner in which these difficulties should be dealt with, but undoubtedly this is a matter as to which the people of London do look to effect a material change and improvement in their condition, and as to which I think, on grounds of justice and high policy, it will be important to make a change.

MR. LEES KNOWLES

The right hon. Gentleman has ignored the Town Holdings Committee.

MR. SHAW-LEFEVRE

said, that that Committee, by a party vote of nine to eight, drew up a Report which apparently ignored altogether the grievances which existed. He could not admit the authority of that Committee as of any great value. There was another test of public opinion in this matter, and that was the attitude of the Moderate party at the last County Council election. He had observed that the Moderate candidates had almost vied with the Progressives in describing the grievances which at present existed and in suggesting remedies. The programme of the Moderate Party contained reference to this question of ground-rents. The Moderates criticised the Progressive Party for their want of action in three years, and for having been unable to come to any agreement as to what should be done, and the Moderate Party pointed out that the reform of the existing system was a question not, of phrases, but of equitable division of the burden. Lord Cadogan, now a Member of the Council, himself a Ground landlord, a Member of the late Government, and eminently qualified to give an opinion, used these words in his Address to the electors of Chelsea:— With regard to the taxation of ground-values, the discussion of which has occupied so large a share of the time of the Council, I can only say that these ideas do not appear to me to be objectionable. I will approach their I consideration without prejudice, and with a sincere desire to act with impartial justice and fairness to all. So the House might conclude that the universal opinion of London was that there was a grievance for which a remedy ought to be found, and he hoped they might look forward to the Moderate Party on the London County Council, where they had considerable power, vieing with the Progressives in the endeavour to frame a satisfactory scheme. Certainly, in view of the general consensus of opinion, he should, without committing himself to any particular scheme or promising immediately on the part of the Government to introduce a Bill, heartily support the motion of the hon. Member, who had presented his case to the House with so much: ability. But he must frankly admit that between the recognition of the grievance and the application of a remedy there was room for much difference of opinion. The subject was an extremely difficult one, and the consideration given to it did not point to any general concurrence of opinion as to what should be done. The London County Council had given a great deal of time to the thorough investigation of the subject, and he believed he was right in saying had not yet come to a final determination as to the remedy.

MR. DALZIEL

They have suggested three modes of dealing with it.

MR. SHAW-LEFEVRE

said, that was so, but they had not been able to determine which was the best. He believed the general opinion was rather in the direction of the scheme of the hon. Member for South Hackney (Mr. Moulton). He had listened carefully to the speech of the hon. Member for Glasgow (Mr. Provand), and noticed that he did not commit himself to any definite scheme. He indicated several method's by which his object could be effected, and, among others, he mentioned Municipal Death Duties, the rating of vacant land, the appropriation of some part of the unearned increment, and the separate assessment of ground value as distinct from building value, so ably advocated by the hon. Member for South Hackney, but he did not commit himself to any one scheme. He said that no doubt a method would be found, that the difficulties were not insuperable, and he appeared to think that the Government ought to undertake the duty of finding a remedy.

MR. PROVAND

Hear, hear.

MR. SHAW-LEFEVRE

said, several other Members had spoken in support of the motion, and, with the exception of the hon. Member for South Hackney, who had a very definite scheme which he expounded with great ability, there was no common concurrence of opinion in favour of any definite plan. Under these circumstances he did not think it was incumbent upon him at the moment to determine what was the best mode of dealing with this difficult subject. All he could say was that he felt himself entirely in sympathy with the case the hon. Member had made out. He had presented a grievance in respect to the position of occupiers in urban districts, a real and substantial grievance, and for his own part he (Mr. Shaw-Lefevre) would have great pleasure in conferring with hon. Members on the subject with a view to devising the best remedy. He could not commit the Government to any promise of immediate submission of legislative proposals, or to an obligation to discover a definite scheme in the matter. With regard to the Amendment which the hon. Member for Salford (Mr. Knowles) proposed to move, and which referred to the recommendations of the Committee of 1892, it was hardly necessary to say it stood self-condemned. The hon. Member for Leeds (Mr. G. Balfour) said these recommendations had no importance, and everybody who had listened to the Debate, or had studied the subject, must come to the conclusion that the remedy proposed in the Amendment was insufficient and inadequate. It could prove no settlement of the question, though he frankly admitted the Report of that Committee did decide one certain principle, which would be of value in the examination of the case. One principle of value presented in the Report was that in which the Committee recommended that in future contracts between land-owners and intending builders of houses, for the purpose of protecting owners from the payment of rates during leases, should be made void, and that owners of land should bear their proper- tion of taxation. He felt no doubt then that the House would reject the Amendment of the hon. Member for Salford, and would accept the original Motion of the hon. Member for Glasgow.

SIR EDWARD CLARKE (Plymouth)

said, that there was little time to discuss in detail the speech the right hon. Gentleman had made, but he would have time to make a few observations on the curious character of the speech. It was an extremely important subject that had been discussed, and it was not usual for a Member of the Government to heartily support an Amendment to the Government proposal to go into Committee of Supply unless he was prepared to deal in a specific way with the question before the House. Now, they had waited for this speech with interest, because the hon. Member who moved the Resolution said he looked forward to a declaration of the intention of the Government, and that was an important matter in the Debate, because no private. Member could deal with the question. What had the House had from the right hon. Gentleman of the intentions of the Government? The right hon. Gentleman proposed to vote for a Resolution with regard to the terms of which he had said nothing whatever; and not a single phrase of it had passed his lips during his speech. But he had founded his support of the Resolution on what he called a consensus of opinion with regard to the existence of a grievance. But the last time the matter was seriously discussed by a Committee of the House, the Resolution of the Committee was in direct conflict with the conclusion the right hon. Gentleman had expressed. He was reminded in the course of his speech, while he was boasting so cheerfully of a universal consensus of opinion, that that Committee decided against him by a majority of nine to eight. He said that was a Party majority, and when it was against him he said it was a consensus of opinion on his own side. When any great measure was before the House, and the Government got its normal majority of 14, were they to say that was a consensus of opinion in their favour because it was a Party majority? To prove the consensus of opinion which had been described, the right hon. Gentleman quoted a speech made by his right hon. Friend the Mem- ber for St. George's in 1871 now 24 years ago. The right hon. Gentleman made a speech representing the policy then led by the right— hon. Member for Midlothian, and he presumed he satisfied his colleagues and followers at that time that lie was right. Why had they not done anything during the last 24 years? Had they really felt that there was the injustice they said, why had they not only failed to find a remedy, but when their representative spoke now he said his mind was not ready for any specific remedy at all? He thought the President of the Local Government Board distinguished between a grievance and an injustice. Grievance in the sense of complaint there undoubtedly was. A great number of persons complained that the result of the contracts they had entered into had been unsatisfactory and unpleasant for them. But that was an entirely different thing from injustice, and the whole of the first part of the right hon. Gentleman's speech sounded like an argument in favour of the legislative prohibition of long building leases; because he pointed out the mischief that arose in consequence. But surely the right hon. Gentleman did not think a large part of the small property in London was held directly from a ground landlord? In the larger majority of cases, with small property there was a leaseholder standing between the ground landlord and the tenant, and upon that leaseholder fell directly a great share of the burden of rates put on the occupier. Really the proposal upon the Paper was an almost meaningless proposal. The last few words were words of limitation. The hon. Member said no system of taxation (he, himself, supposed he meant no system of rating, because there was an essential difference) could be equitable unless it included the direct assessment of enhanced value of land due to the increase of population, of wealth, and the growth of towns. Why did he put in those last words? He agreed with him that there should be an assessment of value of land however enhanced, but if they were now to make an alteration which distributed between, the occupier and the ground landlord the rating of London, they would not add a single shilling to the rating of London. At the present time £8,000,000 was raised, but it represented, as every Committee had recognised (and Lord Hobhouse and Lord Farrer among others) that the rating of a house was the rating of the building and the land. They could not be separated. It had been tried over and over again, and in the rating of property in London no attempt was made to do it. It was only when exceptional cases were dealt with, such as railway stations, sewerage works, or great public institutions that any attempt was made to separate the value of the land from the value of the building. He thought they were entitled to have from the Government some specific declarations in this matter. No proposition that could be agreed upon as tangible had been put forward, and he was surprised that the right hon. Gentleman had enthusiastically declared for a Resolution for which he was not prepared to advance arguments, and the existence of which upon the Notice Paper was hardly recognised in his speech.

Amendment agreed to.