LOCAL TAXATION.

HC Deb 18 February 1908 vol 184 cc727-70

*Mr. HEDGES (Kent, Tonbridge)

said that the Motion which stood on the Paper in his name in regard to local taxation was one which he thought the House would agree with him was very opportune, coming as it did before the Budget was introduced, and demanding a reform which was very desirable. It was— That, in the opinion of this House, the present system of Local Taxation and the relations between Local and Imperial burdens demand the immediate attention of His Majesty's Government, with a view to a more equitable adjustment as between Local and Imperial obligations. He hoped that the opinions which might be expressed in the discussion that evening would have some weight in the decision which the Chancellor of the Exchequer might arrive at a later stage of the session. He was rather confirmed in that expectation by the fact that a few days ago the right hon. Gentleman, in replying to a question, said that The relationship between local and Imperial finance was receiving the attention of His Majesty's Government. It would be within the memory of the House that the final Report of the Royal Commission appointed to inquire into this question was presented in 1901, but nothing much was done until last year, when the Chancellor of the Exchequer made an excellent start by clearing the decks for action. Under these circumstances, he thought he was in some sense preaching to the converted. In the speech which the hon. Gentleman made on that occasion, referring to the stopping of ear-marking of certain taxes for local purposes, the Chancellor of the Exchequer said— The object is first of all to get rid of an enormous, most unsightly, and inconvenient complication in our national accounts; second, to set free the hands of the Chancellor of the Exchequer with regard to a large area of taxation and thirdly, to clear the ground—for this is only a provisional arrangement—for a future re-settlement, I hope on equitable terms, of the whole relations between the central authority and the local authorities. Perhaps this Motion might be looked upon as a reminder to the right hon. Gentleman who, he hoped, would be able to say that having put his hand to the plough he would not look back. After this, he was sure that no expression of his in regard to the existing state of affairs could be considered an exaggeration. It was piecemeal, haphazard, unbusiness-like, and involved; that description was a re-echo of the speech of the right hon. Gentleman last year. The method of allocation seemed to him to be very like legislation by reference, but somewhat worse. This was what was said in the Report of the Commission in regard to the apportionment of the proceeds of whiskey money between county boroughs and counties— The Commissioners determined that an equitable adjustment between each county and the county boroughs deemed to be therein situate would be effected by giving to such several authorities in each year the annual amount received prior to the passing of the Local Government Act out of the grants discontinued after the passing of that Act together with the amount payable under the above mentioned Section 20 of the Act, and dividing the remainder in proportion to the rateable values of the county and boroughs. He ventured to suggest to the House that such a sentence as that was worthy to be compared with the most involved ruminations of a philosopher, but few had any idea of what it meant. We suffered, he knew, in this country from the disadvantages just as we enjoyed the advantages of being citizens of an old country with old traditions, and he suggested that the time had now arrived, and was more than fully ripe, when the whole question should be gone into of the relationship between local and imperial burdens, so that these might be put on an equitable basis. What were the complaints? Undoubtedly they were very constant, and perhaps they heard more frequently of them in the localities interested in the matter. But he was sure that hardly a post arrived at head-quarters which did not bring some inquiry or complaint from local authorities in regard to the position in which they stood on this important matter. Roughly, the complaints of local authorities ranged themselves under four heads. In the first place, ratepayers had to meet the cost of national services which ought to be borne by the tax-payer, who had the broader shoulder. In other words, there should be a more clearly marked distinction between the payment for onerous services and the payment for services which were beneficial. Secondly, there was a lack of variety arising from the fact that rate were confined to the occupiers of rateable property. Thirdly, there was a wide disparity between different areas, though adjacent and fulfilling the same conditions; and fourthly, the cause a complaint was one very frequently ex pressed, and found its chief exponents in the agricultural districts—he mean the incidence of rates upon the agricultural part of our population; the urban ratepayers in their turn complaining that by reason of the relief given to agriculture by the Agricultural Rates Act their burdens were by so much increased. In other words, the urban ratepayers paid for agriculturists who even now said they bore more than their fair share of the burden. He thought that under a wise and properly adjusted scheme both these complaints would disappear. It was not fair to either the agricultural or the urban ratepayers that either of them should have just cause to say that one or the other was treated with favouritism. In fact the very existence of this mutual suspicion and mistrust showed that the method of rating was not fair to all those involved. Lastly, it was essentially the poor districts of low total rateable value which particularly suffered. He thought to even the wayfaring man—the man who ran could read—that those things were fairly self-evident. Perhaps the most important of them came under the head first mentioned, that was to say that rate-payers as such were bearing large burdens for national charges. Generally, it might be said that we suffered from another peculiarity in regard to our position in local finance, viz., the multiplication of spending authorities. There were the county council, the district council, the town council, the parish council, and the boards of guardians, all spending money. Another peculiar feature was that although half the total rates were called poor-rates, only a half of these was used in any sense for the relief of the poor. That might not be a very important matter, for it would not affect the amount of the cheque which would have to be drawn; but it was rather an archaic and anomalous thing that we should call by the name of poor-rate, something which had nothing to do with the relief of the poor. It was a matter of congratulation that the Chancellor of the Exchequer had practically stopped the system of assigned revenues. It was with the greatest possible pleasure that they heard in the last Budget speech that that absurd method—by which certain revenues, which were assigned to local authorities, was going to be stopped, and the right hon. Gentleman gave them all the more hope that he had taken this matter in hand in a business-like fashion and really intended to place the whole scheme on a business-like foundation. Periodical grants-in-aid on no fixed principle whatever were a hand to mouth expedient, with the necessary equivalent grants to parts of the United Kingdom not affected by legislation which might entail expenditure; they were not defended, but as a temporary palliative pending permanent adjustment. The more the whole position was considered as to the relationship on which local and national finance stood, the more he thought the balance of criminality lay here: that there was a want of system and of any fixed principle. It might be forgotten, but the original intention was undoubtedly expressed in the earlier Acts regulating the imposition of rates, that it was axiomatic that rates and taxes should be levied according to capacity to pay; and there was no doubt that the rates themselves were originally intended as a local income-tax, and that the rent was only a rough and ready method of calculation. The income-tax as now levied followed the eternal principle of justice, that taxation should be levied according to the capacity to pay, but in the rates this principle was ignored to a large extent. The rates were fixed on the basis of the rent of a man's house but in these days of commerce and trade that was a very poor index of a man's capacity to pay. They had heard a good deal in the course of the discussion of this question about taxing certain things, such as land, houses and so forth, but they did not tax these anymore than they taxed coffee, or sugar; but they taxed the people who paid. He hoped he might be pardoned for making such a simple statement, but nevertheless it was necessary to bear it in mind and to understand that it was the people who paid and not the places they occupied. The incidence might be difficult to trace, but the Chancellor of the Exchequer in his Budget speech last year evidently did not dismiss the idea of exacting a contribution from personalty. The right hon. Gentleman said— As regards the death duties, with the revision of those duties in 1804 by Sir William Harcourt even the semblance of a special contribution from personalty to local taxation disappeared; and the Agricultural Rates Act and various other Acts which have since been passed have rendered the system even more intolerable than it was before. The regretful tone of that phrase "Even the semblance of a special contribution from personalty to local taxation disappeared," seemed to indicate that there was some lingering hope in the Chancellor's mind that there was some spot at which personalty might be hit. As he had said, the incidence might be difficult to trace, but he thought that taxation, even local, should fall on the lines which he had indicated and should have regard to the capacity of the person rated to pay. The position seemed to him to be brought down to these lines. There were certain charges which were collected locally and administered locally, but which were undoubtedly onerous and national. No one in his senses would pretend or even suggest that the collection of dust from outside a man's own house should be borne by the National Exchequer. That was an ordinary expenditure which undoubtedly should be borne by himself without reference to any larger issue. But when they came to some of the other expenditure which was collected and administered by local authorities it could not be denied that it was national in its character and national in its results. He had only to mention the item of expenditure for education to show that it was now more than ever a matter of national concern and a matter which brought national benefit, especially in these days when migration was becoming almost the order of the day. A very large number of our lads and maidens were educated in our village schools; then they went away, to his mind, unfortunately, into the large centres of population, and there used the education which the rural ratepayers had paid for, for the benefit not only of the towns in their ordinary commercial capacity, but, as he was glad to know, also for the benefit of the physique of the people of those metropolitan communities. That could hardly be called a local responsibility, when so many of our young healthy lives were poured into the large cities after having been educated at the expense of the rural ratepayers. Then again there was the question of emigration, and there they came against not only a national question, but one which affected the whole of the Empire. If a locality was famed for education, he thought the least they could ask the English House of Commons was for some assistance with regard to the expenditure. Then another point which had been a matter of very serious complaint, was the money which had to be spent by local authorities upon main roads. He knew, and those who were the happy or unhappy possessors of motor cars, were equally well aware, that they did not confine their use of them to the parish in which they were rated, but that in the course of their peregrinations they covered the roads of perhaps 100 or 200 authorities, who had to maintain them at great cost, at the expense of the ratepayers in their respective areas. Regard should also be had to the fact that this new method of traction was not only used for motor cars and pleasure vehicles, but was applied to those tremendous engines which went about country roads drawing forty or fifty tons behind them, and doing damage. They did not belong to any particular area, but seemed to come more within the class of railway transit than anything else. He thought the time had arrived when the local authorities should be relieved of a huge portion of the expenditure on what were called main roads, and at least half of these heavy payments should be met by payments other than rates. There ought also to be main national roads. He believed that this evil was likely to grow to a very large extent, and if we got the local authorities to look after the administration of these affairs, the least we could do as a central authority was to see that they were not out of pocket by the process. Several methods had been suggested from time to time with regard to the raising of the money which might be devoted to helping local authorities, and relieving the burden under which they were undoubtedly labouring, and with the permission of the House, he would like just in passing to deal with some of those which had been suggested, and had more or less reason behind them. First he would say that no inconsiderable portion of those who had thought upon the subject, had a leaning towards the imposition of a local income-tax. He was bound to say that at first sight the local income-tax was very attractive and had much to commend it. It fulfilled the admitted conditions as to taxable capacity, and he did not think it should be altogether dismissed from the minds of those who had the management of these affairs, without further consideration. He was quite aware that the difficulties in the way were not inconsiderable. It would act undoubtedly perhaps in exaggeration of the difficulty he had mentioned of the disparity between the burdens in different areas. That was to say that in rich residential centres money would be raised when it was not particularly wanted; but in poor and thickly populated areas they could not raise the money required for the purposes to which local taxation was devoted. But might he suggest that one difficulty could be overcome, and he believed it was overcome in some of the Continental countries where a local income-tax was in operation? The difficulty which at first sight seemed almost insurmountable was the case of a man who had two or three residences, or had a residence in addition to that of his business premises. It would be manifestly unfair that he should be taxed or rated upon his whole income in every locality in which he resided. But a very easy system might be devised to overcome the difficulty; for might it not be possible to bring into account the various rents which he paid in order to adjust the amounts payable in the different areas. He only mentioned these as methods which had been suggested for raising money for local purposes, and there was one which had been brought forward and had been mentioned by the Commissioners in their Report of 1901. It was to localise Schedule A of the income-tax. He did not think there were so many objections to that, but still there were manifest objections to it. He only suggested it, and if the Chancellor of the Exchequer pulverised it with a sentence he would have nothing to say. What it meant was to transfer from the book of the tax collector to the book of the rate collector the amount payable under Schedule A. It could not be denied that the value attaching to property under Schedule A was a local value, that was to say it had obtained its present position of value by work done on the spot and was local in its circumstances. Then, of course, it had this extra advantage which his hon. friend the Member for Newcastle-under-Lyme would appreciate, that it would fall on the owner and would therefore, according to his view, be more equitable. Then there was another suggestion made with regard to the transfer of the inhabited house duty, but there were very much the same objection to that as to the localisation of the income-tax under Schedule A, to which he had already referred. There remained, of course, the plan which had been in existence for some little time, that of making direct grants from the Exchequer to local authorities in order to relieve them from these onerous burdens which they had to bear, and when one had eliminated these different expedients, with their various advantages and difficulties, they came back at last to the Chancellor of the Exchequer and asked him to see that the payments made from the central authority were more in accord with the services rendered by the local authority on national lines. It had this advantage. It was simple and clear, and it involved no muddle for the accountants. There were objections raised by purists in economy and finance with regard to payments from the central authority, which though trite were none the less unreal. The objection to the extension of Parliamentary aid to local authorities was one based on economy. It im- plied that the money would be wasted. To this he thought the all-sufficient answer was that it depended upon the efficiency of the central control. The burden of the income-tax was just as much felt as the burden of the rates. The burden of the rates could only be lightened by an increase in the taxes, and the man who paid both was no better off. As a payer of taxes he was interested in national economy, and as a payer of rates in local economy; was it not absurd to say that the same person considered as a ratepayer was a miser, and considered as a taxpayer was a spendthrift. In this matter he had endeavoured to steer clear of figures, and all those matters which were difficult to follow, and which were, perhaps, neither interesting nor intelligible; but he thought he had said sufficient to show that the inequality had been recognised, the anomaly admitted. Local public life during the past twenty-five years had been growing in importance, and was, in his opinion, destined to become of much greater importance in years to come, when this House devolved further duties and responsibilities upon it. Local authorities and those who took part in local government were much grieved at the delay that had taken place in the settlement of this long unsettled question. This House had ever and again placed new obligations upon those who heroically and without any idea of reward carried on the drudgery of local government. New obligations and fresh responsibilities were placed upon them, and the reward in most cases was abuse from the ratepayers because the rates had gone up. He thought the time had arrived when they could with confidence look to the Chancellor of the Exchequer to do something which would relieve this intolerable strain; which would give greater freedom of action to those who had undertaken with no selfish interest the management of our local affairs, men who were public spirited in the highest sense. Now was the opportunity for the Chancellor of the Exchequer to give some word of encouragement and some word of hope, which would send these men on their course of public service with greater confidence, and a great desire to use all those advantages which their position gave to fulfil the responsibilities this House placed upon them. He begged to move.

MR. ROGERS (Wiltshire, Devizes)

said that after the exhaustive speech of his hon. friend he desired only to place one particular aspect of this question before the House. He approached this question as one who had devoted some time to local government; who had been a member of every board in his district, and who was now vice-chairman of the county council. The present size of the local burden had produced a condition of things which had caused those responsible a considerable amount of anxiety. The voice of the ratepayer was always heard and always would be, but never had there been a time when his voice was heard so clearly and so persistently as at the present. It had become impossible to raise the standard of local government, and it was very difficult even to maintain the standard of efficiency which now existed. That the grievance of the ratepayers was to some extent justified there could be no doubt. A great number of things upon which the rates were spent to-day were strictly national, and a case certainly existed for the transference of some of those burdens to the Exchequer. There was education. He held, and held very strongly, that because a child was born in an out-of-the-way rural district that was no reason why that child was not to have every opportunity that was given to the child born in a progressive urban district. But no money was more difficult to raise than the education rate, or money that was to be spent generally on education. That was the direct result of localising it to a great extent. Then let him take the Poor Law. That was almost entirely a local burden. Very little contribution was made to Poor Law expenditure, and the whole burden fell upon the locality. It might have been all right years ago when population was differently distributed, but at the present time there existed very rich districts with a high rateable value and a small poor population, and consequently a very small poor rate, and on the other hand poor districts with a large poor population and an exceedingly high poor rate. That again was the direct effect of localisation instead of nationali- sation. He supported very heartily the statement of his hon. friend that the ratepayer had great ground for complaint. He knew how impossible it was to persuade the occupier of the land that his rates were really a part of his rent, and how impossible it was to get the occupier to throw his weight and influence into the scale in favour of efficient administration when he knew it meant more expense. It was no good to discuss with these men the merits of a particular reform, the advantages of education, of public health, or of sanitation. One always came back to the fact that they were not willing to accept a higher standard if it meant an addition to what they had to pay. That might be a narrow view to take, but when the fact that an occupying farmer whose farm was rated at £100 paid just as much rates as the man who lived in a house rated at £100, was taken into consideration, and when regard was also had to the fact that the rates bore no relation to the profits he made, it was not surprising that such a view should be taken. Although it might be contended that in the long run the rates were paid by the landlord, it was only in the long run. It was actually the tenant of the farm who paid, and until there was some revision in land tenure the burden would remain on his shoulders. Another complaint he desired to make from the point of view of those engaged in local government was of the extraordinary complexity of the system of accounts. The finance system of a council was the most impossible thing that an ordinary person could set himself to unravel. It was not natural, but the result of historical accident; of grants-in-aid given from time to time, which had the effect of complicating in a most marvellous manner the accounts with which they had to deal. The most weighty charge which local authorities had against Parliament was that hardly a session passed without measures of social reform being passed and handed over to the local authorities to administer without any assistance being given to the local authorities for that purpose. For the past twenty years hardly a session had passed without Parliament adding further responsibilities to those already borne by the local authorities. In this connection he might mention several Education Acts, in reference to the last of which he ventured to urge on the Government the importance, and in fact the necessity for finding some money for its administration. Unless something was done in this direction he was certain that the administration of that Act would be ineffective. In many districts as little as possible would be done as was compatible with the control of the central Government. The general proposals he would venture to lay down which seemed to be important were first as to the way in which relief was given now, and the way in which it should be given. He did not agree with those who desired to place national services, on the ground that they were national services, on the Exchequer. He believed that such a thing would destroy all control by the local authority. If education were transferred to the central Government it would be necessary to have central administration, which would go a long way to destroy that local control which was one of the most creditable features of our public life. The present system of grants should be thoroughly overhauled, and grants made, distinctions being drawn between the national and local services which local authorities performed. National services should be assisted by grants and local services performed by the local authorities for their own benefit left to the charge of the local authorities. Any money that was given to local authorities should be given for a definite purpose, and should not be a mere dole; not a mere subsidy or a grant-in-aid, but given for a definite purpose like the education grant at the present time. The advantage was that they retained in the hands of Parliament the control which always ought to accompany the spending of money and enabled Parliament to exact a sufficiently high and uniform standard of administration in all the localities, and by this means they could also obtain a greater equality of burden between one district and another. In the Education Act of 1902, he held that some grants were given on the principle of the relation which the rateable value of the district bore to the child population, and by that means they got some relation between the wealth or poverty of a district and the amount of the burden which the district had to undertake. Again the grants made under the Poor Law for medical officers of health and Poor Law officers had proved on several occasions a very useful weapon in exacting a proper standard of administration for the various Poor Law boards, and had prevented them from making the far too common mistake of expecting to get good service from officers whom they did not pay an adequate salary. He earnestly hoped the Chancellor of the Exchequer would avoid the model of the Agricultural Rates Act under which the greatest amount was given where it was least needed, and the least where it was most needed. It was a grant simply in aid of expenditure and was not given for any definite and specific purpose. It also created the widest disparity of rates as between one district and another. The Act did nothing to level up the conditions between poor and rich districts, and the relief was given just as much for the maintenance of the district rate as it was for the repair of main roads, the expenses of the Poor Law, or education, which might fairly be described as national objects. It was only for national objects that he suggested more money was required, but it should be given on certain definite principles and always be subject to central control, and when local authorities were entrusted with the carrying out of certain work they should endeavour to obtain a high standard of efficiency in it. He earnestly asked the Chancellor of the Exchequer whether this matter could not be dealt with during the present Parliament. Unless something was done he felt certain that local government would not progress. It was difficult enough now to keep the work going and to get a sufficiently high standard of administration. Unless some more money was found for these national services which Parliament handed over to local authorities he was afraid the standard of all local government would go back, and it would be found more and more difficult to get men to serve upon these bodies unless they went there merely to save the rates, and the programme which the Government had set before itself to carry out would fail in many of its most important features.

Motion made, and Question proposed, "That, in the opinion of this House, the present system of Local Taxation and the relations between Local and Imperial burdens demand the immediate attention of His Majesty's Government, with a view to a more equitable adjustment as between Local and Imperial obligations."—(Mr. Hedges.)

THE CHANCELLOR OF THE EXCHEQUER (Mr. ASQUITH,) Fifeshire, E.

I have listened, as I am sure every Member present has listened, with the greatest interest to the two able and lucid speeches from my hon. friends. I do not think the case, strong in many of its features as it undoubtedly is, could have been presented in a more persuasive way than it has been put before us by them. I will at once frankly state, on behalf of the Government, that I do not intend to offer any opposition to the Motion that has been put on the Paper by my hon. friend. I may perhaps make some reservation in my own mind, and I may as well make it also public, to the introduction of the word "immediate." In every political vocabulary that word is subject to a very wide construction. The hon. Member must be content with the assurance that I will give it as strict a construction as the exigencies of public life allow. Subject to that qualification, I see no objection to the Resolution, nor have I much ground of quarrel with the proposed Amendments or additions to it which are on the paper in the names of hon. Gentlemen opposite. One hon. Gentleman wishes to have "a more reasonable apportionment of the incidence of local burdens." I quite agree. A noble Lord wishes a more equitable adjustment "as between agriculture and other industries and sources of wealth." Taking these words in a discriminative sense, I quite agree that agricultural and other industries and all other sources of wealth ought to have their burdens equitably and fairly adjusted between them in regard to their ability to bear them and to their special circumstances. But, although I am not going to address the House, and certainly not my hon. friend, in a con- troversial spirit, there are one or two observations which I think I am bound to make and for which I would ask the indulgent attention of the House. Like almost every proposition that is discussed here on a private Member's night, this is a demand for a further and a very large sum from the Imperial Exchequer. Our professions of economy and our practice of economy, as we all find in our actual experience of political life, are limited to subjects on which expenditure can safely be restricted, while every one has one or more subjects of his own on which he thinks that public expenditure may be largely and legitimately increased. There is no demand received with more general favour than a demand for a contribution in aid of local rates. The solution of this problem, as my hon. friend has said, has been long delayed. That is no fault of mine. We have had no opportunity for a long time of dealing with the subject. The report of the Commission which dealt with it was presented to Parliament as far back as 1901, and until I last year undertook what I believe to have been the absolutely indispensable preliminary step towards simplifying national and local accounts, I am not aware that anything had been done to grapple with the question. That does not absolve us from the duty of facing it now. Let me point out one or two facts which perhaps are not sufficiently borne in mind in most of the controversies which take place on this subject. An enormous amount has been done in the last sixty years in the way of contributions from the Exchequer in aid of local taxation. Seventy years ago the Exchequer contributed not one halfpenny to local expenditure. The amount contributed last year, omitting the most import, ant item of all—namely, the amount expended on primary education in the shape of the Parliamentary grant—was no less than £8,600,000 for England and Wales. And that does not take into account the fact that in the meantime the State has resumed the complete control and the entire expense of some costly services which formerly were locally administered. If we take the case of agriculture, while I do not deny that agriculture has still a grievance in the matter, the facts are very remarkable. The amount of public rates of all kinds levied in the rural parishes of England and Wales in the last year for which information is complete—namely, 1904–5—was £8,600,000, exactly the amount of the imperial subvention for local purposes, which I have already mentioned. Of that sum levied by local rates, £7,900,000 takes the form of poor rate, £630,000 separate rate for special expenses in rural districts, and £70,000 for rates under lighting and watching. To show that agriculture has not been entirely left out in the cold, let me point out that as regards poor rate, under the Agricultural Rates Act, one-half of the rate, as it stood at the time of the passing of that Act, is now contributed by the Imperial Exchequer, and the agricultural occupier pays only the balance. I quite agree that since that Act was passed the burden of local rates in the agricultural districts has increased substantially, largely owing to the increase of the local cost of education. But the fact remains that, as regards the poor rate the agricultural ratepayer is in an exceptionally favourable position. Then, as regards the rate for special expenses, he is rated only on one-quarter his annual valuation; and as regards the lighting and watching rate only on one-third. Notwithstanding that recognition by Parliament of the heavy pecuniary local burdens of the ratepayers, I agree that there are districts in which the rates still press very heavily on agriculture. In my opinion, and the opinion of my colleagues, it is a condition precedent to making any progress in this matter that we should have a proper system of valuation. There is no use going on doling out money here and there so long as our valuation, both as between different interests and still more as between different areas in different parts of the country, is conducted, not on a uniform, but on a thoroughly haphazard and inequitable system. In our judgment, the first step to be taken is to bring into existence machinery which will secure a uniform and adequate valuation on equitable principles of the whole of the property of the country. We are awaiting the Report of the Poor Law Commission, which we hope to have this year or the beginning of the next. I think it will lay the foundation for distinguishing between site value and the value of improvements, and in that way will provide an additional source of revenue for the discharge of purely local burdens. Assuming that these preliminary steps will be taken, as I hope they will be, completely and effectively, we come to what is the crux of the whole problem. How, and by what principle ought you to discriminate, not between local and national expenditure, but between local expenditure locally administered, and national expenditure locally administered? That is a most difficult problem. Let me assume for the purpose of my argument that that distinction has been established. There remains the question of how to meet the charges properly locally administered and properly locally chargeable. Certainly I am not a great admirer of our present rating system, even if based on a proper system of valuation. There is the problem of how to increase from local sources the revenue at present derived from the rates. I have suggested one source from which additional revenue may possibly come. I doubt whether you will find successful any attempt to bring personalty within the scope of the local rating law. Personalty is not local in its nature, in its origin, or in what I might call its permanent domicile and residence. It is an illusory fluctuating mobile thing, which is earned in one place, spent in another, and accumulated in a third; and any attempt to fix down a specific part of a man's property as that share of his personalty which should contribute to the local expenses of the place where he resides or carries on his business is a task which I doubt is capable of accomplishment. I do not look with much hope upon any scheme of that kind, nor do I think it would be possible to localise Schedule A, but I will not give my reasons now. For the local expenditure which is ultimately to be chargeable locally you will have to rely first, on an improved system of rating, and, secondly, upon additional revenue to be derived from some system of taxation of site values. But that is, after all, not the problem which interests us particularly to-night. I come to the endeavour to answer the question. How are you to discriminate between local services in the strict and narrower sense, and those services which, though locally administered, are of a national character, and towards which, therefore, the Imperial Exchequer, though not discharging the whole, is required to make some contribution? There are two or three very plain principles which it seems to me ought to regulate any action which takes place in regard to this. In the first place, if we are to combine, as we must combine, the continuance of local administration with an increase in Imperial contribution, it is perfectly clear that localities must continue to discharge some substantial share of the obligation, otherwise you will find yourself landed in an absolutely paradoxical situtaion; money would be contributed by one set of people and expended by another who had no responsibility of an sort or kind towards those who forwarded the money. All experience shows that that is in the long run extravagant and inefficient. If you are to combine a thing like education, which I agree is one of those services which may be described as national in their character, if you are to have what is called local control over the administration of education in our public elementary schools, it is quite clear that the whole cost of education cannot be thrown on the Exchequer. The same thing applies to the Poor Law, which again, I think, is a national service; and to any other specimens of the same class. That, I think, is perfectly plain. Then the next principle I lay down, and here I am in entire agreement with both my hon. friends, is this, that whatever form your subvention takes it should not be, as unfortunately it has been, by the allocation specificially of Imperial taxes to local purposes. We have had a good many years' experience of this system, and I think it was the general consent of all parties that I obtained consent last year to sweep it away. X Instead of allocations of taxes to local purposes, your Imperial contribution ought, I am satisfied, to take the form of a subvention—that is to say, of a grant in aid of these national services performed by local authorities, subject to the condition that the central authority is able from time to time to satisfy itself by proper means that those services are being efficiently and economically administered on the spot. In other words, your Imperial contribution ought to take the form of a grant, but it ought to be a grant not of a specific tax, but for a specific purpose; not a general grant in aid of the expenditure of the local authorities, but a grant for some specific purpose. It follows from that that the Central Authority ought to have adequate power to see that the specific purpose is being accomplished in the hands of the local auhtority. To give an illustration, such a form of subvention as the exemptions by the Agricultural Rates Act is altogether to be deprecated. That form of subvention is the worst of all forms, because it is distributed in a perfectly haphazard and uneven fashion, falling with undeserved leniency on places whose needs are not great, while starving places whose needs are really urgent. I have sketched what, in my view and that of my colleagues, ought to be governing lines on which the problem is to be met. I am most anxious to have an early opportunity of dealing with it, but I repeat I cannot put the matter in train for legislative solution until, first, having la it year swept aside the cumbrous system of assigned revenue, we next get a proper system of valuation in working order, and so can do evenhanded justice not only as between the Imperial Exchequer and the ratepayers of the country, but also as regards the localities.

MR. CHAPLIN (Surrey, Wimbledon)

The right hon. Gentleman has admitted to the full the grievances of the ratepayers which has been so plainly put before the House; he has admitted the grievance of agriculture itself, and thinks that in the course of time this, too, ought to be dealt with. This is, indeed, an agreeable change since the days when we were engaged in passing the Agricultural Rates Act. Then the grievance of agriculture was not admitted, and the Government of the day were taunted with giving doles. All the evidence since then shows clearly that the whole of the benefit given under that Act has gone straight into the pockets of those for whom it was intended—the occupiers of the land. ["No."]

MR. ASQUITH

I thought I had made it perfectly clear that my opinion is that the Agricultural Rates Act is the very worst measure of this sort that could be passed.

MR. CHAPLIN

That expression of opinion adds to my wonder that the right hon. Gentleman has not repealed the Act. The first step, we are reminded, must be the facing of a Valuation Bill. That is an absolute essential, and, so far as I have been able to follow him, the right hon. Gentleman has given us no indication whatever when that Valuation Bill is going to be introduced, and when it is going to be carried. That fact is quite sufficient to satisfy my curiosity or anxiety on the point, but I doubt whether it is sufficient to satisfy the mover and seconder of this Resolution.

MR. ASQUITH

It is in the King's Speech.

MR. CHAPLIN

I read many things in the King's Speech which never come to anything. I think I gathered from the right hon. Gentleman that we shall, at all events, have to wait for the Report of the Royal Commission which is now sitting upon the Poor Law. Agriculture is not the only industry which has a grievance. The Report of 1901, to which the right hon. Gentleman referred, teems with evidence as to the grievances which the ratepayers suffer at present. In its very earliest pages, if I remember aright, it deals with those services which it calls onerous and national services. It includes Poor Law and education. The police, I think, is another. The Report lays down that these services ought to be dealt with with as little delay as possible, and yet the right hon. Gentleman has held out no hope that there is any immediate, or even distant, prospect of his dealing with the question at all. What are his remedies when it is to be dealt with? He has examined the question of calling in personalty, and making it contribute its fair share to the rates, and after full consideration, he has come to the conclusion that personalty will not do, and that it must be set on one side. The right hon. Gentleman falls back on one thing. He looks to what he calls site values by which a real and serious contribution can be obtained. Has the right hon. Gentleman ever examined the Report of the evidence on this subject?

MR. ASQUITH

Frequently.

MR. CHAPLIN

Then I wonder that he did not tell the House something about it. It is diametrically opposed to his view. First of all there is a great difficulty as to the cost of these proceedings. I looked at the Report this afternoon, and endeavoured to refresh my memory. There is any amount of evidence upon it, and out of all the evidence of surveyors and valuers who dealt with the question, I could only find three witnesses of importance who favoured the plan of the right hon. Gentleman, and seemed to think that it was practicable. I will quote some of the opinions expressed by witnesses— Mr. Cross, surveyor and valuer of Manchester, thought that, though it would not be actually impossible to put a separate figure upon the value of a site and a structure, it would be exceedingly difficult, and that it was not really a proposal which could be put into actual practice, and, in any event that it would not be worth while owing to the cost. Mr. Mathews, land agent and surveyor, of Birmingham, thought that though it was possible to put a separate value on site and structure it was not practicable, as it would involve an inquiry into the most productive use the land could be put to. He also thought that the proposed system would give rise to endless litigation. Mr. F. W. Hunt, architect, agent, and surveyor, of London, also stated that though a valuation of site and structure was possible, he considered that the proposal was not a practicable one. Mr. H. A. Hunt said it would probably cost several millions to value the sites in London if experts were employed. He also thought that the cost of the litigation might come to as mum as the primary valuation if it were indifferently done. Mr. Wainwright asserted that it would be impossible to value the sites at 1s. apiece, and that the valuation of half a million houses would cost over two millions. What sort of a valuation are you to have? If you want a fair and reasonable valuation, in which all the circumstances shall be taken into consideration, it must inevitably be a very serious matter with regard to the cost. I have the greatest possible doubts as to the value of the remedies suggested by the right hon. Gentleman even when he is able to try them. Upon that point we have no information whatever. We have absolutely nothing held out to us except that the right hon. Gentleman very plainly and distinctly states that he will have nothing to do with the acceptance of the word "immediate" in the Resolution. I think that is a not unreasonable disclaimer on his part. This question, I frankly admit, has been postponed a great number of years. It is not for me to say why that has been. Certainly so far as I am concerned, having been President of the Local Government Board at the time the Commission was appointed, no charge can be brought against me since the Report was published. I do wish to impress on the right hon. Gentleman that this is a grievance which is growing day by day on the minds of the ratepayers of the country. It is one of those questions which must be dealt with and cannot be indefinitely postponed. As regards agriculture the right hon. Gentleman must remember that although considerable advantage was given to the agricultural interest at the time by the passing of the Agricultural Rates Act, in many cases the whole of that advantage has been swept away already by the large increase of other rates which has taken place since then. I believe it to be an actual fact at the present moment that it would not be difficult to produce instances where agriculturists are worse off to-day than they were before the Agricultural Rates Act was passed owing to the enormous increase of rates which has occurred. I am bound to say that having listened to the right hon. Gentleman's speech, it appears to me to be of the smallest possible value. It holds out no hope or encouragement with regard to the future. The only remedy on which the right hon. Gentleman relies, even when he is able to attempt to deal with the question, would prove to be worthless, but as to the time when he is going to attempt to put that remedy into operation he has given no indication whatever. I can only say that I am bitterly disappointed at the right hon. Gentleman's speech.

*MR. MILDMAY (Devonshire, Totnes)

said that he could not help thinking that the Motion must meet with very general sympathy from all sides of the House, for as he read it, it was not brought forward in the interests of any single class in the community. Was there any hon. Member, be his constituency what it might, who could deny that the whole question of rating cried out for legislative consideration? But the question must be considered from a more comprehensive point of view. If they perused election addresses at the last general election, they would find in them an all but unanimous consensus of opinion amongst candidates that the rates were at present charged with certain responsibilities which were really matters of national concern, and so should be a charge upon the national purse. For instance, could it be denied that education was a national concern? Surely education was as much a national service as were the Army and Navy. Their continued efficiency as a nation, their continued pre-eminence in the markets of the world, and therefore, their continued prosperity depended as fully on the average mental equipment and development of the people as they did upon the efficiency of the defensive forces of the Crown. Especially was that so in these days when their great commercial rivals, the United States and Germany, were straining every nerve to outstrip them in the field of educational efficiency. As he had said, he did not wish to consider the question from the point of view of any single class, but as representing an agricultural constituency, he could not refrain from saying what a hardship it was that the ratepayers in the country districts should be called upon to provide an education which unfitted he children for country life, how unfair it was that the farmer and small holder should have to pay the bulk of the local contribution to an educational system which tended to their own discomfiture. He would not pursue the subject, but would only now ask the assent of hon. Members to the proposition that educational efficiency was a national interest, and so should be a national charge, at any rate to a greater extent than it was at present. Then there was the question of the expense of the maintenance of the poor. He had high authority for saying that the cost of maintaining the poor was not equitably distributed at present. It was Mr. Gladstone who had said that it was impossible to look at the nature of the tax for the support of the poor without being struck with the inequality of its incidence. The relief of the poor was a purpose for which, as far as could be done, all property, and not one description of property only, should be liable. Now the ever increasing proportions of the county rate must give sincere concern to those who studied such matters. If that increase were analysed, it would be found that it had occurred principally under the headings of (1) Education; (2) Maintenance of pauper lunatics; (3) Main roads. His experience in these matters was confined to Devonshire, and he had found that the education rate bad increased from £166,300 in 1905, to £193,287 in 1907, but this was not the whole of the story, for the county debt had increased from £141,500 in 1890, to £307,589 in 1907, and this increase had been mainly due to an education loan of £142,636. Putting aside education, with regard to the second heading, pauper lunatics, many thought that they should be a charge upon the public purse to a greater extent than at present. It was true that the State did contribute to their maintenance, but counties and boroughs were now compelled to erect palatial edifices as lunatic asylums. The requirements of the Lunacy Commissioners were always increasing. In view, therefore, of the fact that counties and boroughs were not masters of their own expenditure in this counection, in view of the fact that the central body dictated that expenditure, it seemed to him that the national purse should defray its cost. He passed from that part to the third heading, the question of the cost of main roads. In Devonshire the expenditure on main roads had increased from £24,000 in 1890 to £72,000 in 1907. That was a terrible increase. Could there be found any to contend that in these days of motors, the cost of keeping main roads in fit order, a cost which had risen enormously through motor traffic, should fall, not on those who destroy the roads as fast as they were mended, but on the unfortunate agriculturists who lived in the vicinity of these roads? Prior to the introduction of railroads, when there was a considerable through traffic along these roads, the cost of their maintenance was defrayed by means of turnpikes. With the advent of railroads that through traffic had died out, and the turnpikes has been done away with, but with the introduction of motors a great through traffic had once more developed itself along the main roads of the country, and it was manifestly unfair to compel the locality to keep up these roads for strangers to destroy. The rural population admittedly suffered very great inconvenience and discomfort, yes, and in many cases even serious injury, through the stream of motor traffic along the main roads, and it was the height of irony to make this injured population pay for the maintenance of these roads in order to facilitate the advent of motor traffic which they loathed. All must admit that this was quite indefensible. As an owner of a motor car himself, he thought owners of motor cars should be anxious to see an alteration of this state of affairs. They recognised that motor traffic could never be as popular as it ought to be, and that the motor industry would not advance as it should so long as the present state of things existed. He was on the executive of a large automobile club, and he spoke on their behalf, and he believed on behalf of the general run of motor-owners, when he said that they would be prepared to submit to an increased tax on motors, but on the distinct understanding that the money should be allocated to the provision of sound, smooth, mudless, and well made roads. [Laughter.] Hon. Gentlemen might laugh; but there was no reason why our roads should not be made efficient. He maintained that there were main roads throughout the country which fell very far short of what they should be and what they were in Germany and France, where they were constructed on the best scientific principles. He would remind right hon. Gentlemen that they had recently passed an Act involving local expenditure under a new heading. A year or so ago they provided for the medical inspection of school children. Now if this was properly done, it would involve considerable expenditure, especially in the country districts. Even in Plymouth it involved the increase of the remuneration of the medical inspector by £300 a year, and there, of course, all the schools were concentrated within a small area. The cost would be very much greater in the country districts, where the schools were scattered over a large tract of country. He believed he was right in saying that there were 20,000 school children in the administrative county of Devon, that was Devonshire, excluding Plymouth, Devon-port, Exeter, Barnstaple, and Torquay. In view of this considerable expenditure, the Devon Education Committee had unanimously passed a motion praying that it should be a charge upon the national purse, and as the proposer of that resolution had been. Sir Thomas Acland, a gentleman whose name might almost be said to be historic as far as West-country Liberalism was concerned, he had some hopes that the Government would listen to the prayer of the petition. He had pointed out three respects in which local ratepayers were saddled with an unjust burden. Other instances might be adduced in this connection. He would not, however, labour these points. He had said enough to show how urgent was the need for inquiry into this branch of the subject. Then, as he had already said, the whole question of the incidence of local taxation should be attended to. All must wish that the burden of the rates should fall upon individuals in proportion to their ability to pay. Did it so fall? No one for one moment could contend that it did so. Their present system was a survival of the days of old, when there was but one form of property, real property, land and houses, visible property. Their present antique system shut its eyes to the fact that the bulk of the wealth of the country was represented by personal property. Personal property was three or four times as great in volume as real property, and under these circumstances he hoped the House would agree that it was manifestly unjust to impose local taxation, and especially to impose local taxation for national objects, exclusively upon real property. The Agricultural Rating Act was a very crude method of endeavouring to remedy this state of affairs, which Mr. Gladstone himself, let him say, had been wont to characterise as an injustice; and very rightly did he so characterise it, for what were the rates originally? They were intended to be a kind of local income-tax under which all were to contribute to local objects according to their incomes reckoned by what they owned in the parish. People had to pay on all kinds of property, real and personal. For long the tax had been fairly collected, but in time, owing to the difficulty of estimating income derived from property other than real property, it gradually grew to be the custom to levy rates only on owners and occupiers of land and houses, property which was easily seen and valued, and so it came about that the retired merchant or manufacturer, the owner of personal property, escaped altogether from paying the rates in proportion to his means. In consequence of complaints the whole matter was referred in 1841 to a Court of law, which laid down that all should contribute to the rates in proportion to their means, whether their incomes were derived from real or personal property. This was a serious blow to the owners of personal property, and being an influential class they succeeded in inducing the Parliament of the day to pass a law relieving them altogether from the payment of rates in respect of personal property, and throwing the whole burden of the rates on the owners and occupiers of land and houses. At the same time it was felt that this was rather rough on the latter class, and accordingly the operation of the Act was limited to a single year, so that the whole subject might be reconsidered; but so far from the matter being reconsidered, for over sixty years Parliament had annually passed an Act exempting the owners of personal property from payment of rates according to their means, which the law of the land would otherwise have compelled them to do. There was the injustice. For over sixty years the owners and occupiers of land and houses had been paying their own share of the rates and that of the owners of personal property as well. The Agricultural Rating Act had been denounced by many as a dole, but how could this so-called dole, conferred by the Agricultural Rating Act, compare with the dole annually presented to the owners of personal property by the yearly Act conferring upon them total exemption from rating in respect of that personal property. It was not as if it was a Party matter. The injustice of the incidence of the rates had been recognised by all parties, by Mr. Gladstone himself, and even by the Liberal Commission which looked into the matter under the Chairmanship of the right hon. Gentleman the Member for Wolverhampton. It was an extraordinary thing that the general public should imagine that because half the rates on agricultural land were paid by the State, that therefore agriculture was treated with peculiar indulgence. Nothing could be more untrue. The agricultural industry was treated with gross injustice in this connection, and was singled out as no other industry was, to bear an unjust burden. It could not be too often repeated that those who got their living from the land did not want exceptional treatment. They were not in love with the Agricultural Bating Act. They recognised that it was a crude, a rough and ready method of dealing with the difficulty. All they asked was that their industry of agriculture, which, after all, was the most important industry in the country, should not be treated more harshly than any other industry. All they asked was that the raw material and stock-in-trade of the industry should not be specially singled out for taxation, while the raw material of all other industries was specially exempted. The peculiar thing was that while so many of those who sat on the opposite side of the House were up in arms at the suggestion of the slightest taxation of the foreign importer of agricultural produce, they were wholly indifferent to the ever-increasing burden of taxation which was being heaped upon the home producer. They did not mind taxing him. Could they not see that such unjust taxation was constantly adding to the English agriculturist's expenses of production, and that by forcing him to pay unjust taxes to which the foreigner was not subjected, they were protecting the foreign producer in their home markets and unfairly handicapping the home producer in his competition with the foreigner. Were not those who got their living from the land rightly imbued with a sense of injustice in this connection? Let them take a concrete instance. He would like before he sat down to give, a concrete instance of an injustice. They might have a capitalist, a retired manufacturer living in a rural district in a villa rated at £100, he having an income of from £5,000 to £6,000, derived from investments. Next door to him was a yeoman farmer, farming his own land of 250 acres, the farmhouse buildings and agricultural land being rated at £250. The profits of the latter, under very favourable circumstances, would not amount to more than a hundred pounds or two. Perhaps he might have a struggle to make both ends meet, and yet he contributed to local purposes more than double what was required of his neighbour who had an income of several thousands a year. Did the farmer get more advantage out of this local expenditure? No, the capitalist with his motorcar, horses and carriages, got more use out of and did more damage to the roads. The protection of the police was more essential to the rich man's house than to the farmer's house. All must agree that the position was indefensible. There was now a unanimous desire to increase the number of small holdings in the country. Could not hon. Gentlemen see how such unjust burdens militated against the success of small holdings? Could it be denied that excessive local taxation had been a great factor in the, disappearance of small holdings, and had contributed to rural depopulation? As he had said, the Agricultural Rates Act was a rough-and-ready method of dealing with the difficulty; it was not satisfactory. Agriculturists did not ask for exceptional treatment, but they were entitled to ask for that justice which Mr. Gladstone and all great financial authorities had admitted had long been denied them in this connection. The light hon. Gentleman, the Chancellor of the Exchequer, in speaking for the Government, had just now said that at any rate his party was not responsible for the neglect of this question, because it was only in the year 1901 that the Commission repotted in favour of a reform in the incidence of local taxation, but surely he was not entitled to urge that plea. The question had been an urgent one long before 1901, and he found corroboration of his views in the words spoken by the right hon. Gentleman, the Member for Wolverhampton, a member of the present Government, in 1883. He had said, "Why should taxation be assessed on only one description of property, when the expenditure is for the benefit of all?" Twenty-five years ago the right hon. Gentleman had asked "Why?" And echo had continued to answer "Why" ever since. Let him, however, disavow any intention of bringing forward this Amendment in the interests of the agricultural community alone. Local taxation pressed unfairly at many points, and he claimed the support of a strong contingent of opponents in that House who were of opinion that the system of rating machinery required looking into. There were many conflicting opinions in regard to that question, but all were agreed upon one point. The system under which machinery was rated was a huge muddle, and required elucidation. Nobody could defend the present happy-go-lucky method of rating machinery. The difference of practice in different parts of the country was indefensible, and severely handicapped many manufacturers in their competition for the favour of the market. He could not go into the question at length that evening. He was not competent to do so, but there were all sorts of subsidiary questions in this connection which cried out for settlement. For instance, there was the question of rating unfixed machinery. No one could say what was really the law as to the rating of machine tools on manufacturing premises. He would not say more than that ail would agree that the practice of the law with regard to the rating of machinery was so uncertain as to be a serious handicap in many industries, and he claimed the support that evening of all those who were of this persuasion. He felt that he had spoken at some length, though there was much more that might be said. The right hon. Gentle man who had spoken for the Government, had expressed sincere sympathy with the terms of the Resolution, and he said that it was a matter which must be dealt with, although it could not be dealt with immediately. That would seem to be satisfactory, but unfortunately that was what every Government had been saying for thirty years past. All Governments had in the past put off consideration of this question. For years past it had been admitted by successive Governments that our system of local taxation was chaotic, and that being so he was asking the House to declare that it was the duty of the Government of to-day to tackle the question, not to keep putting it off, to face the difficulty and to deal with it boldly.

*MR. LUKE WHITE (Yorkshire, E.R., Buckrose)

said he would not occupy the House more than two or three minutes, because he found that from all quarters of it there was a disposition to accept this Motion, which had already been accepted by the Chancellor of the Exchequer. Anyone who had any acquaintance of local taxation could come to no other conclusion than that the time had arrived when the whole question should be discussed and dealt with. With regard to the question of agriculture, to which so much allusion had been made that evening, he might say that, representing a large agricultural constituency, he felt that agriculture especially had great complaint to make with regard to the existing burdens which had been placed upon that industry. The Royal Commission which reported in 1901 made it quite clear that some attempt should be made in order to lessen the burdens upon agriculture which then and still existed. He did not think he need occupy the attention of the House that night with any remarks as to the mode and manner in which Parliament should deal with this question of the incidence of local taxation. He was very glad indeed to find that the Chancellor of the Exchequer had made it clear that he agreed with the Report of the Royal Commission that there was now placed upon local rates an expenditure for various services which were national in their character. The Chancellor of the Exchequer had alluded to Poor Law relief as being a national service, and also to the fact that education was a national service, and that various other services the expense of which was borne by the localities were national in their character. That was a very great admission to be made by a Chancellor of the Exchequer, that he agreed that in altering or reforming the system of local taxation, the people of this country must have grants from the National Exchequer equivalent to or very largely equivalent to the expenditure incurred by them in these services. He wished to make an appeal to the Government to deal with this question. It was true that for the last fifty or sixty years Motions had been passed in this House calling for a remedy or a reform with regard to the system of our local taxation. But nothing had been done. In 1901 the Royal Commission reported, but before they had made their Report to this House, the Government promised to bring in a Bill which was absolutely necessary to deal with the whole question, and the first step in dealing with the reform of local taxation as was mentioned by the Chancellor of the Exchequer, was to pass a Valuation Bill. He had the privilege in the last Parliament of hearing a promise in the King's Speech each session to bring in a Valuation Bill. It was true that in the last Parliament the right hon. Member for South Dublin, then President of the Local Government Board, did bring in a Bill for that purpose, and that Bill might and would be in the future a very difficult and com- plex measure. This was a difficult matter, but it had to be faced, and he now hoped that his right hon. friend the President of the Local Government Board would bring in this Valuation Bill at the earliest opportunity. It would be a measure that between its First and Second Reading would have to be considered by the local authorities throughout the country, and the ratepayers and taxpayers throughout the land. It would be a measure which would require great consideration, and therefore it was necessary that it should be brought in and discussed at the earliest possible moment. He appealed to his right hon. friend to give some promise to-night as to when he would be able to introduce this measure, because it would have to become law before local taxation could be dealt with. As Parliament thought the time had come when the problem of local taxation should be dealt with he trusted the House would now support him in his appeal.

MR. JOWETT (Bradford, W.)

said that the hon. Member for the Totnes Division had referred to the fact that for sixty years an Act had been renewed every year to set aside the power of the overseers to rate the citizens according to their ability to pay. Since this Parliament had assembled he had endeavoured to raise the question when, under the Expiring Laws Continuance Act, the Act came up for renewal. On that occasion he endeavoured to obtain from the Chancellor of the Exchequer some word of hope for the ratepayers of the cities and towns of the kingdom who were groaning under burdens which were almost too heavy to bear. On that occasion he failed to obtain such a promise as would bring the relief for which he had hoped. On this occasion he trusted the House would receive something more tangible than anything they had obtained previously. That was still to come, if it came at all, because the speech of the Chancellor of the Exchequer did not bear any construction that was likely to be of importance to the over-burdened ratepayers for some time to come. The first word he would like to say was that the speech of the Chancellor of the Exchequer contained a rather deprecating reference to the idea of rating according to ability to pay. It was, however, somewhat late in the day to say it was impossible to rate according to ability when those who had read anything of the literature on the subject knew full well that in Germany rating according to that principle was already in operation. As the Chancellor of the Exchequer and the President of the Local Government Board were no doubt aware, in German cities there was some arrangement which gave municipalities some advantage in the shape of the imposition of an income-tax for local purposes. That was what he and some of his friends would like to see put into operation in this country, and if it could be done in Germany it could certainly be done here. With reference to the right hon. Gentleman's statement as to the taxation of site values, he did not desire to be misunderstood, because he was one of those who believed in the taxation of site values, but he could not think that the Chancellor of the Exchequer was right in endeavouring to lead the House to believe that there would be any very serious and tangible relief accruing to the ordinary ratepayer through such, taxation. The theory of the Solicitor-General for Scotland with reference to the taxation of site values was that there should be a transference of rating from the property to the land. That merely meant a shifting of the burden. The hon. and learned Gentleman was of opinion that all local rates should be placed on the land value. If such a step were taken no increase in the amount of revenue could be expected The property owner as such apart from the land would be released, and the land would bear the whole burden. But he would like to point out that in nearly every municipality in the kingdom, the rates were greater in amount than it was possible to put on the land value. He had in mind a municipality which recently was rated at 9s. in the £. If they took as an average the land values at one third of the total rateable value, it was evident that the whole of the land values would be taken by the municipality under such a system. He wanted to know as early as possible what was the view of the Government on that matter. He did not think that hon. Members opposite should go about the country declaring that the Party to which they belonged were in favour of the total confiscation of land values unless the Ministerial Bench were also in favour of it. He would like to know exactly where they were. It would be interesting to find out. The taxation of site values would not bring an increase unless it was placed upon the owner of sites as an extra burden. If it was an extra tax put on the owners of property and sites there would be an extra revenue, but if it was merely to take burdens from the owners of other forms of property there would be no such relief. The Chancellor of the Exchequer had asked the overburdened ratepayer to wait until that precious Poor Law Commission had reported. That Commission had sat a long time. The end was not yet clearly in sight, and meanwhile the injustice pressed heavily on those concerned. Let them take the case of a professional gentleman who needed only for the pur- poses of his business perhaps a couple of offices, and who was making perhaps a thousand or two thousand a year. A poor shopkeeper who was obliged to occupy commodious premises might be struggling with adversity and hardly able to make ends meet and yet might be paying £100 a year or more in rates. The amount was almost unlimited according to the nature of his business. There was nothing fair in that. And further it was becoming the custom in manufacturing towns for large capitalists to escape the obligation of holding and running machinery by simply taking an office and putting their work out at the lowest possible price to impecunious owners of machinery, who were bound to take the work at whatever price they could get. For instance, a loom if it stood for a week might cost the person responsible for it 7s. in standing charges. He could not afford to let it stand, and he cut the loss. The rich man who had made himself a factor sat in his office and waited for the manufacturer to come to him at his wits end, and then squeezed all the profit he could out of him. But that man was let off with a very small payment every year. That could not be right. It was not tolerable. The increasing tendency to pass laws excellent in themselves but providing no money, ought to be taken into account in a discussion of this kind. They had passed the Feeding of School Children Bill. How many authorities had put it into operation? Many of them had hesitated for fear of the intolerable burden of the rates. Something must be done to give help and succour to the municipalities that had extra burdens of that kind placed upon them. Money was also needed for the Medical Inspection Act. It was all very fine for that Assembly in righteous and virtuous fits to pass laws and hand them coolly over to localities to put them in operation without supplying the money. The position was coming to a climax. Municipalities which were doing their best for the public good found they came against this dead wall of inability to find the necessary money. He trusted the President of the Local Government Board would go a little further than the Chancellor of the Exchequer.

*MR. STUART (Sunderland)

said that the right hon. Gentleman had placed before the House the claim of agricultural districts for consideration under such a measure as this. As far as he had been able to gather, the speeches had dealt chiefly with the agricultural difficulty. He would like for a moment to divert the attention of the House to another matter which deserved attetion. He would take as an illustration an instance which he knew well, the case of the county of Norfolk and the city of Norwich. Before the Agricultural Rating Act of 1896 was passed the rates in Norwich were 8s. 8d., and the rates in the county was 2s., and the relief that was given to the rates in the city was 16 per cent. of its expenditure, while the relief given to the county was 28 per cent. of its expenditure. In the county there was practically the same amount of rateable house property as there was of rateable agricultural land, so that the remainder of the expenditure, which was 72 per cent., was borne half by agricultural land and half by house property. Under the Agricultural Rating Act the county was relieved of an additional 18 per cent. of its expenditure, making a total of 46 per cent., while the city continued to be relieved only to the extent of 16 per cent. Therefore, there was great inequality between the relief given to the county and that give to the city. That was a fair sample of many cases, and he hoped that agricultural relief would not be the only plea heard in that House, more particularly as the Royal Commission was the produce of circumstances such as he had described. The right hon. Gentleman who was then President of the Local Government Board, admitted that a large concession had been made in relief of agriculture by the Act, and he set up the Commission with the object of seeing what could be done for urban districts. He warned the Chancellor of the Exchequer against meeting the difficulties by a too tree expenditure from the Consolidated Fund, as the tendency of such relief was to help in the long run the owner of the site value and not the occupier for whose relief it was primarily intended. There were two Reports from the Royal Commission, and among the signatures to the Minority Report was that of the Chairman, Lord Balfour. That Minority Report expressed the view that site values could be taxed, and went so far as to say that they ought to be taxed, that accompanying grants there should be a site value rate, the tendency of which would be to fall on owners, and the benefit of the subventions would be secured to those for whom it was intended, the occupiers. When they requested the Chancellor of the Exchequer to mitigate their difficulties by paying out of the general fund of the country, it should be remembered that unless something was done corresponding to what the Minority Report of the Royal Commission represented as necessary, what was done would, he was afraid, be a gift of the hard earned money of the general population to the owners of site values in towns. The persons who appeared to get the benefit were the occupiers, but it slipped through them like sand through an hour-glass into the pockets of the site owners. It was on the site owners that the rate ultimately fell, and therefore to them that relief to the rate ultimately accrued. A good system of valuation was the first necessity. The present system was absurd and ridiculous. A system of separate valuation of sites would be easily and successfully accomplished.

VISCOUNT HELMSLEY (Yorkshire, N.R., Thirsk)

said the debate had shown remarkable unanimity in one respect. No one had said a word on behalf of the present rating system. The Chancellor of the Exchequer had said that this was another demand upon him, and that it was intended to make something out of the Imperial Exchequer. That was quite true, but it seemed to him that there was a difference between this and certain other demands. They were not asking the right hon. Gentleman to draw more deeply on the national funds as he was asked to do in connection with other schemes which had been proposed. On the contrary it was a transference of expenditure from one purse to another rather than any fresh expenditure which was being pressed upon him this evening. A good deal had been said about onerous and national services, but he thought what had been said did not really go to the root of the matter. If they were going going to follow out the suggestion in Sir George Murray's Report and only transfer the cost of one half of these services to the national Exchequer, the incidence of the other half would be as unjust as at present, and practically it would be no remedy. He could not understand why they should not transfer the whole of the cost of the national services to the Imperial Exchequer. There was a very excellent precedent in the action of the Secretary of State for War who had recently set up local bodies which were to be administered for national interests out of national funds. Poor relief, asylums, and education, could be so treated. The cry of want of economy if that were done would not really be a sound one, because so long as the money was devoted to particular purposes, and the Exchequer audited most carefully, there would be no room for extravagance. The second grievance of the ratepayers was that which owners of real property had against owners of personal property, and the third grievance was that felt by agriculturists against other forms of real property. This was a genuine grievance only partially remedied by the Agricultural Rates Act. Some hon. Members might think that that Act was crude, but, at all events, it had answered its purpose for the time being in affording farmers a substantial measure of relief. He could give a great number of instances of the complaints of farmers about the injustice which they felt on account of the burden of rates which fell so heavily upon them. He would not go into these, but he would take a hypothetical case and compare two men—one a farmer, and the other a tradesman, and both in a small way. He would suppose that the income of each was £100. A farmer, according to the income-tax schedule, was supposed to pay one-third of his rent as income-tax, and if he had an income of £100, it might be supposed that his rent would be £300. That was not an uncommon calculation. On the other hand, the tradesman would probably pay for his house one-fifth of his income, and, therefore, he thought that without unfairness it might be put down at £20. Therefore, a considerable disparity arose in the method of assessing these two men. Whereas the tradesmen paid rates only on £20, or making the usual deduction as to rents to be paid, on £16 13s. 4d. the farmer with the same income paid rates on house and buildings (say £30, less one-sixth), £25; agricultural land (half £270, less one-eighth), £118; total assessment, £143. Hon. Members would see that in the case of an education rate of 6d. the farmer would pay on that assessment, £3 11s. 6d. and the tradesman only 8s. 4d. That was an enormous difference and a grave injustice. The one paid eight and-a-half times more than the other towards the rates, in spite of the Agricultural Rates Act. Had it not been for that Act, the farmer would have paid seventeen times more than the tradesman with a similar income. When hon. Members talked as if the Agricultural Rates Act was a charitable gift from the nation to the agriculturist, they forgot how great was the injustice which had been inflicted, and how very partially that injustice had been relieved. He need not say this tax, which practically amounted to an excise duty on home-grown food, had been very deplorable in its results on agriculture. The fact that it was paid by the producer and not by the consumer did not make the hardship the less. When one reflected that it was the policy of both parties in the House to encourage the people to get back to the land, and to encourage agriculture as an important national industry, it was deplorable that that industry should labour under such grievous disadvantages compared with other industries. He should also like to point out that the whole difficulty arose from the fact that the farmer for the purpose of his trade needed more rateable property than other people for their trades. When members who represented urban districts pointed out the grievances which their constituents had to contend with, they who represented agricultural constituences did not wish to minimise their grievances. All they wished was a frank recognition of the grievances of the agriculturalist. The whole thing lay in a nutshell when it was remembered that in the case of a farmer his income was calculated as one-third of the rent, while in the case of other people their rent was calculated at one-fifth of their income. He hoped that some thing would soon be done to remedy this injustice, and that the word "immediately" would have a little more liberal interpretation from the Chancellor of the Exchequer than he had led the House to believe. He Was sure that the sooner the Government—he was indifferent as to which side of the House it belonged to—took up this question the better it would be for the agricultural industry.

MR. HUGH LAW (Donegal, W.)

said he hoped that when this Government did tike up this question they would devote their attention to the special recommendations made by Lord Balfour of Burleigh and other Commissioners with regard to different contributions of aid of rates in Ireland. An hon. Gentleman opposite had given striking figures in regard to the county of Norfolk, but he could give a companion picture of what occurred in two agricultural districts in Ireland. The Chancellor of the Exchequer had described the system of valuation and the system of grants-in-aid as hap-hazard and inequitable. That description was certainly not exaggerated. The valuation was such as to penalise all improvements, and it was incredible the burden which the rates put on the inhabitants of poor districts. It was impossible for these poor people to put up so much as a pig-stye without an appreciable difference being made on the rates. Again, the present manner of granting Exchequer contributions was such as to give relief where it was least needed. If hon. Members would refer to page 24 of Lord Balfour's Report they would find two extraordinary cases. In one the rateable value per head of the population was 13s., and the amount paid from the grant-in-aid was 1s. 3d. per head, while in the other case the rateable value was £12 13s. and yet the grant-in-aid per inhabitant was no less than 7s. 6d. In districts where the rateable value was very low it was impossible for the guardians and the district council to provide the merest decent accommodation for the sick poor.

Resolved, "That, in the opinion of this House, the present system of Local Taxation and the relations between Local and Imperial burdens demand the immediate attention of His Majesty's Government, with a view to a more equitable adjustment as between Local and Imperial obligations."—(Mr. Hedges.)