§ (1) For the purposes of this Part of this Act, the total value of land means the amount which the fee simple of the land, if sold at the time in the open market by a willing seller in its then condition might be expected to realise.
§ (2) For the purposes of this Part of this Act the site value of land means the amount which the fee simple of the land, if sold at the time in the open market by a willing seller, might be expected to realise if the land were divested of any buildings, and of any other structures (including fixed or attached machinery) on, in, or under the surface, which are appurtenant to or used in connection with any such buildings and of all growing timber, fruit trees, fruit bushes, and other things growing thereon.
869§ (3) For the purposes, both of total value and site value, land shall be deemed to be sold free from incumbrances, but subject to any easements affecting the land, and to any covenant restricting the use of the land entered into before the thirtieth day of April, nineteen hundred and nine, where, in the opinion of the Commissioners, the restraint imposed by the covenant is reasonably necessary in the interests of the public, or in view of the character and surroundings of the neighbourhood, and the opinion of the Commissioners shall in this case be final and not subject to any appeal.
§ (4) The Commissioners shall allow as deductions from the site value of any land:—
- (a) Any part of that site value which is proved to the satisfaction of the Commissioners to be directly attributable to works of a permanent character executed bonâ fide by or on behalf of any person interested in the land for the purpose of fitting the land for use as building land or for the purpose of any business, trade, or industry other than agriculture; and
- (b) Any sums which in the opinion of the Commissioners it would be necessary to expend in order to divest the land of buildings, timber, trees, or other things of which it is to be taken to be divested for the purpose of arriving at the site value and of which it would be necessary to divest the land for the purpose of realising the full site value;
§ Amendment proposed in Section (3) to leave out the words "where, in the opinion of the Commissioners, the restraint imposed by the covenant is reasonably necessary in the interests of the public, or in view of the character and surroundings of the neighbourhood, and the opinion of the Commissioners shall in this case be final and not subject to any appeal."—[Mr. Salter.]
§ Question proposed, "That the word 'where' stand part of the Clause."
§ Mr. E. G. PRETYMANThis Amendment covers the whole of the ground, and three questions arise upon it. First of all, as the Bill is amended, I think the Committee will observe that the words preceding this Amendment are taken out, 870 which rather alters the bearing of it. The words "entered into before the 30th day of April, nineteen hundred and nine," are now taken out, so that the Amendment really follows "land," and the clause now says, that land "shall be deemed to be sold free from encumbrances but subject to any easements affecting the land, and to any covenant restricting the use of the land." Then comes the qualification "where, in the opinion of the Commissioners, the restraint imposed by the covenant is reasonably necessary in the interests of the public." That is the first point of my hon. Friend's Amendment. It is intended to suggest that the covenant restricting the use of the land should not be limited by that expression of opinion of the Commissioners as to whether it is reasonably necessary in the interests of the public, because "public" is a very wide term, and although it might be argued that it is in the interests of the public that the restriction should be imposed, and naturally affects individual interests, I hardly think that the Attorney-General would argue that this is necessary. I think he would agree with me that, in the ordinary case where you have a plot of building land which has restrictions upon it in regard to the construction of a certain class of house of a certain value, that it would not be primarily in the interests of the public to maintain that provision.
I do not think the Attorney-General will suggest that it could be argued that on general grounds that could be said to be in the interests of the public. You lay out a piece of land and you say that residential houses of £75 rent shall be the smallest type of houses which shall be erected upon it. That covenant runs with the land and the owner of that land is bound by it, and he would erect perhaps half a dozen £75 houses. Then the market might change, and he cannot get customers for £75 houses, and he would like in his own selfish interests to erect smaller houses of £20 rent. The covenant restricts him from doing so, and the covenant clearly ought to be maintained in the interests of the occupiers and purchasers of the £75 houses already erected. I do not think that can be said to be in the public interest, and yet it is clearly impossible to suggest that this House should do anything to discourage it. One of the objects we have very much at heart, and which has been a good deal in the mind of the House, is the matter of housing and town planning, and, certainly in the 871 matter of town planning, it is obviously desirable to get a certain class of house in a certain area and not to allow property of one kind, small houses or shops, to be put closely adjoining large residential houses, and so to deteriorate their value and destroy the amenities of the neighbourhood. Therefore, I cannot see on what ground the Government restrict this deduction of any depreciation due to a covenant to cases where the covenant is in the public interest. The Amendment removes that restriction and leaves it simply that where land is subject to a restriction or a covenant it shall be taken into account. It is obvious that the man who owns the land might be able to make more of it by selling it for an inferior class of property. This is a very material matter, that where he is subject to restriction he should be entitled to deduct it. It seems to me that you cannot wish to prevent such restrictions being made in the future. The only hypothesis on which you can keep this in is either that you want to prevent such restrictions being imposed in future, which I do not say you do want to do, or that you desire to tax people for a value which the land does not possess and cannot possess because it is subject to this restrictive covenant. On that ground I think we may fairly ask that these words should be taken out. The second point is that the opinion of the Commissioners shall in this case be final, and not subject to any appeal. From our point of view, that is a very undesirable restriction, and it ought to be a question of fact. There ought to be an appeal in that case, as there is in any other.
§ Mr. CLAVELL SALTERWhen you come to valuation this question of restrictive covenants is exceedingly important. These restrictive covenants affecting the commercial value of land are a comparatively modern device—a product of recent years—but they are found very useful and beneficial improvements from a private point of view, and they are very widely employed, and they have a very powerful effect on commercial values, and everyone would agree that although wise and far-sighted, restrictive covenants may often, as years go by, have a great effect in increasing value, yet in their early days, when they are in operative and active restrictive effect, they invariably have the effect of reducing the commercial value of the land, because a man will not give as much for land the use of which is re- 872 stricted. This Amendment will affect an enormous amount of property, because these covenants mostly apply precisely to that class of building land which the Government think it desirable to deal with. What does the Bill say as it stands as to the manner in which a valuer has to deal with restrictive covenants? He is valuing a good piece of land, and he finds that it is subject to a restrictive covenant which reduces its commercial value. Is he to reduce its estimated commercial value in assessing the land for taxation as he would if he were assessing the value of the land for the purpose of advising a buyer as to how much he should get for it? I should have thought if you want to tax a man on the real value of his property obviously that is what he ought to do, but that is not what he is to do. Under the Bill as it stands, having made up his mind that if the restrictive covenant is to be taken into account it will reduce the value of the land, the valuer, as I understand, must communicate with the Commissioners and report to them that on a given property he finds such and such a restrictive covenant in force, and he must, I suppose, obtain their decision as to whether in their view such a covenant is either in the public interest or in the local interest, which, I imagine, amount to about the same thing.
If they come to the conclusion that the covenant is not in the public or in the local interest, the instruction given by the Bill to the valuer is that he is not to value the land at that which, in his opinion, is its true value, but he is to add to what he honestly believes to be its true value, a fictitious and false addition, by ignoring the restrictive covenant, which, as a matter of fact, reduces its value. The object of the Amendment is to say that in every case where there is, in fact, a restrictive covenant, whatever the Commissioners may think about it, which, in the opinion of the valuer, reduces the value, he is to reduce his assessment. It is obvious that if the Amendment is not carried we will get all over the country people taxed upon excessive values. I can hardly imagine that that is the desire of the Government. It does not appear to me to be at all a question whether the covenant is what I may call a politic covenant. May I take the case of the simplest possible restrictive covenant? A man has bought some land for development in suburban villas in a country town subject to a very common restrictive covenant that he is not to build a public-house or any kind of shop, and that he is not to 873 apportion less than half an acre to a house and not to build any house of a less value than £500. He has given less for the land in consequence of these restrictive covenants. I will suppose that the neighbourhood has not developed quite as had been anticipated, and that the restrictive covenant is a misfortune, not only to the owner of the land who has bought subject to it, but to the locality. The locality has so developed that it would be desirable to have shops and smaller houses with less gardens, and possibly a public-house. The prospective taxpayer will heartily agree with the valuer, and will say: "I entirely agree that this restrictive covenant is a great misfortune to the locality. I bought the land subject to it, and gave less for the land because of it, and I should like nothing better than to be relieved from it, and I entirely agree with you and the Commissioners that this is not a good restrictive covenant." But what is to happen in such a case? I have observed with great interest an Amendment to be moved later on that in such a case the effect shall be that the restrictive covenant shall cease to operate, and that the fortunate developer, without paying any more, shall be free from the restrictive covenant.
I do not want to anticipate that Amendment, but it is significant that it should be on the Paper. I do not know what the owner of the land, who is not consulted on the matter, would have to say. He has imposed a restrictive covenant in the interests of other land of his in the neighbourhood, and he would think it something of a hardship that the person who bought it should be relieved from it without paying any more money, and I do not know what would become of the celebrated observation of the Prime Minister in the City of London in regard to the sanctity of contracts. That, indeed, would be a very large order, but at present certainly I shall not assume that the Committee would think of interfering with contracts in that way. What is to be the position? That in the case I have put, a restrictive covenant which is not merely contrary to local interest, but is admittedly on all hands contrary to local interest, you are going to say to the developer who would be glad to be released from his covenant: "I am not going to release you from this covenant at all. As you have thought fit to subject yourself to it you shall not only develop your land under the commercial disadvantages which it entails, but meantime and for ever you and your successors shall be taxed upon 874 an inflated and artificial, which is not the real, value of the land, because it is not in the public interest." The supporters of this Budget are accustomed to repudiate very strenuously, and, I do not doubt, quite sincerely, the allegation so often made that parts of the taxation imposed by this Budget are penal. Can one imagine a more essentially penal, a more fatally penal, kind of taxation than to say to a man, "Because we disapprove of the nature of the covenant imposed on you and to which you submit, we are going to impose an artificial and admittedly unreal value"? The Committee will see that this Amendment proposes to deal both with this matter of the approval of the covenants and the question of appeal. The two questions raised by the Amendment are these. First of all, is the valuer to be instructed to disregard all such covenants as the Commissioners disapprove of; and next, and only in the event of the Committee being against me on the first point, is there, or is there not, to be an appeal? It is suggested that it will be better to deal with the question of appeal in the later Amendment, and that it will be convenient to confine the attention of the Committee at present to the other point. I propose to take that course. If this Amendment is defeated, I desire to raise the latter question, whether there should or should not be an appeal from the Commissioners allowed? I desire to urge on the Government and the Committee that since their desire admittedly is to base the taxation on a real estimate—I think myself it is always a great misfortune to have to base taxation on estimates at all; sometimes it has to be done, and it is done both in relation to local and Imperial taxation—let us try to base it on a real estimate and not on an untrue estimate, which the man instructed to make the estimate will tell you is not the real value of the property.
§ Mr. WATSON RUTHERFORDIt must not be lost sight of in looking at the Amendment that practically all property that has been built, especially in the neighbourhood of towns, within the last 50 years is subject to covenants of some kind, and, therefore, the Amendment is of great importance, because it affects the method in which the whole of that property will have to be valued, both for Increment Duty and Reversion Duty. Of course, it will not affect the Undeveloped Land Duty, because in that case no question of covenants arise. But it must seriously affect 875 the two earlier duties. Some of these covenants are certainly of a character to reduce the actual saleable value of a given piece of property. I could mention plenty of cases where these covenants are of value—where the mere fact that the covenants exist is a very considerable element in the value. I might give an illustration. Some of those properties which have been laid out depend, as regards the amenities of the land, almost entirely on the excellent way in which the estate is laid out, and the way in which the owner of each house is bound to do or not to do certain things, all of which tend to add materially not only to the value of the whole estate, but, of course, to the items which constitute that estate. Bearing these facts in mind; and bearing in mind also the fact that we have got to deal with a state of affairs which applies to nearly every recently built house in the kingdom, we ought to look at the Amendment and see whether it is practicable or whether it is one which the Government ought to resist. I submit that the Amendment is the best way out of the difficulty, namely, to leave entirely out of the Bill all those words which tend to prevent the valuer in valuing the property from forming a judgment and fixing upon a value which is not the actual value of the property. I ask myself, looking at the clause, why should the Government seek to insist upon a valuation being made of any property which is not in fact the value of that property? Is there any object in the Government going out of its way to have a value put upon a given house which is not its real value? If so, perhaps when the Attorney-General comes to deal with the question he will tell us why they want to put a fictitious, and not the actual, value on these properties.
The importance of these covenants cannot perhaps be better illustrated than in a case of my own. I have a piece of land, and I entered into a contract to sell it six years ago. It had upon it at one end a joiner's shop, and the rest of it was an open yard. I suppose 60 years ago, when that piece of land was carved out, there was a covenant that the yard should not be built upon. In fact, it abuts on a number of other houses and open ground. When I entered into the contract to sell that piece of land in Liverpool I found this covenant in the restrictionis affecting the title. I said to the buyer, "I think I can get rid of that covenant," and he replied, "I will take it if you can." I found 876 that so much money was asked that it was impossible to get rid of it, and the consequence was that my contract was cancelled and I could not sell the land. The object of the buyer of the property was undoubtedly to build upon the site, which is in a neighbourhood which has changed, and where there is no reason now in the public interest why that restriction should any longer exist. I think that illustrates the importance of these covenants. I suppose if the valuer under this Bill got to that piece of land he would say, "I am going to put a charge on the land for Increment Duty." If we passed the Bill without the Amendment the valuer will say, "The covenant is not in the interest of the public, and I am not going to pay any attention to it. I am going to assume that the piece of land could be sold perfectly free." He would put the value at £1,200, the price at which I was going to sell it, and I should have to deal with that property not only in regard to these taxes, but in regard also to other taxes which the Government may impose next year on a valuation of £1,200, whereas it is perhaps not worth half that amount. Is that right? My case is that if there is a covenant which is enforceable, and which affects the land, there is no way of valuing the property except by taking the covenant into account. The covenant is there. The Attorney-General will probably tell us that the Amendment is impracticable for this reason. It is not proposed by this Bill to set up a tribunal to determine the reasonability of all covenants, and which would have the power to knock them off entirely if they thought the covenants were no longer in the interest of the public. If a representative of the Government will get up and say that he will accept such an Amendment as that we will know that those covenants; which are of no further use to the public can be got rid of in that short and somewhat drastic manner, and I shall be content as regards this particular Amendment. I should say, perhaps, that it is a good idea if we can get rid of the covenants, but we cannot get rid of them in this way, and it is not proposed by the Bill to do so. We must therefore value each property not only with the buildings upon it, but with the covenants affecting it. They are just as much an item in estimating the value of the property as the fences that surround it and every other matter that affects it. There is another reason why I support the Amendment, 877 and that is because of its simplicity. If you stop in this clause after the word "nine" and knock out all the words which attempt to, restrict the operation of covenants, to impose a classification of covenants, and that sort of thing, then you simplify the matter if we are imposing new taxes. May I, as a matter of common-sense, put it to the Government to impose the tax in a simple way, and not to invent complications which are unnecessary, and which will, of course, make matters more difficult. By the Bill as expressed, without the Amendment, the Government propose to brush aside covenants. They cannot brush them aside, and therefore the alternative is that they must take each property with the covenants as they find them. The value otherwise would he illusory. Let me point out to the Attorney-General that if a covenant is of no use, if on being examined it is obviously out of date—supposing it has been obviously set aside by what has happened in connection with the actual facts in relation to surrounding houses—the valuers will pay no attention to it. You will get every protection against stupid and expired covenants by the fact that the valuers will not take them into account because, if taken into account, they would not alter the state of affairs. If the Government are really serious about this tax and about this clause, I do not think they should make it impossible to carry out a proper valuation. I do not think they should make the carrying of it out absurd, and it is absurd and unreasonable if the Government insist upon adhering to the clause in the way it stands, because it would have the effect simply of enabling the valuers to put a valuation on a property which was not the true value because of these covenants. I think it is a very great pity that the Government should introduce into the consideration of any of these covenants the opinion of the Commissioners as to whether the covenants are or are not in the interests of the public. The interests of the public to-day are protected by the statute, and protected by the local authorities. These covenants are all for private purposes generally, and only are public so far as they affect the rest of the estate which has been laid out under a similar covenant. It seems to me that the attempt for the purpose of these taxes to extort a valuation which has no foundation in fact is a very unfortunate one. I think the Government would be very well advised if they leave the whole of the 878 words of this clause out from "where" down to the end of the section, in accordance with the Amendment now before the Committee.
Mr. BALFOURI do not rise to argue this case. Clearly it does not require argument. The Government have not tried to argue it, and cannot argue it. Why cannot they give way at once? We have had two or three speeches. It is clear that there is no reply, and they are acting on the old principle of absolute indifference, and will not defend their attitude.
§ Sir W. ROBSONThere may be some other reason than pig - headedness or obstinacy which induces the Government to pause before making a somewhat important alteration in the scheme of the clause like this. The hon. Member for West Derby (Mr. Watson Rutherford) spoke in favour of simplicity. We all try to have simplicity where we can, but unfortunately there are many reasons, some legal and some in reference to various interests, which animate mankind which prevent lawyers from indulging unduly in the pleasures of simplicity. We are obliged to consider not merely the effects, frequently undesired, of any particular form of words we adopt. We are obliged also to consider the other effects, which may be more serious in the form of words which may be suggested as an alternative. First of all see what we are trying to avoid by the limitations which we put upon this clause. Suppose we struck the words out completely as suggested by hon. Members opposite. There is no doubt that we would avoid some of the cases which have been put with great force and moderation in the speeches that have been made. I feel the force of these speeches as much as anyone can. It may be when you are imposing some fiscal burden that you are hitting someone in a way which you cannot avoid, and which undoubtedly puts upon him some hardship, and yet it may be the lesser evil. That makes a justification for a good many fiscal hardships. What are we trying to avoid here? Suppose there is no kind of qualification upon the sort of covenant that the Commissioners may entertain as a ground for exemption, you have two possible evils. You have your land-owner, neither better nor worse in this respect than the rest of the community, imposing upon himself disabilities in order to save this tax.
§ Mr. WATSON RUTHERFORDCan the hon. Gentleman tell us how he can impose these upon himself?
§ Sir W. ROBSONI am certainly not going to suggest. Hon. Members can imagine for themselves the way in which a tax may be evaded by covenants of a kind which may be entered into by agreement of the parties, and which, for the time being, as long as they last, would have the effect of exempting the property. There is another effect which we must consider. You may have a landlord and someone else putting a very large and unreasonable area of land under the burden of a covenant of this kind. It might be that it might cover an area of land that would be a very serious hindrance to the development of some adjacent community. As we know, there are many persons who desire, and from motives which are not by any means dishonourable, to keep land undeveloped in the neighbourhood of their places, although it may be to the detriment of their community. Clearly we ought not to treat cases of that kind as being proper subjects of exemption. Therefore we must devise some means, if we can, of preventing the two classes of evils which I have suggested. Some qualification, I think, will be required. It is not quite easy to devise words that would deal with the cases which we want to avoid and yet not bring in some cases that we would wish to exclude. Hon. Members opposite, in order to meet the particular cases of hardship, which I think will not by any means be so common as they have indicated, would sweep all safeguards away in this Amendment, leaving the door open both to evasion and to the class of covenant I have described where the landlord and the tenant between them, desiring to secure the amenities of one or two houses in the neighbourhood, by mutual covenant subject an unduly large area of land to this restraint. I am perfectly conscious of the hypothetical cases of hardship that have been mentioned. They are only hypothetical in the sense that they are used as an illustration. But the cases of hardship put by hon. Members opposite are not mere hypotheses. They represent real, but, I think, rare cases. How can we deal with them? We say that first of all the Commissioners may have regard to the public interest. I grant that those would, if they stood alone, not be adequate or even satisfactory in a certain class of cases, because it might be contended that, after all, the public have no interest in such restrictions. I do not think myself that that contention would be effective. I think that the public interest, especially when one comes to consider the 880 succeeding words, and especially also when one comes to consider the tendency of any tribunal, be it Commissioners or Court or Referee dealing with cases of this kind, wherever those open spaces are not a real cause of congestion in the immediate neighbourhood, I think that the public interest would receive a more generous construction than hon. Members give to it, even if the words stand by themselves. But they do not stand by themselves. There is an additional ground for consideration put before the Commissioners, in itself important, that, I think, shall affect any construction they are to give to the words. "public interest," namely, "in view of the character and surrounding of the neighbourhood." See how many cases that covers. I am not saying that it covers every conceivable case, but it covers by far the greater part of the cases put by the hon. Member for West Derby. Let us take the general run of such cases where you have got these restrictive covenants imposed, where it is desired to have buildings only of a certain class in a certain part of the town. That is precisely the kind of case to be met by these words.
§ Mr. STEWART BOWLESIs that necessary? The Commissioners only allow the covenant if, in their opinion, the restraint is necessary and in view of the character and surroundings of the neighbourhood. Would the Commissioners say it is necessary?
§ Sir W. ROBSONTaking the words "reasonably necessary," I do not think the word "reasonably" would be ruled out as totally inoperative in such a case. I think anybody construing the word "necessary" would make some difference on account of the word "reasonably." But I think that the words might be somewhat reconsidered. We must be somewhat careful about the choice of words in this case. I do not indicate the construction we desire to adopt. But that is a point which could be considered at any time in the light of what we have heard in this Debate. Anybody who has had to do with the drafting of a Bill in the Committee stage, which comes before the Report stage, knows that there is plenty of time to consider a minor point like that. But I was considering something of more substance. The great bulk of these cases clearly are due to the desire of the persons laying out the land for building to preserve this amenity in the interests, not only of one or two persons, but of all those who are concerned in the general condition 881 of the land—that is, the character and surroundings of the neighbourhood. That covers the great bulk of cases. It covers clearly the case which was put by my hon. and learned Friend the Member for Basingstoke (Mr. A. C. Salter), where you have an owner averse to different types of property being built in a street, and therefore the restriction is put on the class of houses, and it is provided that nobody should put a poor house, a mean house, or a public-house, or a house with no space about it on this land. These are the oases which have been pointed to, and in every one of them account would be taken of the character and the surroundings of the neighbourhood, and of what is reasonably necessary from the point of view of the neighbourhood. I think, therefore, the great bulk of cases are covered by that qualification, and therefore when you come to measure the possibility of individual cases of hardship against the disadvantages of this other course, it seems to me on the whole to present a less evil than if you cut these words out. That is the only answer that can be clearly given to individual cases of hardship, that although individual they are the lesser evil. I submit to the Committee that we must have some qualifications. The Government will give careful consideration to the points, but we are not able to do away with safeguards altogether.
§ Mr. AUSTEN CHAMBERLAINI regret the absence of the Chancellor of the Exchequer. I mean no discourtesy to the hon. and learned Gentleman, but we all of us know that the Minister primarily responsible in this case is the Chancellor of the Exchequer. The learned Attorney-General has not that freedom of action which the Chancellor would have in a case of this kind. I do not mean to say that he would not accept anything, but not being the Minister primarily responsible for the Bill he has not that same freedom as he would himself have if he were the Minister in charge. I am convinced that if the Chancellor of the Exchequer had been present and had listened to this discussion half an hour ago he would have got up and said, "I think you have made a case. I am always anxious to meet a good case," and he would have accepted the words. There would have been no more talk, there would have been no Division, and we would have got on with something else. What does the Attorney-General's defence come to? He admits a case of hardship, but he thinks that such cases are not likely to be as numerous as we sup- 882 pose. He says it is better that these cases should arise and that the victims should suffer than—what? I really do not know. He said we had the lesser of the two evils. I really do not know what the other evil was, unless it was that this tax might become unworkable. Upon my word I think that would be the lesser of the two, and to deliberately set up and enforce a tax knowing that you are going to create and inflict permanent injustice seems to me a most amazing defence for the Government to put forth. What have they said again and again in respect of this tax in answer to our arguments. They have said, "We are going to tax a man on what he has got; we will not tax him on what he has not got." Is there any statement which has been more frequently repeated in these Debates by every Minister? What is the admission of the Government in regard to this particular case? That you are going to tax a man on what he has not got, what he cannot get and what you will not give him—not only what he cannot get for himself, but what you will not give him; because, if you did, you would break numberless contracts throughout the country in the most flagrant way, or in so flagrant a way that you dare not do it, after the declarations of the Prime Minister and other Ministers. To "tax on what a man has got" goes absolutely by the board. It is a tax on what a man has not got, and what he cannot get. It may or may not be a reasonable restriction placed upon him; it may or may not be a restriction in the interests of the public, but as long as it is put on him, nothing could be more grossly unjust than that he should be taxed as if that restriction was not in existence. The position of the Government astonishes me all the more, because on one section of Clause 10, as I am informed, the Chancellor of the Exchequer has already pledged himself to do exactly what we are asking the Government to do in this case. The Attorney-General, I think, was here during the discussion of Clause 11, and, as I understand, the Chancellor of the Exchequer proposes these words:—
(c) On the site value of any land where it is shown to the Commissioners that the land is being kept free of buildings in pursuance of any definite scheme, whether framed before or after the passing of this Act, for the development of the area of which the land forms part, and that it is reasonably necessary in the interests of the public, or in view of the character of 883 the surroundings or neighbourhood, that the land should be so kept free from buildings.I am glad to see the Chancellor of the Exchequer now in his place. I quite understand that he was away on public business. In regard to Section (c) of Clause 11, it is exactly parallel to Subsection (a) of this clause, and contains the very same words. In answer to the Member for West Derby, the Chancellor of the Exchequer undertook on Report, or I believe it was the Attorney-General himself, to introduce a safeguard in the case of private rights as well as public rights. I want the Chancellor of the Exchequer to do exactly the same thing here. If you omit these words, that is one way. If you will not omit those words, introduce other words. Anyhow, what we ask is that you shall not tax a man on the basis of it being possible for him to do what it is not possible for him to do.
§ Mr. J. W. HILLSI hope—even at this eleventh hour—the Amendment will be accepted. I may be sanguine, but the case is so absolutely unanswerable that I cannot help thinking that the Government will change their mind. The Attorney-General really has not attempted to meet the case at all. Our case is this: Take a house which is bound by certain covenants. The man who owns the property did not impose those covenants, and he cannot withdraw them; they go with the land; they are part of the flesh and bone of the property, just as much as is the situation. Take a house in Park-lane. You cannot value it on the same basis as a house in Caithness. You must have regard to the fact of the surroundings of a house in Park-lane, and also to the covenants which bind it, as well as other houses around it. These covenants are an essential item of value. That is our case. The answer of the Attorney - General is threefold. He says that if you leave out these words, and allow the valuer to take into account all covenants, it is then in the power of the land-owner in future to burden his land, and thereby to reduce the tax. I find it hard to treat that argument seriously. Is it really supposed that the land-owner will depreciate the value of his own land? It is just as reasonable to say that a man will invest his money without getting any income. It has been argued that these covenants depreciate and decrease the value of land. A large number increase the value of land. I 884 think it stands to reason that it should be so. The seller imposes them and he puts them on to get a bigger price, thereby increasing the value of the land and increasing the subject on which the tax is levied. The second answer of the Attorney-General is really the same as the other. He said it might place a large area under the burden of these covenants. I think that was hardly a subject for a Finance Bill. If the owner sells his land at a higher price, the valuer has got to value it at a higher price, and, therefore, increases the value, and does not decrease it.
Without disregarding the facts of the case, what happens is this: An estate is laid out in the suburbs, and houses with gardens are built. Then the character of the neighbourhood changes. The population goes elsewhere, and a new population comes in. All these houses are bound by restrictions, such as that no shop should be put in, and so forth. This, no doubt, increases the value, and the covenants were required in the public interests when they were first imposed. Now they are quite out of date, and the Commissioner and valuers are bound to see that these restrictions are now absurd in the public interest, and, of course, they would say so. Therefore it is perfectly clear that no Commissioner could possibly say that these restrictions are in the public interest. In fact, the whole genesis of these covenants is that they are imposed by the owner and seller of the land to increase the value of his land. He does not impose them in the public interest, though in certain cases they may be in the public interest. My real point is that unless you leave these words out valuation is absolutely impossible. You cannot value a single piece of land apart from the covenants binding upon it or upon the property surrounding it. Take a house in London, good, bad, or indifferent, you have to regard these covenants. No man on earth can say what is the value of that house unless he regards the covenants binding upon it and upon the surrounding houses. You cannot regard London as stripped of all these covenants. There they are, and there they have been for centuries, and they are essential in determining the value of every single house in London. Who, in heaven's name, could value the houses of London and disregard those covenants? All these covenants are just as much a part of the value as the situation, and the valuer who comes along and is told to value a house 885 in Park-lane without having regard to the covenants binding it and upon surrounding houses would be set a perfectly impossible task. That, surely, shows the Government ought to accept the Amendment, because I am certain that you will render any real valuation of any town absolutely impossible if these words are allowed to stay in.
Mr. G. D. FABER (York)Under Clause 14 the Government are enabling these Commissioners at their own sweet will and pleasure to say whether in any case restrictive covenants are to be regarded by them or not. The Attorney-General is afraid of leaving out the words proposed to be left out by the Amendment because it might give rise to cases of collusion. It is hard to follow what he meant by cases of collusion, because if a landlord engaged in an operation of that kind he would, to use a homely illustration, be cutting off his nose to spite his face. He would be hurting his own pocket. Until the Amendment which the Government themselves adopted last night, taking out the words "before the 30th April, 1909," collusion could not have arisen at all, because as the clause then stood it comprised only cases before the 30th April, 1909. It is really only an after thought on the part of the hon. Gentleman, who said as well there would be only rare cases of hardship. I rather think there will be hundreds and thousands of cases of hardship. It has been pointed out that in London, at any rate, and in all other large towns, restrictive covenants are the rule rather than the exception.
Let me quote a case which is within my own knowledge, and which at any rate brings home the injustice; the flagrant injustice to my mind. A relative of mine, a distinguished lawyer—and lawyers are not always good business men—bought 300 or 400 acres of land near a provincial town about 25 miles from London. He paid something like £200 or £300 per acre, and built himself a house. He particularly desired to live in that particular spot for private reasons. He bought the land from a large adjoining land-owner, who put this restrictive covenant into the conveyance, which my relative wisely or foolishly accepted, that although a house might be built, on the rest of the 300 or 400 acres no other house should be erected. The 300 or 400 acres were along a main road not far from a fashionable centre, and no doubt they had very considerable undeveloped value. Now suppose that case had come before the Commissioners. There 886 is the property belonging to my relative, which cannot be built upon—the covenant actually estops his representatives from doing anything of the kind. The Commissioners come in, and they say, in the words of the Bill, that the restraint imposed by the covenant is not in the interests of the public at all, or of the character of the neighbourhood, and that those acres ought to be built upon—that it was merely the will of the original vendor that imposed this covenant, and that the land ought to be built upon. What an extraordinarily difficult position you are putting the owners of that land into. The Commissioners say the land ought to be built upon, and therefore that they shall disregard the covenant altogether, while the covenant says you cannot use it for building purposes for all time. The truth is that once you depart from the broad track of justice you get into devious paths, and you never get to the end of your difficulties. I daresay hundreds of cases could be quoted where just as great hardship would arise. We have got the great master of the Bill back again in the House after his fight or otherwise with the London brewers. Whatever he is not, at any rate he sees which way the game is going and the way the cat is jumping. I do hope he will get up and save the face of the Government and say that they must not be allowed to go on with an impossible case.
§ Mr. G. YOUNGERAt the risk of being tiresome, I should like to read again a few words from the Scotch Land Values Bill, words which I read last night, and which contradict the words we want to get out of this Bill. The land is supposed to be sold free of all burdens, public and private, except building restrictions, and then there is the point of the Attorney-General as to-collusion. The words to which I refer are:—
Provided that where an assessor considers that any restriction or servitude created after the passing of this Act has been created in order to defeat this Act, without prejudice to the appeal which any person aggrieved has, he is entitled to disregard such restriction or servitude.It appears to me that that is a very useful contribution to the Chancellor of the Exchequer in dealing with this question, and if Philip drunk will appeal to Philip sober then you get this clause all right and in proper order. Without a clause of this kind you will see the difficulty which the Attorney-General says might arise, and you will get rid of the appalling proposal to interfere with all these covenants. We have got no leasehold system in Scotland, but a system 887 of permanent feus, and therefore there is never any power to review, and such restrictions can never be removed except by the superior, who does not pay the tax and has no interest to do so. Otherwise they remain permanently on the land, and cannot be dealt with after any series of years. As this Bill applies to Scotland, it is most necessary that those words should go out, and that the Commissioners of Inland Revenue should not be entitled to come down to our country and tear up every feu.
§ Lord ROBERT CECILI had hoped the Government were going to rise and say they were prepared to give way on this point, or, at any rate, mate some suggestion to meet the difficulties. As they have not done so, I desire to say a word or two on the aspect of this Amendment, Only two reasons have been given—indeed, only one—by the Attorney-General for the insertion of these words, namely, that they are designed to avoid evasion, and his second reason, as I understood it, was only a kind of accidental incidence to add importance to the first reason. If you look at this clause for a moment you will see that is not the reason why those words were included in this Bill, and it is quite plain they cannot be, because they were originally designed only to apply to existing contracts. Nobody could have possibly foreseen this Bill, and therefore could not enter into a covenant to evade its provisions before 30th April, 1909. Therefore the Attorney-General's reasons are not the reasons the Government have for inserting those words. They cannot be, that is obvious. Then there are no reasons, so far, that the Government have given us, absoluely none. I agree there might be a reason for keeping them in now that you have changed the Bill. The Attorney-General said that they do much harm, because a covenant which is a reasonable and necessary covenant practically includes every covenant, or almost every covenant. Then what is the use of putting them in if in point of fact they are going to have such a very small effect? Therefore I do not think that that can be the real reason of the Government.
I think myself there is some other reason why those words are put in. I think they are an excellent instance of one of the many vices which underlie this Bill. If this were a Finance Bill those words would not have been put in, and the Government 888 would be ready to strike them out in a moment from a financial point of view. They will do nothing but harm, they will greatly increase friction, and their return in money would be infinitesimal. They are put in owing to some crank of a land reformer. I suppose some friend of the hon. Member for Newcastle-under-Lyme (Mr. Wedgwood) has a dislike for covenants of this kind, or it may be the Lord Advocate. I do not know, I have not followed their reasoning. It may be only as is suggested, a general dislike to contracts. Those words are inserted for some purpose of that kind, and not for a financial purpose. It would be impossible to convince any impartial Member of the Committee that they are for a financial purpose. I hope they will be struck out, and that the Government will have the good sense, if not the prudence, to accept the Amendment.
§ The CHANCELLOR of the EXCHEQUER (Mr. Lloyd-George)I have to apologise to the Committee for not having been here during the discussion, as I had to meet some deputations. I had no idea the Bill would be taken on Friday when I so arranged, and it was too late to make a change. I am afraid the contribution of the Noble Lord (Lord R. Cecil) has not assisted the solution of this question. What is the position? The position is this, and it is quite clear from the speech which has been delivered by the hon. Member for York (Mr. G. D. Faber) that you may have restrictive covenants which would have a very serious fiscal result. The Noble Lord said this is not a fiscal matter at all, that it is purely what he would regard as a first-class crime and misdemeanour, that it is an attempt at land reform.
§ Lord ROBERT CECILBy a Finance Bill.
§ Mr. LLOYD-GEORGELet me assure him this is not contaminated with that sort of vice at all, it is purely fiscal. The whole point is put by the speech of the hon. Member for York. He gave the case of 400 acres of land which was subject to restriction with regard to building. Surely if covenants of that kind are allowed to be entered into, and not merely allowed to be entered into, but are allowed to be effective in excluding taxes, you may have a very serious fiscal effect, certainly as far as this particular tax is concerned. I know of a covenant of that sort, extending 889 not to 400 but to 40 acres, where the lessor insisted on a covenant that no other houses should be built which would interfere at all with his view. That meant that the whole of the 40 acres were absolutely destroyed for building purposes.
§ Mr. REMNANTIt might be an open space in a very crowded neighbourhood.
§ Mr. LLOYD-GEORGEIt was nothing of the kind; and I am answering the point of the Noble Lord to show that covenants of that kind may have a fiscal side. In the experience of two Members there are 440 acres on which you could never get your tax at all. You can multiply those cases all over the country. So that there would really be a fiscal result. I agree that there is a distinction between covenants entered into before the Act and covenants entered into after. The hon. Member for Durham (Mr. J. W. Hills) says: "At any rate, here are parties who have entered these engagements, which they cannot break; but they have to pay the halfpenny tax upon land which, under these covenants, they cannot develop, and the party which keeps them from developing the land is the party who does not pay." I think there is a case there for consideration, and I say frankly that I am quite prepared to meet the case with regard to existing covenants. But I say still that there is a very serious distinction between existing covenants and covenants made in the future. Otherwise there would be a distinct inducement to put covenants into an agreement for the purpose of excluding the operation of the tax. In the case put by the hon. Member for York (Mr. G. D. Faber) there was no intention of evading the tax. It was purely—I will not say a whim of the landlord; but it was what the landlord thought was probably in the interests of his own estate. I can however, quite conceive its having a very disastrous effect on the development of the neighbourhood.
§ Mr. LLOYD-GEORGEHe may have thought it was best in the interests of his own property; but at the same time, unless it is in the interests of the neighbourhood, I can quite conceive a covenant of this kind being entered into in the future with a view to evading the tax. The hon. Member for Ayr (Mr. Younger) has quoted the Scottish Land Bill as if he were quoting the Ten Commandments.
§ Mr. YOUNGERThe right hon. Gentleman must not forget that that Bill was drafted and carried through this House by the prophets of land values, and he is only a new recruit.
§ Mr. LLOYD-GEORGEThe hon. Member must not make too sure of that. At any rate he quoted it last night and again to-day. But in that case they foresaw the possibility of covenants of this kind being used to the detriment of the revenue, and that was their way of meeting it. I do not deny that it may be the best way for Scotland; but I think on the whole, that this is the best way, taking the country through, for meeting that case—that you should give to the Commissioners a discretion with regard to future transactions. I am quite willing to meet the case of covenants already in existence. I am impressed by the case made by the hon. Members for York and Durham, that we might be imposing a tax upon a man who is bound by a covenant which he cannot abrogate, and that the man who insists upon the covenant is one who will not pay. I am not sure that I can give the exact words now, but I would be prepared to consider words to this effect, "Saving so far as covenants or agreements entered into before the Act are concerned"; but in regard to agreements entered into after 30th April, 1909, the Commissioners should disregard restrictions of that kind. I agree that it is rather hard on a tenant who is bound by an agreement into which he certainly has not entered with a view to evading the Act of Parliament. He might be very glad to use the land for building, but he cannot do it. But in the future I think parties when they enter into an agreement of that kind should do it with full knowledge that unless it is in the public interest the halfpenny tax can be enforced.
Mr. BALFOURI am sure we all feel that the right hon. Gentleman in any suggestion he has made has done his best to meet us, at all events as far as the consideration which he has been able to give to this matter enables him to come to a decision. But I am rather anxious about one point. In the first place let me remind the Committee that there is an absolute divergence of opinion between the Attorney-General and the Chancellor of the Exchequer as to the number and magnitude of the cases affected Before the Chancellor of the Exchequer came in the Attorney-General, who was fighting a 891 rearguard action with most commendable persistence, found temporary refuge behind certain imaginary statistics or statements of general fact, which he laid before us with great assurance, as to the number of cases in which the grievance of which we complain really occurs. He said, "You can indeed find here and there a case in which the Bill as it stands would throw the tax upon a man for possessing undeveloped land which he cannot develop, but those cases are of the rarest kind. My Noble Friend (Lord B. Cecil) pointed out that all these provisions have clearly nothing to do with a Finance Bill; but the Chancellor of the Exchequer, not to be outdone in rapidity of movement and dexterity, immediately faced round, and said, "This is indeed a financial transaction. Look at the immense loss to the Exchequer on account of the number of these cases. The hon. Member for York (Mr. G. D. Faber) gave a case affecting 400 acres; I myself know another case affecting 40 acres. Such cases occur in every part of the Kingdom." And he assured the House, with all the authority of his position, that really the finances of the country would be shaken to their base if the rare exceptions which the microscopic examination of the Attorney-General could not find were allowed to escape the net of his taxation. May I point out also, though I do not wish to go back on anything that is past, that, as the clause was originally drawn, it did in the main apply to these cases, and drew a distinction between past and present—I do not say the precise distinction drawn by the Chancellor of the Exchequer, but it did draw a sharp distinction between contracts entered into before the passing of the Act and contracts entered into after. That distinction was abolished last night by the Attorney-General, and, if not re-established in precisely the old form, I think the Chancellor of the Exchequer will admit that there is a very great resemblance between the new form and that which was last night abandoned by his legal confrère.
There is a much more substantial point, and this is a criticism which I venture to put in all seriousness to the Chancellor of the Exchequer. As I understand it now, all existing contracts are to be safe, and a man is not to be taxed for land which, owing to a past contract, he cannot develop. That is the new proposal of the Government. All future arrangements, however, which might diminish the operation of the tax, can be disregarded by the 892 Commissioners. Are the Government quite sure that they are right in adopting that form? The Scottish form read out by my hon. Friend (Mr. Younger) only excepted those contracts which were entered into for purposes of, I will not say fraud, but something very like it—evasion. The Chancellor of the Exchequer will not have that limitation; he wants it to apply to all arrangements. In that case, I would point out that unless the Commissioners lay down beforehand what kind of regulation they will allow, everyone who wishes to lay out his estate to the best advantage of the public, unless he is going to cover the whole of it with buildings, will do so with the gravest doubts as to what the financial result will be to himself or to the purchaser. That must be wrong. If you think that these arrangements are in themselves bad, or that, on the whole, they ought not to be allowed, you should forbid them. But nobody does think that. The whole theory of the Government in regard to town planning is that such arrangements, made either by a local authority or by a private owner, are in the highest interests of the community. Everybody will admit that wherever a town has expanded in a manner satisfactory to the public, wherever it has been laid out with open spaces and amenities, it has always been done by a single owner or landlord planning the estate himself under restrictions—because it is only under restrictions that such arrangements can be entered into. In Scotland I can assure the right hon. Gentleman the system of feus is the only possible system, if you allow these restrictions and make them eternal, because the essence of a feu is that it is a perpetual lease, and if it is for the benefit of the community the restriction limiting the building of houses should be as perpetual as the lease to which it refers. No Scotsman will admit that you can do without these restrictions. You must have them; I am sure the right hon. Gentleman agrees to that. But does not the Government see that, unless people who have to enter into these restrictions have some knowledge beforehand of the view which will be taken by the Commissioners as to the taxable result of the arrangements they enter into, there will be a real impediment thrown in the way of the proper use of the land? I think that is absolutely the case. Therefore, I would venture to suggest that if the Government will not go the length of the Scottish precedent, if they will not allow restrictions, and 893 future contracts or covenants made bonâ fide are to be free from the operations of this Bill, at all events, make some provision that broad categories shall be made by the Commissioners as to what they will regard as a proper kind of arrangement to be come to, so that those who enter into this eternal arrangement may know what the result to themselves may be. If not, I am convinced that this proposal of the Government will be found really to be an arrangement restricting the proper use of land. I do not think the Government have thought this matter out. All the difficulties arise upon the absolute insistence of the Government to treat parcels of land as if they were parcels of stock. Parcels of land are not parcels of stock. One £100 in Consols is similar to another £100 in Consols in the books of the bank. It is not so with land. The character of one acre of land does not depend upon its inherent value, but upon what is done in the next acre. When you are dealing with buildings it is even more so. The whole thing is mutually dependent. The matter is a serious one. If the Government could find some method of laying down principles or rules that when buyer and seller maintained their transactions they would not find themselves penalised, I do not think much harm would be done. But under the sort of loose arrangement proposed by the Government, in which men who know nothing or need to know nothing about town planning, and who may have the most varying views as to what is good for the neighbourhood, the community, the owner, or the occupier of a house—if all uncertainty and variety of opinion is to be drawn into the middle of the land transactions to hamper development and falsify the conclusions of those who are making arrangements, not for this or next month, but for the next 20 years—or under the Scottish system, for eternity—then I think no small individual injustice will be perpetrated, and the result will be to hamper the proper development of the suburbs of our great towns. The advantages which you are introducing in one Bill are advantages you take away by this so-called Budget Bill. I am grateful to the Chancellor of the Exchequer for the concession he has made, but I ask that he will go further and endeavour to meet our objections, which are wide in their scope, and not frivolous in their character, and which deserve serious consideration.
§ Mr. LLOYD-GEORGEI do not think the Scottish words really as helpful as those we have in the Bill, because they 894 involve really consideration of intentions. The words in the Bill involve the adjudication by the Commissioners upon questions of fact. The words in the Scottish Bill involve rather an examination of intentions. You have got to prove fraudulent bargaining with a view to getting rid of taxes. Now that is very difficult indeed. Our experience of recent casts in the House of Lords shows how very difficult it is to establish lack of bona fides. That is one thing we are bound to take into account. I do not want to discuss these cases at present. We have come to the conclusion, for the reasons I have given—and we have considered the words—that the Scottish words will not do. The right hon. Gentleman suggests that you should have some sort of regulations or catalogue of things which would be regarded as giving the right of exemption, or rather depriving a man of exemption under this particular clause. That is a very difficult thing to do. I confess I should not like to under take the responsibility of drafting a clause of that kind. It would involve your foreseeing every possible contingency that would arise. Whatever the authority may be, whether commissioners or other body, I do feel that it would be infinitely better that they should have general instructions of the character indicated. I think the right hon. Gentleman as a whole will agree with me that, subject to his having confidence in the body that will adjudicate, that it is very much better that the words should be general rather than that we should attempt to enumerate all sorts of contingencies which are likely to arise, and under which exceptions are suggested to be made.
§ Mr. PRETYMANMay I ask the Chancellor of the Exchequer to consider one further point in regard to the concession he has offered? He proposes to deduct the value of any reduction in value due to existing contracts, but as regards future contracts to take the words of the Bill. But there is this point: that a contract may be perfectly bonâ fide entered into, and may fulfil the conditions that he imposes, but subsequently when you come to the word to put the thing into effect the effect does not follow. I would suggest the substitution of the words, "was when imposed." One other remark. I think it is necessary to look at this question of restrictions not only from the individual standpoint, but from the wider standpoint of the whole ground. The general effect of these restrictions is to improve the revenue. If you put restrictions upon one piece of 895 land that reduces its value in order to maintain the value of the adjoining land. Therefore the State will get the advantage of the other piece of land. At the same time they should be most careful not to penalise the piece of land upon which the restriction lies.
§ 5.0 P.M.
§ Mr. LLOYD-GEORGEWith regard to the second point given by the hon. and gallant Gentleman, I do not quite agree. I am perfectly certain in the case which I have quoted that it would destroy the value of the adjoining property, and that it would not be in the interests of the property. As to the first point, I think there is something in it. I am not prepared to give an answer now. I would rather not at the present stage promise absolutely, because I want to see exactly what the effect of the Bill may be.
§ Mr. AUSTEN CHAMBERLAINAs to the other point?
§ Mr. LLOYD-GEORGELand may be residential one moment, and then become industrial, but I would rather have a further consultation before making such further concession.
§ Mr. AUSTEN CHAMBERLAINThe point of view of myself and my Friends is that it is a matter of the utmost importance. If the Chancellor refuses, if he were ultimately not to meet that case, it would withdraw a great deal of the value of the concession he has made. What is the Chancellor's whole argument? It is not that he can prevent improper covenants being made. That may be a proper matter for legislation. But, as was said by the Noble Lord, it is not a proper matter for a Finance Bill. The Chancellor of the Exchequer is very anxious that we should understand that it is nothing but a Finance Bill. He cuts that ground out altogether. He is not producing taxes in order to discourage what he considers a wrongful covenant. He is doing it merely in order to prevent your losing money. How do you lose money? You lose it because the land which was bound by covenant, which was reasonable at the time the covenant was made, and was recognised by your officials as reasonable, as being the proper thing to do, remains bound by that covenant after it has become a disadvantage to the owner of the land. That is, so long as the covenant adds to the value of the land the man is 896 not taxed, but the moment the covenant detracts from the value of his property he becomes a victim to taxes. The whole question of fraud is gone. Provided you sanctioned it once, surely you ought to be bound as much for the purpose of the Government. If the Government had said we will not sanction it so far as this tax is concerned—that would have been the course—that is to say, it shall have no fiscal, whatever other effect it may have. You have your option, and like the seller and the buyer, like the lessor and the lessee, you ought to stand by your option. You have no right to go back upon that bargain, which they cannot go back upon, and you have no right under a Finance Bill to destroy the liberty of contract. I do press upon the Chancellor of the Exchequer—the case of fraud or the possibility of creating this covenant to avoid a tax being out of the question—I do press that the covenant which you yourselves think wise and in the public interest if, by an unfortunate turn of events, it becomes a misfortune, you ought not then to drop upon the poor sufferer and to tax him.
§ Mr. LLOYD-GEORGEI do not want to be forced into the position of arguing against the proposition. At the same time, I cannot agree that it is in the same position as a covenant entered before the Act. If a man enters into a restricted covenant of this kind he does so with full knowledge that the land may become the subject of this contribution to the revenue. It changes the character of it, and the land may become the subject of revenue without interference with the contract. I would rather not be forced to argue the matter at the present time, as I want to give it absolutely free and unbiassed consideration. I may have to argue it later on. Undoubtedly there are reasons against it There may be a considerable amount of revenue in cases of that kind. You may exempt land in the whole of a neighbourhood from taxation, and for these reasons I am afraid I must adhere at the present moment to what I have said already. I am willing to move an Amendment, of which I have given notice, but I cannot promise anything further.
§ Mr. GEORGE HARWOODI want to suggest to the Chancellor that there is another way of dealing with this matter, and that is that where the Commissioners come across a covenant which is not reasonably necessary in the interests of the 897 public, and in view of the character of the particular neighbourhood, that it should be abolished. I am not a lawyer, but if covenants which were originally made and intended in the interests of the public are, owing to a change of affairs, found indefensible, and that everybody acknowledges that it would be well to abolish them, why not let them be abolished. It is obviously unfair that the tenant should be made to pay a tax when he cannot perform certain particular conditions, and therefore it seems to me that it would be obviously fair, and obviously in the public interest, if the covenant were abolished.
§ Mr. WATSON RUTHERFORDI think in discussing this matter the fact is lost sight of that when the ordinary covenant is made without collusion, it really docs not depreciate any property at all. The Debate, to my mind, has proceeded entirely on a misapprehension on that point. Of course if a collusive covenant such as that referred to by the Chancellor of the Exchequer is put on, then it is obvious it might depreciate a large piece of the property. But the ordinary covenant does not really cause any depreciation whatever to land as a whole at the time it is put on. Let me give an illustration, and it is a frequent illustration. A man owns, say, 30 acres of land. He reserves to himself or sells to another individual a corner plot. That corner plot contains a number of restrictions and covenants, but not one against building a licensed house upon it. The licensed house can be built upon the corner plot, but it cannot be built upon the rest of the property. See the effect in the question of value upon that plot of land. It is true that a certain price per yard, some small fraction of a ½d. or something of that kind, may conceivably be taken off other bits of the property, which has the restriction upon it, but I contend that the whole of that value has gone on to the piece at the corner which has got an additional value exactly equal to what the other pieces have been deprived of, because the particular piece at the corner is now the only piece in the neighbourhood where a licensed house can be built. What the Chancellor of the Exchequer referred to in reply to the hon. Member for York, was the case of the man who bought 400 acres from another with a covenant that he was never to build a house upon it. But I contend that that covenant did not reduce the value of the land in the country by one penny. What was the reason for putting on that covenant? The man who 898 insisted on that covenant said to himself, and perhaps to those who bought his land, if there is going to be any building in this district it is going to be done upon my land, and you will therefore covenant with me that no houses are to be built upon the 400 acres. There is a certain depreciation, but the man who kept the greater part of the property got the added increased value, because if there is going to be any building value in the district he reserved the right to keep it for his own property. I do not represent any party, of course, in this House except myself, but I do not think that the suggestions made by the Government should be listened to for a moment. The case is perfectly simple, and it ought to be decided by an absolute principle of right and wrong. If there are binding covenants on a property that property should be valued subject to these binding covenants, and no attempts should be made to whittle them down. The Government are malting an objection, and they are setting up a state of facts which is absolutely vicious. You must take the binding covenants and you must value the land with them, or else you must take steps to get rid of them. If the covenant is against public policy, and if they are wrong covenants they ought to be got rid of, as the hon. Member for Bolton has just said. He need not have apologised for not being a lawyer, for in my opinion he made a very sensible suggestion. Why could not the Commissioners give an undertaking that this particular covenant was now no good and doing a great deal of harm and abolish it? As a land law reformer myself, and I think there are a considerable number of matters in our land laws that ought to be reformed, and have been waiting to be reformed for years, I would say, why do you not bring in a Bill putting in a clause providing that when covenants are effete and useless, and detract from the value of property, and are no longer required for any sensible reason, that they should be got rid of? I think it ought to be possible to do that.
§ Mr. W. P. BEALEThat is a doctrine which is in force now without an Act of Parliament.
§ Mr. WATSON RUTHERFORDI know when the character of a neighbourhood has entirely changed if the parties to the covenant have been parties to the change in the surroundings, then the Court may give relief; but there are very few cases of that kind, and there are lots of cases 899 in which you cannot get relief. I earnestly protest against any trifling with this matter, and against the acceptance of any Amendment or any whittling down of these clauses. If you have the covenants on the property, they ought to be taken into account, unless they are got rid of in a legal and proper manner, and there is no other just or right way of dealing with this subject.
Mr. BALFOURI would suggest now that we should come to a decision upon this question, and I wish to say that I am grateful to the Chancellor of the Exchequer for the concession he has made
§ I also absolutely agree with what has fallen from my hon. Friend on this point. The Bill, as amended by the Chancellor of the Exchequer, contemplates the possibility that a man may be taxed for possessing developable land, which, in fact, is not developable. That is a most flagrant injustice, and it would be done away with by the Amendment of my hon. Friend. I see no reason why the Debate should go on, but if my hon. Friend goes to a Division I shall support him.
§ Question put, "That the word 'where' stand part of the Clause."
§ The Committee divided: Ayes, 130; Noes, 54.
901| Division No. 447.] | AYES. | [5.20 p.m. |
| Acland, Francis Dyke | Gladstone, Rt. Hon. Herbert John | Montgomery, H. G. |
| Ainsworth, John Stirling | Goddard, Sir Daniel Ford | Morgan, G. Hay (Cornwall) |
| Alden, Percy | Greenwood, G. (Peterborough) | Murray, Capt. Hon. A. C. (Kincard.) |
| Atherley-Jones, L. | Griffith, Ellis J. | O' Malley, William |
| Baker, Joseph A. (Finsbury, E.) | Gulland, John W. | Partington, Oswald |
| Balfour, Robert (Lanark) | Hancock, J. G. | Priestley, Arthur (Grantham) |
| Baring, Godfrey (Isle of Wight) | Harcourt, Rt. Hon. L. (Rossendale) | Rainy, A. Rolland |
| Barnard, E. B. | Harcourt, Robert V. (Montrose) | Richards, T. F. (Wolverhampton, W.) |
| Barnes, G N. | Hardie, J. Keir (Merthyr Tydvil) | Roberts, Charles H. (Lincoln) |
| Barry, Redmond J. (Tyrone, N.) | Harmsworth, Cecil B. (Worc'r) | Roberts, G. H. (Norwich) |
| Beale, W. P. | Harmsworth, R. L. (Caithness-shire) | Robinson, S. |
| Beaumont, Hon. Hubert | Harwood, George | Robson, Sir William Snowdon |
| Bellairs, Carlyon | Haslam, James (Derbyshire) | Rogers, F. E. Newman |
| Berridge, T. H. D. | Haworth, Arthur A. | Samuel, S. M. (Whitechapel) |
| Bethell, T. R. (Essex, Maldon) | Hazleton, Richard | Scott, A. H. (Ashton-under-Lyne) |
| Bowerman, C. W. | Hedges, A. Paget | Seely, Colonel |
| Branch, James | Hemmerde, Edward George | Sherwell, Arthur James |
| Brocklehurst, W. B. | Henderson, Arthur (Durham) | Shipman, Dr. John G. |
| Brooke, Stopford | Henry, Charles S. | Silcock, Thomas Ball |
| Brunner, Rt. Hon. Sir J. T. (Cheshire) | Higham, John Sharp | Snowden, P. |
| Bryce, J. Annan | Hobart, Sir Robert | Soames, Arthur Wellesley |
| Burns, Rt. Hon. John | Hobhouse, Rt. Hon. Charles E. H. | Stanger, H. Y. |
| Byles, William Pollard | Hodge, John | Stanley, Hon. A. Lyulph (Cheshire) |
| Causton, Rt. Hon. Richard Knight | Howard, Hon. Geoffrey | Steadman, W. C. |
| Cherry, Rt. Hon. R. R. | Hudson, Walter | Stewart, Halley (Greenock) |
| Clough, William | Jones, Leif (Appleby) | Strachey, Sir Edward |
| Clynes, J. R. | Kekewich, Sir George | Strauss, E. A. (Abingdon) |
| Collins, Stephen (Lambeth) | King, Alfred John (Knutsford) | Sutherland, J. E. |
| Compton-Rickett, Sir J. | Lamont, Norman | Tennant, H. J. (Berwickshire) |
| Cooper, G. J. | Lever, A. Levy (Essex, Harwich) | Thompson, J. W. H. (Somerset, E.) |
| Corbett, C. H. (Sussex, E. Grinstead) | Lewis, John Herbert | Thorne, G. R. (Wolverhampton) |
| Cornwall, Sir Edwin A. | Lloyd-George, Rt. Hon. David | Walsh, Stephen |
| Crooks, William | Lough, Rt. Hon. Thomas | Wardle, George J. |
| Cullinan, J. | Luttrell, Hugh Fownes | Warner, Thomas Courtenay T. |
| Dewar, Arthur (Edinburgh, S.) | Macnamara, Dr. Thomas J, | Wason, John Cathcart (Orkney) |
| Duncan, C. (Barrow-in-Furness) | Macpherson, J. T. | Waterlow, D. S. |
| Dunn, A. Edward (Camborne) | MacVeagh, Jeremiah (Down, S.) | White, J. Dundas (Dumbartonshire) |
| Elibank, Master of | M' Callum, John M. | Whitley, John Henry (Halifax) |
| Evans, Sir Samuel T. | M' Laren, H. D. (Stafford, W.) | Williams, W. Llewelyn (Carmarthen) |
| Everett, R. Lacey | Marks, G. Croydon (Launceston) | Wills, Arthur Walters |
| Ferguson, R. C. Munro | Marnham, F. J. | Wilson, P. W. (St. Pancras, S.) |
| Foster, Rt. Hon. Sir Walter | Massie, J. | Wood, T. M' Kinnon |
| Fuller, John Michael F. | Masterman, C. F. G. | TELLERS FOR THE AYES.—Mr. Joseph Pease and Captain Norton. |
| Gibb, James (Harrow) | Mond, A. | |
| NOES. | ||
| Anstruther-Gray, Major | Cecil, Lord R. (Marylebone, E.) | Gardner, Ernest |
| Arkwright, John Stanhope | Chamberlain, Rt. Hon. J. A. (Worc'r | Gordon, J. |
| Ashley, W. W. | Clive, Percy Archer | Guinness, Hon. W. E. (B. S. Edmunds) |
| Balfour, Rt. Hon. A. J. (City, Lond.) | Clyde, James Avon | Harrison-Broadley, H. B. |
| Banbury, Sir Frederick George | Coates, Major E. F. (Lewisham) | Hills, J. W. |
| Banner, John S. Harmood- | Corbett, T. L. (Down, North) | Hope, James Fitzalan (Sheffield) |
| Beach, Hon. Michael Hugh Hicks | Douglas, Rt. Hon. A. Akers- | Hunt, Rowland |
| Beckett, Hon. Gervase | Faber, George Denison (York) | Kimber, Sir Henry |
| Bowles, G. Stewart | Fletcher, J. S. | Lambton, Hon. Frederick William |
| Butcher, Samuel Henry | Forster, Henry William | Lonsdale, John Brownlee |
| Mildmay, Francis Bingham | Renton, Leslie | Walrond, Hon. Lionel |
| Morpeth, Viscount | Rutherford, John (Lancashire) | Warde, Col. C. E. (Kent, Mid) |
| Morrison-Bell, Captain | Rutherford, Watson (Liverpool) | Williams, Col. R. (Dorset, W.) |
| Newdegate, F. A. | Stanier, Beville | Wilson, A. Stanley (York, E.R.) |
| Nicholson, Wm. G. (Petersfield) | Starkey, John R. | Winterton, Earl |
| Percy, Earl | Staveley-Hill, Henry (Staffordshire) | Younger, George |
| Pretyman, E. G. | Talbot, Rt. Hon. J. G. (Oxford Univ.) | |
| Rawlinson, John Frederick Peel | Tuke, Sir John Batty | TELLERS FOR THE NOES.—Mr. Salter and Mr. G. A. Gibbs. |
| Remnant, James Farquharson | Walker, Col. W. H. (Lancashire) |
§ Mr. STEWART BOWLES moved in Section (3) to omit the words, "in the opinion of the Commissioners" ["where, in the opinion of the Commissioners, the restraint imposed by the covenant"].
§ The phrase is a very simple one, but the Amendment raises a really very important point. The words, as they stand here, are only necessary to provide that there should be no appeal from the Commissioners. That is the only object of putting the words in here, because, of course, it would be understood that the question whether or not a restraint imposed by a covenant was in the interests of a locality would be one for the Commissioners to decide in the first instance. The only object of these words, therefore, is to carry us on to the words at the end of the section, and to provide that not only are the Commissioners to decide the question in the first instance, but that there shall be no appeal from their decision. The question raised by this Amendment is really whether or not it is a good thing that the decision as to the character of the covenants, and as to whether allowance is to be made in the valuation or not, shall be by the Commissioners without appeal.
§ Mr. JAMES HOPEOn a point of Order. May I ask whether this Amendment will preclude the discussion of lines 22 and 23 about the possibility of an appeal, or whether we shall be able to discuss that important question at a later point?
§ The DEPUTY-CHAIRMAN (Mr. Caldwell)The Amendment just negatived by the Committee covered the question of appeal raised by the Amendments on lines 21 and 22, and these later Amendments would be included in the decision of the Committee if they formed the subject of discussion.
§ Mr. AUSTEN CHAMBERLAINYou were not in the Chair, Mr. Caldwell, at the time the point arose. It was, I think, with the concurrence of the Chair, agreed that we would not discuss the question of an appeal on the last Amendment. In order that we might raise it on appropriate words, we carefully refrained from discussing the question then.
§ The DEPUTY-CHAIRMANThat being so, the later Amendments would not be excluded by the decision, the question put being that "where" stand part.
§ Mr. JAMES HOPEI do not think you answered my point of order as to whether it is necessary on this Amendment we should discuss the question of an appeal, or whether this Amendment will preclude that question being discussed two lines lower down, If we must discuss it on this Amendment, I should personally suggest to my hon. Friend not to move, but to let us have it discussed on a later point.
§ Mr. STEWART BOWLESThen I will move the Amendment as it stands, the point being the short and simple one as to why it is considered necessary for the Government to provide in terms that the question of the character of the restraint imposed by a particular covenant should be decided here by the Commissioners. I should like to know from the Government what is the object of putting in here words which give the Commissioners a power which we cannot but regard with some suspicion, in view of the enormous power given to the Commissioners.
§ Mr. LLOYD-GEORGEThe same question arose on Clause 11. This question has got to be decided by somebody, and the whole point is whether the Commisioners are the proper body to determine it. I rather regret we cannot discuss these two subjects together. We had the same two questions discussed on Clause 11, and the view of the Government was that they were quite willing to consider some alternative authority for the purpose. No one took the responsibility of suggesting an alternative. The Government suggested the Local Government Board if that would meet the views of hon. Gentlemen opposite. I do not want to discuss the comparative merits of the Local Government Board and the Commissioners for this purpose, but if there is an objection to the taxing authority being the court for the purpose of deciding this question, I am quite prepared to meet the Committee on 903 that point. It must, however, be the same authority as decides the issue in Clause 11. They have got to be decided together. I understood the Opposition were willing to allow the words to stand on the distinct understanding that the question of the authority should be reconsidered. At the present time I have had no alternative suggestion from the Opposition. I think there is possibly a great deal to be said for the objection raised to the taxing authority deciding a question of that kind, especially as they are also a court of appeal. I agree that Clauses 11 and 14 should be considered together, and that the authority of Clause 11 should be substituted for the Commissioners, but you must have some authority in, and I therefore suggest we should leave these words in at the present time and reconsider the question later on.
§ Lord ROBERT CECILI think the right hon. Gentleman is perfectly reasonable in saying we must stand or fall by what is done under Clause 11, and I therefore do not think any good purpose will be served by prolonging this discussion; but I desire to add that, in my opinion, no adequate reason was given to the Committee on Clause 11 why it was not right to leave this appeal to the Referees, which, I understand, is to be greatly improved by an Amendment suggested by the Government. I frankly admit I have not had time to properly examine that Amendment, but I hope to do so in the course of a day or two.
§ Lord ROBERT CECILNo, on some other occasion. I am rather surprised at such a suggestion coming from a Welsh Nonconformist. Let me add, that if the Commissioners are not to be subject to appeal, then it is very important we should have the right body to decide this question. But if they are to be subject to appeal, then personally I cannot see the least objection to its being left in their hands.
§ Mr. LLOYD-GEORGEI have given some consideration to this matter, and personally I should prefer some authority like the Local Government Board, which has a staff for the purpose of considering questions of this kind. I would rather not put forward my suggestions just now, because that would lead to a discussion on alternatives which would be worse than the dis- 904 cussion on the Amendment, and would take much more time.
§ Viscount MORPETHI should like to enter my caveat against the introduction of the Local Government Board. The right hon. Gentleman was not here the other day when this proposal was discussed, and when I gave reasons why I thought the Local Government Board was a very undesirable body to introduce. I will not now repeat those reasons, but I will give an additional one, and that is that the Local Government Board, under another Bill introduced by this Government, are already being given extensive and far-reaching powers.
§ Mr. LLOYD-GEORGEI at once withdraw, in order to shorten discussion, my suggestion as to the Local Government Board.
§ Mr. JAMES HOPEI do not think my hon. Friend would be wise to take this Amendment to a Division. Providing there is to be an appeal, it does not matter much whether the Commissioners or some other body are to act in the first instance. I want, however, before the Amendment is disposed of, to put another point as to how the opinion on the Commissioners is to be expressed. Will it be before the conveyance is finally entered into? The parties to conveyances will, in future, be under considerable difficulties and uncertainties, and they may want to know at what time the restrictive covenants may be set aside. Will it be possible for the party to go before the Commissioners and get their approval? And if they can do that, how long will that approval be binding? I take it it will be rather difficult for the Commissioners to say more than that "we think that this is all right," but will they be able to set their seal of approval on it for a period of years? If they cannot do that, then the greatest uncertainty must arise when discussing the conditions of conveyance and restrictive covenants embodied in it. If their approval is to be binding for a number of years, then the question would arise how far they will have power to give their assurances, and will those assurances require confirmation by some superior authority? I think this is a point of some substance.
§ Mr. J. F. REMNANTI wish to ask one question, an answer to which may save a lot of discussion in Committee. Does the right hon. Gentleman intend to introduce into Clause 22 any provision for granting 905 an appeal in all cases? If the Government will undertake to do this, it will save a tremendous lot of discussion in Committee, and it would be better to do this at once than to leave it for the Report stage.
§ Mr. BOWLESI ask leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ Mr. LLOYD-GEORGE moved, in Section (3), after the word "covenant" ["imposed by the covenant"], to insert the words "or agrement."
906§ Mr. LLOYD-GEORGEI now beg to move, "That in respect of the words of the Clause to the end, the Chair be empowered to select the Amendments to be proposed."
§ Question put, "That in respect of the words of the Clause to the end, the Chair be empowered to select the Amendments to be proposed."
§ The Committee divided: Ayes, 128; Noes, 49.
907| Division No. 448.] | AYES. | [5.45 p.m. |
| Acland, Francis Dyke | Greenwood, G. (Peterborough) | Newnes, F. (Notts, Bassetlaw) |
| Ainsworth, John Stirling | Griffith, Ellis J. | O' Donnell, C. J. (Walworth) |
| Alden, Percy | Gulland, John W. | O' Malley, William |
| Atherley-Jones, L. | Hancock, J. G. | Partington, Oswald |
| Baker, Joseph A. (Finsbury, E.) | Harcourt, Rt. Hon. L. (Rossendale) | Paulton, James Mellor |
| Balfour, Robert (Lanark) | Harcourt, Robert V. (Montrose) | Rainy, A. Rolland |
| Barnard, E. B. | Hardie, J. Keir (Merthyr Tydvil) | Richards, T. F. (Wolverhampton, W.) |
| Barnes, G. N. | Harmsworth, Cecil B. (Worcester) | Roberts, Charles H. (Lincoln) |
| Barry, Redmond J. (Tyrone, N.) | Harmsworth, R. L. (Caithness-sh.) | Roberts, G. H. (Norwich) |
| Beale, W. P. | Harwood, George | Robinson, S. |
| Beaumont, Hon. Hubert | Haslam, James (Derbyshire) | Robson, Sir William Snowdon |
| Bellairs, Carlyon | Hedges, A Paget | Rogers, F. E. Newman |
| Berridge, T. H. D. | Hemmerde, Edward George | Russell, Rt. Hon. T. W. |
| Bethell, T. R. (Essex, Maldon) | Henderson, Arthur (Durham) | Scott, A. H. (Ashton-under-Lyne) |
| Bowerman, C W. | Henry, Charles S. | Seely, Colonel |
| Branch, James | Higham, John Sharp | Sherwell, Arthur James |
| Brocklehurst, W. B. | Hobart, Sir Robert | Shipman, Dr. John G. |
| Brooke, Stopford | Hobhouse, Rt. Hon. Charles E. H. | Silcock, Thomas Ball |
| Brunner, Rt. Hon. Sir J. T. (Cheshire) | Hodge, John | Snowden, P. |
| Bryce, J. Annan | Howard, Hon. Geoffrey | Soames, Arthur Wellestey |
| Burns, Rt. Hon. John | Hudson, Walter | Stanger, H. Y. |
| Bytes, William Pollard | Hyde, Clarendon | Stanley, Hon. A. Lyulph (Cheshire) |
| Causton, Rt. Hon. Richard Knight | Jones, Leif (Appleby) | Steadman, W. C. |
| Cherry, Rt. Hon. R. R. | Kekewich, Sir George | Stewart, Hailey (Greenock) |
| Clough, William | King, Alfred John (Knutsford) | Strachey, Sir Edward |
| Clynes, J. R. | Lament, Norman | Strauss, E. A. (Abingdon) |
| Collins, Stephen (Lambeth) | Lever, A. Levy (Essex, Harwich) | Tennant, H. J. (Berwickshire) |
| Compton-Rickett, Sir J. | Lewis, John Herbert | Thompson, J. W. H. (Somerset, E.) |
| Cooper, G. J. | Lloyd-George, Rt. Hon. David | Thorne, G. R. (Wolverhampton) |
| Corbett, C. H. (Sussex, E. Grinstead) | Lough, Rt. Hon. Thomas | Walsh, Stephen |
| Cornwall, Sir Edwin A. | Macnamara, Dr. Thomas J. | Wardle, George J. |
| Crooks, William | Macpherson, J. T. | Warner, Thomas Courtenay T. |
| Cullinan, J. | MacVeagh, Jeremiah (Down, S.) | Wason, John Cathcart (Orkney) |
| Dewar, Arthur (Edinburgh, S.) | M' Callum, John M. | Waterlow, D. S. |
| Duncan, C. (Barrow-in-Furness) | M' Laren, H. D. (Stafford, W.) | White, J. Dundas (Dumbartonshire) |
| Dunn, A. Edward (Camborne) | Marks, G. Croydon (Launceston) | Whitley, John Henry (Halifax) |
| Evans, Sir S. T. | Marnham, F. J. | Williams, Llewelyn (Carmarthen) |
| Everett, R. Lacey | Massle, J. | Wills, Arthur Walters |
| Ferguson, R. C. Munro | Masterman, C. F. G. | Wilson, P. W. (St. Pancras, S.) |
| Foster, Rt. Hon. Sir Walter | Mond, A. | Wood, T. M' Kinnon |
| Fuller, John Michael F. | Montgomery, H. G. | |
| Gibb, James (Harrow) | Morgan, G. Hay (Cornwall) | TELLERS FOR THE AYES.—Mr. Joseph Pease and Captain Norton. |
| Gladstone, Rt. Hon. Herbert John | Morgan, J. Lloyd (Carmarthen) | |
| Goddard, Sir Daniel Ford | Murray, Capt. Hon. A. C. (Kincard.) | |
| NOES. | ||
| Anstruther-Gray, Major | Faber, George Denison (York) | Lonsdale, John Brownlee |
| Ashley, W. W. | Fletcher, J. S. | Mildmay, Francis Bingham |
| Balfour, Rt. Hon. A. J. (City, Lond.) | Gardner, Ernest | Morpeth, Viscount |
| Banner, John S. Harmood- | Gibbs, G. A. (Bristol, West) | Newdegate, F. A. |
| Beach, Hon. Michael Hugh Hicks- | Gordon, J. | Nicholson, Wm. G. (Petersfield) |
| Beckett, Hon. Gervase | Guinness, Hon. R. (Haggerston) | Percy, Earl |
| Bowles, G. Stewart | Guinness, Hon. W. E. (B'y St. Edm'ds) | Powell, Sir Francis Sharp |
| Cecil, Lord R. (Marylebone, E.) | Harrison-Broadley, H. B. | Pretyman, E. G. |
| Chamberlain, Rt. Hon. J. A. (Worc'r) | Hills, J. W. | Rawlinson, John Frederick Peel |
| Clive, Percy Archer | Hope, James Fitzalan (Sheffield) | Remnant, James Farquharson |
| Clyde, J. Avon | Hunt, Rowland | Renton, Leslie |
| Coates, Major E. F. (Lewisham) | Kimber, Sir Henry | Rutherford, John (Lancashire) |
| Douglas, Rt. Hon. A. Akers- | Lambton, Hon. Frederick William | Salter, Arthur Clavell |
| Stanler, Beville | Walker, Col. W. H. (Lancashire) | Winterton, Earl |
| Starkey, John R. | Walrond, Hon. Lionel | |
| Staveley-Hill, Henry (Staffordshire) | Warde, Col C. E. (Kent, Mid) | TELLERS FOR THE NOES.—Mr. H. W. Forster and Mr. Watson Rutherford. |
| Talbot, Rt. Hon. J G. (Oxford Univ.) | Williams, Col. R. (Dorset, W.) | |
| Tuke, Sir John Batty |
Question, "That those words be there inserted," put, and agreed to.
§ The DEPUTY-CHAIRMAN (Mr. Caldwell)In accordance with the decision of the Committee, and having regard to the importance of the Amendments, I think that of Mr. Laurence Hardy [to leave out the words, "and the opinion of the Commissioners shall in this case be final and not subject to any appeal"] should be discussed. I understand that is the Amendment which raises the question of whether there should be any appeal, and in order to carry out an undertaking given to the Committee I call upon the hon. Gentleman to move it.
§ Lord R. CECIL (in the absence of Mr. Laurence Hardy)I rise to move the Amendment.
§ Mr. LLOYD-GEORGEMay I point out that exactly the same words appear in Clause 11?
§ Mr. AUSTEN CHAMBERLAINThose words in Clause 11 were passed under the closure. I understand the Chancellor of the Exchequer wants to avoid a discussion now of the character of the tribunal to which the appeal should be taken, and he proposes to have a discussion on that on a later clause. That is all right, but if these words stand in the Bill, whatever the appeal or whatever tribunal is created in a later clause, there can be no appeal. What we want to do here is to secure an appeal under this section, and we are quite content to leave the character of the tribunal to whom the appeal goes until the proper time comes.
§ Mr. LLOYD-GEORGEI understood that the Government had pledged themselves to consider the suggestion of the Noble Lord as to whether the Commissioners should decide in the first instance and there should be an appeal, and on that understanding to reconsider the whole question. I understood the Secretary of State for War gave some pledge with regard to Clause 11. The question is not pre-judged at all.
§ Lord ROBERT CECILI do not want to take up time, but as a matter of fact it shows the inconvenience of the procedure under which we discussed Clause 11 the other night. The whole of that clause was closured on the Motion of the Government, which called forth a certain amount of angry protest and angry feeling 908 on this side, but these words were never discussed or considered on Clause 11.
§ Mr. LLOYD-GEORGEI am assured by my hon. Friend that the whole question of appeal was discussed upon the words "and the opinion of the Commissioners," and not only that, but my right hon. Friend the Secretary of State for War gave a pledge in regard to these words, and which distinctly referred to these words.
§ Mr. STEWART BOWLESAm I not right in saying that the arrangement throughout has been that nothing shall be done to prejudice the question of the tribunal? That was the arrangement, and, that being so, I think the Chancellor of the Exchequer will see that to leave in at this point the positive words that the opinion of the Commissioners shall be final and not subject to any appeal, whatever else it may be, is to prejudge the simple issue. I think we are all agreed that the only thing to do is to carry out the clear understanding on both sides that this matter shall not be prejudiced. It would be prejudiced if those words were left in.
§ Mr. AUSTEN CHAMBERLAINWould the Government allow my Noble Friend to move the Amendment and accept it on the understanding that they do not pre-judge the matter? Let them take out the words which would pre-judge the decision.
§ Mr. LLOYD-GEORGEThe words are already in Clause 11, and it was agreed that the two cases were quite analogous, and I understood it was accepted that we should consider the two cases together, and whatever was decided in regard to Clause 11, the decision should be extended to the machinery of Clause 14. But the words are in Clause 11, and I could not take them out here.
§ Lord ROBERT CECILReally it will be shorter to move the Amendment, and let the Government consider what they will do about it. I would not move it if the recollection of the Under-Secretary for the Home Department was the same as mine of what occurred the other night, but ray recollection is that what we discussed was the question whether the Commissioners are the proper people to decide it in the first instance. Then there were suggestions of various kinds, and there was a general suggestion that the matter 909 should be left over. But I remember very distinctly the Secretary of State for War stating that he did not think it was possible to have an appeal in any case. If the Government will say specifically that they are perfectly ready to consider the question whether these words should or should not be struck out at a later stage, and do rot in any way pre-judge the question of an appeal, I do not think it would be right to take up any time on the matter. But the only sugestion the Government have made is to substitute the Local Government Board, which they have withdrawn. That suggestion shows the kind of way their minds are moving. I am very confident that the right way of settling this question is to leave either the Commissioners or some one else to decide, in the first place—it does not matter very much whom you leave, provided you have a really good appeal in the background—not for the sake of taking every case, on the contrary, my own anticipation is that there will be scarcely any cases taken. But, if you have a really good appeal court behind the Commissioners, they are not under the temptation, to which it is not fair to submit any one in a judicial position, to decide the matter in one way rather than another apart from the evidence. If the Commissioners are left without an appeal behind them, it is absurd to say they will not be biassed in favour of that course which will bring most revenue to the Crown. That is the whole bent of their mind, and they are bound to decide every case with that bias. If you have a really satisfactory appeal behind them they are perfectly competent people. I think this is a separate matter altogether, and it is just as convenient to discuss it now as at any other time.
§ Mr. RAWLINSONI rather gather that the Government have already made up their mind that this decision should not be final, but that there should be an appeal somewhere or other. But if we leave these words in it is shut out, because the words of Clause 22 are clear, "but except, as expressly provided in this Act, there shall be an appeal against the determination of any other matter which the Commissioners are to determine, or may determine, under this part of the Act." Surely the Government might see their way to 6trike out these words, which certainly pre-judge the whole case, and make the decision of the Commissioners absolutely final.
§ 6 P.M.
§ Mr. BEALEI speak from the point of view of one who is an enemy of any court being absolutely without appeal. The crux of this question is not whether there should be an appeal or not, but whether the words "in the opinion of the Commissioners" are to stand or not, because us the matter stands it seems to me very analogous to the case of an arbitrator. If you have to predicate of a thing that it is to be so and so in the opinion of the Commissioners, the question for the court of appeal will be not whether they are of opinion, but whether the Commissioners have reasonably exercised and expressed their real opinion. I think the whole question having to be reconsidered, it should be reconsidered in connection with these words "in the opinion of the Commissioners," which qualify the whole thing.
Mr. BALFOURI will not contest the statement made by the hon. Gentleman, but I think he is wrong. I think as a mere question of drafting construction he is wrong. What we are on now is whether there should or should not be an appeal from the Commissioners. There is one ground which my Noble Friend (Lord R. Cecil) has not stated. As the clause now stands the view of the Government is that the Commissioners should adjudicate from time to time as to whether certain restrictive covenants are of a kind which should free people from taxation or not as regards future covenants. It is of importance that people who are going to make future covenants should know where they are. In order that they may know where they are there should be a body of accepted judgments as to what is or is not regarded as "reasonably necessary in the interest of the public, and in view of the character and surroundings of the neighbourhood." These are very difficult words, and as we are dealing with the limitless future, and as the Government refuse to alter this, it is quite clear that where you have these transactions in land in the future in which covenants are to play a part it is all-important that we should have a body of doctrine laid down as to what is the kind of covenant which will be accepted by the Commissioners and what will not be accepted. If there is a strong court behind the Commissioners there will be some kind of uniformity, and there will be a general policy which, it is understood, the courts will uphold, and 911 those who have to make these arrangements in future, those who desire to impose covenants or to enter into them, will know exactly what the fiscal results are likely to be. They will not be left to the uncertainty in which the Bill is going to leave them, which cannot but hamper in the most embarrassing and injurious way all future transactions in land.
§ Mr. LLOYD-GEORGEI am afraid I do not quite take the same view of this particular matter as the Leader of the Opposition. Each of these cases has got to be considered on its merits. It is not so much a question of laying down general principles of law. It is a question of an expert of some kind to decide whether, in his judgment, a certain covenant is in the interest of a neighbourhood or not. It is not a question of law, but a question of fact.
§ Mr. LLOYD-GEORGEYes, I know. But the right hon. Gentleman knows perfectly well that once you get to a court of law, so far from emancipating the thing and making it clearer and easier, you are hampered in the work, and you are apt to be embarrassed by all sorts of legal decisions that really are not helpful to a man who has to decide the issue. He is not assisted by general doctrines, which would take the form of legal doctrines. I know lawyers pretty well, and that is the form it will eventually take. I am perfectly certain that if the right hon. Gentleman had to decide the question whether a certain form of development was in the interest of a neighbourhood he would not ask a lawyer to decide the point for him. Lawyers have their uses, and you cannot get on without them. Eventually all these things get into the hands of the lawyers for the interest of the community, and incidentally for the advantage of the profession. But I am perfectly sure, if the right hon. Gentleman had to decide it for himself, he would not go to the judges for their opinion, and therefore I do not think it is desirable to go to a court of law on this question.
§ Lord R. CECILThe appeal is to the Referee. The Referees are not always under the proposal of the Chancellor of the Exchequer.
§ Mr. LLOYD-GEORGEI agree.
§ Lord R. CECILI do not say that I in any way accept the method of the appoint- 912 ment of the Referee, but still, as I understand, he is an expert tribunal in this very kind of matter.
§ Mr. LLOYD-GEORGEThat is the very reason why I should not decide on this point at the present moment. The Noble Lord's idea is the same as mine that the Referee would be perfectly impartial, and that there should be a judicial guarantee of his impartiality in deciding. That is a very different thing from such an appeal as we are prepared to concede under Clause 22. That appeal would involve questions of law. There you must have a general body of doctrine laid down. We have conceded the question of appeal which the right hon. Gentleman pressed upon us. There we met his view, but I do not think this is a case in which you want to lay down general doctrines. On the contrary, it is a case where you want an impartial Referee. That is a very different thing from the ordinary appeal, and I hope that the Committee will allow this to remain in the same general category of considerations with the decisions under Clause 11, because there again the questions are not what may be called questions of law. I would like the Committee to permit the Government to consider these two questions together because they are the same class of questions. We want the judgment of experts on this particular kind of question. We do not want to go to courts of law to argue whether a particular covenant is in the interest of a particular locality. It is far better in dealing with such questions to get experts, with the guarantee that the Referee will be impartial. I must say that, as at present advised, I cannot consent to the elimination of the words. I am perfectly ready to consider the nature of the tribunal and the nature of the appeal from the tribunal.
§ Mr. AUSTEN CHAMBERLAINIf that is so, I do not understand why the right hon. Gentleman refuses to accept this particular Amendment, which does no more than he says he is prepared to do. The right hon. Gentleman is prepared to concede an appeal from the Commissioners. At present the proposal is that the Commissioners are to decide in the first instance. He is prepared to take it from them to somebody else who is an expert.
§ Mr. LLOYD-GEORGEWhat I suggested was that it might be desirable to refer questions under this section to a totally different tribunal from the Commissioners. It might be an impartial 913 Referee. The question whether you should have an appeal from that Referee afterwards is a totally different question.
§ Lord R. CECILI do not quite accept the right hon. Gentleman's interpretation of what fell from myself. I am not a believer in experts.
§ Mr. LLOYD-GEORGEIt is perfectly clear that you had better refer to somebody who knows something about the question.
§ Lord R. CECILNo.
§ Mr. LLOYD-GEORGEThat depends upon the amount of confidence which you have in your case. The Noble Lord has had some experience of experts upstairs, and therefore he is a great authority as to the amount of reliance to be placed on their judgment. At any rate, what I want to put now is that the two questions are not necessarily identical. There are the Commissioners to decide in the first instance. After that there is the question whether there should be an appeal from them to some other tribunal. My own view is that the Referee ought to be an impartial person who knows something about the matter. The Noble Lord says he should be an impartial person who knows nothing about it. I will not at present pre-judge that question, but I think on the whole it is not desirable that there should be an appeal from him to a court of law, once you have secured the impartiality of your tribunal.
§ Mr. AUSTEN CHAMBERLAINI join issue with the Chancellor of the Exchequer. I agree with what I understand to be the view of my Noble Friend (Lord R. Cecil) in distrust of experts. An expert has proverbially a reputation which sometimes does him gross injustice, but which is worth bearing in mind. Apart from that, the expert is very apt to be a faddist. He is apt to think that there is nothing like the particular thing with which he is always dealing. I would not like to appeal to an expert in that sense, but I wish a real appeal to a court of law. It is quite true that a court of law does not bring expert knowledge to bear upon the matter, but it brings what is more valuable, common-sense. I see that the Chancellor of the Exchequer differs from me as to the Court of Appeal bringing common-sense to bear on any question. But, on the whole, with all its limitations, I would sooner trust in this matter to a court of law than to the expert on whom it is suggested we should rely.
§ Mr. A. C. SALTERI think we are in a very unsatisfactory position in this matter; and yet the Chancellor of the Exchequer cannot see his way to go a little further. The Chancellor of the Exchequer suggested a moment ago two main questions: Who should decide the question in the first instance; and what would be the nature of the appeal? The Committee has decided who is to decide this in the first instance. We have passed the point in the Bill which says that the valuer is to ignore these conditions in his valuation where, in the opinion of the Commissioners, certain conditions exist. There is not the slightest doubt that the Commissioners are to decide this matter. Then the Bill goes on expressly to exempt this particular decision from the general class of decisions of the Commissioners which, otherwise, would be subject to appeal, because a general right of appeal is given. But the passage affected by this Amendment says that in this particular instance the decision of the Commissioners shall not be subject to any appeal at all. I understood the Chancellor of the Exchequer to say, assuming, as we must assume, that this matter is to be decided in the first instance by the Commissioners, he was prepared to concede that that was not to be a final decision, that there was to be an appeal, and he is turning over in his own mind whether there should be an appeal to an expert or a non-expert, a court of law, and so on. That can be discussed on a later occasion. I understood him to agree to an appeal. That is all that the elimination of these words requires, and, therefore, I do not understand why he objects to their omission. The Committee will pardon me if I point out in one word that this matter, the finality of the decision of which we are now considering is a very doubtful and difficult matter. Besides being very important, it may affect very large interests, and someone has got to determine whether a given set of restrictive conditions are or are not in the local general public interest. I ask the Committee to consider that it is a matter which will vitally affect the assessment. There is a general right of appeal against the assessment. It is a pure question of fact. If it were not for these express words which we are seeking to strike out, then, of course, there would be an appeal from the Commissioners because the taxed subject could go to the court of appeal, whatever it is, and say, "My assessment is too high, and one of the reasons it is too high is because these 915 restrictive covenants have been ignored," and so the matter would come to appeal. But it is to be expressly shut out.
Have the Committee considered at all what will actually happen? Does anybody suppose that the Commissioners who are three rather eminent and very busy gentlemen in London, are really going to apply their judicial faculties to the question whether a given set of restrictive conditions, applied to land in the neighbourhood of some provincial castle, are or are not in the local interests of the inhabitants of that place? It is a matter requiring the most intimate and minute local knowledge. The best persons to ask would be local surveyors. Is the assistant valuer who goes to this place to make the valuations to send up some kind of report? He will probably know nothing about the place. Is he to send up such impressions as he can form, and are the Commissioners to sit in judgment upon his reports? Is one of these eminent gentlemen to travel down into a provincial town and to look upon these villas and make inquiry of the porter what he thinks about the needs of the neighbourhood? It will not be the judgment of the Commissioners at all. It will be the hasty impression of an assistant valuer locally gathered. Will the owner of the land—the taxpayer—be consulted at all? Will he have an opportunity of giving evidence, if the assessment valuer talks to some busybody in the street who tells him the neighbourhood has changed, and that covenants of this kind are very injurious, and the assistant valuer reports to Somerset House that that is the local opinion, and they accordingly form the opinion that these particular covenants are undesirable? It may be that the owner of the land could call a mass of irrefutable local opinion which would satisfy any fair-minded man that that is not so, and that these covenants are in the local interests. Will any opportunity be given to him? We know exactly what will happen. He will see the local valuer. He will tell him about these conditions. In due course he will receive a buff or blue-coloured paper saying that he is assessed at so much. If he writes to ask whether his restrictive conditions have been taken into account or not, if he is favoured with an answer at all it will be one saying that they have been considered not to be in the local interests and have therefore been ignored. The suggestion of the Government is that the man should be absolutely without redress, or without appeal to any kind. What- 916 ever be the best kind of appeal is really a different matter, but I do ask the Government to say that the man should be allowed some sort of an appeal.
§ Mr. J. F. REMNANTIn furtherance of what my hon. Friend (Mr. Salter) has just said, may I call the attention of the Committee to what occurred before the Select Committee on the Taxation of Land Values (Scotland) Bill, where evidence, and very powerful evidence I maintain, was called on this very subject of the suitability of officials, who were employed by the Commissioners of Inland Revenue, for the work which they would be called upon to perform. The evidence of Mr. Philip Sully, an assessor, under the Valuation Act, of the county of Fife and the various Parliamentary boroughs, was very much to the point in dealing with this matter. Of course the Commissioners cannot be expected for one moment themselves personally to inquire into all the various intricate matters which may or may not come before them. They must employ a whole host of officials to carry out the work for them. In fact, I do not think it will be disputed that the Government have been themselves looking round among the various valuation staffs of the different corporations throughout the country for suitable men to employ for this purpose. In London the valuation department of the London County Council is often quoted in reference to this matter as being an authority to testify as to the cheapness and so on of valuations likely to be made. I venture to say that the officer who is alluded to in reference to that matter is not a valuer of standing at all, and does not belong to that department, and his evidence is disputed by men more qualified to judge. This Mr. Sully, in giving evidence, was asked among other things as to the position of these officials who were employed by the Inland Revenue for working under the Lands Valuation Act. The evidence he gave was that they were of necessity rather junior men, that they could not get experienced qualified men, and that they had to take men from comparatively young classes, junior men with very little if any experience in these matters, and that they had to train them. You have to depend very largely on the individual. It was almost impossible to get any systematic valuation through these people, as they were all practically men who were exceptionally devoid of what is so necessary in these cases—local information and local experience. Under this 917 clause they will have to judge as to whether the covenants are, in the opinion of the Commissioners, in the interests of the public, in view of the character and surroundings of the neighbourhood, before they can report. How can they get any proper opinion as to that without having local knowledge? You cannot get the necessary valuers with the local knowledge. The whole system is wrong. If, in addition to that, these promiscuous officials, appointed for a purpose for which they are not qualified, are to be allowed a final judgment on the matter, you are going to put a gross injustice upon those who are brought under their control. It is one of the most preposterous provisions of a preposterous Bill to suggest that these inexperienced men should have the right to decide the rights of parties in very difficult and intricate cases. I am quite sure if party feeling were left out of the matter the Committee would decide in favour of the Amendment. We have certainly on this side of the House not endeavoured to delay or obstruct in any way. These are very important points on which we offer very strenuous opposition, and therefore I do hope that the Government will see their way to accepting the Amendment.
§ Viscount MORPETHI would suggest to the Chancellor of the Exchequer that he might adopt a method similar to that which obtains in the case of the local Income Tax Commissioners. If you look into the way in which the private taxpayer manages his income you will see that if he mismanages it he has to pay the Income
§ Tax accordingly; but in the case of the income from property, if the property is not managed in consonance with the ideas of the Government, instead of having a plan such as that adopted in the case of the Commissioners of Income Tax, they propose to appoint officials who are to say that he shall manage his property in the way they decide in order that they may tax him on that management. That is a very bad system. The point is that you have got to find some body of persons fairly reasonable, if possible with the confidence of the taxpayer himself, and who shall stand between the Government tax-gatherer and him. I believe that the local Income Tax Commissioners were set up by Sir Robert Peel when the Income Tax was originally started in order to meet this very difficulty. They were, if I may so describe it, the representatives of the ancient jury, not the jury of the present day, but the Jury in its original form. They were appointed as fairly impartial local persons, having the confidence of the taxpayer, to represent his interest as against the central authority. I suggest to the Chancellor of the Exchequer that if he considers, and I think very likely rightly, that a court of law is not the most suitable authority, it is desirable that he should have some body either in the position of the present local Income Tax Commissioners, or a body constituted in a similar manner.
§ Question put, "That the words proposed to be left out stand part of the Clause."
§ The Committee divided: Ayes, 120; Noes, 52.
919| Division No. 449.] | AYES. | [6.30 p.m. |
| Acland, Francis Dyke | Cornwall, Sir Edwin A. | Henry, Charles S. |
| Ainsworth, John Stirling | Crooks, William | Higham, John Sharp |
| Alden, Percy | Cullinan, J. | Hobart, Sir Robert |
| Balfour, Robert (Lanark) | Dewar, Arthur (Edinburgh, S.) | Hobhouse, Rt. Hon. Charles E. H. |
| Barnard, E. B. | Duncan, C. (Barrow-in-Furness) | Hodge, John |
| Barnes, G. N. | Dunn, A. Edward (Camborne) | Howard, Hon. Geoffrey |
| Barry, Redmond J. (Tyrone, N.) | Elibank, Master of | Hudson, Walter |
| Beaumont, Hon. Hubert | Evans, Sir S. T. | Hyde, Clarendon G. |
| Bellairs, Carlyon | Fester, Rt. Hon. Sir Walter | Jones, Leif (Appleby) |
| Berridge, T. H. D. | Fuller, John Michael F. | Kekewich, Sir George |
| Bethell, Sir J. H. (Essex, Romford) | Gibb, James (Harrow) | King, Alfred John (Knutsford) |
| Bethell, T. R. (Essex, Maldon) | Gladstone, Rt. Hon. Herbert John | Lamont, Norman |
| Bowerman, C. w. | Goddard, Sir Daniel Ford | Lever, A. Levy (Essex, Harwich) |
| Branch, James | Greenwood, G. (Peterborough) | Lewis, John Herbert |
| Brocklehurst, W. B. | Griffith, Ellis J. | Lloyd-George, Rt. Hon. David |
| Brooke, Stopford | Gulland, John W. | Lough, Rt. Hon. Thomas |
| Brunner, Rt. Hon. Sir J. T. (Cheshire) | Hancock, J. G. | Macnamara, Dr. Thomas J. |
| Burns, Rt. Hon. John | Harcourt, Rt. Hon. Lewis (Rossendale) | Macpherson, J. T. |
| Byles, William Pollard | Harcourt, Robert V. (Montrose) | MacVeagh, Jeremiah (Down, S.) |
| Causton, Rt. Hon. Richard Knight | Hardie, J. Keir (Merthyr Tydvil) | M' Callum, John M. |
| Cherry, Rt. Hon. R. R. | Harmsworth, Cecil B. (Worcester) | M' Laren, H. D. (Stafford, W.) |
| Clough, William | Harmsworth, R. L. (Caithness-sh.) | Marks, G. Croydon (Launceston) |
| Clynes, J. R. | Harwood, George | Marnham, F. J. |
| Collins, Stephen (Lambeth) | Hazleton, Richard | Massle, J. |
| Compton-Rickett, Sir J. | Hedges, A. Paget | Masterman, C. F. G. |
| Cooper, G. J. | Hemmerde, Edward George | Mond, A. |
| Corbett, C. H. (Sussex, E. Grinstead) | Henderson, Arthur (Durham) | Morgan, G. Hay (Cornwall) |
| Morgan, J. Lloyd (Carmarthen) | Scott, A. H. (Ashton-under-Lyne) | Thorne, G. R. (Wolverhampton) |
| Murray, Capt. Hon. A. C. (Kincard.) | Seely, Colonel | Walsh, Stephen |
| Newnes, F. (Notts, Bassetlaw) | Sherwell, Arthur James | Wardle, George J. |
| O' Donnoll, C. J. (Walworth) | Shipman, Dr. John G. | Warner, Thomas Courtenay T. |
| O' Mahey, William | Silcock, Thomas Ball | Wason, John Cathcart (Orkney) |
| Partington, Oswald | Snowden, P. | Waterlow, D. S. |
| Rainy, A. Roiland | Soames, Arthur Wellesley | White, J. Dundas (Dumbartonshire) |
| Richards, T. F. (Wolverhampton, W.) | Stanger, H. Y. | Whitley, John Henry (Halifax) |
| Roberts, Charles H. (Lincoln) | Steadman, W. C. | Williams, W. Llewelyn (Carmarthen) |
| Roberts, G. H. (Norwich) | Stewart, Halley (Greenock) | Wilson, P. W. (St Pancras, S.) |
| Robinson., S. | Strachey, Sir Edward | Wood, T. M' Kinnon |
| Robson, Sir William Snowdon | Strauss, E. A. (Abingdon) | |
| Rogers, F. E. Newman | Tennant, H. J. (Berwickshire) | TELLERS FOR THE AYES.—Mr. Joseph Pease and Captain Norton. |
| Russell, Rt. Hon. T. W. | Thompson, J. W. H. (Somerset, E.) | |
| NOES. | ||
| Arkwright, John Stanhope | Gibbs, G. A. (Bristol, West) | Remnant, James Farquharson |
| Ashley, W. W. | Gordon, J. | Rutherford, John (Lancashire) |
| Balfour, Rt. Hon. A. J. (City, Lond.) | Guinness, Hon. R. (Haggerston) | Rutherford, Watson (Liverpool) |
| Banner, John S. Harmood- | Guinness, Hon. W. E. (B. S. Edmunds) | Stanier, Beville |
| Beach, Hon. Michael Hugh Hicks | Harrison-Broadley, H. B. | Stanley, Hon. A. Lyulph (Cheshire) |
| Beale, W. P. | Hills, J. W. | Starkey, John R. |
| Beckett, Hon. Gervase | Hope, James Fitzalan (Sheffield) | Staveley-Hill, Henry (Staffordshire) |
| Bryce, J Annan | Hunt, Rowland | Talbot, Rt. Hon. J. G. (Oxford Univ.) |
| Cecil, Lord R. (Marylebone, E.) | Kimber, Sir Henry | Tuke, Sir John Batty |
| Chamberlain, Rt. Hon. J. A. (Worc'r) | Lambton, Hon. Frederick William | Walker, Col. W. H. (Lancashire) |
| Clive, Percy Archer | Mildmay, Francis Bingham | Walrond, Hon. Lionel |
| Clyde, J. Avon | Morpeth, Viscount | Warde, Col. C. E. (Kent, Mid) |
| Coates, Major E. F. (Lewisham) | Newdegate, F. A. | Williams, Col. R. (Dorset, W.) |
| Corbett, T. L. (Down, North) | Nicholson, Wm. G. (Petersfield) | Winterton, Earl |
| Douglas, Rt. Hon. A. Akers- | Paulton, James Mellor | |
| Faber, George Denison (York) | Percy, Earl | TELLERS FOR THE NOES.—Mr. Clavell Salter and Mr. Stewart Bowles. |
| Ferguson, R. C. Munro | Powell, Sir Francis Sharp | |
| Forster, Henry William | Pretyman, E. G. | |
| Gardner, Ernest | Rawlinson, John Frederick Peel |
Question, "That those words be there inserted," put, and agreed to.
The CHAIRMANThe next Amendment is that of the Chancellor of the Exchequer. Perhaps I ought to say about the two Amendments of the hon. Member for the West Derby Division of Liverpool (Mr. Watson Rutherford), to which he attaches some importance, that they are not raised in the right place. If he wants to raise anything which is not allowed for in the clause he must do it later in the paragraph, and not at the beginning.
§ Mr. LLOYD-GEORGE moved, in Section (4), Sub-section (a), to leave out the words "satisfaction of the" ["which is proved to the satisfaction of the Commissioners"].
§ Question, "That the words proposed to be left out stand part of the Clause," put, and negatived.
§ Lord ROBERT CECIL moved in Section (4) Sub-section (a) to leave out the words "of a permanent character" ["directly attributable to works of a permanent character"].
§ This is an Amendment which I think the Government will probably accept. I cannot understand on what grounds, they suggest the deduction should be confined to works which are of a permanent character. The point is that you are to deduct from the site value "any part of that 920 site value which is proved to the satisfaction of the Commissioners to be directly attributable to works of a permanent character." Why you are to deduct value which is proved to be attributable to works which should be of a permanent character I cannot conceive. Suppose you have land laid out, or in course of being laid out for building, and you have some levelling done and the erection of some fencing or something of that kind, why should you deduct the value which is due to the levelling, which I presume would be work of a permanent character, and not deduct the value which is due to the fencing? I cannot see any reason in that at all. It appears to me if it is right to deduct what is added to the land by the efforts of the owner or those who are acting on his behalf, it must be equally right whether the work is of a permanent character or a temporary character. It appears to me exceedingly difficult to give a certain meaning to such an expression. I do not know what work of a permanent character is. If you are to consider the matter strictly and grammatically, there is scarcely any work that is of a permanent character. I do not know that a road would be a work of a permanent character. It requires to be constantly renewed and kept up, and we know that those in London, at any rate, are very much the reverse of a permanent character. What is 921 work of a permanent character? Who is going to set limits to the operations of time, and if you cannot set a limit to the operations of time I do not think you can say what are works of a permanent character. I do venture to protest altogether as a matter of drafting against putting in any words of that kind. It will lead to perpetual dispute, and it is very unfair. As the Bill stands, it leaves it very much to the discretion of the Commissioners. It is quite true you are going to have an appeal, which is an immense protection, but not a complete protection. It is an immense protection to the rich because the rich can put the appeal machinery in motion. It is not so much protection to the poor. They are not advised, to begin with, by skilled people, and they have not the money to spend on law. If you have these doubtful words put into the Bill, it will mean perpetual risk.
§ I do not want to attack the Government official more than any other official, but I observe that in all cases of officials, whether they are officials of the Government or of a great company, there is a great tendency to stretch their powers as far as they can, and I have observed, I do not say it in the case of the Government, but in the case of great corporations, who are more or less actuated by the same kind of motive as the Government official, that they do undoubtedly oppress the people who have not the knowledge to resist them. I have come across many cases in my own experience of that kind. If you put in doubtful words, then there will be no protection against that kind of oppression except the result of a rather doubtful appeal. I protest against those words. They seem to be utterly unsound, and I hope the Government will see, even on the principle which underlies their measure, a principle which seems to me utterly unsound and unjust, that this particular proposal cannot be justified even by their own showing.
§ Mr. LLOYD-GEORGEI do not quite agree with the Noble Lord's view as to those words. They are given in several Acts of Parliament, and they have been the subject of legal decisions, of which there is quite an array. I do not attach any particular importance to the words. I do not think it very much matters when you are trying to ascertain the site value. Even if the improvements were of a temporary character, it is only the value attributable to them. Therefore I do not attach very great importance to the words, and, as the Noble Lord seems to consider 922 that they might be injurious, especially in regard to persons of small means, I do not object to their elimination.
§ Amendment agreed to.
§ Mr. LLOYD-GEORGE moved to insert in Section (4), Sub-section (a), after "executed" ["works of a permanent character executed"], the words "or expenditure of a capital nature (including any expenses of advertisement) incurred."
§ This is an important Amendment, adding to the deductions which may be made. I think the Committee will agree that we ought to deduct expenditure of a capital nature calculated to increase the value of the land.
§ Mr. J. W. HILLSWill capital expenditure include legal expenses? I think they ought to be included.
§ Mr. LLOYD-GEORGEThe hon. Member knows very well the kind of expenditure which an accountant or auditor when examining accounts will pass on to capital. I am not quite sure whether that would include legal expenses, but I am using words which are very well known in business, and I think it would be a mistake to begin to say that such and such expenditure is capital expenditure. The kind of expenditure meant is very well known in business circles, and it is far better that the words would be in the ordinary form.
§ Mr. LLOYD-GEORGEI have inserted advertisements, because it is conceivable that such expenditure would not be taken as being of a capital character.
§ Mr. PRETYMANIt is a dangerous thing to put in one word, because it might have a limiting effect.
§ Mr. LLOYD-GEORGEI do not object to leaving out the word, but the hon. Member knows there is a certain type of land value which is created by advertisements. There are districts where you would not have had any houses for the next 500 years if somebody had not advertised the place. Very often the amount of money spent on advertisements is more than the owner would realise in the next 20 or 30 years, and I want to make it clear that such expenditure should be included.
§ Mr. PRETYMANI should like to ask a question with regard to a subsequent Amendment which may possibly save time. 923 Would expenditure of the kind referred to be held to include the dedication of land? That is a most important power of development, and it is a very common case. You do not spend money, but you sacrifice it. You take three or four acres worth perhaps £500 per acre, and dedicate it to the use of the public as an open space. You do not spend the £1,500 or £2,000, but you lose that sum. It is obvious that that must be included. I have handed in an Amendment which may possibly take the place of two Amendments standing in the name of the hon. Member for West Derby Division (Mr. Watson Rutherford). The first refers to value "arising from any expenditure by the owner, whether on the land itself, or upon any adjacent land of the owner." I am of opinion that the Chancellor of the Exchequer's words cover that. It would cover expenditure not actually on the laud.
§ Mr. LLOYD-GEORGECertainly.
§ Mr. PRETYMANTherefore, that Amendment would be unnecessary.
§ Sir W. ROBSONThe word "directly" might have the effect of limiting the clause to money absolutely expended on the land, and therefore we suggest inserting the words "improved the value."
§ Mr. PRETYMANIn that case it would be unnecessary to move the first part of the Amendment of my hon. Friend. Then conies the second Amendment, the first part of which, I think, is also covered; but it concludes with these words, "or the dedication as streets or passages or open spaces of any part of the land of the same owner." That is a point which must be covered. I do not know whether the Chancellor of the Exchequer would like to deal with it in a separate Amendment, but it would perhaps save time if it could be added to the present Amendment.
§ Mr. WATSON RUTHERFORDIn laying out a piece of land of four acres probably one acre goes in streets, passages, and so forth, so that you ought to add 30 per cent, to the value of the remainder in order to get the same money for the estate as it was worth at the beginning. I think it is essential to make allowance for the land necessarily sacrificed in this way.
§ Mr. LLOYD-GEORGEUndoubtedly the expenditure on roads would be deducted, but I do not think the actual land 924 devoted to the making of roads could be. The value attributable to the expenditure on the roads would be deducted, but not the actual land absorbed in the operation.
§ Mr. WATSON RUTHERFORDThere are numerous cases where land has had to be bought for roads or for part of the roads. It is obvious that the money spent on that part would come in, and why not on the part the owner has to sacrifice?
§ Major COATESIf a man buys four acres of land, and desires to lay them out, he will have to sacrifice one-fourth of his land to make the roads; therefore, he will really sacrifice one-fourth of his capital account. Under these circumstances it is only fair and right, if all capital expenditure is to be deducted, that this expenditure should be. It is one of the main portions of capital expenditure; it is part of the actual capital money.
The CHAIRMANWe are going away from the Amendment actually before the Committee. The simplest way will be to move the further Amendment, if necessary, when we come to the point.
§ Amendment agreed to.
§ Mr. F. W. LAMBTON (on behalf of Mr. Radford) moved, in Section (4) Sub-section (a), after the word "land" ["Any person interested in the land for the purpose of"], to insert the words "or his predecessors in title." I understand the Chancellor of the Exchequer is disposed to accept this Amendment, and that will save me the trouble of moving it.
§ Mr. LLOYD-GEORGEindicated dissent.
§ Mr. LAMBTONWords like these are absolutely necessary. May I point out the case of two persons holding the land. One is an old man who came into the land 40 years ago, and is still living on it. He gets no deduction. In the other case a young man coming into property left by his father will be able to make the deduction.
§ Sir W. ROBSONI take it that the predecessor in title is interested in the land. We have chosen words which are not limited to the living person. There is no limitation to the living person.
§ Mr. LAMBTONMay I just say that it would appear to be necessary to put in some words to make it so that a layman can understand it. The person interested in the land may be anybody.
§ Mr. PRETYMANWhat we want is that anybody who has spent money on the land 925 should obtain the preference. So long as we obtain from the Government an intimation that that is their intention, it will, I think, be far wiser to leave the Bill as it stands—knowing thoroughly the intentions of the Government, and asking them to see that that intention is carried out.
§ 7 P.M.
§ Amendment, by leave, withdrawn.
§ Mr. PRETYMAN moved, in Section (4), Sub-section (a), after the word "land" ["interested in the land for the purpose of fitting the"], to insert the words "or arising from dedication of streets, passages, or open spaces on any part of the land by the same owner." I will not repeat the arguments which I have already used. The Chancellor of the Exchequer, in the rather irregular discussion we have had on this point, seemed to feel some hesitation in allowing for the value of land given by or dedicated for the purposes of streets. It is obvious that that is one of the just sources of expenditure of any man who buys a piece of land and lays it out for building. Part of it goes in streets, part in open spaces, part of it is actually built upon. The whole value of the land, so far as it is realisable, is concentrated upon that part which is only available for one of these three objects, namely, the land which is to be actually built upon. The owner takes the area of the land, and part of the land is used in order to develop the other part. Whether he has deducted his streets or his passages, or whether he has given up land for a square, for a garden, or for open spaces, it is obvious that the surrender or deduction of that portion of the land is one of the main expenses which will fall upon the owner who is developing his property. It seems to me obvious, if you are deducting expenditure upon land, you could not have anything more comprehensive than a road. Now, the making of a road consists of the direct expenditure of the material and labour which go for the construction of the road, and there is the indirect expenditure of giving up the land upon which the road is situated. If you are to allow one, you must also clearly allow the other. I cannot see that it is possible to avoid the principle which the Committee had adopted in dealing with this matter, which merely demands that this deduction should be allowed for indirect expenditure in the same way as direct expenditure is provided for.
926Mr. DUNDAS WHITEThe argument just put forward is to a considerable extent based upon a fallacy. The expenditure involved is not direct expenditure, and it can hardly be called indirect expenditure, because it is done upon a business basis. You leave a certain space open and by leaving it open you increase the amenities of the place, and therefore the value. Consequently by leaving that space open there is no real diminution in the value of the property, because what you lose in one way you gain in another. It is for the latter object that the expenditure is made. If in addition to getting that value there is to be compensation in the way of deduction, then the owner has been paid twice over.
§ Mr. LLOYD-GEORGEI am not sure that my hon. Friend behind me has met the case of the hon. and gallant Gentleman. He admits that the deduction of the open spaces increases the value of the original site, and if you increase the original site value by what is practically an expenditure by the landowner, whether it is by means of the deduction of a space or by means of permanent works, I cannot see any difference in principle. I find this matter was debated on 20th July, and I think I did promise to consider it on that occasion. I must say I do not think it is quite in the same position now as it was at that time. The point pressed was that it is desirable to encourage landowners to create open spaces, and undoubtedly it improved the value of the land, but it improves the value of the land by a sacrifice on the part of the owner. I think it ought to be taken into account in the site value, but the street is a different matter. We are deducting the expenditure on converting a piece of land; we deduct the value which is attributable to the expenditure, and there is some little danger, if they accepted this Amendment, that it might be deducted twice over. That is not the case with open spaces. I think there it ought to be deducted. If the hon. and gallant Gentleman would confine his Amendment to open spaces I think he will find that streets are already provided for. I agree with the hon. Member that it is desirable to encourage open spaces in the middle of large towns and such places.
Mr. BALFOURI am not quite sure whether I agree or disagree with what has been said by the right hon. Gentleman. It is not a discouragement to have wider streets—not to make any deduction in the respective streets. The Chancellor of 927 the Exchequer does admit it would discourage open spaces not to make a deduction An consideration of open spaces. He says streets are in a different position. Nothing is worse in the construction of modern towns than to have narrow streets.
§ Mr. LLOYD-GEORGEI dealt with that point. What I am contending is that that is already contained in the Bill. The value which is attributable to streets is already deducted, whatever that value may be. If it is a narrow street it would be smaller; if it is a wide street it would improve the value, but it is deducted already. You already deduct the value, whether the street is narrow or wide.
Mr. BALFOURDoes that act upon the assumption that the wide streets increase the value of the building sites? I do not speak as an expert on the matter, but I should have thought that was the case. I should have thought a man would make more out of a street, a plot of land with streets which were narrow, than out of a plot of land in which the streets were wide. Although I agree, the actual expenditure upon wide roadways is large, I should say that the method in which the Government have drawn this clause is a premium on narrow streets and a discouragement to wide streets, and it must be so unless you proceed on the proposition that the wider your streets the greater your value.
§ Mr. LLOYD-GEORGEAll that the hon. and gallant Member who moved the Amendment claimed was not that the value of the land should be deducted, whether the streets were narrow or wide, but that the value which is created by the street should be deducted. I claim I am doing that whatever be the value created, and I quite agree that the value created is not at all in proportion to the amount of land you may take up. It depends entirely upon the neighbourhood, and I have provided in the Bill that the deduction should be in proportion to the value created.
§ Mr. WATSON RUTHERFORDI think the discussion has proceeded to some extent upon a fallacy which, perhaps, I may be allowed to point out. The hon. Member opposite pointed out that if we take away a part of the landed property for streets you still have the same value, and therefore you do not get any alteration with regard to the price; but suppose you 928 take a case where you give, say, £10,000 for a block of property for the purpose of development building, and you lay out the streets and dedicate this portion of the land to the public. If you can sell that property for exactly the same money as you gave for it, after taking into account the loss of area through your streets, then it is obvious you would lose your money, and I think that is the argument that led the hon. Member astray. But how is it to be done in practice? The estates usually are 30 or 40 acres in size. If the property is laid down for building, you start by making sewers, putting down kerbs and channels, and putting down roadways. The whole of the value of that is taken per yard. It is not taken as so much for the whole property, it is taken per yard, and for this reason, when the 20 or 30 pieces of the net land are sold, you have got to deal with each bit of the property per yard.
Let me show how it will work out. You get 4s. per yard to start with for the whole piece. You make the roads and streets, and you have the net land left. You must take the net land at 5s. in order to get out the same total price, because you have lost the difference in area on the property. As you, develop the property, perhaps you allow an acre in the middle of the estate as a common garden, available for the whole of the property, and you make certain roads extra wide, lay down trees, and provide grass plots. Every time you do anything of that sort you are bound to put something per yard on to the net property in order to come out at the same total value, and that is just as much an expenditure as the money spent in making sewers or making roads or any other outlay. Anything in this statute, from one end to the other, which would tend to prevent or discourage people from making these amenities, such as extra wide roads and little bits of grass plots, would be a very great pity. In making up this schedule of allowances one of the first things should be the extra amount a man ought to have allowed in respect of land which he has voluntarily given up. The case is absolutely proved by the fact that it is conceivable that some portion of the land wanted for the road he may have to buy and pay money for to form part of the site for the road which he wants. That is allowed for, because it would be expenditure under the Bill. But we are told that because he supplies the land himself he is not to be allowed for it. Anything more absurd it would be difficult to imagine. But I will put the case a step 929 higher. Supposing the man under a mistaken scheme of development had sold a piece of land which he afterwards found he wanted for another purpose, and he goes and buys it back again. Of course, it is obvious that that comes to the same thing as if he had never sold it or bought it at all, but if he had bought it from a stranger an allowance would be made for it. How can it be said that because it was his own to begin with it should not be allowed for on the same principle?
§ Lord ROBERT CECILI think that possibly the Government have forgotten for the moment that this is a matter that applies to Increment Duty as well. The dedication of land to a street will greatly increase the value of the remaining land, and yet there will be no expenditure at all. Take the ordinary street widening carried out by agreement with the owner of the land. The ordinary procedure is for the landowners to dedicate the land both for his own purposes and for the purposes of the public, and the whole expenditure of making up this street devolves upon the local authority. The landowner may have contributed a large sum of money towards improving the value of his land and also for public purposes. It is just as important to encourage that kind of operation as to encourage the creation of open spaces, and it is quite plain that unless some such words as have been suggested are inserted that operation will not be provided for at all. The oases of this kind in London are extremely numerous, and, as far as I know, they always take that form of dedication of the land by the owner, the expenditure falling upon the local authority in connection with the making up of the street.
§ Mr. E. G. HEMMERDEI think everybody admits that this matter is one of considerable difficulty, and I should like the Government to reserve the whole question. I am unable to understand the argument used by the Chancellor of the Exchequer, who says that if you give part of the land for a public purpose and dedicate it for an open space or road you are making an expenditure. It does not seem to me that you are doing anything of the sort, and I do not think you are making an expenditure. It is quite true that you are doing something to increase the value of the property. It seems to me that if you are going to make any allowance whatever as an expenditure in regard to land which is dedicated for roads or public purposes you are going to get into a very 930 difficult position. There are many cases where a considerable amount of land is laid out on estates to increase the value of the property around, but merely because you do a thing to increase the value of the surrounding property it does not follow that what you do is an expenditure, if you can do it without any sacrifice. [An HON. MEMBER: "But you cannot."] If you were to keep the land in your own hands it would probably be valueless. If in order to make the land more valuable you give a right of way, that is to be allowed for as expenditure. I cannot understand why in estimating the value that such a thing as that should be allowed for at all. It seems to me that you ought not to allow for it, because it is not an expenditure, and it is merely an attempt by the owner to increase the value of his property. We all know cases where a man has given land for a public park, and in the end has made an enormous fortune out of the fact that he has done so. I can mention cases where an enormous value has been given to the land round parks from the fact that land has been given for the parks. In my opinion, you are going by this proposal to make allowances quite outside the purview of the Bill.
§ Mr. PRETYMANI think the fact that the hon. Member opposite (Mr. Hemmerde) is not able to understand this proposal rather accounts for some of the speeches he has made in the country. I think I can make the matter clear. What we have to remember is that the dedication we are making is not the dedication of the cost or value of the thing, but that part of the value of the subject matter of taxation. I quite see the Chancellor of the Exchequer's point as to streets being of a different character, and the reason is because a street is a permanent work, and it is already allowed for. That I entirely admit. The open space, not being a permanent work, is not allowed for. Then comes the point raised by my Noble Friend (Lord Robert Cecil) where a permanent work, namely, the making of a road, has not been executed by the owner, and he has only surrendered the land. He ought to be allowed the value of the land. The whole point will be met by accepting the Amendment as it stands. We are not going to deduct the cost of the road or the value of the land he has given up for the road, but the part of the value of the taxable subject which is due to the road as it stands. It therefore cannot be deducted twice over. The two oases are the case of 931 the man who makes the road and the man who does not, and in both they will only be entitled to deduct the value due to the road, and not any additional value. There can be no additional value. If no deduction has been made for the road because it was not a permanent work executed by the owner, then under this Amendment he would be entitled to deduct the value of the land he has given up for the road, and that would be perfectly legitimate and proper. Having considered the matter very carefully, I think the case will be absolutely met by accepting the Amendment as it stands.
§ Mr. LLOYD-GEORGEI cannot accept the Amendment as it stands. The cost of the road is deducted in hypothetical value. When you are getting at the hypothetical value you take into account the fact that you have got to leave a certain sum out for making the road. I cannot accept it at the present stage. If I did accept it I should certainly insert the word "road" on the Report stage. I will promise, however, to give consideration to the matter. I think I have met the hon. and gallant Member very fairly.
§ Mr. PRETYMANI am quite prepared to accept that suggestion. The Amendment will be accepted so far as open spaces are concerned, and the question of the road will be left until the Report stage. I admit it will be easier for us to put in the words on the Report stage. I understand the matter will be considered, and I feel perfectly confident when it comes to be examined closely that the right hon. Gentleman's advisers will tell him that what I have just stated to the Committee is the correct interpretation. I have therefore great pleasure in acceding to his suggestion.
The CHAIRMANWill it not be necessary to alter the Amendment? Will the hon. and gallant Gentleman propose that alteration?
§ Mr. PRETYMAN moved to leave out from the proposed Amendment the words "streets, passages, or"
§ Mr. J. W. HILLSThe Chancellor of the Exchequer, as I understand him, agrees that you ought to deduct all the present value of the road to ascertain the taxable value. The value of this street is made up of two parts. You have in the first place the value of the land used to form the street, and, secondly, you have the cost of the actual making of the street. If I 932 understand the Chancellor of the Exchequer rightly, he said the true value of the street ought to come off the value of the land. I do not think the clause says that. The value you can deduct is that of works of a permanent character, executed on the land, and I am perfectly certain that value would not include the value of the land. All you can deduct is the actual cost of making the street, and the deduction will not include the value of the land taken for those works. Surely part of the value, of the street is made up of the land, and you ought to include that, in the value you take off.
§ Question, "That the words, 'streets, passages, or,' stand part of the proposed Amendment," put, and negatived.
The CHAIRMANI do not know whether it is desired to raise the question of agricultural land on the Amendment of the hon. Member for Blackpool (Mr. Ashley), or later.
§ Mr. AUSTEN CHAMBERLAINI understand the Chancellor of the Exchequer is ready to make some concession on this point to meet the case which we raised the other night.
§ Mr. LLOYD-GEORGEBefore we come to that I have an Amendment. I move to leave out from Section (4), Sub-section (a), the words "fitting the land for use" ["for the purpose of fitting the land for use as building land"], and to insert instead thereof the words "improving the value of the land."
§ Question, "That the words, 'fitting the land for use,' stand part of the Clause," put, and negatived.
§ Mr. LLOYD-GEORGE moved, at the end of Section (4), Sub-section (a), after the word "agriculture," to insert the words "or to the expenditure of money on any redemption of Land Tax, or any rent-charge as defined by this Act, or other fixed charge not being an incumbrance within the meaning of this Act, or on the enfranchisement of copyhold land or customary freeholds, or to goodwill or any other matter which is personal to the owner, occupier, or other person interested for the time being in the land."
933§ Mr. LLOYD-GEORGEI now move the Amendment which was promised last night. The object is to make it perfectly clear that where reclamation works make land more valuable for building as well as agricultural purposes, the cost shall be deducted, whether for building or for agricultural value.
§ Mr. YOUNGERI am not quite certain whether the Amendment does actually cover the point I raised last night. I am inclined to think that it does not go far enough. But perhaps if it does not cover the pledge the right hon. Gentleman will be willing to deal with it on the Report stage.
§ Mr. AUSTEN CHAMBERLAINI hope my hon. Friend will assent. The right hon. Gentleman was good enough to submit the Amendment to the hon. and gallant Member for Chelmsford (Mr. Pretyman) and myself, and we certainly thought it met the point.
§ Mr. G. HARWOODWill the whole cost be allowed, or only the cost so far as it has contributed to the site value?
§ Mr. LLOYD-GEORGEIt is not the amount spent, but the value created.
§
Question proposed, after Sub-section (a), Section (4), as amended, to insert the words:—
Provided that where any works executed or expenditure incurred for the purpose of improving the value of the land for agriculture have actually improved the value of the land as building land, or for the purpose of any business, trade, or industry other than agriculture, the works or expenditure shall, for the purpose of this provision, be treated as having been executed or incurred also for the latter purposes.
§ Question proposed, "That the Clause, as amended, stand part of the Bill."—[Mr. Lloyd-George.]
Mr. BALFOURI do not wish to make a long speech on this subject, but I do not think we can leave this clause without saying that it is really and inherently absurd, and it is absurd on the very principle advocated by its framers. I understand that this clause is intended to work out a scheme by which we shall know exactly what nature did, and then be able to 934 subtract what man did, and make the difference between these two things the basis of all sorts of calculation for taxation. That is the theory of the clause. I say it is not carried out by the clause. The second section proposes to give us what the value of the land would be as it came from its Maker. It does not, and nobody who reads it can believe that it does. The fourth section which we have been discussing professes to tell us what the owner of the land has done to give it its present value. That again it does not do. The Chancellor of the Exchequer has constantly urged in this House and elsewhere that it would be quite preposterous that the owner of building land should claim untaxed the additional value given to land by the opening up of towns. He gives us his theory of social value, but I say that neither in reason nor in logic does he get in Section (2) the original site value, or the value as modified by the industry and enterprise of man. The Government are not only plunging at the bidding of theorists into a perfect quagmire of foolish and costly finance, but they have not even succeeded in carrying out the abstract principles to which they give all this lip-service. That, Sir, is my final blessing, which I beg to give to this clause and, in deference to a natural desire on the part of an exhausted Committee to get a little food and a little sleep, I do not propose further to extend my observations.
§ Mr. LLOYD-GEORGEI think I may say one word in reference to the final malediction pronounced by the right hon. Gentleman upon this clause. He has said that it is absurd, that it cannot possibly be done, that it is quite unworkable, and that it is unjust and inequitable, and he has piled up the adjectives. I would commend to him a small document, written by the late Commissioner for New Zealand, where the same epithets, adjectives, and maledictions were pronounced on an exactly similar proposal made in New Zealand. It was said that no one could work it, and that any human ingenuity was quite incapable of dealing with the difficulty.
§ Mr. LLOYD-GEORGEThen that was reserved for the Noble Lord the Member for Paddington (Lord R. Cecil) to say. At any rate, the same arguments that were used to-night were used in New Zealand. It was said that there would be a bureaucracy of extortion, headed by some modern John of Cappadocia, to make life un- 935 bearable for the poor plundered farmers and landowners. Exactly the same arguments as were used by the Noble Lord were used in New Zealand.
§ Lord R. CECILI do not know who John of Cappadocia was.
§ Mr. LLOYD-GEORGEThe Noble Lord and his Friends have dwelt upon this particular clause as an instance of the extortion which will be practised, and all these things have been said about practically the same things in New Zealand, and, according to the Commissioner, the reforms there are working smoothly, both parties have adopted them, and the result has been that they have been able to promise us a "Dreadnought" out of their taxes. The proposals as to site value and its separation and divestiture from other values are exactly the same as in the New Zealand Act, which has been very carefully drafted, and it has worked so very well, that I am convinced that the right hon. Gentleman opposite will some day or other be congratulating himself upon the ample revenue arising out of the taxation which he has now denounced with such exhaustive ingenuity and eloquence, but which he will find so very useful when he wants to get money for his own particular purposes.
§ Lord R. CECILI cannot think that the discussion this afternoon, especially for the last hour or two, has really been quite adequate to the importance of the subject. I do not blame anybody, but I think there have been a great number of Amendments put into this Bill about which the Committee have very little knowledge of what they are going to do, and an equally great number refused about which the Committee is equally in the dark. But I do not rise to go into that. The right hon. Gentleman has suggested—I do not know why he selected me—that my objection to this Bill was that it was unworkable. I do think that the Bill is unworkable, as a matter of fact, but that is a matter of minor importance, so far as I am concerned, and that is not my main objection. My main objection is that these
§ clauses are founded upon wholly erroneous economic theory, in the first instance, which is entirely novel and quite unsound, and the fact that it exists in New Zealand, or even Australia or anywhere else, does not convince me of its economic soundness; and, secondly, and still more important, I do not believe this is an honest Finance Bill. That is the real objection that I have. I do not think it was meant to devise a scheme for the taxation of land, which would be the case in any honest Finance Bill, but this, as I have said, is not an honest Finance Bill, because it appears to me, for reasons which it is unnecessary to enlarge upon, that the cost of carrying out this very clause is going to be so enormous and overwhelming that it is quite absurd to imagine that any return will be thrown into the coffers of the State which is at all commensurate with the expenditure incurred.
§ I know that people say that Clause 14 is the most important clause in the Bill. I do not in the least agree. It is a mere matter of machinery. It is, I think, bad machinery, but it is not, I think, the most important clause, although I shall vote against it, I do not regard this as the vital clause in the Bill, but I do say it is quite grotesque of the Chancellor of the Exchequer to get up and ask the Committee to believe that our objection to these clauses is merely because they are unworkable. That is not the ground of our opposition, nor is it that these clauses will inflict an undue burden upon our political friends and allies. Our objection is, that the clauses are founded on a wholly erroneous economic theory, and still more and mainly so far as I am concerned, because I do not believe that this Bill is introduced, and that this clause itself is brought forward for the purpose of carrying out a real financial object, but in order to achieve a second object, which I do not think is a proper one, to be introduced into a Finance Bill.
§ Question put, "That the Clause, as amended, stand part of the Bill."
§ The Committee divided: Ayes, 112; Noes, 38.
937| Division No. 450.] | AYES | [7.55 p.m. |
| Ainsworth, John Stirling | Bethell, T. R. (Essex, Maldon) | Cherry, Rt. Hon. R. R. |
| Alden, Percy | Bowerman, C. W. | Clough, William |
| Barnard, E. B. | Brocklehurst, W. B. | Clynes, J. R. |
| Barnes, G. N. | Brooke, Stopford | Compton-Rickett, Sir J. |
| Beale, W. P. | Brunner, Rt. Hon. Sir J. T. (Cheshire) | Corbett, C. H. (Sussex, E. Grinstead) |
| Beaumont, Hon. Hubert | Bryce, J. Annan | Cornwall, Sir Edwin A. |
| Bellairs, Carlyon | Burns, Rt. Hon. John | Crooks, William |
| Berridge, T. H. D. | Byles, William Pollard | Cullinan, J. |
| Bethell, Sir J. H. (Essex, Romford) | Causton, Rt. Hon. Richard Knight | Duncan, C. (Barrow-in-Furness) |
| Dunn, A. Edward (Camborne) | Lamont, Norman | Scott, A. H. (Ashton-under-Lyne) |
| Elibank, Master of | Lever, A. Levy (Essex, Harwich) | Seely, Colonel |
| Ferguson, R. C. Munro | Lewis, John Herbert | Sherwell, Arthur James |
| Foster, Rt. Hon. Sir Walter | Lloyd-George, Rt. Hon. David | Shipman, Dr. John G. |
| Fuller, John Michael F. | Lough, Rt. Hon. Thomas | Silcock, Thomas Ball |
| Gibb, James (Harrow) | Macpherson, J. T. | Snowdon, P. |
| Gladstone, Rt. Hon. Herbert John | MacVeagh, Jeremiah (Down, S.) | Soames, Arthur Wellesley |
| Goddard, Sir Daniel Ford | M' Callum, John M. | Stanger, H. Y. |
| Greenwood, G. (Peterborough) | M' Laren, H. D. (Stafford, W.) | Stanley, Hon. A. Lyulph (Cheshire) |
| Griffith, Ellis J. | Marks, G. Croydon (Launceston) | Steadman, W. C. |
| Hancock, J. G. | Marnham, F. J. | Stewart, Halley (Greenock) |
| Harcourt, Robert V. (Montrose) | Massie, J. | Strachey, Sir Edward |
| Hardie, J. Keir (Merthyr Tydvil) | Masterman, C. F. G. | Strauss, E. A. (Abingdon) |
| Harmsworth, Cecil B. (Worcester) | Mond, A. | Tennant, H. J. (Berwickshire) |
| Harmsworth, R. L. (Caithness-shire) | Morgan, G. Hay (Cornwall) | Thompson, J. W. H. (Somerset, E.) |
| Harwood, George | Morgan, J. Lloyd (Carmarthen) | Thorne, G. R. (Wolverhampton) |
| Hedges, A. Paget | Murray, Capt. Hon. A. C. (Kincard.) | Ure, Rt. Hon. Alexander |
| Hemmerde, Edward George | Newnes, F. (Notts, Bassetlaw) | Wardle, George J. |
| Henderson, Arthur (Durham) | O' Donnell, C. J. (Walworth) | Warner, Thomas Courtenay T. |
| Henry, Charles S. | O' Malley, William | Wason, John Cathcart (Orkney) |
| Higham, John Sharp | Partington, Oswald | Waterlow, D. S. |
| Hobart, Sir Robert | Rainy, A. Rolland | White, J. Dundas (Dumbartonshire) |
| Hobhouse, Rt. Hon. Charles E. H. | Richards, T. F. (Wolverhampton, W.) | Whitley, John Henry (Halifax) |
| Hodge, John | Roberts, Charles H. (Lincoln) | Williams, W. Llewelyn (Carmarthen) |
| Howard, Hon. Geoffrey | Roberts, G. H. (Norwich) | Wills, Arthur Walters |
| Hudson, Walter | Robson, Sir William Snowdon | Wilson, P. W. (St. Pancras, S.) |
| Hyde, Clarendon G. | Roch, Walter F. (Pembroke) | |
| Jones, Leif (Appleby) | Rogers, F. E. Newman | TELLERS FOR THE AYES.—Mr. Joseph Pease and Captain Norton. |
| Kekewich, Sir George | Russell, Rt. Hon. T. W. | |
| King, Alfred John (Knutsford) | ||
| NOES. | ||
| Arkwright, John Stanhope | Gordon, J. | Rawllnson, John Frederick Peel |
| Ashley, W. W. | Guinness, Hon. R. (Haggerston) | Remnant, James Farquharson |
| Balfour, Rt. Hon. A. J. (City, Lond.) | Guinness, Hon. W. E. (B. S. Edmunds) | Rutherford, John (Lancashire) |
| Beckett, Hon. Gervase | Harrison-Broadley, H. B. | Rutherford, Watson (Liverpool) |
| Bowles, G Stewart | Hills, J. W. | Salter, Arthur Clavell |
| Chamberlain, Rt. Hon. J. A. (Worc'r.) | Hope, James Fitzalan (Sheffield) | Starkey, John R. |
| Clyde, Percy Archer | Hunt, Rowland | Staveley-Hill, Henry (Staffordshire) |
| Clyde, J. Avon | Lambton, Hon. Frederick William | Walker, Col. W. H. (Lancashire) |
| Coates, Major E. F. (Lewisham) | Mildmay, Francis Bingham | Warde, Col. C. E. (Kent, Mid.) |
| Corbett, T. L. (Down, North) | Morpeth, Viscount | Younger, George |
| Douglas, Rt. Hon. A. Akers- | Newdegate, F. A. | |
| Faber, George Denison (York) | Nicholson, Wm. G. (Petersfield) | TELLERS FOR THE NOES.—Mr. H. W. Forster and Lord R. Cecil. |
| Gardner, Ernest | Powell, Sir Francis Sharp | |
| Gibbs, G. A. (Bristol, West) | Pretyman, E. G. |
Question put, and agreed to.
§ Mr. LLOYD-GEORGEI beg to move, "That the Chairman do report Progress, and ask leave to sit again."
§ Committee report Progress; to sit again on Tuesday (17th August).
§ Whereupon MR. DEPUTY-SPEAKER adjourned the House without Question put, in pursuance of the Order of the House of this day.
§ Adjourned at Five minutes after Eight o'clock.