§ Postponed Proceeding resumed, on Amendment [Lord Robert Cecil], after the word "deduction" to insert the words "as shall equal an addition to the value caused by a general rise in prices, estimated by reference to an index number to be fixed by the Board of Trade, and such."
§ Mr. LLOYD-GEORGE
I do not know whether it is necessary for me to say anything more about this Amendment, but I should have thought it was disastrous to have any scheme of this kind. The Noble Lord takes the case of tithe rent charge, which is fixed in accordance with the rise and fall in price, but I do not think anyone is satisfied with that particular method of regulating the amount of tithe,, and I am perfectly certain that it would not be fair in this case, and a scale of that kind is perfectly impossible. If the Noble Lord is going to use it all round, I am not sure that a decrement may not be claimed instead of an increment. Supposing the price of gold appreciates, and land which is worth £2,000 now was sold 30 years hence for £1,900. There is are apparent decrement of £100, but as a matter of fact, it can be proved on a scale of 1121 this kind that an apparent decrement of £100 was really an increase of £300 or £400. I really hope the Noble Lord will not press this Amendment.
§ Mr. BONAR LAW
The right hon. Gentleman before the private Bill was introduced spoke of this Amendment as if it were more or less in the nature of a joke, but I am bound to say that if the Amendment had been put down upon the Paper, and hon. Members had had an opportunity of seeing what it is, they would have seen that whatever the difficulty is in point of practice, the object at which it aims is perfectly fair, and that object is to take the mean value of the land. I have no doubt my Noble Friend drew this Amendment from the letter which appeared in "The Times" from a very distinguished professor at Cambridge. The Prime Minister was beside the Chancellor of the Exchequer at the time that he made the statement, and it is hardly for a Member of a distressed Government to bail as if it was a word of inspired wisdom the word "windfalls." The professor explained what he meant, and he said that you might have an apparent increment where there was a decrement and it is hardly fair to treat that as a a joke. The meaning of the Amendment is perfectly plain to any Member who has taken the trouble to read it. It amounts simply to this: that if you extend the operation over a long period, there may be an apparent rise in the value of land which has not really risen at all, and which is represented by a corresponding rise in everything else, and which, therefore, means that the man who sells it will not be able to buy anything else at a bit better advantage than if land had remained at the old price. That is the point, and the Government claim—as one of the first merits of this proposed tax—what an immense advantage it would have been to the country if this sort of thing had been established 100 years ago. It is apparent to anyone that an apparent rise in the value of land 100 years ago is not really a rise, because there is a corresponding rise in almost all other things, and, indeed, I think a greater rise. But even supposing I am wrong, that does not take away from the fact that there is a possibility of an apparent rise in the value of land which is not a real one. Then the right hon. Gentleman told us that it was impossible to work it, and that all that it would mean would be that he would go to the Board of Trade and ask his right hon. Friend to arrange index numbers in 1122 such a way as to give a higher tax. That is not possible. That is the way in which platform speeches of hon. Gentlemen opposite on the fiscal question have been arranged, but that is not the way in which the statistics of permanent officials have been arranged. These index numbers are perfectly understood now by the Board of Trade and they are used regularly for the very purpose of showing how the whole value of commodities has risen or fallen throughout a particular period, and all that my Noble Friend wishes is that something of that principle should be adopted, so that, in the words of Professor Pigou, it should be found, when you are taking increment value, that you are taking the real and not the apparent value. I admit it is very difficult to work this, but the principle which lies at the bottom of it is sound, and if the principle is sound, it is only right, in some shape or another, the attempt should be made to distinguish between apparent and real increment value.
§ Mr. STEWART BOWLES
The right hon. Gentleman the Chancellor of the Exchequer begun by saying that he did not think the Amendment could be adequately dealt with on that bench in language which was even Parliamentary, so ridiculous did he regard it. This Amendment may be wise or unwise, but really it is not ridiculous. It raises in the clearest way a point, which it seems to me the Committee will have to consider, and ought to consider very carefully, if these duties are to be, even in theory, fair and calculated to carry out the objects which the Government have in view.
I have on the Paper lower down an Amendment on exactly this subject, and I have proposed that the Commissioners should be bound to take into consideration in calculating the value not merely all the various matters which they are directed to in this clause, but also the changes in the value of land due to a decrease in the value of money since the original site value was taken. That avoids the introduction of the expression "index numbers," which I observe is regarded as a sort of inscrutable mystery, and which, perhaps, complicates in appearance, though not in reality, the simple point my hon. Friend desires to raise. Is it not quite obvious that, if the scheme of these duties is really to be carried out, if you are to start in regard to all the land in the country from 30th April last as a fixed immovable quantity, and if for all time to come it is to be a permanent growing part of our fiscal system, 1123 and for all the alterations of the general level of prices you are to refer back to that original value which is the scheme of the Government, you really must, if the duty is not to be fantastic, have some reference to the general level of prices ruling at the time you take the tax? It is true that this consideration would not arise in the next few years, because prices would not move much. But suppose at this moment one valued land by reference to its value 50 or 60 years ago. In that time the value of land expressed in sovereigns was very much increased. But that is not a real increase, because the price of everything else has increased as much, or even more, and all the time there is the possibility of a sudden discovery of gold, which will immediately inflate the price of everything, and if you merely take the money value of land at any moment, year after year, or 20 years after 20 years, and refer it back to this fixed and immovable money value of 30th April, 1909, you will inevitably, unless you are to assume that the price of everything is going to remain at the level of 1909, inflict very great injustice, and you will be charging people upon a fictitious and not a real increment. The point is quite simple, and it ought to be considered as something more than a joke. This is a new principle. Never before have you taxed a man on the difference between the value of his property at a particular moment arbitrarily chosen, and the value of the same property on a given date, except, perhaps, to some extent in the case of the tithe-rent charge, and there a provision was made of this same character with regard to the general level of prices. I am perfectly persuaded that this is a genuine point, and it seems to me quite clear that if the Government refuse to accept it they will be laying up an injustice which will increase as time goes on.
§ Mr. STUART-WORTLEY
I think it reasonable that not only the longer and more secular fluctuations, but the shorter fluctuations in the value of money ought to be taken into account. This Amendment is the converse of the one which proposes that the factor of the value of money should be taken into account in the valuation. Surely it is not a reasonable thing that valuers are to value enormous estates and to be debarred from taking into consideration all possible factors. I have it positively from those in a better position than I am to speak with authority on the 1124 matter that fluctuations in the value of money will make so great a difference, for instance, in the value of freehold ground rents, that they will fluctuate between 25 years and 29 years purchase. If we are told the Amendment must be rejected on the ground of its impracticability or its want of precedent, it is open to us to remind the Government that in 1887, when it was found necessary to revise the operation which the State had undertaken in 1881 of valuing the land in Ireland, it was enacted that there should be a revision of that valuation in the shape of a revision of the judicial rents. Parliament then provided that the Land Commission, not merely as regards the whole of Ireland, but as regards counties, Poor Law unions, and other smaller areas, should be allowed to revise judicial rents with direct reference to what the Statute calls prices affecting agriculture in those districts. You could not have a more direct precedent, or one which, in the experience we have had of its smooth working, shows that the thing is practicable.
§ Mr. W. PEEL
I think some such Amendment is very necessary, because one is almost inclined to forget what is the principle at the root of the proposals contained in these clauses. It is that the State, after all, should take for itself a portion of that amount which is due to the collective action of the community. With regard to this question of gold, it is perfectly clear that if the increment arises in this way, it cannot in any sense be due to the action of the particular community in which the rise of land takes place. I was astonished that hon. Members opposite seemed to challenge the argument of the hon. Member for Dulwich (Mr. Bonar Law) when he talked about these fluctuations. But in the fifties there was an enormous upset in all prices through the immense discoveries of gold in America.
More recently, as those who follow the effect on prices know, the discoveries of gold in South Africa had a similar effect. It was a great disturbing element introduced into all prices merely through an accident—the fact that a certain amount of gold was found on a few farms in the Transvaal. Increment due to causes of that kind cannot by any hypothesis be put down to the action of a particular community in this country. I think the proposal of my noble Friend (Lord R. Cecil) goes further than he has suggested because there are a great many increments in land in this country which are in no sense due to the action of the community or a 1125 development of towns, but which are due it may be to bad harvests in other countries, or, as in the case of Argentina, to the extraordinary demand for high-class cattle in this country. These are some of the subsidiary causes which affect prices of land in this country. In connection with the question of currency there are certain persons who wish to establish a double standard of gold and silver. If you take these things into consideration, they are far wider than questions as to the rise and fall in the price of commodities produced all over the world. If the whole or any proportion of the increment which is due to these causes is charged on the individual holding land, you will see that not only he but the community of which he is a member are innocent and unresponsible for the rise in prices in one quarter or another.
§ Mr. J A. SIMON
The hon. Member for Dulwich (Mr. Bonar Law) said he thought some people were treating this proposal as a joke. Whether it is a joke or not certainly the circumstances in which it is recommended by certain hon. Gentlemen opposite are truly humorous. The hon. Member who made the proposal (Lord R. Cecil) and the hon. Member sitting on the same Bench with him (Mr. Stewart Bowles) hold fiscal views which many of us observe with sympathetic interest. They both very clearly apprehend the truth of the statement that when you are comparing what appear to be equal sums of money, either at times or in countries, it should be remembered that money is not necessarily of equal value. The humour of it is that the bon. Member for Dulwich, who is fond of quoting without any reference to index numbers, the rate of wages in America.
§ Mr. BONAR LAW
The hon. Member, as a matter of fact, is clearly wrong. I have never used as an illustration the higher rate of wages without at the same time taking into account the buying power of money.
§ Mr. SIMON
All I can say is that I hope that the calculation which the hon. Member always observes will soon be distributed in a Tariff Reform leaflet. The real objection to the Noble Lord's proposal, and what makes the proposal really humorous, is not an objection of principle, but an objection of common-sense and vulgar practice. Theoretically the Noble Lord is absolutely right, but if he is right 1126 about this he and those who support him must remember that other consequences follow. The State says that nobody with an income of less than £160 a year need pay Income Tax, and, of course, according to the Noble Lord, you must not be so absurd as to say that the tax depends upon the number of sovereigns a man gets. You must apply an index number. In the year 1904 the Leader of the Opposition was responsible for a great Irish Land Act. On that occasion it was not a purchase between one person and another, but between one country and another. This country undertook to purchase the land. In return for what? Not in return for a series of annual payments to be ascertained by index numbers, but on the principle of rough-and-ready justice of paying so many pounds, shillings, and pence. If this proposition were seriously entertained and adopted, instead of our wanting a Court of Appeal and legal luminaries to revise the decisions of the Commissioners, we should really have to go to a court of Cambridge professors.
I suppose it is the Oxford prejudices of the hon. and learned Gentleman which are responsible for the closing sentences of his speech, or else a vague consciousness that a Cambridge professor has in the last two days lured the Prime Minister into a bog from which he has not extricated himself in connection with the principle underlying the Finance Bill. The hon. and learned Gentleman, in answer to my Noble Friend (Lord R. Cecil), took two illustrations. One was the Income Tax and the other the Irish Land Bill. The Income Tax as an illustration is an utter absurdity. That tax is levied each year from the income of that year on the inhabitants of the country, and the rise and fall in the real value of money has nothing whatever to do with it. The hon. and learned Gentleman has, I believe, studied this question, and he must know, if he gives it a moment's thought, that there is not a single economist on the other side of the House who will get up and say either that the hon. and learned Gentleman appreciates really the Question before us, or that he has not spoken in haste.
§ Mr. SIMON
I do not rise with any idea that I am one of the economists on this side of the House, but to explain what I meant. The reason why our Income Tax does not tax the first £160 is because it is necessary to leave people a nucleus of money with which to provide the neces- 1127 saries of life, and I should have thought it was not irrelevant to point out that £160 will not buy as much of the necessaries of life at one time as at another.
We deal with the Income Tax every year, and if a change in the value of money was of so great a character as to make £160 different in the power of buying the necessaries of life, of course the Income Tax would be changed in the year in which the change in the value of money took place, but you cannot compare that with the proposition of the Government in connection with this Bill. I very much doubt whether the hon. and learned Gentleman knows what the Bill is. The Bill lays down that a certain valuation in land shall be made in 1909, and that for all time—not for 60, 120, or 240 years—the increment in the land of the country is to measured from that date. Of course, if the value of money was to be constant the tax might be consistent, but the tax to be paid 100 years hence on the increment of a particular estate, whether just or unjust, is to be measured on equal terms by money value. That is quite plain. The only possible way, if you will have these contracts bearing on the obligations of individuals extended over an indefinite period, is to try to invent a standard, if you have not got it, which will give something like equality of value as between one generation and another. That is perfectly true, and I think it a much better illustration of the hon. Gentleman's point of view. For instance, the National Debt is different in value now from what it was 100 or 200 years ago. That is a contract which the State deliberately chose to enter into for its own interest. It is not a burden thrown on particular members of the community. At any rate, it does not tax for an indefinite period. The truth is, I quite agree that if the allegation of the hon. Gentleman was that this scheme of my
§ Noble Friend introduces great complications into the Bill, that it would be difficult to work, and that to fix on some standard of value other than money which is to resist the assaults of time, is not an easy job for even the best of economists, I would agree with him; but then it would be a condemnation of the tax, because the whole system of the tax implies eternity; the whole theory of the Government in devising this tax is that you may take the value of land at a given moment of time, and you have a right to tax the increment on that value for every succeeding generation as far as the human imagination can reach. That is the theory of the Government, but that theory implies a standard of value which is not subject to mutations in these long periods. We have not got that standard. We never had it; and the changes produced in standards of value are well known to all economists in this House, to whatever school they may belong. In these circumstances, although I will not suggest that my Noble Friend's scheme would be easy to work, I do say and I say quite distinctly, that the fact that you cannot work it shows how absurd the plan of the Government is which works everything upon a particular valuation taken in a particular year when this Government happened to be in office. Of course, if they changed that standard, as has been proposed, from year to year, and did it for a particular period, that objection would not hold. But if you insist that 1909 shall be the golden year, shall provide that fixed base line from which for all time the value of land in these islands is to be estimated, then you must find some more stable measurement of that value than that which is provided by the present process.
§ Question put, "That those words be there inserted."
§ The Committee divided: Ayes, 85; Noes, 277.1131
|Division No. 250.]||AYES.||[10.20 p.m.|
|Acland-Hood, Rt. Hon. Sir Alex. F.||Clive, Percy Archer||Guinness, Hon. W. E. (B. S. Edm'nds)|
|Anson, Sir William Reynell||Clyde, James, Avon||Haddock, George B.|
|Balcarres, Lord||Coates, Major E. F. (Lewisham)||Hamilton, Marquess of|
|Baldwin, Stanley||Courthope, G. Loyd||Hardy, Laurence (Kent, Ashford)|
|Balfour, Rt. Hon. A. J. (City, Lond.)||Craig, Captain James (Down, E.)||Harris, Frederick Leverton|
|Banbury, Sir Frederick George||Dickson, Rt. Hon. C. Scott-||Harrison-Broadley, H. B.|
|Barrie, H. T. (Londonderry, N.)||Douglas, Rt. Hon. A. Akers-||Hay, Hon. Claude George|
|Beckett, Hon. Gervase||Faber, George Denison (York)||Hermon-Hodge, Sir Robert|
|Bignold, Sir Arthur||Faber, Capt. W. V. (Hants, W.)||Hill, Sir Clement|
|Bowles, G. Stewart||Fletcher, J. S.||Hills, J. W.|
|Brotherton, Edward Allen||Forster, Henry William||Hope, James Fitzalan (Sheffield)|
|Carlile, E. Hildred||Gardner, Ernest||Houston, Robert Paterson|
|Castlereagh, Viscount||Gordon, J.||Hunt, Rowland|
|Cecil, Evelyn (Aston Manor)||Gretton, John||Idris, T. H. W.|
|Cecil, Lord R. (Marylebone, E.)||Guinness, Hon. R. (Haggerston)||Joynson-Hicks, William|
|Kerry, Earl of||Newdegate, F. A. N.||Sheffield, Sir Berkeley George O.|
|Kimber, Sir Henry||Nicholson, Wm. G. (Petersfield)||Stanier, Beville|
|King, Sir Henry Seymour (Hull)||Oddy, John James||Starkey, John R.|
|Lambton, Hon. Frederick William||Pretyman, E. G.||Talbot, Lord E. (Chichester)|
|Lane-Fox, G. R.||Randles, Sir John Scurrah||Talbot, Rt. Hon. J. G. (Oxford Univ.)|
|Law, Andrew Bonar (Dulwich)||Ratcliff, Major R. F.||Valentia, Viscount|
|Lockwood, Rt. Hon. Lt.-Col. A. R.||Rawlinson, John Frederick Peel||Walker, Col. W. H. (Lancashire)|
|Long, Col. Charles W. (Evesham)||Remnant, James Farquharson||Warde, Col. C. E. (Kent, Mid)|
|Lonsdale, John Brownlee||Renton, Leslie||Williams, Col. R. (Dorset, W.)|
|MacCaw, William J. MacGeagh||Renwick, George||Wortley, Rt. Hon. C. B. Stuart-|
|Magnus, Sir Philip||Ronaldshay, Earl of||Wyndham, Rt. Hon. George|
|Mason, James F. (Windsor)||Rutherford, W. W. (Liverpool)||Younger, George|
|Mildmay, Francis Bingham||Sassoon, Sir Edward Albert||TELLERS FOR THE AYES.—Mr. W. Peel and Viscount Morpeth.|
|Morrison-Bell, Captain||Scott, Sir S. (Marylebone, W.)|
|Abraham, W. (Cork, N. E.)||Davies, Ellis William (Eifion)||Jowett, F. W.|
|Acland, Francis Dyke||Davies, Timothy (Fulham)||Joyce, Michael|
|Adkins, W. Ryland D.||Davies, Sir W. Howell (Bristol, S.)||Kennedy, Vincent Paul|
|Ainsworth, John Stirling||Dewar, Sir J. A. (Inverness-shire)||Laidlaw, Robert|
|Alden, Percy||Dillon, John||Lamb, Ernest H. (Rochester)|
|Allen, A. Acland (Christchurch)||Dobson, Thomas W.||Lambert, George|
|Allen, Charles P. (Stroud)||Duncan, C. (Barrow-in-Furness)||Lamont, Norman|
|Armitage, R.||Duncan, J. Hastings (York, Otley)||Layland-Barrett, Sir Francis|
|Ashton, Thomas Gair||Edwards, A. Clement (Denbigh)||Lehmann, R. c.|
|Asquith, Rt. Hon. Herbert Henry||Edwards, Sir Francis (Radnor)||Lever, A. Levy (Essex, Harwich)|
|Astbury, John Meir||Elibank, Master of||Levy, Sir Maurice|
|Balfour, Robert (Lanark)||Esslemont, George Birnie||Lloyd-George, Rt. Hon. David|
|Baring, Godfrey (Isle of Wight)||Evans, Sir Samuel T.||Lundon, T.|
|Barker, Sir John||Everett, R. Lacey||Lyell, Charles Henry|
|Barlow, Sir John E. (Somerset)||Falconer, James||Lynch, H. B.|
|Barlow, Percy (Bedford)||Ferguson, R. C. Munro||Macdonald, J. R. (Leicester)|
|Barnard, E. B.||Flynn, James Christopher||Macdonald, J. M. (Falkirk Burghs)|
|Barnes, G. N.||Fuller, John Michael F.||Maclean, Donald|
|Barry, Redmond J. (Tyrone, N.)||Fullerton, Hugh||Macnamara, Dr. Thomas J.|
|Beale, W. P.||Furness, Sir Christopher||Macpherson, J. T.|
|Beauchamp, E.||Gill, A. H.||MacVeagh, Jeremiah (Down, S.)|
|Beck, A. Cecil||Gladstone, Rt. Hon. Herbert John||MacVeigh, Charles (Donegal, E.)|
|Bell, Richard||Glen-Coats, Sir T. (Renfrew, W.)||M'Kean, John|
|Bellairs, Carlyon||Glover, Thomas||M'Laren, H. D. (Stafford, W.)|
|Benn, W. (Tower Hamlets, St. Geo.)||Goddard, Sir Daniel Ford||M'Micking, Major G.|
|Berridge, T. H. D.||Gooch, George Peabody (Bath)||Mallet, Charles E.|
|Bethell, T. R. (Essex, Maldon)||Greenwood, G. (Peterborough)||Marks, G. Croydon (Launceston)|
|Black, Arthur W.||Greenwood, Hamar (York)||Marnham, F. J.|
|Boulton, A. C. F.||Griffth, Ellis J||Massie, J.|
|Bowerman, C. W.||Guest, Hon. Ivor Churchill||Masterman C. F. G.|
|Bramsdon, Sir T. A.||Gulland, John W.||Meagher, Michael|
|Branch, James||Gwynn, Stephen Lucius||Micklem, Nathaniel|
|Bridgeman, W. Clive||Hall, Frederick||Middlebrook, William|
|Brocklehurst, W. B.||Harcourt, Rt. Hon. L. (Rossendale)||Molteno, Percy Alport|
|Brodie, H. C.||Harcourt, Robert V. (Montrose)||Mond, A.|
|Brooke, Stopford||Hardie, J. Keir (Merthyr Tydvil)||Morgan, J. Lloyd (Carmarthen)|
|Brunner, J. F. L. (Lancs., Leigh)||Hardy, George A. (Suffolk)||Morse, L. L.|
|Brunner, Rt. Hon. Sir J. T. (Cheshire)||Harmsworth, Cecil B. (Worc'r)||Morton, Alpheus Cleophas|
|Bryce, J. Annan||Hart-Davies, T.||Murray, Capt. Hon. A. C. (Kincard.)|
|Buckmaster, Stanley O.||Harvey, A. G. C (Rochdale)||Napler, T. B.|
|Burns, Rt. Hon. John||Hazel, Dr. A. E. W.||Nicholls, George|
|Burt, Rt. Hon. Thomas||Hazleton, Richard||Nicholson, Charles N. (Doncaster)|
|Buxton, Rt. Hon. Sydney Charles||Hedges, A. Paget||Nolan, Joseph|
|Byles, William Pollard||Helme, Norval Watson||Norman, Sir Henry|
|Cameron, Robert||Henderson, Arthur (Durham)||Norton, Capt. Cecil William|
|Carr-Gomm, H. W.||Henderson, J. McD. (Aberdeen, W.)||Nuttall, Harry|
|Causton, Rt. Hon. Richard Knight||Herbert, T. Arnold (Wycombe)||O'Brien, K. (Tipperary, Mid)|
|Cawley, Sir Frederick||Higham, John Sharp||O'Brien, Patrick (Kilkenny)|
|Chance, Frederick William||Hobart, Sir Robert||O'Doherty, Philip|
|Cheetham, John Frederick||Hobhouse, Rt. Hon. Charles E. H.||O'Donnell, C. J. (Walworth)|
|Cherry, Rt. Hon. R. R.||Hodge, John||O'Grady, J.|
|Cleland, J. W.||Hogan, Michael||O'Kelly, Conor (Mayo, N.)|
|Clough, William||Holland, Sir William Henry||Parker, James (Halifax)|
|Clynes, J. R.||Hooper, A. G.||Pearce, Robert (Staffs, Leek)|
|Cobbold, Felix Thornley||Hope, John Deans (Fife, West)||Philipps, Col. Ivor (Southampton)|
|Collins, Stephen (Lambeth)||Hope, W. H. B. (Somerset, N.)||Philips, John (Longford, S.)|
|Collins, Sir Wm. J. (St. Pancras, W.)||Horridge, Thomas Gardner||Pickersgill, Edward Hare|
|Cooper, G. J.||Howard Hon. Geoffrey||Pointer, J.|
|Corbett, C. H. (Sussex, E. Grinstead)||Hudson, Walter||Ponsonby, Arthur A. W. H.|
|Cornwall, Sir Edwin A.||Hyde, Clarendon G.||Power, Patrick Joseph|
|Cory, Sir Clifford John||Illingworth, Percy H.||Price, C. E. (Edinburgh, Central)|
|Cotton, Sir H. J. S.||Isaacs, Rufus Daniel||Price, Sir Robert J. (Norfolk, E.)|
|Cowan, W. H.||Jenkins, J.||Priestley, Arthur (Grantham)|
|Crooks, William||Johnson, John (Gateshead)||Priestley, Sir W. E. B. (Bradford, E.)|
|Crossley, William J.||Jones, Leif (Appleby)||Radford, G. H.|
|Davies, David (Montgomery Co.)||Jones, William (Carnarvonsh.)||Raphael, Herbert H.|
|Rea, Rt. Hon. Russell (Gloucester)||Soares, Ernest J.||Warner, Thomas Courtenay T.|
|Rea, Walter Russell (Scarborough)||Stanger, H. Y.||Wason, Rt. Hon. E. (Clackmannan)|
|Richards, T. F. (Wolverhampton, W.)||Stanley, Hon. A. Lyulph (Cheshire)||Wason, John Cathcart (Orkney)|
|Richardson, A.||Steadman, W. C.||Watt, Henry A.|
|Ridsdale, E. A.||Stewart, Halley (Greenock)||Wedgwood, Josiah C.|
|Roberts, Charles H. (Lincoln)||Stewart-Smith, D. (Kendal)||White, Sir George (Norfolk)|
|Roberts, G. H. (Norwich)||Strachey, Sir Edward||White, J. Dundas (Dumbartonshire)|
|Roberts, Sir J. H. (Denbighs.)||Straus, B. S. (Mile End)||White, Sir Luke (York, E. R.)|
|Robertson, Sir G. Scott (Bradford)||Summerbell, T.||White, Patrick (Meath, North)|
|Robinson, S.||Sutherland, J. E.||Whitley, John Henry (Halifax)|
|Robson, Sir William Snowdon||Taylor, John W. (Durham)||Wiles, Thomas|
|Roch, Walter F. (Pembroke)||Taylor, Theodore C. (Radcliffe)||Wilkie, Alexander|
|Rogers, F. E. Newman||Tennant, Sir Edward (Salisbury)||Williams, W. Llewelyn (Carmarthen)|
|Rose, Sir Charles Day||Tennant, H. J. (Berwickshire)||Williamson, Sir A|
|Rowlands, J.||Thomas, Abel (Carmarthen, E.)||Wills, Arthur Walters|
|Runciman, Rt. Hon. Walter||Thomas, Sir A. (Glamorgan, E.)||Wilson, Hon. G. G. (Hull, W.)|
|Samuel, S. M. (Whitechapel)||Thomasson, Franklin||Wilson, Henry J. (York, W. R.)|
|Schwann, Sir C. E. (Manchester)||Thompson, J. W. H. (Somerset, E.)||Wilson, John (Durham, Mid)|
|Scott, A. H. (Ashton-under-Lyne)||Thorne, G. R. (Wolverhampton)||Wilson, J. W. (Worcestershire, N.)|
|Seddon, J.||Tomkinson, James||Wilson, P. W. (St. Pancras, S.)|
|Seely, Colonel||Toulmin, George||Wilson, W. T. (Westhoughton)|
|Shackleton, David James||Trevelyan, Charles Philips||Winfrey, R.|
|Shaw, Sir Charles E. (Stafford)||Ure, Rt. Hon. Alexander||Yoxall, Sir James Henry|
|Silcock, Thomas Ball||Vivian, Henry|
|Simon, John Allsebrook||Walsh, Stephen|
|Smeaton, Donald Mackenzie||Walters, John Tudor||TELLERS FOR THE NOES.—Mr. Joseph Pease and Mr. Herbert Lewis.|
|Smyth, Thomas F. (Leitrim, S.)||Ward, John (Stoke-upon-Trent)|
|Snowden, P.||Wardle, George J.|
Question, "That the House doth agree with the Committee in the said Resolution," put, and agreed to.
I espy strangers. Mr. Lumley, land agent, of St. James's, is occupying a seat under the Gallery, and I ask your ruling whether that is permissible. During the Debate on the alteration of the Chamber it was stated by the First Commissioner of Works that the facilities to be gained by the alteration were for private secretaries and permanent officials of the various offices. Throughout the Debate that was distinctly understood. I should like——
I quite appreciate the point of the hon. Member. I consider that the matter has already been settled. The gentleman to whom the hon. Gentleman refers is an official of the Treasury, and has a right to be under the Gallery.
§ Mr. CLAUDE HAY
May I ask, with all respect, upon what authority you stare that this gentleman is an official of the Treasury?
§ Mr. LLOYD-GEORGE
What I stated was that I thought the appeal of the 1132 Noble Lord that nothing in this clause should prejudice the discussion of the question of appeal, and the conditions under which there should be an appeal, was perfectly fair, and therefore I agreed to the elimination of words which would have prejudiced that discussion later on.
I quite recognise the conciliatory spirit which the Chancellor of the Exchequer showed earlier in the evening on the question of appeal. As I understand it, the Amendment to which reference is now made deals not with the appeal, but with the hearing before what I may call the court of first instance. The Commissioners of Inland Revenue, in dealing with the question of valuation, are bound to hear the persons interested. That is what this Amendment deals with. But that has nothing to do with an appeal to a higher court. Therefore this is rather important, whatever decision the Chancellor of the Exchequer may subsequently come to in regard to establishing an appeal, either to the High Court or to some other tribunal.
§ Mr. LLOYD-GEORGE
The right hon. Gentleman is right, and if I may say so, he is also wrong. There is an appeal to the referees, and also to the court in the second instance.
§ Mr. ALFRED LYTTELTON
It is rather absurd that what my right hon. Friend has called the court of first instance should not hear the parties according to certain definite rules, and that the Court of Appeal should. I judge the reply of the Chancellor of the Exchequer to intimate that he will leave open for our 1133 future consideration whether or not both parties should have the right to be heard in the first instance by the Commissioners, as well as that both parties should also have the right to be heard on appeal.
§ Mr. LLOYD-GEORGE
I should say that that would rather arise under Clause 4. You submit particulars to the Commissioners. That is not a hearing in the ordinary sense, and that is one of the questions to be discussed, whether it is a valuation or an ordinary hearing. On the particulars supplied the Commissioners adjudicate. If the parties are not satisfied they appeal. It is a question of the procedure to be followed; whether there shall be a hearing in the ordinary sense of the term, or purely a valuation.
§ Mr. H. W. FORSTER
We have rather wandered from the point. As I understood it, it was that, in view of the promise given earlier by the Chancellor of the Exchequer, that the House should have the opportunity of a full and free discussion upon the question of appeal.
§ Mr. LLOYD-GEORGE
Certainly. I thought I had made that perfectly clear; and I think it is very important that the question should not be prejudiced by any words incorporated here.
If this Amendment is not moved, will it be open to us at any subsequent period to suggest that in addition to the particulars in writing to be laid before the Commissioners of Inland Revenue, there shall be a hearing, or oral communications, between the parties interested and the Commissioners. That really is the point.
§ Mr. LLOYD-GEORGE
Yes, I quite see the point. It would not, first of all, be a hearing in the ordinary sense of the term; but, if the solicitors representing the parties are not satisfied with the Commissioners' adjudication, there is an appeal. Then arises the question as to whether the hearing at first is to be a hearing in the ordinary sense of the term, or whether it is going to be a valuation purely. That is a question, I think, the Committee should be free to discuss when we arrive at that stage
If the parties desire it, they ought to be heard. That will be the first appeal. There are two questions of appeal.
§ Mr. LYTTELTON
The parties can come before the Commissioners, and then, if they are dissatisfied there will arise the question of the appeal.
§ Mr. LLOYD-GEORGE
It is quite unnecessary to have any words for the purpose of enabling the parties themselves to come in that instance. It is so now in regard to the question of affixing stamps, but the right hon. Gentleman wants to guard the question of appeal, and that is absolutely safeguarded
I presume your ruling refers to my Amendment after ["In each case in respect of"], to leave the words "of any part."
§ Mr. JAMES HOPE
May I ask, on a point of order, in respect of which Amendment of the hon. and gallant Member have you called upon him?
I took it the hon. and gallant Member did not want to move his Amendment to insert the word "shall" after "Commissioners"; he could not discuss it on the question of its being mandatory on the Commissioners. Besides, the Amendment would not have the effect, and, therefore, I took it, he did not want to move it.
I understood, in the first instance, it was out of order, but as it is not out of order, I shall move the Amendment which is to insert the word "shall" after the word "Commissioners." Of course, if the right hon. Gentleman can persuade me that the insertion of this word will not have the effect, I will consider the advisability of withdrawing it. As the clause reads at the present time, it is "Subject to such deduction (if any) as the Commissioners allow." That has the effect, so far as I read it, of giving the Commissioners an option as to whether they allow any deduction at all, and it seems to me we ought to have the word "shall."
§ Mr. JAMES HOPE
I propose to move: After the word "Commissioners" to insert "or the tribunal of appeal as hereinafter provided." I move the Amendment under better auspices than I could have hoped for earlier in the evening, 1135 because I now understand the Chancellor has allowed that there shall be some sort of an appeal to the Commissioners. The words I have sought to put in here would not prejudice the nature of the appeal. It is quite true that on Clause 22 there is an Amendment down in the name of the hon. Member for Basingstoke (Mr. Clavell Salter) and myself, which was intended as a complement to this Amendment, but the words of my hon. Friend's Amendment will leave the nature of the tribunal perfectly open. There is a very general sense of feeling in the Committee that there must be an appeal from the judgment of the Commissioners.
§ Mr. LLOYD-GEORGE
On a point of order, I should like to ask whether this Amendment does not practically raise the same issue as that which we have been debating, and which, I understood, by the common consent of the Committee, was to be postponed to a later stage, the Government having agreed to eliminate any words which would in the slightest degree prejudice the discussion of this very issue. I submit, therefore, that it is completely out of order. At any rate, if we discuss it now, I submit that it cannot be discussed a second time.
I can only take this Amendment now as practically a verbal Amendment. If it is to be moved as a matter of substance, I think it would prejudice the further discussion of this point at a subsequent stage.
§ Mr. JAMES HOPE
Without prejudicing the future discussion, I think the insertion of these words would be a great advantage, because I foresee some difficulties if words of this kind are not inserted. I do not say that they are absolutely necessary as a matter of substance, and I merely move them as a matter of drafting.
If it is a mere matter of drafting, I cannot say that the Amendment is out of order. On the other hand I cannot say that the moving of this Amendment now will not prejudice the whole question at a subsequent stage.
§ Mr. A. J. BALFOUR
I understand that we are agreed on both sides that there should be a fair opportunity of discussing the whole question of appeal without prejudice, and the Government have consented to certain quasi-verbal Amendments with a view to leaving the future 1136 discussion of this question untrammelled. Does the Amendment of my hon. Friend help that course? If so I would suggest that it should be accepted. If it will limit the discussion of this point at a later stage perhaps my hon. Friend will take the view that we had better defer the whole discussion of that point until the subject is taken in its entirety.
I never can feel sure until an Amendment is moved what arguments can legitimately be used. I am afraid if this Amendment were moved at this stage it might prejudice any future discussion. I do not see any object to be gained in moving it now.
§ Question, "That those words stand part of the Clause," put and negatived.
§ Mr. LAURENCE HARDY moved after the word "attributable" ["which is proved to their satisfaction to be attributable"] to insert "to minerals underneath the surface of the land or."
§ In this proposal we at last get to a really tangible Amendment dealing with minerals in connection with the Increment Duty. I do not desire to go through the whole substance of the case, which I made in connection with the Debate which took place on Clause 1 standing part; but I do think we have had some rather valuable information from the Government since that date, and I hope that, in approaching this Amendment, they will be able to give us some definite account of how they intend to apply minerals to this particular duty. I rather understood, from what the learned Attorney-General said at a rather late hour last night, or early this morning, that the Government intended that minerals should be divided into two classes. Where a separate valuation of minerals took place, which I suppose would apply to coal, ironstone, and such classes, the Increment Duty was not to be charged. They would come under the Mineral Eights Duty. Where there was a genuine question whether there were minerals or not under the land, they would be included in the value of the land, and the Increment Duty would therefore be taken upon them. Whether I understood what the hon. and learned Gentleman said, I am afraid, without the Hansard Report, I am not able 1137 to say; but I do think it is very necessary, before we pass from this clause, that we should have some definite explanation given to us as to how they intend to apply this Increment Duty. It does seem to me that by far the simplest thing would be to exclude minerals altogether from this tax; but, however you desire to do it, minerals stand in such an entirely different position from land that you cannot expose them to this tax and to the Ungotten Mineral Tax and to other things without having necessarily a duty doubled upon the same article, and not only upon the same article, which may eventually be gotten under the ground, if it is ever got, but upon an article which in some cases may become non-existent altogether. It should not, therefore, be subject to such a tax as this Increment Tax. I will take the county in which I at present reside. How can anybody say how the Increment Duty is to be applied to the Kent coalfield? We have had a large amount of money spent on the Kent coalfield, and we have had borings made which are said to prove that a number of valuable beds of minerals lay under the Kent coalfield, but no coal has been got. Is it fair, before that Kent coalfield has been proved to exist in a workable fashion, that all the land-owners round that part should be exposed to the extreme difficulty of valuing the minerals under their land, such valuations to be the Domesday Book of minerals for ever afterwards, so that, if anything does occur to bring the minerals into working order, they should always be bound by a valuation taken at a time when it is absolutely impossible for them to give any true valuation at all. I believe, however, that the Government have already seen to some extent the difficulty of this particular duty. In every speech which has been made, in every answer to a question there has been a disinclination to deal with the substance of the question; the inclination has always been to ask for alternatives. They tell us how the site value of minerals is to be arrived at, and how the Increment Duty is to be charged in all the varying circumstances which must arise in connection with minerals. Is it not well known that in no case does a person ever take minerals in the manner suggested? We have had very fair arguments addressed to us which go to prove that this duty is one not upon persons, but upon land, and upon each portion of land in separate occupation. Is it possible you can get any fair valuation of minerals in this manner? When people 1138 take minerals they take a large field with the knowledge that they have to equalise all the different circumstances which must arise. They do not take minerals by the acre or part of an acre, but they average it over a large area, knowing very well that the working of the minerals may be subject to faults. I must ask the Government for some more definite information as to the manner in which they propose to apply this duty on minerals. At present there is a great amount of doubt on the point, and if they have not made up their minds I suggest it would be better for them to accept my Amendment and leave the matter perfectly free to be dealt with when the mineral clauses come up for discussion. Probably by that time the Government will have come to a definite decision as to how they are going to deal with minerals in the future. I beg to move.
§ Sir W. ROBSON
Whatever conclusion the Government may come to with regard to the precise manner in which minerals shall be dealt, the proper occasion will not arise on this Amendment. The hon. Member is proposing that the value of the minerals shall be made a deduction from the site value when the tax comes to be imposed. When we deal with Clauses 15 and 16 we shall of course, go into the question of the capital value of minerals, and to the fact that minerals have to be included in a separate return, and all these are matters very proper for discussion on that clause. We are now dealing with land in the ordinary sense, and we must deal with land in regard to some other value when the occasion arises.
§ Mr. S. ROBERTS
I am very pleased that we are to have another opportunity of trying to find out what is meant by minerals, and the way in which the Government mean to tax minerals. Under this Bill minerals are to be taxed three times, for Increment Duty, Reversion Duty, and then in regard to minerals, and for all these purposes all the minerals of the country have to be valued. How is it going to be done? The Chancellor has never given us the slightest information as to how these valuations are to be carried out. There are large areas where no one knows whether there is coal or not. By the Report of the Royal Commission of 1905 the Midland coalfield, that is to say the coalfield of the East of Yorkshire, Nottinghamshire, and Derbyshire, has been extended to a tremendous area, and the Commissioners 1139 find that in the county of Lincoln alone there are 1,750 square miles where they believe that minerals exist, but they cannot say what those minerals are, because they have not been proved. Certain boreholes have been put down, but it is quite impossible to tell from the small amount of testing that there has been whether minerals are under this land or not. Under this Bill each little plot, each field is to be valued, and, not only that, there is to be a separate valuation for minerals alone in order that they may be separately taxed. The Chancellor received a deputation from the mining association, on which I had the honour to be, with great courtesy, and he asserted that it was not his intention in any way to tax the coal industry. What he was aiming at, in popular language, was to tax the mineral owner, to tax his royalty, and he said he was quite prepared to accept an alternative proposal. It is not for us to give an alternative proposal. It is for the Chancellor of the Exchequer himself to submit his proposals. The right hon. Gentleman admitted to that deputation that he thought an alternative might be arrived at by taxing the output of coal. If it is to be taxed at all that is the only way of doing it, We object entirely to this industry, which is the raw material of all the industries of the country, being taxed further in any way. It has already to pay Income Tax and local rates, and very heavy charges have been placed upon it by the working of the Compensation Acts. It has been said that coal has been held up. That is not true. Owners of minerals are only too anxious that they should be developed, and if it is the object of the Chancellor of the Exchequer to make the mineral owner develop his coal fields he is on the wrong tack.
With regard to these valuations, it is all uncertainty and guesswork except where the coal is being worked. I have an instance in mind where a large colliery is sinking a pit. There are no end of owners, and each of them is going to be taxed before he can draw any money, and many of these will have to wait perhaps 50 or 60 years until they get any royalty at all. There really is a case for consideration, and if the Chancellor of the Exchequer will consent to postpone the question of the Increment Duty until we arrive at the Mineral Rights Duty he would probably find a solution. I hope he will give us a clear explanation of what he means by 1140 Increment Duty on minerals, and what he means by minerals. We ought to have a list of what would be included.
Mr. F. A. NEWDEGATE
When the mention of minerals was first introduced some hon. Member said something like 1s. or 1s. 6d. a ton was paid as royalty on minerals. I want to disabuse the Committee on that. Possibly in some parts of England it may be paid, but in the part of England which I come from the lowest royalty is 2½d. a ton and the highest is 5½d. a ton.
If you want to catch the people fairly who obtain the royalties, I would urge the Chancellor of the Exchequer to restrain the excessive nature of the taxation. I want to point out certain cases of hardship. There are some in the county I come from in connection with undeveloped coalfields. I know of an estate in which boreholes have been sunk and coal has been found of good quality at a depth of 800 yards. It is impossible for the owner at present to let the coal because of the depth. In that particular neighbourhood a depth of 800 yards is prohibitive, and yet under the Bill if the owner were to die his successor would have to pay owing to the fact that coal has been found on the estate. There is no doubt whatever that some day, from twenty to fifty years hence, the coal will be worked. That would add increment value to the estate. I venture to say that it is hard that this estate should be mulcted because coal has been found. I would direct the attention of the Chancellor of the Exchequer to how hard the tax will fall on small owners of land. The county of Warwick is made up of a few large estates and a great many small estates. When a person has managed to save a little money it has always been the practice in that county to invest it in two or three fields. We have in our midst a mineral estate which is made up of a very large number of small holdings. I venture to say that as regards these small holdings that the charging of Increment Duty on the separate plots of land would be to place a real hardship on them.
As regards the Bill as a whole I would say that the method of valuing minerals seems to be extremely bad and unsatisfactory. Hitherto, in connection with the Death Duties, in a rough way the value of minerals has been discovered by calculating the value of royalties over a certain number of years. Under this Bill you propose to levy a tax on undeveloped 1141 minerals if you can find what is underground, but there are risks of all sorts, such as faults and wash outs and water and the thousand and one things which mining engineers have to contend with. I was glad the Chancellor of the Exchequer gave an assurance last night that he was prepared to consider, not only the question of increment as regards minerals, but also the question of decrement. I understood the right hon. Gentleman to say that if duty has been paid on minerals which do not exist the person who has paid will receive an allowance in respect of such payment. Did I misunderstand the Chancellor of the Exchequer?
§ Mr. LLOYD-GEORGE
I did say last night that supposing there was a lease of minerals, it being supposed at the time that they were used, and that it was discovered in the course of two or three years that the minerals were not workable, there are provisions in the Bill which meet a case of that kind, and I made a promise to the hon. Member for Brighton (Mr. Ridsdale), that in a case of that kind it will be made perfecly clear that the rest of the charge would not be imposed.
That shows how badly a layman like myself dealing with these complicated questions expresses himself, because I understood that the point I put before the hon. Gentleman was supposing something goes wrong with the minerals the unfortunate owner is to be given an allowance? At all events, we would like to understand clearly on this side of the House that an allowance is to be given. It seems to me a great hardship if, as often happens, a person was to purchase 1,000 acres of land at, say, £30 an acre. Owing to minerals proved to exist in the neighbourhood the Commissioners might declare that the value of the land had risen from £30,000 to £100,000. As the Bill stands, if the purchaser of the land was to sell the land before he died he would have to pay Increment Value at the rate of £100,000, although he may never have worked the minerals, because the minerals were known to exist. That seems to me to be another point which ought to be looked into before this Bill becomes law. Then supposing the owner of these minerals where they are proved, leases the minerals he has to pay for doing so, on the supposition that these minerals are worth £100,000, a tax to the State of £20,000 for unseen minerals. Then, supposing having done so in the next year the owner 1142 dies, in that case it appears to me his estate will have to pay another sum of £20,000. So it is quite possible that £40,000 will be paid in respect of these minerals, which are worth £100,000, before any money at all had been got from the development of these minerals. That seems to me to appear in the Bill as it stands at present. Then another point is the great difficulty of valuing the capital value of minerals for taxation. You may possibly arrive at the value of the minerals and may tax the owner up to a certain point which the Commissioners may consider right. But I happen to know of a case in which there is coal which is valued in one place at 5½d. a ton royalty, in another place at 4d. a ton royalty, and in another place at 2½d. a ton royalty. The coal is exactly the same value and adjoining, and before capitalising it to pay its Increment Duty you could not make the coal in this radius of different value. Yet in one case the royalty owner only gets 2½d. a ton, in the other case 4d., and in the other case 5d. a ton, but according to this Bill, if he was to die without entering into a lease—it is extremely difficult to state a complicated case like this when the Chancellor of the Exchequer, in charge of the Bill, and the Prime Minister, carry on a conversation when I am trying to put certain questions. The Prime Minister and the Chancellor of the Exchequer are in charge of the affairs of the Government, and all we can do on this side of the House, if we consider an injustice is done, is to bring certain definite cases before them. It is a little hard, especially, as in my case, when one speaks very seldom—I was ten years in the House and scarcely lifted up my voice—that one should not receive attention when one is dealing with what we consider an extreme hardship. I have a definite case given by a distinguished mining engineer in the Midlands, who makes the following statement:I have the management of an estate in which we have bored and proved the coal, and from the condition of trade and our position in the coalfield, where there are other minerals nearer the surface and more accessible to the market, it will be probably ten years at least before we can find a lessee to take our mines. Consequently, in the present value for this tax, the annuity value to be derived from them for, say, 20 years must be deferred 10 years, so that, assuming figures and periods, a long way under the mark, to illustrate the matter, the revenue or annuity of £1,000 per annum, for 20 years, deferred 10 years, valued upon the Somerset House basis for Death Duties on the 10 per cent. tables for mining risks, would be £2,810. At the end of the 10 years, supposing we lease the mines, the £1,000 per annum will be immediately expectant, and under this Bill it looks as if the unjust advantage of claiming Increment Duty would be 1143 exercised, when the valuation would come out at £7,290, and the fallacious increment at £4,480, in which case the State would be depriving the owner of £896, the one-fifth. There are thousands of instances of this kind.I will not weary the House by reading further passages, but I think it might be well for the Chancellor of the Exchequer to look into that passage which I have quoted. I want to go into the case of pillars of coal left in many parts of England. Are they to be taxed? Pillars of coal are left to prevent houses from falling; they are left under docks, railways, reservoirs and canals, and especially at the boundaries of collieries. Is this coal, which is not got, to be taxed, or will the Chancellor of the Exchequer put a clause in the Bill?
The hon. Member seems to me to be referring to ungotten minerals. This is a question of the increment value of minerals.
With all deference, suppose the case of an estate on which a person dies. The point which I venture to make, with all deference to your ruling, is this, supposing a person who owns an estate dies, and under his house or any section of his estate a quantity of coal is left, his heirs will have to pay Increment Duty according to this Bill on that coal. I think possibly I may have been in order in mentioning that matter.
The hon. Gentleman was speaking of ungotten minerals. If he puts it forward as a serious argument that those pillars will be taxed for increment value, that is an argument he can make.
That is what I was trying to argue. If the Chancellor of the Exchequer will at once say no Increment Duty will be charged in such cases then this argument falls to the ground and I will not discuss it any more. It is well-known that minerals are of no value at all until they are proved and brought up to the surface. Under the Houses of Parliament, where we are now sitting, there may be a most magnificent seam of coal, and in all this neighbourhood; but it is of absolutely no value until it is brought to the surface. It seems to me that in the case of a large estate those minerals may be valued at £100,000, and that a sum of £250,000 may be spent in sinking and developing those collieries. That gives a sum of £350,000. According to this Bill, it seems to me that the 1144 unfortunate owner, although he may lease the coal and get a very small royalty, will have to pay Increment Duty on the £350,000. And if the colliery was paying a revenue of £50,000 a year to the colliery company the valuation by the Commissioners might bring up the sum of £500,000 on which the owner would have to pay increment of £100,000, although his interest would hardly be worth that sum. This is another hard case which ought to be looked into by the Chancellor of the Exchequer and by those Gentlemen who are in charge of this Bill. I can only say, with all the seriousness I can command, that if these taxes are intended as regards minerals the effect will be that people in this country, instead of doing their best to develop the minerals, will do their utmost to conceal the fact that minerals may exist under the land which they possess, because they will know that if they develop the minerals, or if they let the Commissioners know that minerals exist they will, under this Bill, be mulcted to an extent that it will hardly pay them to work them.
§ The PRIME MINISTER
I can assure the hon. Member opposite (Mr. Newdegate)—and that is the reason I have risen—that there was no intention of discourtesy in what passed between the Chancellor of the Exchequer and myself; we were really listening closely to his argument and simply exchanging ideas as to the best way in which to meet it. I have observed from the reports in the newspapers that some remarks have been made by various speakers, including the Leader of the Opposition himself, commenting, I will not say with severity, upon my absence from the proceedings of this Committee. I am sure the House knows me too well to believe that I should be guilty of any disrespect to the House. I entertain the very strongest opinion, founded now upon a long experience of the proceedings of this House, that for a Minister or even an ordinary private Member to intervene spasmodically in technical complex discussions upon a Bill in Committee, without having been able to give close and continuous attendance to the proceedings, leads to waste of time, friction, inconvenience, and general misunderstanding. The Committee will believe me when I say that, particularly at this moment, with the various duties which lie upon me, I am not able, with the best wish in the world, to give that 1145 close and continuous attendance. It is for that reason that I have refrained from taking part in these debates. My right hon. Friend the Chancellor of the Exchequer and I are in constant consultation on all the important points in the Bill, and I leave it with the utmost confidence to him, the Minister of Finance, and the person primarily responsible for the Bill, to conduct it through Committee. I trust the Committee will accept that assurance of mine that it is for this reason, and this reason alone, that I have not been more constantly in attendance and more frequently intervening in the Debates.
In regard to this particular Amendment, while I listened with great interest to the speech of the hon. Member (Mr. Newdegate), I must profess my complete inability to understand what relevance it has to the point now before the Committee. I agree that the point he put forward ought to be, and will be, considered when we come to deal with the mineral clauses. The only point raised by the Amendment is whether, in what I may call the second site value—the site value when the Increment Duty falls and has to be paid—you ought to deduct the minerals from the value of the land. If you do it in one case you surely must do it in the other. If the minerals have been included in the original valuation, it is obviously unfair that they should be excluded from the second valuation. As I read Clause 1, which uses the word "land"—and land, as everybody knows, is a comprehensive term, which includes everything, unless it is specially excepted, that is naturally or artificially inherent in the soil—I read the word "land" as including minerals, and if it includes minerals in the original site value it must surely include it in the latter. It is quite true that sub-section 2 of Clause 16 says: "Where land comprises minerals, a separate return shall be made under this section of the value of the minerals." That clearly contemplates this: that if in the original site value these minerals have been excepted they may be equally, and of necessity, excepted from the second site value. Therefore what is the necessity for this Amendment? If carried, this Amendment would have the extraordinary, and I think absurd consequence, that although minerals have been included in the original site value, yet when you come to compare the second valuation with the first, you would exclude what might be just the 1146 element in its value that is the real source of increment, namely, the minerals under the land. Whatever course therefore may or may not be adopted in the various cases of hardships, it is abundantly clear that we cannot possibly accept this Amendment.
§ Mr. A. J. BALFOUR
The right hon. Gentleman's observations require qualifications as to my comments upon his absence in the course of these Debates. It is quite true that I did, in the Debate in which I recalled the particular utterance outside the House, point out and showed to my own entire satisfaction, at all events, that the official statements of the Government inside and the statements outside the House were quite inconsistent with each other. The Committee will probably admit that under the circumstances I am rather justified in saying that the Prime Minister is perhaps more free with his comments on the Bill outside than inside the House. But, if I may say so, while the Prime Minister, I think, may give us his valuable assistance when big principles come up at stated intervals under this Bill, I do agree, speaking from a long experience, that there cannot be two people in charge of the Bill. To that broad principle I assent. I hope I have said nothing inconsistent with that either last night or on any other occasion. The Prime Minister has replied. The Prime Minister must remember that we have not yet discussed, or been allowed to discuss, whether minerals are, or are not to be included in the original site value. The issue is that the word "land" in Clause 1 minerals are ipso facto included. I am told by a right hon. and learned Friend near me that that is not only contrary to ordinary usage but contrary to the settled law of the land, and that land, for instance, when compulsorily taken for a railway company does not include minerals. I am not going to intervene further in the collision which I perceive imminent between high legal authorities on all sides of the House, but speaking as a layman, and in no way endeavouring to interpret what the Courts call land and what they do not call land, I can assure the Prime Minister we have not been allowed to determine whether or not in the original site value minerals are to be included or not, and if the Prime Minister will look at Clauses 1 and 2 up to the point at which we have arrived he will see the word minerals does not yet occur. It is perfectly true we are engaged 1147 in discussing the occasion of the second or occasional valuation. The reason of that is that the first or original valuation does not come on for detailed discussion until Clause 14, and we really have had no alternative. I agree it seems to be useless to discuss the omission of minerals in the second valuation until you have discovered whether or not it has formed part of the first. But we have not been allowed to discuss the first valuation and shall not be allowed until we come to Clause 14. Therefore, I think the Prime Minister and the Chancellor of the Exchequer will see that my hon. Friends had no alternative whatever but to raise, upon this occasion, the question whether we shall or shall not include minerals on any valuation either first or second. That, I think, is not an exhaustive treatment of the subject raised by my hon. Friend, but it is I hope a complete and adequate reply to the observations made by the Prime Minister, who shows conclusively he has not fully appreciated the order in which we have presented to us the various topics in this extremely complicated Budget.
§ Mr. IVOR GUEST
In connection with a similar subject which I brought to the attention of my right hon. Friend, he said he would be prepared to consider an alternative tax in Clause 12 for the halfpenny there proposed. The ground upon which I ventured to draw the right hon. Gentleman's attention to the alternative proposal was the difficulty of estimating the value of the ungotten minerals, and I think it was upon that ground that he answered the question I put. My point is this: if there is a difficulty in estimating the value of ungotten minerals in the annual tax, there surely is equal difficulty in valuing the increment on ungotten minerals under the present clause. It seems to me that the two points stand together. If there is great difficulty in determining what the increment of the annual value is there must be equal difficulty in determining what the increment is upon the occasion of the death of the owner of the minerals. I should like to ask whether, in view of the proposed change of front in regard to increment of minerals, it would not be more convenient to omit minerals altogether from the valuation, both on the first fixing of site value, and also on the second. I submit it is quite a different point from increment on land which can be always estimated and determined. I think it can, and I do not 1148 think there is any difficulty in estimating the increment on land. When, however, you come to ungotten minerals then I think we get into regions of very great difficulty. I think it would be better to disentangle this question and adopt a better scheme of taxing receipts. If the Government accede to that view it would be politic to accept this Amendment, and also accept a similar proposal on Clause 4, which would cut out minerals from the increment liable to taxation. We should then disentangle the two subjects, and we should be able to deal with them in a more satisfactory manner.
§ Lord BALCARRES
I think the Government are under some obligation to explain how they mean to arrive at the increment value. Can they now give us a definition of the Government proposal? The Attorney-General stated categorically that he saw no difficulty in arriving at the valuation for the purposes of the Increment Duty. All I can say is that people who have spent long lives successfully in looking after minerals are absolutely puzzled as to how this increment value is going to be determined. I will give in a sentence or two some of the difficulties. Take a purely arable farm in Lincolnshire sold or transferred at any date after the specified date in the Bill for the original valuation. You have got somehow or other to determine the value of the minerals for the purposes of the Increment Duty. We assume, geologically speaking, that the minerals are there, and that there is good reason for believing that they are there. Everybody knows that this great coalfield is only at this moment being developed, and you have to arrive at some decision without having any accurate data to work upon. Take a much simpler case of a mine where we know that the minerals are there, and you have to arrive at the Increment Duty. I do not know how you are going to arrive at it, because it is not defined in the clause. This clause deals primarily with the surface of the land, and so far as Increment Duty is concerned it would really appear that the Increment Duty is an after thought. How are you going to arrive at it? If you take a year when there is a coal boom the price of the mineral that year may be 40, 50 or 60 per cent. above the price of the year before or the year after. The difficulties of ascertaining the value of ungotten minerals for the purposes of this tax are indeed very great, but in one sense they are not so great as the difficulties to be 1149 encountered in regard to the Increment Tax. Take the case of a big mine in Lancashire in which there are minerals under 80 different freeholds. Now, whenever there is a death or a reversion, or if the colliery were to become a limited liability company, the Increment Duty would be raised on each one of those 80 freeholds. The Attorney-General dismissed this airily and in a genial speech of just two minutes, but I assure him in all sincerity that this is a subject which is troubling the minds of professional men who have been occupied in dealing with colliery business years and years. Take a very natural difficulty which would occur at once. There is a great pit which has got to be taken for minerals under 80 different freeholds. Perhaps some of them will not be approached for thirty years. Each time a death occurs or when the company is made into a limited liability company, there would be an increment and gradually by your 20 per cent. tax you might take away the greater part of the profits of that mineral.
It is not the fault of the freeholder or of the proprietor that the field is not worked. These things cannot be rushed into the market. When making his Budget speech, the Chancellor of the Exchequer talked about undeveloped land, and he painted rather a lurid picture of the dreadful conditions under which people lived because of capricious landowners holding up land. His next sentence was that on similar principles he proposed to tax minerals. There is a profound fallacy underlying that land, the right hon. Gentleman says is held up. It may be held up in a few cases. There are 1,200,000 freehold owners of land in this country, and it is a very small proportion who hold up land. What about the minerals on which he is going to put the tax? It is a great mistake to suppose minerals are held up for nefarious purposes. Minerals are certainly held up for good objects. It is absolutely necessary that at the foot of every shaft thousands of tons should be held up for the maintenance of the shaft, and that has got an Increment Value. It is the last bit of coal to be worked, and at the end of the lease it has an Increment Value. Coal is also held up for the purposes of reservoirs, railways, canals, and different things, and it is just as good as the coal which is being worked in a normal way. Subject to the discretion of the Commissioners, that coal has got a market value. It could be worked, but it would be most unwise, for it might be disastrous to the whole coal 1150 field. The question I should like to ask the right hon. Gentleman now, I have asked frequently, and always without success, his colleague the Financial Secretary. We are, by this Amendment, trying to exclude minerals from the Increment Duty, and by refusing to accept it the Government make themselves responsible for including minerals. I beg to ask the Chancellor of the Exchequer what minerals are? We have asked this question in various forms, but the only satisfaction we have received up till now is that peat is not going to be considered as a mineral.
We were told by the Financial Secretary to the Treasury it would confuse matters to say what is going to be taxed under Clause 1 of the Finance Bill. I asked what was the definition of minerals upon which the Increment Tax was to be levied. Was not that a plain question which the Government might well be called upon to answer? I want to know is marble, is fire clay, is shale, is slate a mineral? Coal and ironstone we know are staple minerals. Let the Government tell us what other minerals are going to be made subject to this Duty. Why do they refuse to tell us? They say it may lead to confusion ! But surely the confusion cannot be anything like so great as that which now exists in the minds, say, of the landowners of Cheshire, under whose land salt or brine is universal. There is not a man in Cheshire who can tell whether the subsoil of his property contains brine or salt, which is going to be taxed under this clause. In answer to one of our questions we were referred to the Carpalla case, and then when we inquired if the decision in that case was to be accepted by the Government as defining minerals, the Secretary of the Treasury simply replied: "How very interesting indeed." We could get no definition, however, of the word "minerals" under this clause. In view of the fact that Reversion Duty, Increment Duty and Ungotten Minerals Duty must be determined in relation to the articles upon which the charge is to be levied by the State, we say it is the absolute duty of the Government to make up their minds at once what are the minerals which are to be subject to this tax. Let us have a schedule. It is not merely unfair to the House to keep back this information, but it is unfair to the people who own what may or may not be minerals and who cannot tell whether or not they are going to be taxed. Salt is a very obvious case in point. Then there are mineral oils and mineral 1151 waters. The waters of Harrogate, Bath, and Cheltenham must all be taxed, and it is the duty of the Government to let us know what is going to be done, and up to the present I can assure the Prime Minister we have had no serious answer to the very serious questions which have been put upon a very important subject.
§ Mr. GEORGE CAVE
The reasons given to us for not answering the questions put are really not sufficient. My hon. Friend has put forward a perfectly clear case, and said deal separately with surface and minerals. If by communal process value is added to the land the action only affects the value of the surface, but when increased value is due to mines it is not owing to local or communal action, but to some much wider reason, and because a demand springs up not in the locality but in the whole world for a particular mineral. Therefore, while an increase of the site value may be due to the community, the price of minerals is not a local price, but a world price, and therefore the hon. Member says deal separately with surface and minerals, and exclude minerals altogether from Clause 14, which deals with surface site value, and Clause 2, which deals with taxable site value. Two reasons are given to us for not giving an answer. First we have the reason of the Attorney-General, who says if you exclude minerals from taxable site value you ought to exclude them from original site value, and he says in Clause 14 the minerals are included, and therefore we cannot discuss the exclusion of minerals on Clause 2. The answer to that is really too obvious. We have not reached Clause 14. When we do my hon. Friend will propose that the minerals which are shut out from Clause 2 shall be shut out from Clause 14 also. They must be shut out from both, but we must raise the point on the first clause in which the point can be raised. That disposes of the Attorney-General's reason for postponement. Then we had a reason from the Prime Minister. He says: "We cannot deal with an Amendment on Clause 2 because land in Clause 1 includes minerals." In fact, in his view, the question is already dealt with. There are two answers to that, one is that the point was raised on Clause 1, and we were told, "No, raise it on Clause 2"; and if I may say so, we were told that perfectly correctly, because in Clause 2 you are defining the meaning of increment value in Clause 1. All we have done so far is to say that the duty shall be levied 1152 upon the increment value of land. Now in this clause we are defining the meaning of the term the increment value of the land. It is defined by reference to site value. The proposal now before the Committee is to exclude from that artificial term, site value, the minerals under land—a perfectly reasonable proposal and quite consistent with Clause 1 as already passed. That is an answer to the Prime Minister's reason for not dealing with the matter now. We really ought to know what the view of the Government is on the merits of the question. We ought to be let into the secret hitherto religiously kept as to whether they agree with the principle of the Amendment or not, and whether they think increment value duty ought to be levied on the minerals as well as on the surface of the land. The value of the surface is affected by local conditions and the value of the minerals is not. Therefore if you are right in levying Increment Value Duty on the surface, it does not follow that you are right in levying it on minerals.
§ Mr. LAMBTON
It is quite obvious that the Government have never thought out the question. The Commissioners are directed to make deductions in certain cases, but there is no mention whatever of rights in regard to minerals or mineral leases. That shows that it was in the mind of the Government that they would not have to deal with minerals until they came to Clause 12 or 14, and that the Increment Tax would be on land only. Now, having hurried Clause 1 through, they find minerals are included, and they have made no reasonable deductions for minerals. But we have never had a definition of minerals. May I ask the Prime Minister if he would define minerals as windfalls? If not, according to his speech last week, I maintain that these minerals do not come under Increment Duty at all. In his speech at Newport he laid down that increment value was to be charged upon any increment which came through the efforts of the community, but he will not maintain that the community made minerals. The right hon. Gentleman also said these taxes were justified, because there were a large number of persons who held up land and did not sell it. But that reasoning does not hold good with regard to minerals at all. I defy anyone to point to any part of the country where minerals are held up. Take the case of an area of coal, which is let to a colliery with perhaps 80 holders. Each one, when a new lease 1153 is made, has to return the value of his lease. I presume any increase of value would be increment, and the increment value would have to be capitalised. Perhaps 30 or 40 of the holders never have their coal worked at all. They would pay their increment, but would never bring their coal to the surface. How are they going to get back the increment they have paid? The colliery owner works one corner or the other, and one gets his coal worked and the other does not. And yet they are both charged the same Increment Duty. I am pointing out a simple fact. I think these minerals ought to be exempted from the general provisions in regard to the leasing of land. The lease of a coalfield may apply to coal which is not to be worked during the next 50 years, and yet at the beginning of the lease the Increment Duty is to be charged. It is a perfectly impossible situation. Not only will the Increment Duty be paid at the beginning of the lease, but during the running of the lease there will also have to be paid the halfpenny tax. It will be charged not only on the original site value, but on the increment.
§ Mr. BALFOUR
I wish to point this out to the Prime Minister and the Chancellor of the Exchequer. It must be admitted that the subject raised on my hon. Friend's Amendment is one of the most important that can be raised. It touches very large and very varied interests. It raises questions of the utmost difficulty, delicacy and complexity. I am by no means anxious to discuss it at this time of night (12.10 a.m.). The interests involved are so great that there really ought to be some better opportunity for stating what are the views held on this side of the House, and of hearing what are the views of the Government. If the Government take the view that this is not the proper place to raise these great questions, what, in their opinion, is the proper place? This is the first occasion on which we have been able to discuss how these mineral values are to be taken into account for the purpose of duty. If these questions are not discussed now, the Chairman may get up at a later stage and say that we have decided on Clause 2 that minerals are to be taxed, and that we cannot go back to the discussion of the proposal. I do not imagine that my hon. Friends care when it is discussed, provided that it can be raised at a convenient hour and without prejudice to the whole area of the question. I am quite sure that 1154 the Government must feel that elaborate and detailed comments on the proposal in the Bill have been made by my hon. Friends. They have not attempted to reply to those comments.
§ Mr. BALFOUR
The Amendment does raise this question. At any rate, the Chairman has not suggested that it is out of order to discuss the question now. I assure the right hon. Gentleman that we do not want to press it at this hour, but what we do honestly want as soon as possible is a declaration of the policy of the Government on this all-important question and a real attempt to grapple in detail with the comments which have been made. It is a substantial question, and considering that Great Britain is becoming more and more a great manufacturing country dependent on her coal supplies, I think everybody will agree that we must have the assistance of the Government in dealing with this question. It is in no captious spirit that I ask: When are the Government going to give us an opportunity for discussion? My hon. Friends who have spoken are intimately acquainted with the industry of which they speak, and so far there has really not been any attempt on the part of the Government to deal with the difficulties which have been laid before the Committee.
§ Mr. LLOYD-GEORGE
This is a question which obviously ought to be debated, and debated under conditions which will enable the Opposition to raise the question whether minerals should be subject to any Increment Duty, and also whether they should be subject to other taxes. There are several questions raised, some of them at the tail of Clause 12, and some which could have been raised on Clause 1. Who is to blame for these not being raised on Clause 1 I would rather not say at the present moment. But the right hon. Gentleman (Mr. Balfour) says how is it to be raised in future? Take the question raised by the Noble Lord. That is a question preliminary to the consideration of the Increment Duty. What is a mineral, to begin with? Does he deny that in discussing the whole of that question we are bound to do it in Clause 12? Then, when you come on to Clauses 14, 15, and 16, they raise the whole question of minerals in reference, not merely to occasional valuations, but Increment Duty as well. Then take the question raised by the hon Member for Warwick (Mr. Newdegate). That 1155 undoubtedly has got to be considered. I think it is covered already, but if not I propose to make it perfectly clear. Railways and canals, I agree, should not be charged, but they could not be considered on this Amendment. With the best wish in the world, the Government could not make any concession at this stage. That is a question which has got to be considered either in the form of separate clauses or as an Amendment to the valuation clauses. There are questions as to which the Government themselves will put down special Amendments dealing with them. It would be quite impossible on this Amendment to discuss all the issues that have been raised. Certainly we could not raise the question that has been referred to by the right hon. Gentleman with regard to the Increment Duty on minerals.
§ Mr. BALFOUR
Suppose we do not discuss on this clause whether the increment value of minerals should be included when you come to discuss the occasional valuation of land which is the subject-matter of this clause. Can we ever go back if once it be admitted that minerals are to be included? Can we ever reverse that decision, and, if so, at what stage?
§ Mr. LLOYD-GEORGE
Before the Chairman replies we have got to consider minerals, not in reference to deductions, but in reference to original value. Otherwise it would be quite impossible to discuss them. One of the difficulties in discussing it here is we are discussing it purely in reference to deductions and not in reference to original value. I submit that it would be competent to discuss It on Clauses 14, 15, and 16.
§ Lord BALCARRES
May I ask a question as to the definition of minerals? The Chancellor of the Exchequer has just informed us that Clause 12 is the place where the definition of minerals must arise. I submit that we cannot offer to leave out the word minerals, because that would make nonsense of the text, and we cannot move to leave out that portion of the section, because, according to your recent ruling, that would leave the rest of the section inoperative. Unless it is made a general debate, which may range over the whole question of mineral duties, we shall never be able to get a concrete definition—which the Government apparently wishes to avoid—of the term "minerals."
Several points of order have been raised. With reference to that of the Noble Lord, I really cannot answer the question as to sub-section 1. If sub-section I does involve the whole clause I could not allow that to be moved out, but I have not had time to examine the case. If one sub-section is independent of the other, or practically independent, sub-section I can be moved out. In regard to the question, what are minerals, an Amendment can be moved leaving out the word "minerals" and inserting certain specific minerals. The particular point could be raised in that way.
§ Lord ROBERT CECIL
The question whether Increment Duty is to be charged on minerals is, of course, distinct from the question of whether there shall be a duty on undeveloped minerals. The two are quite distinct, and depend on different considerations. Therefore the discussion of Clause 12 would evidently not enable us to raise any question adequately dealing with Increment Value Duty, as that clause deals with undeveloped minerals. As to Clause 14, the difficulty, I submit, is this: Supposing exceptions were inserted in Clause 14, excluded minerals under that clause would be obviously, by the elementary rules of construction in Clause 2, and the result would be that you would exclude minerals from the original site value, while you include them in increment site value, which would be an absurd result, and evidently could not be discussed on Clause 14. As to Clauses 15 and 16, they refer not only to Increment Value Duty, but to all three duties, and a discussion cannot take place. I submit very respectfully, on Clauses 15 and 16, as to whether minerals should be included in the Increment Value Duty. This is very important, both on the ground of practical difficulties, and also on the whole question of the theory of the tax. Minerals rest on a wholly different footing from the land, and I submit the only place on which the point as to minerals can be discussed is on Clause 2.
I do not see at present very clearly how the question of increment value on minerals can be raised other than at or about this point. It is possible that it might be raised in some other form if this Amendment were by general leave withdrawn.
§ The PRIME MINISTER
Let me make a suggestion. It is that the question could be properly and appropriately raised on the second sub-section of Clause 14.
1157 Let me point out the prefatory words of Clause 2, which provide "For the purposes of this part of this Act the increment value of any land shall be deemed to be the amount (if any) by which the site value of the land, on the occasion on which Increment Value Duty becomes due, exceeds the original site value of the land." Therefore you have got to find out somewhere else in the Act what the original site value of the land is, and, amongst other things, whether it includes minerals. In Clause 14, sub-section (2), that term is defined: "For the purposes of this part of this Act the site value of land means the amount which the fee simple of the land…might be expected to realise if the land were divested of any buildings…and of all growing timber, fruit trees, fruit bushes, and other things growing thereon." I submit it would be open to any hon. Gentleman to move to include minerals in the things which would be excluded from section (2) of Clause 14.
§ The PRIME MINISTER
I agree, but, at any rate, it could apply to either one of the three. Attention has been called to the fifth section of Clause 14, which says: "The provisions of this section are not applicable for the purpose of the valuation of minerals." I do not think that has any effect whatever on section (2). I think it refers to section (4). We will be able to deal with section 2 before we come to section (5), and the question whether for the purposes of Increment Duty or the other two duties, minerals should or should not be included.
§ Mr. PRETYMAN
I do not think the Prime Minister has quite realised that site value as denned is two totally different things in Clause 14 and in Clause 2, and that the words "site value" have not the same signification in Clause 2 as in Clause 14. If in the manner suggested you define site value in Clause 14 as excluding minerals, that does not debar you in any way from holding that in Clause 2 minerals would not be excluded. Section (2) states: "The site value of the land on the occasion on which Increment Value Duty becomes due shall be taken to be." What the site value would be taken to be by that section is quite different from what it is established as being for original site value purposes in Clause 14.
A question has been put on a point of order. I think it is quite clear that sub-section (2) of Clause 2 refers only to site value of the land on the occasion on which increment value duty becomes due, or what the Leader of the Opposition called, the occasion at site value. Sub-section (2) of Clause 14 does, I suppose, from what has been said, refer to the original site value. I am not at all sure, and I really could not bind myself to say that the question of the Increment Tax on minerals could be dealt with on Clause 14. I may point out that not infrequently a Bill is altered in Committee, with a promise of consequential alterations on Report. If this Amendment is withdrawn by general consent, I am not quite sure how far the question can be raised on Clause 14, sub-section (2). These discussions are so complicated that I cannot, with the best will in the world, say without examination what can and what cannot be done.
§ Mr. BALFOUR
I do not rise to suggest that we should report Progress, and so prevent further proceeding. Without any evil intention, we are obliged to put to the Chairman questions of very great difficulty, simply because of the drafting of the Bill. I do not criticise the draftsman or the Government; but everybody knows that the Bill is one of extraordinary complexity, and we have to put questions which the Chairman cannot answer off hand. How are we to get out of the present difficulty? The Chairman evidently thinks that this is the only place where he is quite sure we have the right to raise this point. Personally, I do not think that this is an hour at which any really important question can be debated with advantage; I would rather have it raised at a more convenient hour; but I could not—and I think I speak for my friends as well—consent to our losing what may prove to be the only opportunity, inconvenient as it is, of discussing one of the greatest and gravest problems raised by the first portion of the Bill. Under these circumstances, I should hope the Government would consent to our proceedings being now concluded for to-night; or, if not, that they will endeavour to deal with the big problems which have been raised.
§ Mr. LLOYD-GEORGE
I think the Amendment to be moved by the Attorney-General immediately after this will enable the Opposition to raise the whole issue on Clause 14. The Attorney-General pro- 1159 poses to add after "structure" the words "or other things." That means that there will be a deduction in calculating the increment of all the things of which the land can be divested for the purpose of ascertaining the original site value. When we come to Clause 14, we divest the land of trees, bushes, and buildings. All you have to do is to add the word "minerals." Assume that the Committee adopt that Amendment, what would happen? The words "or other things" in Clause 2 would cover minerals for the purpose of increment value. If the word "minerals" is moved in Clause 14, the words "or other things" here would cover both. Therefore, I submit that the question could be raised then.
On the point of order, if the Amendment is withdrawn now I am not quite sure how far the question of minerals can be raised on a subsequent section.
§ Lord ROBERT CECIL
I do not think the Chancellor of the Exchequer has really grasped the difficulty that we on this side feel very much. The Amendment he suggests would have the effect of striking minerals out of three land taxes. That may or may not be a proper course, but it would have to be defended by totally different arguments, and raises a totally different point to striking the minerals out of the increment taxes at all. It is really a serious point, and I do ask the Chancellor of the Exchequer to try and realise it. It is that we wish for a discussion on the question as to whether minerals should be excluded in the Increment Value Duty. His suggestion would not enable us to raise that question, and that question only. I would ask as to whether this Amendment is regarded by the Chairman as in order, because I never heard of a proposal to divest land of minerals. My point is that it does not enable us to raise the question.
§ Mr. GEORGE WYNDHAM
It does seem on the face of it very doubtful as to whether the suggestion of the right hon. Gentleman can be carried out. The whole of Clause 14 as drafted contemplates the exclusion and reservation of minerals. The clause adjoins the question of the valuation of minerals until the next clause. In Clause 15 it is brought in by a reference that the site value is to be ruled by a reference to the capital value of the minerals. I think it would be very 1160 difficult to remodel the structure of these two clauses in order to carry out the suggestion.
§ The PRIME MINISTER
Clause 14 applies a definition to land. It is intended to apply to land and minerals, which are really one subject. In Clause 15 minerals are treated as a separate subject. I say most emphatically, so far as I can, consistent with the rules of order, that it is our intention, whether minerals are or are not excluded, whether for the purposes of Increment Duty alone, or for the purposes of other duties, that the question can be most properly raised on Clause 14.
§ Mr. LAURENCE HARDY
The short title of Clause 14 explains what it is. Whether or not it will be possible to raise the question as suggested, seems to me, by the Chairman's ruling, to be an extremely doubtful point. I should be reluctant to withdraw my Amendment in this particular place, unless I have some very much more certain assurance than has been given up to the present. Allusion has been made as to whether the question should have been raised on Clause 1. When I had an Amendment on Clause 1 of the very first word "land" to exclude minerals, I did not move it at the very special request of the Chancellor of the Exchequer, who suggested that it would be better raised on Clause 2. When I put down several Amendments at the end of the clause I was ruled out of order, because it was considered better it should come on on Clause 2. I did my best to raise it on Clause 1. We have at last obtained an intimation that it is in order, but the Government have given us no clue as to this important decision, though they admit it deserves very considerable and careful debate. I think we are justified in asking at this late hour that the Government should take time to consider the matter.
§ Mr. BALFOUR
I venture, with no obstructive desire, as I am sure the Committee will admit, to move that you. Sir, do report Progress, and ask leave to sit again. It is evident, I think, that this is the proper place to discuss the question of minerals in relation to the increment, and it is certainly time, in the second place, that with the best will in the world, we are not in a position to enter usefully upon that discussion now. I do not believe the discussion would be useful now, and I venture to move, "That the Chairman do report Progress, and ask leave to sit again."
§ The PRIME MINISTER
I very much hope the right hon. Gentleman will not press that Motion, because I really think we might make some further progress. There are some non-contentious points in the next two or three lines. If the Chairman ruled that the matter could not be raised in its fullest and most comprehensive sense at a later stage, then I agree there would be some ground for the right hon. Gentleman's contention, but I did not understand the Chairman to give any such ruling, and I have stated most emphatically on the part of the Government, if this Amendment is either withdrawn or negatived, that the whole matter would be open upon Clause 14. In other words, it would be entirely without prejudice to the discussion of Clause 14 as to whether minerals are to be included in the value of the land, both for the purposes of Clause 1 and Clause 2. I agree it is a very serious matter, and cannot be conveniently discussed at this hour. So far as the Government are concerned, they desire to make it perfectly clear that they will interpose no obstacle to its discussion.
§ Mr. BALFOUR
I desire to ask your ruling, Sir. Is this not the proper place on which to raise this isolated issue, namely, whether minerals should be calculated for the purpose of taxing increment values of land? In other words, I wish to know whether we may raise that isolated point, which is an extremely important point, on other clauses of the Bill with equal convenience?
I am hampered in giving a decision by not knowing whether it is intended to withdraw the present Amendment. If the present Amendment is negatived it puts a different complexion upon my ruling in regard to this matter. Assuming this Amendment is withdrawn, assuming the Government could deal with the matter comparatively soon—I do not mean to-night, of course—but at some early date, no doubt the same point could be raised on a proviso to this clause. The right hon. Gentleman has asked me whether the point could be raised on Clauses 14 and 15 as applied to the increment value. I wish someone would suggest the actual way.
§ The PRIME MINISTER
My suggestion is to add at the end of Clause 14, subsection 2, words providing that for the purposes of increment it shall not be deemed to include minerals.
§ Mr. F. W. LAMBTON
I suggest that we should take the discussion on this question at the end of Clause 2, and that would give the Chairman time to consider this point.
I really should prefer to have more time to consider this question. I have not had time to study Clause 14, and I do not want to give a ruling which I might find cause to regret.
§ The PRIME MINISTER
I agree that this is a complex matter. If to-morrow you decide that in your judgment this question cannot be raised on Clause 14 the point can be held over until we reach the end of Clause 2. I think this Amendment should be withdrawn.
§ Mr. LAURENCE HARDY
I do not wish to harass the Government in any way, and I am perfectly willing to withdraw my Amendment. I do so, however, upon the understanding that the Government will allow a full discussion. If it is decided that the matter can be better raised on Clause 14 I shall be quite ready to move it then.
§ Motion to report Progress, by leave, withdrawn.
§ Amendment, by leave, withdrawn.
§ Sir W. ROBSON
moved to omit the words "the value of" ["attributable to the value of"].
It is a drafting Amendment intended to exclude the value of the land attributable to the buildings upon it from the tax. As the Bill stands the deduction which is to be allowed in respect of buildings might be so read as to be limited simply to the cost of the buildings. We desire to strike out the words "the value of" following the word "attributable" in order that, in addition to the cost of the buildings, the value added to the site by the buildings shall also be deducted. This makes clear the full scope and benefit which is intended to be allowed to the taxpayer for the deduction. Supposing you had a site value of £100, and the buildings on it cost £1,000, it would not be fair to take the total value as being £1,100 because the 1163 mere fact of buildings being upon the site brings in an additional value. We therefore strike out the words "the value of" in order that the taxpayer may get the full benefit of the deduction in so far as the total value is due to the buildings, not merely the cost of the buildings, but any value they give to the site. It is only to make sure that you do not bring in for the purpose of the tax any value the buildings give to the site that the Amendment is moved.
§ Question proposed, "That the words proposed to be left out stand part of the Question."
§ Mr. PRETYMAN
It is quite clear this Amendment may cut both ways, and it is also clear that it makes the clause very much more vague. It is very difficult to see how you are going to take a site value which in one sense may be less than the veal site value. The Attorney-General will admit that it is a much more difficult task to put upon a valuer to take the value attributable to the buildings upon the land than merely the value of the buildings. The value attributable to the buildings might be less than the cost of the buildings, and it is extremely important from our point of view. It might be held that the land was not being put to its best use, and that the kind of buildings put upon it, instead of increasing the value to more than their cost, might decrease the value to less than their cost. This might be easily settled. There is an Amendment in the name of my hon. Friend the Member for Basingstoke (Mr. Clavell Salter) to this effect: After "value" to insert "being in no case less than the cost of constructing such buildings or structures as at the date of valuation, but subject to an allowance for depreciation (if any) in respect of their state of repair." If the Government are prepared to accept that proviso to their Amendment, then it would be perfectly clear that what they suggest would be given effect to, and they were really conferring a benefit, without at the same time running a risk of doing a very considerable injury. If we are given to understand that the Amendment of the hon. Member for Basingstoke will be accepted, then I think we might agree to the Amendment of the Attorney-General without further discussion.
§ Sir W. ROBSON
I do not think it should be made a condition of the acceptance 1164 of this concession that the Government should agree to make a further concession later on. I can only point out that if these words are left standing they will have a very detrimental effect.
§ Mr. PRETYMAN
It is quite impossible for us to discuss one point without the other. I do not think the Attorney-General was here when we debated this point at some little length, and when we got the statement from the Lord Advocate that the best way, in his opinion—and there is no greater authority in the House—of arriving at the value of buildings was cost less depreciation. That depends on this Amendment.
§ Mr. PRETYMAN
But why cannot we have some indication at this stage whether or not the Government will be prepared to accept this Amendment. What the Amendment of my hon. and learned Friend (Mr. Clavell Salter) provides for is exactly what the Lord Advocate told us was the intention of the Government. Now the Government say they wish to go a step beyond, and to give us any further value that may be attributable to the buildings on the land. We say we will gratefully accept that, provided the Government will see that in the case where the owner has honestly put buildings on the land which may not contribute so much to its value, he is not to be prejudiced by the Amendment, and that he shall be allowed the actual cost—less depreciation—of the buildings. I submit that that is a reasonable request, i.e., that the Government, in extending the Amendment in favour of the subject, shall not at the same time deprive him of something previously given to him by the explanation of the Lord Advocate.
§ Mr. J. H. M. CAMPBELL
I think we all appreciate the object of the Attorney-General in introducing this Amendment. It is to cover cases in which the actual value of the property may not be sufficient to cover the cost of the buildings on it. Where you have a valuation wholly in excess of the cost of construction that case will be met by leaving out the words "the value of the buildings." But there undoubtedly will be cases in which the buildings will diminish the value of the property. The result would be that if the words of this Amendment were accepted the owner would be getting, as regards the deductions in respect of the value of his buildings, a sum far below the actual cost of 1165 his premises. I have had ample experience, of this in connection with land legislation in Ireland. In this case the Government will fail to carry out the purpose they profess to have in view unless they accept the Amendment of the hon. and learned Member for Basingstoke (Mr. Salter), because what that Amendment does is to say that in no case shall the deduction be less than the cost of constructing such buildings or structures as at the date of valuation, but subject to an allowance for depreciation (if any) in respect of their state of repair.
§ Mr. CAMPBELL
It is not a different matter if the right hon. Gentleman sincerely means to give the owners the benefit which he says his measure contemplates. This Amendment before the Committee, without some such safeguard as has been suggested, would be a real trap to the owners in all cases in which the buildings, having regard to the changed circumstances, do not enhance the value of property but actually diminish it. I hope the Chancellor of the Exchequer will consider the Amendment of the hon. and learned Member for Basingstoke, and I think we might safely stop at this stage and deal with the matter the first thing to-morrow.
§ Mr. LLOYD-GEORGE
The right hon. and learned Gentleman wants us to decide now not merely the Amendment under consideration, but at the same time another Amendment which I do not propose to take to-night. I think it would be better if the right hon. Gentleman did not press the Government to give a definite answer now. This Amendment is really a concession to a claim put forward by the hon. and gallant Member for Chelmsford (Mr. Pretyman). It is his case of the brickyard again. What is it we are trying to arrive at? We are trying to arrive at the increment in the site value. When you come to structures they may contribute in two ways. They may contribute in excess of the money spent upon them. I think it is conceivable they may depreciate. But why should the State be called upon to suffer an increased deduction where the structure counts for a larger increment than the money which is spent upon it? Where, on the other hand, the site value has depreciated, it is suggested that the State is to get no credit. Surely the right hon. Gentleman 1166 cannot possibly say that is fair? I cannot really argue the other Amendment at the present stage. I do not wish to press this concession upon him; but he really cannot have it both ways. I ask him whether he is prepared to take this concession at this stage? If so, we will consider the Amendment of the hon. and learned Member for Basingstoke when we arrive at it.
§ Earl WINTERTON
I only desire to put a point in connection with a matter in which I am personally interested. My hon. and gallant Friend did not suggest that the Attorney-General had any evil intention with regard to this Amendment. I understand that the Attorney General wishes to remove what he thinks is a justifiable grievance, and therefore he has put down the Amendment. But the feeling is that the Amendment is more dangerous than the Bill as it stands. Now this is the point I wish to put to the Chancellor of the Exchequer or to the Attorney-General. It frequently happens that buildings are put up upon land that costs a great deal, and which are, perhaps, known as model dwellings, which really are relatively of less value than smaller or even more old-fashioned dwellings upon the land. It is very difficult to gauge the value of buildings in that way, and it would undoubtedly happen in quite as many cases as not that the owner would benefit in these matters. The Chancellor of the Exchequer engaged in a dissertation as to the knife cutting both ways. Is not that a little beside the question, because the whole point of this Amendment is to benefit owners of property, and to remove a grievance which may arise under this Bill? In some working class districts people desire to live in flats, as under the German system, and in other cases the people wish to live in small houses. In these circumstances I hope the hon. Gentleman will not press his Amendment, and that he will agree to the Amendment which will be proposed by the hon. and learned Member for Basingstoke (Mr. Salter), which really carries out what the Government intends.
§ Lord WILLOUGHBY de ERESBY
I hope my hon. Friends will accept this Amendment. In my opinion it is certainly a concession on behalf of the Government, and it is one we ought to accept. The only instance in which it might possibly go against our case is that of agricultural land, where undoubtedly in better times extensive buildings have been 1167 put up, which, owing to another kind of cultivation coming in, the Amendment might not benefit the owner to the same extent. As a matter of fact, having regard to the previous clause, I do not think agricultural land will come into the increment value. On the other hand, when different amusements came into fashion, a man might put up a skating rink on his property, which may cost him very little money, and he might get off the increment value. I think it would be far better to accept the Amendment and hope for further concessions later on.
§ Mr. PRETYMAN
The Chancellor of the Exchequer having promised that he will consider the further Amendment, although he is perfectly free to decide one way or the other upon it, I should advise my hon. Friends to accept this Amendment.
§ Amendment agreed to.
§ Mr. STEWART BOWLES
proposed to leave out the words "buildings or structures," and to insert the word "anything."
It is quite true that the point raised by my Amendment is met to a certain extent by that standing in the name of the learned Attorney-General, but I think mine is better.
§ Mr. STEWART BOWLES
If, as is suggested, minerals are going to be included in the things of which the soil is to be divested for the purposes of this valuation, it seems absurd that they should be included in Clause 14 by a reference to buildings, growing timber, fruit trees, fruit bushes, and other things. What you really have to do is to divest the land of anything to which value may be attributed.
§ Sir W. ROBSON
The reason why I have chosen the words "or other things" is that I desire not merely to cover buildings, structures, and other things, but to establish parity between this clause and Clause 14. That clause sets out timber, fruit trees, and so forth. In drafting Clause 2 we only repeat Clause 14, and I have chosen phraseology which follows Clause 14.
§ Mr. STEWART BOWLES
If the learned Attorney-General desires to follow the phraseology of Clause 14, sub-section 2, it is quite clear that he has not done so. 1168 He must say that the deductions shall be in respect of any part of the value which is proved to be attributable to buildings, 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. If it is true that all these are covered by the phrase "other things," they are equally covered by the word "anything." The learned Attorney-General has not been able to explain why he attaches such importance to the words "or other things," and is unwilling to accept the shorter, simpler, and more comprehensive direction given by my Amendment.
§ Mr. CAMPBELL
There is a difficulty in using the words "or other things," without enumeration, namely, that the Court or the Commissioners will have to construe them on the principle of in justem generis, if they are left alone without any reference to Clause 14, subsection 2. Instead of enumerating the things in that sub-section the learned Attorney-General proposes to summarise them in the words "other things." Any court and any lawyer must construe those words as if they were ejusdem generis. The whole difficulty will be got over by retaining the words suggested by the learned Attorney-General and adding to them "as defined in Clause 14, section (2)."
§ Mr. STUART WORTLEY
With the greatest respect for all these high authorities, and with a total absence of obstructive intentions, I wish to say that I have come to the conclusion that the Attorney-General is wrong, especially as in Clause 14, section (2) there is the use of the word "other things." His copying of the language of Clause 14 is, therefore, the more unfortunate.
§ Sir W. ROBSON
This, as I have said, is almost purely a drafting Amendment, and the course I have adopted is the ordinary course, when it is desirous to establish a connection between two clauses in different parts of a Bill. I do not need to repeat Clause 14. All I have to do is to use such phraseology as to show that Clause 14 is in contemplation when we are dealing with Clause 2, and I trust the Committee will, without further delay, accept the words.
§ Mr. STEWART BOWLES
I do not think that, under the circumstances, I should be justified in putting the Committee to the trouble of a division. I still think that the learned Attorney-General is wrong, but if the Committee takes another view I will withdraw.
§ Amendment, by leave, withdrawn.
§ Sir W. ROBSON
moved to leave out the word "or" ["to the value of buildings or structures of which the land is deemed to be divested under this Act"].
§ Mr. PRETYMAN
I have an Amendment down to leave out the words "the land" ["of which the land is deemed to be divested"], and to insert "any land wherever situate," but I do not propose to move it, because I think the point is covered by the first part of an Amendment standing in the name of my hon. Friend the Member for Liverpool (Mr. Watson Rutherford), which, in his absence, I am prepared to move.
§ Amendment proposed, after "value" ["for the purpose of ascertaining the site value"] to insert the words "or to the owner's expenditure on any adjoining property or property in the neighbourhood."—[Mr. Pretyman.]
§ Mr. LLOYD-GEORGE
It was agreed that the Committee should report Progress at this stage, and I move "That the Chairman do report Progress, and ask leave to sit again."
Progress reported; Committee to sit again this day.