HC Deb 22 October 1909 vol 12 cc635-41

(1) Any immediate lessor who under this Act pays any Mineral Eights Duty, and is himself a lessee of the right to work the mineral or of the wayleave in respect of which the duty is paid, shall be entitled to deduct from the rent paid by him in respect of the right to work the minerals or the wayleave, as the case may be, to his lessor a sum equal to the Mineral Rights Duty on a rental value of the same amount as the rent so paid; and any person from whose rent any such deduction is made may make a similar deduction from any rent paid by him in respect of the right to work the minerals or in respect of the wayleave, as the case may be.

(2) Any person in receipt of rent from which a deduction may be made under this Section shall allow the deduction, and the person making the deduction shall be discharged from the payment of an amount of rent equal to the amount deducted, and any contract for the payment of rent without allowing such a deduction shall be void.

(3) If any person refuses to allow a deduction which he is required to allow tinder this Section he shall be liable to a penalty not exceeding fifty pounds to be recovered in the High Court.

Amendment made: In Sub-section (1) to leave out the words "so paid" ["as the rent so paid"] and to insert instead thereof the word "payable."—[Mr. Lloyd-George.]

The ATTORNEY-GENERAL (Sir W. Robson) moved, at the end of the Subsection, to insert the words: "(4) Where in any special case Mineral Rights Duty has been charged on a rental value based on a rent which has been substituted under the provisions of this Act for the rent actually payable by the working lessee, or where in any special case the rental value with reference to which Increment Value Duty is charged has been reduced under the provisions of this Act for the purposes of the collection of that duty, the Commissioners shall, on the application of any lessor from whose rent a deduction may be made in respect of Mineral Rights Duty or Increment Value Duty, as the case may be, make a corresponding substitution or reduction as regards that rent, if they consider that the grounds for the substitution or reduction, as the case may be, are applicable in the case of the rent with respect to which the application is made."

This Amendment is really consequential upon an Amendment which was inserted last night at the end of Clause 20. The result was to enable the lessor to have a rent fixed which would give him an allowance in respect of his expenditure. That only related to the case of the working lessee. Afterwards there was a provision inserted, giving the right of deduction to the intermediate lessor. This Sub-section is to give the right of substitution, not merely in respect of rents paid by intermediate lossors to the head lessor. It is only continuing the same principle. We have had to add to it certain words by reason of the promise given last night to introduce an Amendment in order to meet the case made by the hon. Member for Northants (Mr. Grove). There, again, we had to allow for another deduction from the substituted rent, namely, in cases where the lessor had made expenditure in borings. The Amendment inserted last night in Clause 20 reads:— Provided that if in any special case it is shown to the Commissioners that the rent paid by a working lessee exceeds the rent customary in the district, and partly represents a return for expenditure on the part of any proprietor of the minerals which would ordinarily have been borne by the lessee, the Commissioners shall substitute as the rental value of the right to work the minerals or the mineral wayleaves, as the case may be, such rent as the Commissioners determine would have been the rent customary in the district if the expenditure had been borne by the lessee.

In other words, it enables the lessor to get the benefit of any expenditure by which he has increased his royalty beyond the normal royalty of the district. They are very wide terms, and they deal with the matter rather by results. It will be observed that the wording of the Clause deals only with the amount paid by the working lessee. It is necessary therefore to continue the benefit in the case of an intermediate lessor. There may be some intermediate lessor or lessee who also on his own account has made some expenditure for which he ought to get an allowance; therefore, the Clause proposed gives the intermediate lessor the same benefit. Then we have had to add slightly to it since last night, because we want to give to the lessor not merely the benefit I have already described, but the benefit of the pledge given to the hon. Member for Northampton with regard to allowing the lessor the benefit in the case of increment value. I assure the House there is nothing in the Amendment to diminish the value of any concession given to anybody; the only alteration made in the Amendment now on the paper is one in anticipation of further criticism.

Mr. AUSTEN CHAMBERLAIN

I am not certain that this Amendment and the Amendment put in at an early hour this morning quite carry out the intention of the Government, or, indeed, bow they are intended to apply in, for instance, the specific case of the Wemyss Colliery, mentioned last night. Let me state my difficulty. The whole of this Amendment and the provisions of which it forms a part depend upon the customary rent in the district. The royalty given to a proprietor who has expended a considerable amount in developing a mine is not merely a royalty on the mineral worked, but interest on the capital expended in developing the mine. The royalty is raised to that extent, and becomes something more than a royalty. The royalty given to the proprietor may for the purposes of this tax be reduced by the Commissioners to the customary rent in the district. But I am told that in this particular case, which is a striking instance of the kind of thing which the Government desire to meet, there is no rent in the district except the Wemyss rent, so that there is nothing to compare it with. But for the expenditure of the late Mr. Wemyss there would have been no working there at all. This is the only coal of that kind worked under these conditions. In these circumstances, can the Government carry out their intentions, which are exactly what we should wish to see in respect of this matter, merely by reference to a customary rent of the district, which, in fact, does not exist?

Mr. LLOYD-GEORGE

It is not quite "the customary rent"; the words are "would have been the customary rent." It really depends, not on the district—there is not much difference between one district and another—but rather on the quality of the coal and the difficulty of getting at it. The same quality of coal produces practically the same royalty in every district. The royalties in South Wales, for instance, are very high because of the quality of the coal.

Mr. AUSTEN CHAMBERLAIN

Subject to communications. The right hon. Gentleman will remember that the most important effect, perhaps, produced by the expenditure of Mr. Wemyss was the creation of facilities of transport which did not exist before.

Mr. LLOYD-GEORGE

The same thing would apply in districts in South Wales or Northumberland. There may be exceptional districts where the royalties have been less because of that very difficulty. A land agent takes all that into account in fixing the royalty in any part of the country, and there is no difference between a district in Fife and a district in Northumberland, Lanark, or South Wales, so long as the conditions and the quality of the coal are the same. Every mining expert who valued it would take all that into account. The word "district" will have a wider application than the mere county or whatever it may be. As a matter of fact, this question does not rise on the present Amendment; it is a totally different point.

Mr. AUSTEN CHAMBERLAIN

Does it not depend upon it?

Mr. LLOYD-GEORGE

No. This is a case where a man takes up an area and sublets it. It is rather to deal with the intermediate case. It has to do with merely boring to find out whether there is coal. The other is a case of very large expenditure on jetties and railways, and the development of a whole district.

Sir JOHN RANDLES

The Chancellor of the Exchequer refers to the quality of the coal as being the determining factor. Of course, the transportation——

Mr. LLOYD-GEORGE

I was only replying to the right hon. Gentleman on the coal case.

Sir J. RANDLES

But I contend that in dealing with iron ore that this tax is going to be more burdensome still. I am now asking for information rather than criticising—for I recognise the value of the concession that the right hon. Gentleman has announced—but what I gather is that in searching, for instance, for a period for iron ore, which requires a great deal more searching for than does coal—for not only must you frequently bore, but borings may be of little use, and there must be a lot of underground shafts and the rest of it—in order to get down you have to undertake very heavy expenditure on machinery for sinking purposes. The case I have in my mind is one like this: Suppose that a lessee had been searching and had spent a considerable sum of money and had not succeeded in securing the ore, and the lessor had bought the plant and held it until he could find some further lessee to try and develop the mine. Some one else comes along. They have got a specially favourable royalty—if you like—for they are going to have the advantage of the experiences of their predecessors; but at the same time they are paying no money for the, lease. They are going to pay if the royalty turns out a success. Is the expenditure which has gone before in searching for the minerals going to come into the account, because it would have a bearing upon the terms of the royalty which the new adventurers might have to pay?

Mr. LLOYD-GEORGE

As a matter of fact, I am much more disposed to deal with the case referred to by the hon. Gentleman than with the case of coal. I have seen many cases of searching for copper, iron, and manganese ore, and our part of the country is absolutely disfigured by the number of abandoned mines of the character referred to. If the land-owner has spent money as a lessee then that case is covered.

Sir J. RANDLES

Pardon me a moment. Not the landlord himself, but a previous lessee. That was rather my point.

Mr. LLOYD-GEORGE

I am coming to that. I am taking two cases. First of all, I am taking that where the land-owner himself spends money, not merely in boring, but, as a later Amendment says, "or otherwise proving the minerals." That will over the whole case. If he gets an increased royalty on his lease owing to the fact that he has spent money in proving the minerals, then he gets the full advantage of that expenditure. But the hon. Gentleman gives the case where first of all there is a lessee who spends money—that there is a succession of lessees, from the man who is always digging holes in order to find ore to the last man who takes the thing in hand: the landlord does not spend anything. If he does he gets the full benefit of it; or if he comes to terms with the lessee, and takes upon himself the burden of any of the expense, he will get a benefit that he would not get—that is, benefit of the money spent by a succession of lessees who have become bankrupt in the operation. He is getting his relief because it is not his expenditure. As to the machinery, the hon. Gentleman knows perfectly well that that machinery as a rule is left derelict.

Mr. J. FALCONER

In one sentence I should like to make clear the point which evidently was not made clear by me last night with regard to the Wemyss case. According to the Amendment the Government, in the case of the owner of minerals who has made a large exceptional expenditure, if he succeeds in getting a royalty which is in excess of the average royalty of the district as a result of that expenditure, then no doubt he will get the allowance; and it is quite right that he should get it. But a fortiori if the owner of the minerals has made all the exceptional expenditure of the kind I have referred to, and has only succeeded in getting what is the normal royalty, or, rather less, he is left with a large expenditure altogether exceptional upon which he is not getting any return, and to which the development of the minerals is entirely due. I do not wish to argue the case, but I feel I failed to make it clear. But that is the real point: where there is exceptional expenditure of that kind it seems to me to be fair to the owner of the minerals to give him some allowance. I realise the difficulty in framing the Clause, but I think some allowance should be made in respect of this expenditure, otherwise there is no adequate return.

Mr. BALFOUR

I am not quite sure that I am in order in continuing this discussion, but I want to call the attention of the Government to a matter which can be corrected at a later stage. The hon. Gentleman who has just sat down has pointed out a case which is not met by the Government. All I can say about it is that the late Mr. Wemyss was extremely generous with the public and extremely ungenerous to himself. He spent money which has been of immense advantage to the district, but was uneconomically spent from the point of view of private expenditure. There is another point—as to the interpretation of the word "district." At present it appears as if the district of Fifeshire includes South Wales. That is a very uncommon use of the word, and I think the right hon. Gentleman should make it clear what he means by the word "district."

Mr. LLOYD-GEORGE

I did not intend that, it should be as wide as that. It is hardly intended that you should widen the area to the extent of making Scotland an annexe of Wales. But you would not confine it to the immediate area in Fifeshire. However, I will consider the suggestion made by the right hon. Gentleman.

Lord BALCARRES

Are you going to have a definition clause?

Mr. LLOYD-GEORGE

If it is necessary. I will take an early opportunity of consulting my advisers on the point, which seems a long way off, I am sorry to say.

Lord BALCARRES

This is really a Very complex Amendment. The rent of collieries in a district is far from a simple matter. The rent very often is tied, and the conditions that determine the rent and the royalty are very often very complex, not only with regard to different collieries, but different seams.

Mr. LLOYD-GEORGE

I am very loth to raise a point of Order, but we are now discussing an Amendment disposed of last night.

Lord BALCARRES

I will not press the matter further.

Amendment made.