§ Where the licence holder is bound by any covenant, agreement, or undertaking, or is otherwise under any direct or indirect obligation of any kind, to obtain a supply of intoxicating liquor from any person or persons, the licence holder shall be entitled to recover as a debt due from or deduct from any sum due to any such person such part of any increase of the duty payable in respect of his licence occasioned by this Act as may be agreed upon, or in default of agreement determined by the Commissioners to be proportionate to the benefit obtained by such person from the licence.
§ Sir SAMUEL EVANSThe series of Amendments to this Clause standing in my name on the Paper may seem rather formidable, but they are very simple. The first proposal is, after the word "entitled" ["shall be entitled to recover"], to insert the words: "notwithstanding any agreement to the contrary." The Amendment supplies words which must have been omitted by oversight in the drafting of the Clause. These words are taken from a similar provision in the Act of 1904. The same principle will apply exactly in this case. With regard to the other Amendments, my hon. Friend the Member for the Ayr Burghs (Mr. Younger) will remember the discussion we had on this Clause. He was anxious to make as clear as possible what the ties were, and the form in which the ties would be established. I said it was a difficult matter, but that I would do my best to carry out his wishes. I invited his kind co-operation, and I am 1072 very pleased to acknowledge the help which he gave. As the result of our cooperation we have hit upon these Amendments, which satisfy my hon. Friend. When these Amendments have been made the Clause will read: "Where the licence holder is bound by any covenant, agreement, or undertaking, or is otherwise under any direct or indirect obligation of any kind, to obtain a supply of intoxicating liquor from any person or persons, the licence holder shall be entitled, notwithstanding any agreement to the contrary, to recover as a debt due from or deduct from any sum due to any such person so much of any increase of the duty payable in respect of his licence occasioned by this Act as may be agreed upon, or in default of agreement determined by the Commissioners to be proportionate to any increased rent of the licensed premises, or increased prices of intoxicating liquor supplied, or other benefit obtained by such persons by reason of any such covenant, agreement, undertaking, or obligation as aforesaid." I beg to move the first Amendment.
§ Amendment proposed: After the word "entitled" ["shall be entitled to recover"], to insert the words "notwithstanding any agreement to the contrary."—[Sir Samuel Evans.]
§ Mr. GEORGE CAVEIf these words satisfy my hon. Friend the Member for the Ayr Burghs, it shows that there is something reasonable in the Amendment. This is the Clause which throws upon the brewer or owner of the house some part of the Licence Duty to the relief of the tenant. As the Bill now stands the owner has to pay a sum proportionate to the benefit he receives from the licence. That means a sum bearing the same proportion to the total duty as the benefit which the owner gets from the licence bears to the total value of the licence. But I do not quite follow the meaning of the Amendments. He has now to pay a sum proportionate to the benefit he gets from his tie. That means a sum bearing the same proportion to the total duty as the benefit which he gets from his tie bears—to what? I think anybody reading the Bill would find it difficult to see what the tenant is to be relieved of. Will the Solicitor-General or some Member of the Government be good enough to explain to us what the Amendment means, and to work it out in a concrete example, showing in a given case what amount will fall upon the owner and what amount will 1073 fall upon the tenant? Unless the Clause makes it clear, difficulty will certainly arise. In regard to the other point, how are you to ascertain the part of the increased rent which is due to the tie? It is extremely difficult to ascertain that, and I can see that a very difficult inquiry will have to be made. I should have thought it better to leave the words as they stand, and to allow the persons interested to work out how much benefit each gets from the licence, having regard to all the facts of the case. For these reasons I prefer the words of the Bill to those of the Amendment.
§ 7.0 P.M.
§ Mr. YOUNGERI thank the Solicitor-General for allowing me to make some suggestions to him in regard to this matter. But I disclaim having anything to do with the words of the first Amendment. With regard to the other Amendments, may I explain to my hon. Friend (Mr. Cave) that the object is that wherever the licensed premises are being supplied on ordinary market terms—that is, free trade terms—with liquors, the tenant should not then be entitled to have any recourse against another in respect of the Licence Duties now being imposed. In point of fact, unless the brewer is getting benefit by increased prices or increased rent, obviously he ought not to be asked to pay any portion of the increased duty. The Prime Minister adopted that as being a perfectly fair suggestion and the words which are now being included in the Clause, as I understand it, make that perfectly clear.
§ Mr. GRETTONI really do not think that these words are of any great value. A very considerable proportion of the free houses will either be extinguished or become tied. Of course, in the ease of tied houses all those matters as to proportion of taxation, prices paid for liquor, and so on are matters of agreement between the owners and the tenant, and can be adjusted between them according to the conditions of trade. The words suggested no doubt are intended to carry out the purpose which my hon. Friend has explained, but I doubt very much if they will carry out that purpose. I think that the speech of the hon. and learned Member for Kingston (Mr. Cave) deserves some consideration.
§ Sir SAMUEL EVANSIn proportion to the benefit which the owner receives. He gets the benefit from an increased rent, or 1074 by reason of charging an increased sum over and above the market value, or by getting a higher rate of interest if he has a mortgage.
§ Mr. CAVEThat is one side of the comparison. What is the other side? He is to pay a sum varying in proportion to the whole duties as the benefit which he gets bears to what?
§ Sir SAMUEL EVANSThere are two people in the case who benefit from the licence. The one is the licence holder carrying on business subject to the tie. The other is the person who owns the tie. Between them they get certain benefits. This increased duty is put on that business, and it is distributed according to the benefit accruing to one and to the other.
§ Words proposed there inserted in the Bill.
§ Drafting Amendments also made.
§ Mr. ARNOLD HERBERT moved, at the end of the Clause, to insert the words, "Provided that where the unexpired term of a licence holder does not exceed one year the Commissioners shall allow the whole of such increase of the duty to be recovered or deducted from any such person or persons in manner aforesaid."
§ The object of this Amendment is to enable the tenant of a house subject to a tie who has an unexpired term which does not exceed one year to deduct the whole of the increased Licence Duty from any payment that is due to the person owning the tie. It is common ground that the whole of this duty should not be paid by the tenant but divided proportionately between the owner of the tie and the person subject to the tie. You may have an owner of a tie for all articles that are sold by the person carrying on the business, but you may also conceivably have a person who is subject to a tie to one person for beer and to another for spirits and to another for cider, and so on. Then the benefit would be proportionate to the value of the tie on the articles sold by these different owners of ties as well as the proportion of it obtained by the person who is subject to the tie. The Government proposal is to leave it in all cases to mutual agreement, and, failing mutual agreement, to leave it to be settled by the Commissioners. My Amendment proposes, in cases where the person subject to the tie has a precarious tenancy, and is, therefore, a person not in a position to make a free bargain to lay down once for all that he is to be enabled to deduct the whole 1075 of these duties from any payments that are due to the owners of the tie. It may be said that it is really unnecessary to lay this down in the Bill, because the Commissioners will naturally do this themselves; but I think that we should lay it down in this Bill, because it is a most important principle that this House should, wherever it can, and especially where they are laying charges on the subject, lay down the precise terms on which these charges are to be made, and not leave it to the caprice or discretion of any officials to settle what the amount of those charges would be. I think that all parties who are interested in this matter would really prefer that, wherever it can be done, it should be laid down in clear terms so as to avoid all uncertainty. This provision is taken from the analogy of the provision with regard to compensation levy in the Licensing Act of 1904. It does not go into all the details of the Schedule which are contained in the 1904 Act, because it may be there are many cases where it would be better to leave the Commissioners to settle these matters; but I have taken the first provision from the Schedule to the Act of 1904 as it applies exactly to this, which is an entirely analogous case.
§ Amendment not seconded.
§ Mr. T. H. D. BERRIDGE moved, at the end of the Clause, to insert the words: "Such deductions from rent as are set out in the Second Schedule to the Licensing Act, 1904, may, notwithstanding any agreement to the contrary, be made by any licence-holder who pays the Licence Duty in respect of any increase of such duty occasioned by this Act, and also by any person from whose rent a deduction is made in respect of the payment of any such increase."
§ This Amendment is intended to meet the case of those who are under covenant to keep the premises. The result of this Bill will be that they will have to pay an increased Licence Duty which will mean an increase of the burden that they undertook when they entered into their lease or agreement of tenancy, I propose to apply to the increased Licence Duty precisely the same principles which are applied in the Licensing Act of 1904. This Act gives statutory authority for exactly the proposals which are put forward in this Amendment. It appears to me to be a very reasonable arrangement. The tenant who by agreement or lease is under liability 1076 by covenant to keep the licensed premises will have imposed on him by this Act of Parliament greater obligations than he had at the time when he entered into the agreement or lease, and, therefore, I submit that it is only right and fair that the owner of the premises for whose benefit the licence has to be kept up should bear a proportionate part of the increased duty.
§ Mr. J. M. HENDERSONIn seconding this Amendment I may give a concrete case so as to show its justice. Take a house the normal rental of which, when used for the business of a haberdasher or any other business, is £100 a year. The moment these premises get licensed the landlord charges £150. I have a case in my mind which came under my notice. If the licence is withdrawn, this landlord is entitled to compensation based upon the difference between the value of the licensed premises and their value if unlicensed. The benefit which the landlord receives is £50 a year. It is only to enable him to keep that benefit that this Licence Duty is raised. It is not fair that the licensee should have to pay the whole of that increase. Yet he would have to bear it and the landlord would still have nothing to pay and the £50 would still be received by him as the benefit from that licence. My hon. Friend has pointed out that the tenant under the Act of 1904 is now paying, I should think, about £7 or £10, according to what the licensing justices may fix the figure at, but, if he has an extra £10 to pay the landlord has to contribute towards that, according to the scale my hon. Friend has cited. Surely it is fair, when you are increasing the duty, and putting another obligation upon him of £45, that the landlord who is receiving the continuous benefit by the way of rent, should have something to contribute towards this additional sum, which if is absolutely necessary should be paid to the Government if he is to continue to receive his £50. I have an Amendment on the Paper which would carry the same benefit. As the Licensing Act of 1904 does not affect Scotland I have put down the Amendment so that Scotland may have a similar benefit to that which the Amendment before the House now proposes. Of course, if my hon. Friend's Amendment be carried mine must necessarily follow, because you cannot give a benefit to England which would leave out Scotland, at least, not with my consent. Therefore, if this Amendment is accepted I shall go on with 1077 my Amendment, to which I think there is really no answer in equity. Under this Sub-section you are already breaking contracts, because if the man who owns the ties has got to pay surely the man who gets continuous benefit, and who may obtain the capitalised value of the £50 on a sale, ought to pay something towards that benefit according to the old schedule of compensation.
§ Mr. HERBERT SAMUELThis suggestion has received very careful consideration by the Government, not merely on this Amendment, but before the Bill was introduced. The matter was very fully considered in all its bearings. But there are several objections to the proposal. The chief objection, and that on which I mainly rely, is this: Here you have the case of a publican who is a free tenant, and you propose to tip some part of the burden on him upon persons who are wholly unconnected, or not directly connected, with the trade. They receive their rent in no sense as a profit on the trade, like the brewer or the owner of a tied house, who receives a profit on the trade. Take the example of a beerhouse in London. The publican has been able to recoup himself by throwing the duty on the public; but under this Amendment you will nevertheless give him the right, having recouped himself for increased duty, to throw the charge upon his landlord. Similarly, in other parts of the country, where the price of spirits has been raised and the consumption has not declined, there the publican, who has been reaping a profit, will be able nevertheless to charge the duty on his landlord—perhaps the widow or the orphan, who may be the owner of the house. If, again, by reducing the quantity sold, by reducing the size of the vessels, or stopping the "long-pull," or in any other way, the licence holder recoups himself for this burden, it is obviously wrong that he should be able to shift his burden on to the landlord. We say that the burden ought to be borne by the people who profit directly from the trade. If it is the publican who gets the whole of the trade profit, he will have to pay; or, where the house is run by a brewer, if he obtains the profit, or some part of it, or probably the whole, then the burden will be on the brewer.
There are several other objections to this Amendment. First, as to the scale of deductions under the Act of 1904. That has not proved satisfactory in practice. When I was at the Home Office we had many cases brought to our notice where 1078 persons who practically had no interest at all in the licensed premises and received nothing from the compensation, nevertheless had to pay sometimes a considerable share of the compensation levy. They were exceptional cases, but they were fairly numerous. Consequently, in the Bill last year we asked Parliament to amend the whole of that scale of deductions, and to put in another safeguarding the provisions of the Act of 1904. On that ground alone we could not accept a scale of deductions which, in the view of the Government, is in many respects unjust. While the injustice will be of comparatively small effect in respect to the compensation levy, when it comes to these Licence Duties, which are higher than the compensation levy, the injustice will be increased. The hon. Member lastly proposes that it is only where the licence holder himself pays the duty that he is to be entitled to shift the burden on to the landlord. Take the case of a brewer. He may rent a house from some landlord; he may pay a full rack rent for it, but because the duty in that case is paid by him, and not by the actual publican, is the brewer, who really pays the duty, not to be allowed to shift any of his burden on to his landlord? That would clearly be a very great inequality, if you compare that brewer with another person who has a tied house paying the same rent, and who would be allowed to shift his burden on to the landlord. For these reasons it is necessary to charge those who are able to gain a profit from the trade carried on, and who have, further, recouped themselves for these increased burdens. It is mainly for that reason, and also for other reasons, that we cannot see our way to accept the Amendment.
§ Question, "That those words be there inserted in the Bill," put, and negatived.