§ Motion made and Question proposed, "That there shall be charged on the Con- 932 solidated Fund in each year a sum equal to half the proceeds of the duties levied in respect of land values (including Mineral Rights Duties) under any Act of the present Session, and that sum shall be divided between England, Scotland, and Ireland in such manner and paid into such separate accounts for the benefit of such local authorities as Parliament may determine."
§ Mr. LLOYD-GEORGEWhen we discussed this question at an earlier stage of the Bill I intimated on behalf of the Government that our intention was to propose a new Clause dealing with the matter of the allocation of the amount between Imperial and local finance. Since then I have received quite a number of deputa- 933 tions from the municipalities upon this very question, and we have come to the conclusion that this year it would be undesirable to add to this Bill any Clause dealing in detail with the apportionment, and, therefore, I put a new Clause upon the Paper, which will have the effect of apportioning the sum equally between Imperial and local finance, but hanging up the portion which shall be paid to the localities, and paying it over to a separate account to be dealt with next year. It is perfectly clear that, local and Imperial finance has got to be dealt with in a very thorough, and I should say, searching way, and I think it would be a mistake probably to anticipate the lines upon which that will be dealt with and on which we propose to legislate by incorporating in this Bill anything in the nature of a complete and detailed allocation of the funds. I have seen a good many gentlemen who are specially interested in the matter, and they are all strongly opposed to any attempt being made this year to define the lines of the actual apportionment, and they certainly favour the idea of rolling up the sum and postponing the financial allocation and leaving it to be dealt with at a future date.
I do not think that this will really make any serious difference in regard to localities because of any sum they could possibly receive now, it is so very late in the year. Assuming the Budget got through without difficulty or trouble, at the end of this month or the beginning of next month, the Land Taxes we anticipate to receive cannot possibly come to hand until possibly the very last week of the financial year, and, therefore, the mere postponing of the apportionment of the amount to the localites would be purely a question of a few weeks as between the last weeks of the present financial year and the first few weeks of the next. I therefore propose this Resolution with a view to moving later on the Clause which stands in my name on the Notice Paper.
Mr. BALFOURThe history of the proposal of the Government is that they intended to acquire all the results, great or small, of the Land Taxes and the Mineral Duties embodied in this Bill. There was then a protest made in various quarters, and, having regard to the situation created thereby, and being anxious to make friends with their enemies in the gates or their friends as the case may be, they proposed to hand over half the spoil to the local authorities. My own view—and I am not 934 going to develop it at this moment—with regard to the Undeveloped Land Duties and the taxation upon ground rents, is that, so far as those taxes should be levied they should be levied in the interests, and solely in the interests, of the locality. The only possible justification for these taxes is that here is real property which is benefiting by the local rates and not paying its contribution to that particular area. I do not say that that is right or wrong, but, at any rate, it is an arguable proposition. If it is decided that there is real property which escapes its full share of the rates it may be quite proper that that property should be made subject to the rates, and have its burdens increased in proportion to its gains. That principle is quite simple, although its application may not be easy. But that was not the principle upon which the Government started. I do not really see how the Government are going to join together in holy matrimony these two principles which are really so profoundly opposite.
4.0 P.M.
The general community seem to have no special concern in this matter. You take local property, and tax it for the benefit of a part of the community which has nothing to do with the locality in which the property exists. In consequence of opposition the Government propose to hand over half to local authorities. Having made that concession in the course of our discussions in Committee, the Government are face to face with the necessity of bringing before this House concrete proposals for carrying these general principles or want of principles into effect. I waited anxiously to see how they were going to carry them out, and they have saved themselves a great deal of trouble by not carrying them out at all. They have hung up the whole business, and they propose to allow these funds to accumulate until they or their successors can find a principle of division upon which they can hand over the lump sum to local authorities. I do not think that is a procedure we ought to accept for a moment, but if the Government say the matter is so difficult and complicated that, at this period of the year, in view of the considerable and the immense complexity of the questions we have still to discuss, they really cannot face it, if that is an appeal ad misericordium, that has my hearty sympathy. I think they ought to tell us what are the general views, and the broad principles upon which they propose to act when they 935 have an opportunity of bringing in their legislation. This money which is going to be collected from undeveloped ground near London, Manchester, Leeds, Glasgow, and the great cities of this country, is to be allocated in some fashion among the three Kingdoms. The whole of this money, on the confession of the Government, is to be derived from the industrial activity of the community in certain portions of England and Scotland. Is it to be distributed at large over England, Scotland, and Ireland, and over parts of the country which have nothing whatever directly to do with this commercial and industrial activity? Are the ground rents of London to be handed over to the peasants of Connemara? I am entirely in favour of the British taxpayers considering the necessities of the less fortunate portions of the Kingdom, and I am in favour of dealing with them in a generous spirit. I think the Governments with which I have been connected have shown themselves not oblivious of that principle. That, however, is different to saying that quite irrespective of the needs of a particular part of the country you are going automatically to take the property of that part and hand it over to another part of the country. Whatever may be the needs of London, you are going to take the taxes on undeveloped land in London and hand them over to agricultural districts which have nothing to do with undeveloped land. I understand the Government think they are going to derive great profit from the coalfields of England and Scotland. There are large parts of England where there are no coalfields. Is the enterprise of the industry which you are going to tax in the great mineral fields of England and Scotland going to be handed over upon some wholly unknown principle to a part of the country which has no more to do with that particular development than the people living in Argentina or the islands in the Pacific. On what principle is that to be done? I understand that under this proposal every part of the country contributes to the Exchequer, and out of the fund the Exchequer gives assistance to the distant parts of the country especially in need. In the case of a tax raised in a particular part of the country on the ground that the social forces in that part of the country have made an increment in value which the owners have no title to, I cannot see on what principle you are going to distribute that tax outside the 936 area in which it had its origin. You cannot do it. It is impossible that we should part from this Resolution without the Government giving us some vague intimation as to how they mean to distribute this money. This money, if it belongs to anybody, belongs to London, Leeds, Glasgow, Edinburgh and the great coalfields of Yorkshire and Wales, and I would like to know on what principle the Government are going to hand over the proceeds of this tax to other parts of the country. Is it to be a distribution according to rateable value? Is it to be in proportion to population or in proportion to the burden of the rates? There must be some principle, and the Government must have thought it over. The Chancellor of the Exchequer told us he has been occupied in receiving a large number of deputations from various authorities upon the subject of the distribution of this money. I am not in the secrets of the Government, and I do not know what the deputations said to him or what he said to them. I do not think reports have appeared in the Press upon this point, and I should be very much interested if the right hon. Gentleman would give us some account of what transpired on this question. Were there deputations from local authorities which have nothing whatever to do with undeveloped land or minerals, and did they come and say, "Do not let them get hold of this money. We are quite as much in need of it as they are. We have had nothing to do with producing the money which you are going to distribute, but remember, if we have given very little, we are very eager to get some of it ourselves. Do not forget us when you are distributing largesses throughout the country." I suppose there have been other deputations from the great towns. I do not know whether Glasgow has sent a deputation to the right hon. Gentleman, but I know Glasgow held the view—it was the originator of the view—that municipalities have a right to all this money. Is Glasgow still of that opinion, or is it content that half of the tax on undeveloped land should go to the Exchequer and to see the other half whittled away among communities, north, south, east and west, which have no more, and, indeed, much less, to do with the development of Glasgow than the commercial undertakings of Canada, United States, the East, West Indies, and so forth? I do not know what view Glasgow may take, but I shall be greatly surprised if they would be content to see half whittled 937 away amongst its neighbours when it thinks it has an equitable and genuine title to the whole. If the Government say the difficulties are so great and the complexities so prodigious that it is impossible for them to present a considered scheme we may possibly accept the excuse, but we ought to be given clearly to understand on what general principle the distribution is to be made. Simply to collect the money at random without knowing how it is to be used seems to me contrary to every principle of sound finance, and inconsistent not merely with the canons of constitutional finance, but with wise and prudent statesmanship. As it is, the Government are holding in their hands a kind of bribe to give, when the occasion serves them, to the more deserving constituencies, and we know their view of which are the more deserving constituencies. I do not accuse the Government of that policy, because I have not an idea of what their policy is, but so long as they refuse to give us an idea of their policy they ought not too severely to criticise the position if an unkind construction is put on their silence and they are asked in a somewhat sceptical spirit for the information which the right hon. Gentleman seems so anxious to with-bold, and which I venture to say this Committee must have in its possession before it finally decides upon the wisdom or unwisdom, upon the justice or injustice, of a policy which is as novel in form as it is novel in substance. For these reasons, unless the right hon. Gentleman can give us some fuller information of his views than can be elicited either from the speech he has just delivered or the answers he has given to the deputations to which he has referred, I shall certainly oppose the Resolution.
§ Mr. LLOYD-GEORGEThe speech just delivered by the right hon. Gentleman is very interesting, very significant, and I am not sure it is not very topical. I think it represents a great advance on the position he has hitherto taken up with regard to the Land Taxes. The right hon. Gentleman says that if taxes of this kind are to be levied on the locality on the ground that they represent an increment attributable to the expenditure of rates, then, so long as they go to the locality, there is a principle, but, so long as they go to Imperial purposes, it is theft. I am very glad to recognise this great advance in the position of the right hon. Gentleman on taxation of the kind I have suggested in this Bill. It is really not contrary or abhorrent to principle, and it does not 938 infringe the Ten Commandments. It is purely a question of the purpose to which you apply it.
§ Mr. JOHN WARDIt was the whole burden of his song.
§ Mr. LLOYD-GEORGEApply it to main drains, and it is a great and holy principle. Apply it to the defences of the country, and it is sheer theft and robbery. Now we know exactly what the position of the right hon. Gentleman is.
Mr. BALFOURNobody knows it, or is likely to know it, from the right hon. Gentleman's version of what I said. I am ready to submit to any version of my views, providing I am not regarded as responsible for it.
§ Mr. LLOYD-GEORGEI have only been unfortunate enough to quote the words of the right hon. Gentleman. He said, "There, at any rate, is a principle."
§ Viscount HELMSLEY"Whether right or wrong."
§ Mr. LLOYD-GEORGEThen he thinks it is a wrong principle.
Mr. BALFOURWhat I said was that if anybody will look back at all the Reports of the Commission dealing with the taxation of ground values he will see that the argument always turns on this: Do these lands pay, or do they not pay, their just proportion to the rates of the locality? If you think they do not, I perfectly understand an agitation for making them pay their just proportion, and that is a principle, right or wrong. The allegation is that they gain by the rates, and they should contribute to the rates. That breaks down, however, when you leave the rating area and come to the Imperial area.
§ Mr. LLOYD-GEORGEThe question is not only whether there was an agitation, but whether, in the opinion of the right hon. Gentleman, it was a just agitation. I understood this was a principle he would appreciate.
§ Mr. LLOYD-GEORGEThen the appreciation of the principle by the right hon. Gentleman represents a very distinct advance upon his first position. His first position was one of unmitigated condemnation. His second position is that of 939 appreciation. His third position will be that of admiration and complete support, and I am perfectly certain it will be one of absorption when he comes to the position of having to apply the money. I am very glad the right hon. Gentleman takes this appreciating view of this taxation. The right hon. Gentleman says that if this money was spent in the locality he would appreciate it. He takes Glasgow and asks, What would you think of Glasgow spending all this money improving the value of land and then for the produce of this taxation to go to Connemara instead of Glasgow? What are the facts? The land being appreciated in value is not entirely within the boundaries of Glasgow. It is outside the boundaries of Glasgow.
§ Mr. LLOYD-GEORGEAs far as Glasgow is concerned, I suppose it would be all the same to them so long as their rates are not reduced? Take London. Land in a great area outside London—10, 15, and 20 miles—is appreciated in value; but, if you apply 20 per cent. of the whole sum of money which is due to that appreciation to the parishes where it is raised, London does not get a penny. It is simply spent in small areas outside, where, very often, there is no population. It is the purely villa residents outside London who get it. London, with its teeming population, would get nothing if it had not been for the principle we lay down here that the fund is a national one and not purely a local one. Take the great cities of Lancashire—Liverpool and Manchester. The appreciation in the value of land is not entirely within the boundaries of Liverpool; it is outside, but it is entirely due to the trade and industry of Liverpool. Yet the right hon. Gentleman says that Liverpool has no right to a penny of that increment created by the trade, the enterprise, and the industry of Liverpool.
§ Mr. LLOYD-GEORGEStill, he says they have just as much right to it as people who live in the islands of the Pacific.
Mr. BALFOURI really object to the right hon. Gentleman attributing to me arguments I never thought of using.
§ Mr. LLOYD-GEORGEWas it not the argument of the right hon. Gentleman that, if increment was created by the ex- 940 penditure of rates within an area, the money ought to be spent in that area? If that is not his argument I really do not know what his argument was. I say the increment is outside and the expenditure within, and the reason we nationalise this fund is because by doing so the people who create the increment get their share of it. The only way they can get their fair share of it is by nationalising the fund. I think the right hon. Gentleman really sees that.
§ Mr. LLOYD-GEORGEIt is a fact. The right hon. Gentleman thinks it is absurd, and it is therefore necessary I should repeat it. I say, taking any great city, the increment in land is very largely outside its boundaries, and, if you spend the money in the district where the increment is raised, the people who create the increment do not get the benefit. Where is the absurdity of that? It is in accordance with the whole facts of the case. The right hon. Gentleman says you ought to lay down the general principles, and he asks if people who are just as much interested as those in the Argentine Pacific are to get anything? It is a curious sort of unionism that people who live in the remotest districts of the United Kingdom have absolutely no concern in the prosperity of great towns which may be some miles from them. I thought we were one community. I thought we had a general interest in the same common prosperity. I thought, if one part of the community withered, the whole of the rest of the body politic suffered. I do not take the same view as the right hon. Gentleman that rural districts have no kind of concern in our great thriving centres of population. The right hon. Gentleman invites me to lay down principles at the present moment, but I ask him, with all respect: Has he ever contemplated or realised the difficulties of dealing with the problem of local and Imperial finance? I met one deputation which had a clear and definite suggestion to make, namely, that it should be on the basis of rateable value. That deputation represented a very large body of municipal opinion. But then another section objected to the principle of rateable value: that was the agricultural section. It has been strongly urged that the Government should give the municipalities time to formulate their own proposals and to come to some understanding among themselves as to what they prefer. I think that is a very wise sugges- 941 tion. But the right hon. Gentleman says it is unreasonable, and, while the municipalities are considering what conclusion they should come to, he wants to bind the Committee in such a way that it will be quite impossible for them to depart from a particular line of policy. Is that a wise suggestion? Would it not be infinitely better to wait until the municipalities have made up their minds and sent in their suggestions, so that the Government may consider them and make up their minds? That, at any rate, is our proposal, and I think it is a fairly reasonable one.
Mr. BALFOURThe right hon. Gentleman has misrepresented me, and appears to be thoroughly determined that no interpolation of mine shall put him right as to what are really my views. Perhaps he will allow me to say one word upon a point which I raised in my first speech. I was dealing with the question originally raised at Glasgow with regard to ground values. I said it was a question of rating, and everybody knows that it was fought out on that ground before the Royal Commission. The allegation was that property was to benefit by the rates of a locality while it had not contributed to those rates. I think it will be admitted that that is a fair summary of the argument, and that argument cubs directly across this plan of distributing the money. Half the money is to go to Glasgow and half is to go to places which are in no way directly concerned with Glasgow, its trade, or development. The right hon. Gentleman says, "It is an absurd view for the Leader of the Opposition to put forward. Does not everybody know that the land immediately around Glasgow outside the borough has gained in value by the activity of Glasgow, and why should not some of that money be given to the municipality or locality where it has accrued?" That is perfectly possible, but it does not touch the real gravamen of my case. It is not with regard to those districts just outside the municipal area, where everything except the mere drawing of a boundary belongs to the commercial system, but I raise the point with regard to those parts of the country which have nothing whatever to do with the commercial system of Glasgow, and I ask on what principle you are going to distribute Glasgow funds among them? I ask the right hon. Gentleman to explain that, but he has given no explanation. He put forward this representation with regard to areas just outside municipal boundaries that, after all, are we not one community, do we not all perish 942 or flourish together, and do not we, therefore, owe some assistance to those parts of the United Kingdom which are specially needy? But I specially said in my speech that some contribution might properly be made from the Central Exchequer in these cases, but it should not be given automatically. It should not be part of a particular plan. It should be contributed in proportion to the national power of giving and to the needs of the locality for which the money is required. It ought not to be given as an automatic result of the manipulation of local taxes. That point has not been touched by the right hon. Gentleman. I speak now as a Member of a body which ought to look at these things as statesmen endeavouring to have some principle with regard to the expenditure of money which they are collecting. But the Government have no principle. They are collecting the money, but they avow they have no principle. I think that is utterly unstatesmanlike, quite unprecedented, and extremely dangerous.
§ Mr. LAURENCE HARDYI propose to deal with two points which have been entirely left out in the speeches delivered by the Chancellor of the Exchequer. The right hon. Gentleman has only dealt, in fact, with one-half of the question. We have to remember that a great deal more than one-half the sum which will accrue at once will not come through the tax about which the right hon. Gentleman has just had an encounter with the Leader of the Opposition. It will come from the Mineral Rights Tax. In passing I would only remind the right hon. Gentleman it is remarkable that at the moment he decided to give a part of the Mineral Rights Duty to the local authority he took the opportunity of altering a tax which was to bring in £175,000 so as to make it yield £350,000, thereby ensuring that he lost nothing by the transaction. But why this particular tax should be allocated in this particular way I cannot understand, especially as the arguments that are brought forward with regard to the other taxes apply almost inversely to the Mineral Rights Duty. The action of the community in making roads and drainage and in encouraging building, as well as providing all the accessories which increase the value of land, are really decrement as far as minerals are concerned, and, therefore, the Mineral Rights Duty is almost opposed to the other duties. I think we ought to have some explanation why this particular duty is seized upon, and why half of it is given to the local authorities. Of course a large 943 proportion of the district would have nothing whatever to do with the minerals. So far as the whole amount is concerned, I was rather interested to see the other day that, in the Grand Committee upstairs, the right hon. Gentleman made a passionate appeal not to throw the sum of £600,000 into the melting pot of local rates with reference to road improvements. Yet he is now proposing to allot a smaller sum of money as a reward to the local authorities for not opposing the new taxes he is putting on this year. Whether it is right or not, I think we should have some explanation why this particular duty has been divided. There is another point on which I should like an explanation. When the Prime Minister occupied the position of Chancellor of the Exchequer, he was specially strong against this principle of allotting portions of taxes to local authorities. He said the matter should be dealt with on a large scale, and he took the first step for abolishing this when he granted a sum out of the Consolidated Fund in lieu of various contributions from the Estate and other duties. That was to be the principle on which the Government were to proceed, namely, that they were not, in future, going to allot a portion of taxes to the relief of local rates. But no sooner had they established that principle than they began to whittle it away as fast as they could. Last year they gave a certain portion of the Licence Duties to the local authorities, and this year they propose with reference to four or five new taxes to divide them between the local authorities and the State, and, at the same time, they give no indication of the manner in which these taxes are to be applied. I think we are justified in remembering the very strong language the Prime Minister used when he was laying down this principle, and in asking for some explanation of the reasons why the Government are departing from that principle.
§ Sir F. BANBURYThe right hon. Gentleman gave two reasons for this Resolution. First, he said, it often occurred that the tax was raised on land, the value of which had improved, not owing to the exertion of the people living in the locality, but through the exertion of people living in neighbouring towns, and he proceeded to give examples showing how in his opinion that arose. The second reason was that the local authorities were not unanimous in their opinion as to how the money should be divided. Some were in favour 944 of rateable value and some had other ideas, and he, therefore, thought it better to wait until they were able to come to an agreement among themselves. I propose to deal with both of those arguments. I will take first the point as to unearned increment value. May I say, however, that I do not see how that touches the Mineral Rights Duties, which are by far the larger part of the tax. The right hon. Gentleman appears to have left that out of his calculation. I do not know the nearest point to London at which the question of mineral rights could arise, but surely the right hon. Gentleman is not going to say that any income from those mineral rights ought to be divided among the people of Hoxton, or of any part of London. There may be something to be said on the question of increment value possibly. The right hon. Gentleman said the increment value near the big towns accrues owing to the exertions of the inhabitants of those big towns, and he argues that the money accruing from that increment value should go to places outside. But let me take the case of Croydon. That is a town about eight or nine miles from London Bridge. We know there has been a great rise in the value of land at Croydon, partly owing, I believe, to the action of the railway companies. At any rate, there has been a considerable rise, and I would ask how the inhabitants of Croydon would like it if the money raised by the increase of value of land in Croydon was handed over to the inhabitants of West Ham? It seems perfectly indefensible, because the inhabitants of West Ham had nothing whatever to do with the rise in the value of land in Croydon. The people in the City of London may have had something to do with this, because so many of them live at Croydon was handed over to the inhabi-but I do not fancy that the right hon. Gentleman proposes to endow the City of London, seeing that that is not a part which meets very much with his approval. But take the case of Liverpool. There are towns and villages round about Liverpool where there has been a considerable increase in the value of the land. I can only imagine that the reason for the proposal of the right hon. Gentleman to distribute the money in the way he suggests is that he wishes to dole out his bounty, and that this is the easiest way to do so. But there is nothing in the Bill which suggests mat there is to be anything in the nature of a radius; there is nothing to provide that the money arising from the 945 increment value within 20 miles of London is to go to London, or that that created within 20 miles of Liverpool is to go to Liverpool. There is nothing, in fact, in the Resolution which would prevent this money arising from the increase of land in Croydon being handed over to the Carnarvon Boroughs. So far as I can see there is absolutely nothing to prevent that.
§ Mr. LLOYD-GEORGEHas it never occurred to the hon. Baronet that there may be an increment in the Carnarvon Boroughs, as there really is, and that the people of Croydon would get the same benefit?
§ Sir F. BANBURYWould not the Carnarvon Boroughs get the same allotment? I think they might take both. Is the increment for the Carnarvon Boroughs to go to Croydon and that of Croydon to Carnarvon Boroughs? With regard to the other part of the question, and that is the possibility that the authorities have not made up their minds as to how this ought to be divided, I think that is very likely. The right hon. Gentleman says one set want rateable value, but the country constituencies do not want rateable value. I can quite understand that. This is a new tax, and all the local authorities want to get as much as they can. They have not agreed as to how they should share in the plunder given them by the Government, but have not the Government made up their minds, and, when they introduced this tax, had they not made up their minds? I should not wonder if they had not, because this was only a modification of the Budget made at the last moment in order to propitiate local authorities. Therefore, Parliament is asked to vote money without having the views of the local authorities who are to have the money as to how the amount is to be divided amongst them. That is to be decided by the right hon. Gentleman hereafter without any Parliamentary advice. The manner in which the money is to be divided seems to me to be a difficult question. We are, after all, quarrelling over a very small sum, because, when you pay the cost of collection, there will be very little left to divide. I think the Resolution says that the local authorities are to have a sum equal to one-half of the proceeds of the duties levied in respect of land values, etc. Is that to be the net proceeds or the gross proceeds? Because it is a very important difference if the sum is to be the net proceeds. An hon. 946 Friend below me says that the word "net" is in the Clause, but in the Resolution which we are discussing it says nothing about net, and perhaps the right hon. Gentleman will tell us. It is, as I have said, a very important question, because if it is net there will be very little to be divided amongst the municipalities, because the whole amount would only come to £675,000, and in the second, third, and fourth years the cost of collection will be something like £600,000. I should therefore like to be informed whether the word "net" is to be introduced or whether it is to be the gross amount. If the word "net" is in the Clause I think the Resolution and the Clause ought to coincide.
§ Mr. WATSON RUTHERFORDWe have listened to two speeches from the Chancellor of the Exchequer and to two speeches from the Leader of the Opposition with great interest, and I am bound to say that the Chancellor of the Exchequer in his version of the speech of the Leader of the Opposition gave us little less than a travesty of the right hon. Gentleman's speech, and in both his own speeches the Chancellor of the Exchequer has entirely failed to give us the slightest indication as to what the general principles are on which he proposes to divide the money raised under this Clause among the municipalities if it is agreed to. As I understand it, the whole effect of the speech of the Leader of the Opposition was an argument and an appeal that the Committee here were entitled to know not perhaps the whole details of how this money was to be divided, but the general principles of the basis of the division. To the argument there has been no reply, and to the appeal the Chancellor of the Exchequer has turned a deaf ear. It is not really the demand of the Leader of the Opposition, but it will be the demand of the whole country. The Government are going to mix up these four or five taxes imposed upon the country, and half of the proceeds of those taxes is to be carried to a certain account, but we are not told when we ask the authors of the taxation the general principles upon which half of the proceeds of it is to be divided. The Chancellor of the Exchequer referred just now to the case of Glasgow, and he put his case in this way: He said there are outside the municipal boundaries of Glasgow very considerable areas of land which are considerably affected by the enterprise and expenditure of the municipality of Glasgow, and he said with a great deal of force—and if that 947 were the only argument there would be very little reply to it—he said, "Why should Glasgow be precluded from claiming the increment from the proportion of the tax which arises from the belt outside its own municipal area?" But what the Chancellor of the Exchequer did not tell the Committee just now, and what constitutes a complete reply to the whole of that line of argument, is this: That Glasgow, backed by other municipalities, came forward with a, proposal and a demand that their areas and their municipal boundaries should be extended and that they should have the right to include in them the whole of the land round about their borders, so that they might deal with it as a whole; and, of course, if that demand had been conceded it is quite clear that, on a basis in proportion to the amount of money contributed, they would participate in the whole of the benefit which their enterprise and their expenditure had brought about. I consider that is a complete answer to the whole of the argument of the Chancellor of the Exchequer en that point.
If the right hon. Gentleman had given us the additional reason which I am going to suggest—if he had said the Government are going to bring in a Bill under which the whole of the municipalities of the kingdom will have power to enlarge their municipal boundaries and their own area's, so as to include all land that is beneficially affected, some sort of case would be made to postpone for 12 months the allocation of these monies, because we should then have time to arrive at a just and reasonable basis upon which the division could be calculated. But the Chancellor of the Exchequer has given us no such assurance. He has not held out a word or a hint of anything of the sort, but he has left us without the slightest knowledge or intimation as to the general principles on which this money is to be divided. I shall submit to you, Sir, before I sit down, a point of Order, and it is this: If we are asked under this Resolution, and under the Clause which carries it out and the other clauses referred to, to lay a burden of taxation upon the people or certain classes of people, is it in order to levy half of that taxation entirely without any object to which it is to be applied? I am not submitting the point now, but I shall submit that to your decision before I sit down. The point I raise is this—that in the reference of this question to the Committee there is no object assigned for 948 which half of this taxation is to be used, and, no object being defined or stated to the Committee. I contend that it is illegal to levy it.
Perhaps I may be allowed whilst I am addressing the Committee to say a few words upon the principle of this tax. Here is the Chancellor of the Exchequer saying to a number of people who are landlords, "You are robbers; you have been taking for years, and you are now taking monies which belong to somebody else; monies which have been earned by the State or the municipalities, and you are taking them"; he does not, however, bring in a Bill to stop that robbery—nothing of the sort—but he says, "The State will come in and take part of the proceeds of your robbery—part of the swag"; and the idea is that the municipalities may object to that, and have brought forward Bills which are inconsistent with it; but the Chancellor of the Exchequer says further he is going to square the let by giving them a bit of the plunder. If that is the principle of the taxation upon which the country is to proceed—if that is the principle of the Liberal party—then God help, the country.
With reference to the attack made by the right hon. Gentleman on the Leader of the Opposition in regard to the Bills that were brought forward and the agitation that took place to alter the basis of rating, so that the basis for the division of rating might be more in proportion to the site valuation, there were a considerable number of Members on both sides of the House who were in favour of that proposal. I was one of those who were in favour of it, and I seconded the Bill in 1903 which was brought in to that effect. But I wart to take this opportunity of pointing out that the principles at the bottom of that Bill were altogether and in every respect inconsistent with the taxation now proposed and which is dealt with in the financial Resolution now before the Committee. The principle at the bottom of that Bill was this: That when a municipality was obliged to raise certain sums for its own purposes and lay a rate upon its citizens, that rate should be proportioned, not as it is to-day to the enterprise of individuals in building upon the land, but should be in proportion to the opportunity which the City afforded them. That was the only principle, and the right hon. Gentleman now accuses the Leader of the Opposition of appreciating it. For my part I hope the Leader of the Opposition does appreciate it, because, as far as 949 I am concerned, with many others, I believe that is the correct basis on which the rating of all municipal areas should be arrived at. But that does not prevent us from now pointing out, that in effect that is the very taxation which is included in the clauses of this Bill, and which is to be divided, and that these principles are entirely inconsistent with the principle which we bad at heart, and which we have at heart now—namely, the principle that the municipality shall be entitled to charge its citizens in proportion to the benefits it confers upon them.
The principles of this Bill involve that the State is to interfere, and the State is to take a different account of the tax in a different kind of way which would make it impossible in the future for the municipalities to carry out what they have had at heart so long and in order to quiet these municipalities and prevent them from interference here is the bribe offered by the Chancellor of the Exchequr, who says, "Have a bit of this plunder which we are taking from the landlords." I can only say that I look upon that policy embodied in this Resolution as being one of the most unjust and unfair that has ever been submitted to the Committee or to this House. We are asked to say: "Here is the plunder which the State is going to get. True, for a year or two it is not going to be much, because the expenditure is going to be enormous; there are not going to be any proceeds for many years to come, but there are going to be proceeds in future years, and the municipalities are to be bribed by this bit of money in the future which they are to get, and they are not to have the principal of which they have been defrauded for years past, by taking those houses round about and rating them in a proper manner. There are some of us on this side of the House as well as on the other who look upon the whole of these taxes as not merely unjust and impolitic, but as causing confusion, difficulty, annoyance and expense, which are wholly unnecessary, when the subject might have been dealt with in an equitable manner without causing any of this tremendous expense and upon a reasonable and proper footing. I reiterate the demand which the Committee was entitled to make for some explanation of the general principles on which this money is intended to be divided, and I put this point of Order: Are we as a Committee in order in allowing these taxes when we are distinctly told in the Resolution that half of the taxes are not going to be used 950 when there is no defined object laid before Parliament to which they shall be applied, and when even the general principles under which they are to be dealt with are withheld from us?
The DEPUTY-CHAIRMANWe are dealing at present with the Resolution as a Resolution, and, as the hon. Member is aware, the Resolution is always in very general terms, and the purposes are carried out by Act of Parliament. But he will find here that "half the proceeds of the duty are to be divided between England, Scotland and Ireland in such manner and paid into such separate account for the benefit of such local authorities as Parliament may determine." What will follow necessarily will be a Bill, and the Bill will, of course, determine that in the usual way.
§ Mr. WATSON RUTHERFORDShall we be in order in submitting that point of Order to you later when the Clause comes up?
The DEPUTY-CHAIRMANThe hon. Member may take the opportunity of submitting the point of Order to Mr. Speaker on the Report stage.
§ Mr. PRETYMANWe are at a great disadvantage in debating this. We do not know whether the right hon. Gentleman means proceeds or net proceeds. Will he tell us that?
§ Mr. LLOYD-GEORGEIt is all on the Paper.
§ Mr. PRETYMANNo. The Resolution says "proceeds," the Clause says "net proceeds." Which does the right hon. Gentleman mean?
§ Mr. LLOYD-GEORGEThe Resolution is simply a sort of general authorisation; and you must take the Clause.
§ Mr. PRETYMANThat means that the cost of valuation will be deducted.
§ Mr. LLOYD-GEORGENo, it does not at all.
§ Mr. MUNRO FERGUSONNo doubt the inquiries which have been held and the demands which have been made by the Scottish municipalities have been that the increment on building land should go into the local exchequer. That has been the general proposition up to now, and there might be something to be said in favour of the tax upon building lands going to the local exchequer and the tax on mineral values going into the Imperial Exchequer. But, at any rate, the local exchequer is 951 to get half the Mineral Tax, and that will go some way to compensate for the loss of what they had anticipated in the matter of getting the whole of the building value. I have been associated with many of these inquiries and with some endeavours to deal with this question of building value, and although it is undoubted that we have always had the local ideal before us, the difficulties in the way of carrying it out have been very great, and these difficulties were brought out in the latest inquiry on the subject of the Scottish Land Values Bill. It was proposed there that this tax could be applicable only to urban areas, but it was soon found out that many county divisions are really indistinguishable from urban areas, and that it would be impossible to put this tax upon our urban areas and refuse it to what is nominally a rural area. Take a great mining district, like parts of Fife or Lanarkshire. It will be practically impossible to levy this tax in the urban districts alone. You must go over the whole area, and if you come to that I think there is a great deal to be said in favour of the scheme which has been adopted by the Chancellor of the Exchequer. There are far fewer difficulties in the way of collection. Many local authorities have been very much impressed by the delicacy of the undertaking of collecting these Land Taxes locally, and there are many officials who have never looked upon the project with great favour on that account alone. The tax is much better levied by the central authority. In the matter of distribution there is, I admit, still a great deal to be said, and I think it is wise to postpone the final settlement of how this could be done. It is not only a question of the views of different local authorities, although I am not at all sure that the poorer parts of the country might not participate in the advantages of its distribution as well as the richer part. I think there is a good deal to be said for that, but I am not a warm supporter of subventions to the local authorities when they can be avoided. Until we have a revision of the incidence of local taxation it is absolutely impossible to avoid it, and why we have separate projects of this kind, which do not always hang together with our general legislation or with our system of finance, is that at present one Government has found time to inquire into the subject of local taxation, but no Government has ever yet found time to deal with it, and the sooner we deal with it the better it will be for national and local finance. 952 There are certain services which can be far better carried on by the State than by the local authority, and I would much rather see the money used to carry out services which can be better carried out by the central authority than in giving subventions in aid of those services which are less efficiently administered by the local authority. I by no means say all services can be better carried out by the central authority, but there are some, and that may possibly be one way out of the difficulty. This Resolution, which gives half of these new taxes to the local authority, will be much better received by the country, and is, I think, in itself sounder than the original proposal, that the whole of the tax should go into the National Exchequer. Having had a great deal of experience both of inquiries and of local administration, I have come round to think that the proposal of the Chancellor of the Exchequer with respect to the levy of this tax is the best that has yet been made, and I think, in respect to the distribution of it, he is doing wisely in asking for time to consider the matter, and I think the country will support him in doing it.
§ Mr. WALTER GUINNESSIn view of the great anxiety which is felt by local authorities as to the details of the proposal, I should like to ask the Chancellor of the Exchequer if he can possibly give us a little more information than he has yet seen fit to offer. In the first place, there is a discrepancy between the proposal as it appears in the Resolution and in the new Clause which appears on the Order Paper. The Resolution states that: "This sum shall be divided between England, Scotland, and Ireland in such manner and paid into such separate accounts for the benefit of such local authorities as Parliament may determine."
That suggests that the money derived from England, Scotland, and Ireland will be separately ear-marked and separately paid into accounts for the benefit of those three different countries, and I should like to know, in view of the fact that there is no mention of that in the Clause at all, whether there is any idea of ear-marking the contribution of the three separate countries in the way that is suggested by the Resolution. I think we might have a little more information as to whether the yield is to be net or gross. I could not quite understand the motives of the right hon. Gentleman in giving such a very cryptic answer to the hon. and gallant 953 Gentleman (Mr. Pretyman). The right hon. Gentleman apparently said it was not going to be as in the Resolution, and that we must go by the Clause. Apparently, from the Clause, it is going to be half the net proceeds. That is a very serious matter to local authorities, and I should like to draw the attention of the Chancellor of the Exchequer to an answer which was given by the Financal Secretary to the Treasury to the hon. Member (Mr. Lane-Fox) on 18th August. The hon. Member asked what is the estimated net amount that the local authorities will receive from Land Taxes this year and next year? The Financial Secretary answered:—
It is anticipated that the yield of the new Land Taxes in the current financial year will amount to £675,000, of which one-half will be handed over to the local authority. My right hon. Friend estimates that the tax will yield next year one million, of which the local authorities will receive the same proportion.These figures, of course, are gross figures, and it means that the right hon. Gentleman has changed his mind if he is now going to deduct the cost of valuation.
§ Mr. LLOYD-GEORGENo. I said, "No" to the question put by the hon. and gallant Gentleman (Mr. Pretyman).
§ Mr. WALTER GUINNESSI am very much relieved to hear the right hon. Gentleman's answer. It was very ambiguous. It would have been very unjust to expect the ratepayer to pay a very large sum towards the valuation for several years to come.
§ Mr. LLOYD-GEORGEIt simply means the cost of collection which does not amount to much one way or the other.
§ 5.0 P.M.
§ Mr. WALTER GUINNESSThen are we going to have a new Bill next year to carry this out, because if it is going to be left to a future Session I think it will be a great disappointment to local authorities who are counting on a return during the present financial year? I think the right hon. Gentleman is very wise not to give us details of the allocation, because local authorities are still in some cases in the fortunate position of enjoying holidays, and it has been quite impossible for them to put before him the opinion which they have every right to form on this matter. The right hon. Gentleman mentioned as one proposal that the money should be divided according to rateable value. I think that was the proposal of the Association of Municipal Corporations. I 954 should like briefly to state an alternative proposal, which, I believe, will shortly be put before the right hon. Gentleman by the London County Council, and which would meet some of the criticisms made by him.
§ Mr. LLOYD-GEORGEThe views of the county council, I think, were represented before.
§ Mr. WALTER GUINNESSI think not. The Chancellor of the Exchequer had a deputation from the London County Council alone, and he asked that they should give him a memorandum of their proposals as to allocation. The proposals which they have formulated are very different from that with respect to rateable value.
§ Mr. LLOYD-GEORGEHave they been sent along?
§ Mr. WALTER GUINNESSThey have either been sent along or will be shortly. I think it is important that they should be considered, for rateable value will cause great injustice in the allocation, and will give subventions to some authorities which are least in need of them. In addition to that, rateable value—as put forward by the deputation to which the right hon. Gentleman referred—will also apply to the Mineral Rights Duty. Obviously, the proceeds from the Mineral Rights Duty are in no sense due to local enterprise, and I think it would be most unjust that rateable value should come in at all in that case if rateable value is to be taken as the standard of the amount of work done by the local community in increasing values. The London County Council's proposal is to leave out the Mineral Rights Duty altogether, and to leave that tax to be divided, as the right hon. Gentleman may think fit, over the whole country. While my hon. Friends and I do not offer any opinion on that, we feel strongly that in the case of those revenues which are derived to a large extent by the enterprise of the local community, there ought to be a combination of two principles, namely, that existing local areas should not be accepted, but that zones should be created round large towns to bring in those parts of the country which share in the prosperity of the central town, and that the funds should be allocated to those zones and the towns surrounded by the zones according to the amount of money raised in the zones. That is the suggestion of the London County Council, and, as between the 955 outer part and the inner part of the zone, the basis of rateable value should be accepted. I think that would be a far fairer basis than rateable value, because it would ensure better treatment to the outlying districts who share in the prosperity of the commercial area without, perhaps, having contributed very much to its creation. At the same time, they would not get money to which they were not fairly entitled. I think the alternative proposal put forward by the Chancellor of the Exchequer is in many ways unsatisfactory. I would ask the right hon. Gentleman to tell us whether he is going to earmark the proceeds of the taxes in England, Ireland, and Scotland, and also whether he hopes to carry a new Bill this Session to allocate the funds so that the local authorities should get the benefit in the present financial year?
§ Mr. E. S. MONTAGUI desire to support the Resolution proposed by the Chancellor of the Exchequer. I do so on behalf of the agricultural community, and particularly the one I have the honour to represent. When the Chancellor of the Exchequer made his Budget speech he gave a list of the objects for which he was seeking money and expanding the revenue. He mentioned that one of the objects to be dealt with next year was a general revision of the relations between local and Imperial taxation. This is something which has been promised to us by many of his predecessors, and I venture to think that the Chancellor of the Exchequer has brought its realisation nearer than any of them. This Resolution and the Clause which is to be based upon it make it certain that this reallocation of the burden will be seriously tackled next year. It is gratifying to learn from the hon. Member for the West Derby Division of Liverpool (Mr. Watson Rutherford) that he admits that in these new taxes there is to be found an expanding revenue—a revenue which will grow in succeeding years. That is a proposition which has been often raised on this side of the House, and which has been denied on the other side with equal force. When the Chancellor of the Exchequer desires to help to remove the grievous burden under which the ratepayers have been suffering so long, he is always handicapped by the want of money. If he has a surplus there are many advocates for the removal of different taxes, and it is only by some means like this of earmarking a sum which will 956 go to the realisation of this purpose that any real progress will be made. I am myself an advocate of removing certain services from the domain of the local ratepayer and putting them on the Imperial Exchequer. There is nothing inconsistent with that in the allocation of these particular taxes to that plan, but it is absolutely impossible with the time at his disposal that the Chancellor of the Exchequer should undertake the whole of the work this year. We have already got these taxes, and we hope for the realisation of a larger plan next year. This small sum is only a nucleus which is to be distributed among the local authorities, but it is a guarantee that we are at last to get what we have so long advocated. There seem to be no taxes out of which the nucleus could better be found than these land taxes. The Leader of the Opposition said that if there was any justification for these taxes it was that they were levied on property which had in the past escaped rates. I would point out that they are also levied on property which has escaped Imperial taxation. The division, therefore, of the proceeds of these taxes between the Imperial Exchequer, on the one hand, and the relief, on the other hand, of the local ratepayers as a whole, and in particular of the grievous burden on the agricultural ratepayers, is to my mind one of the most hopeful of the various projects which the Government have proposed.
§ Mr. F. W. JOWETTSo far as I am personally concerned—and I believe most of my colleagues will agree with me—I think the Resolution gives power to levy a tax which is very moderate indeed. I should have liked to have seen the Chancellor of the Exchequer going much farther and levying a tax equal in all cases to the rates of the district where such tax may be levied. Indeed, I would be in favour of undeveloped land being subject to all the municipal rates rather than that this alternative of the Chancellor of the Exchequer should be put in operation. It would be much more costly to the owner, because in many cases it would be equal to 8s. or 9s. instead of 1s., which will be the amount in most cases. I disagree with the position taken up by the Leader of the Opposition who, if I understood him rightly, maintained that the proceeds should go to the locality from whence the values were derived. Apart from the reasons given by the Chancellor of the Exchequer, which, I think, 957 were very sound, there are other considerations which, I think, ought to weigh in favour of the Chancellor of the Exchequer's view. Take, for instance, the case of waterworks. These are rated where they happen to be situated. It is a most grievous anomaly that because a large municipality has to go to some far away part and expend vast sums of money in the construction of waterworks, the immediate district should be able to levy rates on these works for all time to come. The same principle holds good with respect to railways and docks. It is not fair in such cases that the full rating values should always go to the locality where the works happen to be situated. I think it is only fair that these values should go into a central fund to be disbursed therefrom. I should like to put before the Chancellor of the Exchequer another view, and that is whether or not in determining how these central funds, which are to come into the Exchequer, shall be distributed, he will not consider the ear-marking of those funds for separate and distinct purposes. So long as the State gives subventions in relief of local rates without determining how the money shall be spent, it merely goes to relieve the burdens of the owners. But everybody knows that in every locality there are matters that need redressing that cannot possibly be undertaken because these localities have spent as much out of the local rates as they can afford, and, therefore, the work is not being done as it ought to be done. Sanitation and various other services that ought to have public money spent on them are not being looked after as they should be looked after in many places. If the Chancellor of the Exchequer would consent to earmark this money in such a way as to secure that it shall be spent on new objects of public utility so as to ensure that the public shall get extra services for that money, then the objection to subventions to localities would entirely disappear. As has been pointed out in the Minority Report of the Royal Commission on Poor Laws, those subventions that have been given to localities for different purposes, and have been subjected to efficient administration, have justified the action of the State in giving them. Take the subvention to the police. The fact of having given that money gives the State a distinct right to lay down that it shall be efficiently spent. It gives it the right of inspection and the right of seeing that the money has not been improperly dealt with. That is the line on 958 which all subventions from the State to the municipalities and localities should go. Without such ear-marking there is grave risk that the money given by the State will go to the relief of property, and not to amend those services which people have a desire to have amended, and which ought to be amended for the good of the country. I trust the Chancellor of the Exchequer will consider this point.
Sir GILBERT PARKERThe hon. Member who has just sat down regrets that the proposals of the Chancellor of the Exchequer were not those which he would have made. He would, for instance, have dealt with undeveloped land by local taxation, and the 1s. which the Chancellor of the Exchequer expects to get would under his proposals probably be 8s., 10s., or 12s. But he need not despair of the Chancellor of the Exchequer. The right hon. Gentleman has a very receptive mind, and perhaps that may come. But I would direct the attention of the Chancellor of the Exchequer to one or two points which refer to my own Constituency and the county in which it is. When the Chancellor of the Exchequer first introduced this taxation of land values and the Mineral Tax he was going to apply the proceeds of this to national purposes. He was going to tax the undeveloped minerals or the raw material. He changed his mind, probably influenced by arguments in this House, probably by second considerations, and probably by the representations of deputations. At any rate, he has now come to a position when he is going to return the municipalities half the proceeds out of the Mineral Tax. I remember when the Chancellor of the Exchequer introduced his Budget he was very strongly, for instance, concerned at the necessity of placing a tax on undeveloped minerals, and he put it on the ground that the workmen and manufacturers were handicapped by it. The Chancellor of the Exchequer pointed out to this House that trade and industry were handicapped by these royalties, but the landlord got out of these royalties more than his due, and he ought to return something to the State to make up for the fact that the manufacturer and the workman did, as it was termed, their duty. The position now is that the Chancellor of the Exchequer has transferred the tax on undeveloped minerals to wayleaves and royalties, forgetting, I am afraid, that there are a great many proprietors who have bought out their wayleaves and royalties, for which they have compounded, as it were, with the landlord 959 And now the Chancellor of the Exchequer proposes to tax proprietors who have commuted their royalties and their wayleaves. As an example of what has happened, I may refer to the case of the cement works at Northfleet, in my own Constituency. Here you have nothing contributed by the municipality, nothing contributed by anyone to the support of the population, but you have capital itself, which has made the place what it is. It was the purchase of the land and it was the development of the industry by the capital which was expended on the purchase of chalk land which has built up around those cement works a very large and prosperous community. The community owes everything to capital and to the initiative of the capitalists. Suppose the proprietors of those cement works bought their land from the surrounding owners, is it a fair and just thing to tax those proprietors who have compounded with the owners for their royalties and their wayleaves? Is it a fair thing to tax them and give the proceeds of that tax to other portions of Kent or other portions of the Kingdom? No one outside has contributed to the success of that great industry at North-fleet—and there are other industries of the same kind in other parts of the Constituency—except the capital which was spent on it and the energy behind the capital. The Chancellor of the Exchequer may say that that is not what he intended—that he intended by this tax on royalties and wayleaves to get at the chalk land, and the owner of the clay land for making bricks, and the owner of coal land for the production of coal, and that it was his object to compel them to pay, from his standpoint, what was due to the State. But the proceeds of this tax from the cement works at Northfleet will go to relieve the burden of other towns in Kent and other towns in other counties of the Kingdom who may be backward, non-progressive, and uneconomical in their expenditure or lax in fulfilling their municipal duties. Allusion has been made to municipalities in Essex, Kent, and elsewhere who were not doing their duty thoroughly. Why should other places, such as North-fleet, be obliged to pay for the non-progressiveness of other municipalities in their county or in other parts of the Kingdom? Yet, that is what the Chancellor of the Exchequer proposes. He proposes to tax these proprietors who have already compounded, who have already secured their royalties and wayleaves by purchasing the 960 clay and the chalk, and to tax them again, although they have paid for their royalties and wayleaves by giving a lump sum. It is most preposterous, for instance, to tax the owner or proprietor who has paid for clay land for the making of bricks. He has paid the tax already. He has bought these wayleaves and royalties, so that the Chancellor of the Exchequer is proposing a tax which in the circumstances is eminently unfair, and is all the more unfair—
§ The CHAIRMAN (Mr. Emmott)I would remind the hon. Member that this is not a question of taxation. This is a question of the distribution of the proceeds of taxation, and he should confine himself to that.
Sir GILBERT PARKERI apologise. My object was to show that the Chancellor of the Exchequer was imposing a very heavy and very unjust taxation upon this industrial community, and that he was taking the proceeds and applying them to the needs or necessities of municipalities elsewhere which had no possible claim at all upon the proceeds of that tax. I think if the right hon. Gentleman makes inquiries into the case that I have presented on behalf of these proprietors, he will see how unjust it is to give the proceeds of a tax which they have bought out to relieving the needs of other municipalities throughout the United Kingdom.
§ Mr. LLOYD-GEORGEI have just one or two observations to make in reference to the discussion, which has been a very interesting one. I do not propose to follow the hon. Member for Gravesend (Sir Gilbert Parker) in his examination of the problems of taxation, but I may say that the hon. Member's argument is based on an error of a very common character. The facts in regard to his immediate Constituency are very like the facts in relation to almost every constituency of the country. I do not think he could point to a single constituency where he would not get at any rate some portion of Increment Duty of undeveloped land, and I should say mineral rights. I daresay if he looked at the balance-sheet of the Northfleet Company he would find that it comes out very well. I should be very much surprised if they were contributing more in proportion than the vast majority of the constituencies of the country. The hon. Member for Croydon suggested that his constituency was taxed much more than my own Constituency, but I should not be surprised if he found that there is a very 961 much larger increase in my Constituency than he probably thinks, and I believe that is the case in the vast majority of constituencies. The real argument is a national rather than a local one. The hon. Member said I had probably changed my mind on this problem. That is not the case at all. I pointed out in my Budget speech that in my judgment a part of the proceeds of the taxation which I was then proposing to submit to the judgment of the House of Commons should undoubtedly be allocated to the relief of local taxation. Municipalities, it is true, requested that we should earmark part of this money, and that we should give not merely a Parliamentary pledge, but a statutory pledge as to the division of the sum. Several very practical suggestions have been made which I think ought to be taken into account. The hon. Member for Bury St. Edmunds (Mr. Walter Guinness) made a very practical speech, indicating that he had devoted a good deal of time to the consideration of the subject. I noted that he approved of the action of the Government in hanging up the fund, and he declined prematurely to make up his mind as to the method of apportionment between the local authorities. He took that course after a careful examination of the problem. He told the Committee that the local authorities had not had time to examine the subject, that they had been away upon their holidays, that the Government had brought forward a totally different proposal, and that the municipalities had all been invited to consider the matter, but they had not yet finally made up their minds as to the best course to take. The London County Council has only quite recently given a reply.
§ Mr. WALTER GUINNESSThree weeks ago.
§ Mr. LLOYD-GEORGEOnly three weeks ago! At any rate, I invited them to do so about a couple of months ago. I am not complaining, because I think it is a very important problem, and that the county council acted wisely in considering their answer for, at any rate, two or three months before sending it. I think they stand, I will not say alone, but almost alone; other great municipalities have not yet come to a conclusion. I think we have had one or two instances in which definite suggestions have been made. We have had the suggestion from the Association of Corporations, a very powerful body, whose spokesmen are exceedingly able men, but they only represent one section of the municipalities of the kingdom, and 962 I do not think the Government are entitled to accept their view as being that of the whole of the municipalities. I am not sure that the agricultural counties were represented.
§ Mr. WALTER GUINNESSI believe the agricultural counties were represented, and that is one of the chief reasons why the London County Council put forward an alternative proposal. At the time the Municipal Corporations Association proposed the basis of rateable value, the agricultural land was not exempted from the Land Tax. Since then there has been a considerable change in the basis of taxation, and therefore there is a still weaker case in favour of what was put forward by the deputation to which the right hon. Gentleman referred.
§ Mr. LLOYD-GEORGEI would like the Committee to realise what it is they are doing. They are practically depriving the agricultural counties of a very considerable part of the money that will be raised by this tax. It is a suggestion which has been pressed on the Government in the course of this Debate that we should spend the money actually on the locality where the money is obtained. What are the suggestions that have been put before His Majesty's Government? There are at least five. One is that the money should be spent in the locality where it is raised. The second suggestion is put forward by the Association of Municipal Corporations, that the money should be spent according to rateable value. The third is that it should be spent in proportion to population. The fourth suggestion is an ingenious one made by the London County Council, that we should declare zones, and distribute the money raised in those zones in proportion to the rateable value of the various districts within those areas. That is an extremely ingenious suggestion, and it struck me as a very practical one which deserves very careful consideration. The fifth suggestion is the one to which I may say I am very disposed to give favourable consideration myself, namely, that the money should be spent for some specific purpose of the Act, and should be spent locally. That was very largely the method adopted in 1890. At that time the whisky money was given to the localities, a very considerable number of which spent it on secondary and technical education. In my own locality it was used exclusively in building schools. I think if that money had gone into the rates it would have been lost. It has been 963 allocated to purposes connected with education, and children can be sent to secondary schools, where they receive admirable instruction at a £3 fee. I do not believe there are half a dozen towns in England where you get such an excellent system of secondary education at so cheap a price, and the fees are so low that artisans are able to send their children. That is purely due to the fact that the money, instead of being flung into the morass of the rates, has been definitely allocated to a specific local purpose. I earnestly urge the municipalities, when they come to deal with the problem, to consider that which seems to me to be the most fruitful suggestion for spending the money. These are the five suggestions which the municipalities have to consider, and which I believe they are considering. I earnestly urge the Committee not, merely for the sake of a temporary party advantage—I say this without any offence—to rush the Government into a definite allocation of the fund before the municipalities have had full time to consider the matter. I do most earnestly press that upon the Committee. It is all the same to me whether the money is allocated according to rateable value, or it is ear-marked in some other way. There would be no Parliamentary difficulty about it. If I had put into the Clause the words "according to rateable value," it would have been debated; those who are opposed to rateable value would have expressed their opinion, there would have been a Division, and there would have been an end of it.
§ Viscount HELMSLEYA mechanical majority.
§ Mr. LLOYD-GEORGEMechanical majority? I think the Noble Lord has acted in a mechanical majority, and I have very little doubt if he be in that majority again that he will be a mechanician, and then he will know how to appreciate the value of a mechanical majority. We may have to remind him of this in future, but we will not be premature. I think the Noble Lord is one of those who is really interested in this matter. I think he was one of those who brought the matter to the attention of the House a year or two ago, and I am not sure whether or not I had the honour of replying to him, but I take it generally that he would now rather allow the municipalities time to consider before coming to a conclusion on this subject. Of course, it is a matter for the Committee to decide, but I think we ought to give ear 964 to the municipalities and learn what they have got to say. We ought not to force them to come to a premature decision upon the question. What happened in 1890? I remember perfectly well the Government changed its mind in the course of the proceedings. It was the best thing that ever happened to the country that the Government did change its mind. You may say: "Here you are making one set of proposals in May, and in June changing your mind and making another set of proposals." I do not complain of that. It is rather what the Opposition would say. It is one of their stock criticisms; we all do it in our turn; it is part of the machinery, or one of the weapons. At the same time I would urge the Committee to allow time for the consideration of this matter rather than force a decision of the problem. They probably think that they ought to decide it themselves, but it does not matter whether we decide it or they decide it, and I think we will come to a wise decision if, first of all, we have heard what the municipalities have got to say on the problem. That is all I urge upon the Committee at the present moment.
§ Mr. F. W. LAMBTONI would not have intervened but for the speech of the hon. Member for Bury St. Edmunds and the answer of the Chancellor of the Exchequer. I was alluding to my hon. Friend's speech as to the opinion of the London County Council. Throughout the whole of his speech the right hon. Gentleman spoke of the opinion of the municipalities and the attention that should be paid to it. I must ask him to pay some attention to the county councils. I presume he does not mean to leave them out of his calculation.
§ Mr. LLOYD-GEORGEThe hon. Gentleman should have paid some attention to his hon. Friend's speech before addressing me. The first association which came before me was an association representing the county councils. They are responsible for the first suggestion which I mentioned in my list.
§ Mr. LAMBTONThe right hon. Gentleman used the word municipalities throughout. I paid attention to the speech of my hon. Friend below me, and he alluded to the opinion of the county councils as to these mineral taxes, and said, I think, that he was speaking for the county councils, and that the mineral wealth was not due to the industry of the community in which that wealth existed. If the tax is to be 965 allocated on that basis it will be extremely unfair to a great many mineral districts. Take the County Council of Durham: if you are going to rate the industry on which its increased rates are paid, surely it is light you should pay some attention to that county council. The County Council of Durham depends for its rates on the mineral interest, and ought to have the first claim in the allocation of these duties. I ask the Chancellor of the Exchequer to give some weight to the opinion of the County Council of Durham and other mineral districts as well as to London or any municipality.
§ Sir FRANCIS CHANNINGI wish to put a specific question to the Chancellor of the Exchequer which may be of some importance. I think that he is perfectly right in inviting the decision of the various authorities affected, or likely to be affected, in the allocation of these taxes, and that a certain amount of time might be given to enable them to lay their opinions before the Government. At the same time, so far as I can recollect a ruling of Mr. Speaker Peel, in 1890, as to the necessity of allocating the money which was liaised then by Mr. Goschen in his Budget for the purpose of extinguishing certain licences, the decision was that that money must be appropriated during the actual Session the Resolution was passed. In view of that it seems to me it would be extremely imprudent that we should leave this question open until too late a period, and that some decision should not be arrived at with regard to the allocation of this money within a reasonable time before the close of the present Session. I myself do not expect that this Session will last for ever, and it seems to me this is a point of importance. If my interpretation of Mr. Speaker Peel's ruling is correct, it will be incumbent on the Government definitely to allocate this money to the various objects which are considered wisest to allocate it to before this Session comes to an end, and it is obvious that the time during which these matters can be considered is a limited time.
§ Viscount HELMSLEYI think that the difficulty which we are now in as to the allocation of this money arises from what I would call the "hand-to-mouth" legislation which has been indulged in by the Chancellor of the Exchequer in this sort of way. It seems to me this allocation of half of these taxes to the local authorities is, as a matter of fact, nothing but an elaborate sham. It is not really an allo- 966 cation of these particular taxes at all. After all, if it is an allocation of these taxes, the justification of it is, as my right hon. Friend the Leader of the Opposition pointed out, that the municipalities have done something in creating these taxes. That is the only justification. I maintain, as a matter of fact, if you are going to spread the proceeds over the whole of the country, you might just as well take this sum of money from any other tax you like—say, the Income Tax or the Death Duties—and devote it to the relief of local taxation. Or if that is really what has to be done, it would have been much better to have done that honestly when the question of local taxation was before us. The natural solution is to say that, as we cannot allocate this money, we will not raise the tax. That is the logical position. It seems to me obvious, from the position which the Government have taken up, there will be very great difficulty, by which the agricultural community will suffer. The other municipalities will say that this money is earmarked, and that it comes from property in which they have a special interest, and that, therefore, in any division they would claim to have a preponderating right over the agricultural community which has directly no connection with these taxes. Therefore those municipalities will be in a better position in coming to the Chancellor of the Exchequer or any Government of the day than they would have been in if a particular sum had been allocated for the relief of local taxation when that particular question was being dealt with.
It seems to me that so far from having the effect the hon. Member for Cambridgeshire supposed, that of relieving agriculture, which we have all wanted for so long, it will have exactly the reverse, because the agricultural communities will not be able to speak with the same authority or voice to the Chancellor of the Exchequer as the other municipalities will. That seems to be a very great drawback, and it is the result of this second thoughts policy of devoting this Land Tax money to municipalities. It is either a fact or a sham. Either these taxes belong to the municipalities, and shall therefore go to those municipalities where they are raised, or it is a sham, and, as a matter of fact, this allocation means nothing, and you might as well take the money from any other tax and distribute it equally. I think the result will be to delay indefinitely the relief to agriculture, and to tie the hands of the agricultural interest when 967 they are trying to get their fair share, and to tie the hands of any Government who really wish to give that special relief to the agricultural community from local taxation which the Chancellor of the Exchequer and the Prime Minister have on various occasions admitted it deserved.
§ Mr. THOMAS LOUGHThere are two things I wish very respectfully to place before my right hon. Friend the Chancellor of the Exchequer. In the very interesting speech which he has just delivered he seemed to me to mix up two question which I venture to hint to him he should treat as entirely separate. The two questions are, first the areas which will get the money, and, second, the purposes to which the money will be devoted. I venture to think that what we are all interested in, what everybody in the House is interested in, is the first question, namely, the areas which will get the money. I do not think there will be any dispute as to the purposes to which the money will be devoted. [An HON. MEMBER indicated dissent.] There cannot be a dispute without two sides, and I should agree with anything my hon. Friend suggests in the way of expenditure, so that there would not be any dispute. I do think the important matter is in what area this money will go? I will, therefore, hint that those two points should be kept entirely separate, and that the right hon. Gentleman will find that the House and country are most interested in the question of how the money shall be distributed within the areas. The other hint which I venture to give to my right hon. Friend is not to listen too much to the views of the local authorities. We may hear what they have got to say, although I know before they open their mouths what they will say. Every local authority will say "Give us the whole of the funds," or, if not the whole of it, give us as much as you can. The local authorities are all cormorants. They remember nothing but that they have got a stomach, and they want to get it well filled. They look at it from one standpoint, the standpoint of Little Peddlington, that is, to give them all they can get. I venture respectfully to say the duty will rest on this House, on Parliament, and, most of all, upon the Chancellor of the Exchequer and the Government to settle this matter fairly. I am sure my right hon. Friend will remember that these land taxes have almost been converted in the way they have been treated in the Budget 968 into urban taxes. They do not press as heavily on agricultural communities, and the agricultural communities have got one or two pieces of fat already. I believe that they will score very heavily under this concession made under Schedule A over the Income Tax, and they are getting half their rates paid at present at the expense of the houses and the towns.
§ Mr. PRETYMANThey are not getting half the general rate paid. It is only half a sanitary rate.
§ Mr. LOUGHI did not say half the general rate. I am sorry my hon. Friend is so touchy on this sore point. Does he not remember he was in the House when we were discussing the Agricultural Rating Bill, and surely it did some good, and it was something for the agricultural districts and for land. Land has had its turn, and I say the poorer urban districts ought to have their turn now. I would remind my right hon. Friend the Chancellor of the Exchequer that no one put the case of the towns more eloquently than he did in a speech he made in 1900. I wish he would read that speech again, although I know he is very busy at the present time. He promised when the taxes on land came in that those municipalities which were oppressed would receive great relief. All relief has been cut down to about half of the whole tax, although I think we ought to have all those taxes raised in the various localities. I do ask, especially from the standpoint of London, that he should see that the great municipalities where there is a large poor population, and where there are many public services to be discharged, shall have their claims remembered. I ask especially that he should remember the claims of London, for I must say that London has been unfairly treated in many past arrangements. I hope my right hon. Friend will not allow himself to be drawn into any allocation of the funds which will not do full justice to the municipalities.
§ 6.0 P.M.
§ Mr. JAMES HOPEI wish to refer to what has been mentioned by the hon. Baronet the Member for Northamptonshire (Sir Francis Channing). I would ask the Chancellor of the Exchequer whether there is any precedent for hanging up a tax in the way suggested in a case which is authorised by a Resolution of this kind. What happened in 1890 was that the taxes were raised, by Liquor Duties, for the extinction of licences. That was prevented by the efforts of hon. Gentlemen now 969 opposite, and the taxes were diverted to education very properly, but it was a very great shame on those persons on whom the taxes were levied. The point is as to that money which was raised that a new purpose was found for it and done in the financial year. Now apparently the tax is to be hung up, and, if this Resolution is passed, it might be hung up from year to year if the Government of the day did not care to undertake the problem of allocating it. In that case what would be done? Would the money be allowed to fructify, or would it simply be kept idle? Could it be drawn upon as far as it went to take the place of some of the short borrowings in which the Government has to indulge at the beginning of the financial year? Our general theory is that each financial year is a water-tight compartment, beginning on April 1st and ending on March 31st following. Certainly Votes of this House must be spent during the year, or they drop into the Sinking Fund. This money, I understand, will not drop into the Sinking Fund, the Treasury apparently having power to accumulate it. On the face of it, the proposal seems to be a great departure from precedent, because it allows the Treasury to have the handling of certain sums of money which are not accounted for in the Appropriation Accounts of the year. Before we agree to the proposal, I think it will be necessary that we should have some explanation on this important point.
§ Mr. E. B. BARNARDI hope the Treasury will not create a new method of dealing with this money. We have in operation at the present moment a method which practically regulates the contributions given to local authorities, and we are expecting in the near future a Valuation Bill which may alter the whole system. I believe the present method was formed in this way. Some 20 years ago it was calculated how much money each local authority was receiving for the various grants, and when those grants were consolidated the whole amount was put into the form of a fraction, the numerator being the total amount the local authority was receiving, and the denominator £2,000,000, and whatever the fraction was it has since been applied to all the English counties. Whether that is a perfect method or not, there has been no serious complaint at the division so regulated. Another advantage of adhering to that system is that there would be no rivalry between town and country: the same regulation applies to all, London receiving its share of the Ex- 970 chequer contribution in this manner the same as other places. I submit, therefore, that instead of creating a new system it will be much better to continue the existing method until we have the long-promised Valuation Bill.
§ Viscount MORPETHThe right hon. Member for West Islington (Mr. Lough) refers to all other local authorities as Little Peddlingtons, which he describes as cormorants, and says they will only ask for more. The right hon. Gentleman is a pretty fair cormorant himself, because he spent the remainder of his speech in asking that this money should be allocated to London, and that it should not go to the local authorities. He was specially unjust, because the County Councils Association and the Municipal Corporations Association joined together to put a scheme before the Chancellor of the Exchequer, both desiring that if this money is to be allotted to the counties, it should be allotted as fairly as possible. When the Chancellor of the Exchequer promised part of this money to the local authorities, he must have known there would be a scramble for it. I think, on the whole, the local authorities have endeavoured to approach the Treasury in a reasonable manner, and that they desire the money to be allotted as fairly as possible. Owing to the taxes which have been selected and the incidence of those taxes on urban or rural areas, it will be very difficult for the Chancellor of the Exchequer to make such an allocation as will be just between rural and urban communities. I must, however, protest against the theory that all the money raised under these taxes will come from urban areas. If there is undeveloped land, it is very often outside the borough area and within the area of the rural authority, although no doubt it is land which is becoming urban. It is very unfair, too, that the money should be transferred from the district outside the borough back to the borough, it being notorious that the very fact that you have a growing urban population outside large cities like Liverpool, Manchester, and indeed, London, poorer than the borough itself, means a vast expense in the way of rates. Where you have a new town growing up outside an old town, it is the old town which is rich and the new town which is poor. So far from its being right that West Ham, Willesden, Tottenham, and other places of that kind should pay towards London, they are much poorer than London, being merely dormitories of 971 London, which ought to receive money from the great and wealthy city rather than contribute towards it. Although there has been increment in these places, if it is to be taxed the money should go to the rates of Tottenham, Willesden, and West Ham, where it is urgently needed to provide the necessary equipment of the new towns. Putting the principle aside, I am inclined to agree with the Chancellor of the Exchequer that it is not wise to press him to say at present how the money is to be allotted. The constitutional position has been put by my Noble Friend below me (Viscount Helmsley). I would suggest, however, one way in which the allocation might be made. The Treasury owe a debt to the local authorities at the present moment. They have made a definite promise, not once, but half a dozen times, to find the money for the medical inspection which has been placed upon them. Here is an opportunity. The Government tell us that they will have money coming in from these taxes. Let them discharge that debt. By finding the money for the definite purpose of medical inspection they will give relief to the local authorities, and at the same time help to carry out one of the most valuable works which is being done in the country at the present time.
§ Mr. J. McD. HENDERSONI think the Chancellor of the Exchequer is wise in not saying at present how he will allocate the money. We hear a great deal about the urban districts being entitled to it. I do not think they are. It is not Manchester that makes the demand for land in Manchester. It is the trade of Manchester which is entirely outside Manchester. It is India. In the same way it is not Glasgow that makes the demand for land in Glasgow. If there were no orders for ships from London merchants or Liverpool shippers, if Glasgow were left to develop itself, what would Glasgow be? It would be nothing at all. The whole of these urban demands for land arise from the general trade of the country, one might say of the Empire. I hope the Chancellor of the Exchequer will bear that point in mind.
§ Mr. JAMES HOPEIs there a precedent for hanging up a tax in the manner here proposed?
§ Mr. LLOYD-GEORGEI would not like to say that there is a precedent. We, however, consulted the authorities before putting the proposal in its present form, and 972 it is quite in conformity with precedent. The sum will accumulate specifically for this purpose.
§ Mr. REESThe Chancellor of the Exchequer is wise in not saying how he will allocate this money, but I hope, when the time comes, he will not forget his own native country of Wales. Without going so far as my hon. Friend (Mr. J. Henderson) in making a claim on behalf of India, I do say that it is not fair that all this money should be allocated to urban areas. There is one area which the Chancellor of the Exchequer will remember, that has a special claim to some of this money, and that will be for the through roads leading to the coast which are kept up by the County Council of Montgomeryshire, which pays for the upkeep of roads carrying far more than county traffic.
§ Resolution reported; to be considered to-morrow (Tuesday).