§ (1) For the purposes of this Part of this Act, the total value of minerals means the amount which the fee simple of the minerals if sold in the open market by a willing seller in their then condition might be expected to realise, and the capital value of minerals means the total value, after allowing such deduction (if any) as the Commissioners may allow for any sums which are proved to the satisfaction of the Commissioners to have been spent on boring or other operations carried out by the owner or his predecessor in title for the purpose of bringing the minerals into working, or where the minerals have been partly worked, such part of those sums as is, in the opinion of the Commissioners, proportionate to the amount of minerals ungotten.
§ (2) Except where the context otherwise requires, any references in this Part of this Act to the site value of land shall, in cases where the land consists solely of minerals, or comprises minerals, include a reference to the capital value of the minerals.—[Sir W. Robson.]
§ Mr. LAURENCE HARDYI beg to move, in Sub-section (1), after the word "sold" ["fee simple of the minerals if sold in the open market"], to insert the words "at the time of valuation."
The object of moving this Amendment is to obtain from the Government some idea when the valuation is to take place, otherwise we shall be left very much in the dark. If the valuation is taken a long time before it is wanted for the purpose of this Clause, it would not in any way represent the actual value if sold in the open market by a willing seller.
§ Sir W. ROBSONI do not think it is necessary to insert these words. The Clause itself is sufficiently explicit in its terms. It does not fix the time at which the valuation is to be made. No doubt the valuer will consider what is the value at the time he takes the valuation.
§ Mr. LAURENCE HARDYI beg leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ Mr. LAURENCE HARDYI beg to move, in Sub-section (1), to leave out from the word "realise" to the end of the Subsection, and to insert instead thereof:—
"calculated on the basis of the present worth of the royalty value thereof, regard being had to the period within which the minerals could reasonably be expected to be worked.
(2) For the purposes of this part of this Act the capital value of minerals means the total value of minerals subject to the following deductions which shall be allowed by the Commissioners:—
(3) For the purposes both of total value and capital value of minerals there shall be excluded from valuation:—
- (a) Any sums which are proved to the satisfaction of the Commissioners to be reasonable in respect of water, faults, wash-outs, or other physical defects or disadvantages to which the minerals comprised in the area, the subject of valuation, are or are likely to be exposed;
- (b) Any sums which are proved to the satisfaction of the Commissioners to have been spent on boring or other operations carried out for the purpose of bringing the minerals into working, or where the minerals have been partly worked, such part of those sums as is proved to the satisfaction of the Commissioners to be proportionate to the amount of minerals ungotten.
This Amendment comes with the authority of very experienced persons in connection with the valuation of such property, and I only submit it to the Government with the view to its being considered. There is no doubt that the Clause, as it stood, was not at all satisfactory, and I do not think that the Clause, as amended by the, Chancellor of the Exchequer, goes far enough in connection with the questions which are to be considered by the Commissioners. The words I propose to insert represent the custom in connection with the valuation of minerals, and, therefore, I think the Government ought to consider carefully whether they should not incorporate such provisions in a Clause dealing with valuation.
- (a) Any area in respect of which by reason of its not being adjoining or contiguous to an open mine or for any other cause, no reliable basis of computation is available at the time of valuation with regard to the existence and character of minerals (if any) comprised in such area, including their depth, thickness, and quality;
- (b) Any unworked minerals situate at a depth from the surface exceeding eight hundred yards;
1359 - (c) Any minerals which are proved to the satisfaction of the Commissioners to be commercially unworkable at the time of valuation;
- (d) Any minerals which are proved to the satisfaction of the Commissioners to be unworkable at the time of valuation by reason of being required in connection with the working of other mines, as barriers against water, or fire, or other contingency, or by reason of the owner being under a legal obligation to afford support to the superjacent or adjacent surface or mines."
§ Sir W. ROBSONI think all these considerations are really taken at the market value. I do not think the Amendment is necessary.
§ Mr. LAURENCE HARDYI beg leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ Amendment proposed, to leave out from the second "any" ["may allow for any sums which are proved"] to the word "for" ["or his predecessor in title for"], and to insert instead thereof the words "works executed or expenditure of a capital nature incurred bonâ fide by or on behalf of any person interested in the minerals."—[Sir W. Robson.]
§ Mr. LUPTONI consider this a most interesting Amendment. The effect of it, I think, will be to include not only expenditure by the lessor but expenditure by the lessee. In that case it is fair if the expenditure by the lessor is to be considered in this relation that the expenditure by the lessee should also be con- 1360 sidered in this relation, but I think if the total expenditure on other mines has been deducted there will be very little increment left.
§ The SOLICITOR-GENERAL (Sir Samuel Evans)These words are really in the interests of the owners of royalties. The expenditure was confined to money which has been proved to the satisfaction of the Commissioners to be spent on boring or other operations carried out by the owner or his predecessors in title. These words were too limited, and, therefore, we propose to leave them out, and insert words which would permit the Commissioners, in arriving at the valuation, to allow for "works executed or expenditure of a capital nature incurred bonâ fide by or on behalf of any person interested in the minerals."
§ Amendment agreed to.
§ Amendment made: In Sub-section (1), to leave out the words "part of those sums" ["such part of those sums"], and to insert instead thereof the word "deduction."—[Mr. Lloyd-George.]
§ Mr. LAURENCE HARDY moved, in Sub-section (1), to leave out the words "in the opinion of the Commissioners."
§ This is a question of fact, and not one for the opinion of the Commissioners. The right hon. Gentleman the Attorney-General took me to task earlier in the evening for having given too much power to the Commissioners, but in this case their opinion is not needed.
§ Sir SAMUEL EVANSWe are now dealing with the case where part of the minerals is gotten and part remains ungotten, and though it is a question of fact in a sense, it is hardly such a question of fact as is as easy to determine as that two and two are four. It is not a matter that can be deducible with mathematical accuracy. We must have a mode of estimating it, and therefore we insert words enabling the Commissioners to deal with the matter.
§ Amendment, by leave, withdrawn.
§ Amendment made: At the end of Subsection (1), to leave out the word "ungotten," and to insert instead thereof the words "which have not been worked."—[Mr. Lloyd-George.]
§ Mr. LLOYD-GEORGE moved, at end of Sub-section (1), to insert "(2) For the purposes of valuation under this Part of this Act all minerals shall be treated as a 1361 separate parcel of land, but where the minerals are not comprised in a mining lease or being worked, they shall be treated as having no value as minerals, unless the owner of the land in which they are comprised, in his return furnished to the Commissioners, specifies the nature of the minerals and his estimate of their capital value.
§ "Minerals which are comprised in a mining lease or are being worked shall be treated as a separate parcel of land, not only for the purposes of valuation, but also for the purpose of the assessment of duty under this Part of this Act."
§ Mr. LAMBTONThe words "parcel of land" are here used, I think, for the first time. Minerals are to be treated as a parcel of land. How is the valuation to be made? Is it to be compulsory for all owners to return valuations for parcels of land, or is it to be done by a Government valuer? It seems a new proviso, and we should have some explanation from the Chancellor of the Exchequer.
§ Mr. LLOYD-GEORGEIf the hon. Member (Mr. Lambton) carries his memory back to the days long ago, when we were at Clause 12, he will remember that we cut out from Clause 12 the first part of this Amendment, and the other portion is taken from Clause 16, at the request of the hon. Member for Ashford (Mr. Laurence Hardy). We thought it better that all should come together. "Separate parcel of land," I think, is to make it perfectly clear on the register. The idea is you cannot get the increment unless in valuing the mineral rights you treat them as a separate entity for the purpose of valuation and for the purpose of comparison afterwards.
§ Mr. PRETYMANThe Chancellor of the Exchequer told us earlier in the evening that there would be no compulsion on owners of land to return the value. Is he sure that, as a matter of drafting, the Land Clauses which compel the owner to make a return under a severe penalty will not apply in the case under consideration?
§ Mr. LLOYD-GEORGEWhat would happen in that case would be that the man would declare the value of his land. He would declare not merely the value of the surface, but everything down to the centre of the earth and right up to the clouds, it may be, now that we have aviation. A man has got to declare the whole value. If he makes no return, then it will be re- 1362 garded as having no value for the purpose of Increment Duty.
§ Mr. HILLSThis matter is not so clear as is apparently thought. Take a case where you cannot value the minerals and the surface in separate parcels. Assume that the surface has upon it a valuable residence, and assume that the minerals cannot be worked without letting down that residence. How are you to value those two separate parcels? Do you take the value of the house first of all, as though the minerals were always there, as before the house was built upon the surface, and then do you take the separate value of the minerals as though you could let clown the house? If you do that the total value is far more than the joint land. I think that you cannot separate the surface and the minerals. The two are valued as one, and yet the value of the two halves is more than the value of the whole.
§ Sir SAMUEL EVANSIf a man values the land on the basis of the minerals which are required for support, it is perfectly obvious if you take the market value of those minerals that it is nil. If you require them for the support of a house or the protection of other parts of the working, by reason of having a pillar, it is perfectly obvious that the minerals in that pillar have no value at all, because if you wanted to sell them in the market they could not be worked owing to the necessity of leaving them, and therefore it is perfectly obvious there can be no valuation of them at all.
§ Mr. LAURENCE HARDYThis is really the only part of the Clause on which we have an opportunity of knowing what is the valuation of minerals. On reading the Clause it does seem as if the Government in the case of minerals had gone back from the principle they have adopted in connection with other parts of this Bill. Whereas with reference to land they have distinctly taken upon themselves the onus of valuation, they have in this Sub-section thrown back upon the owner of land the initiative in connection with the valuation of minerals. It was very strongly objected to in the case of land that the owners should have to take the first step and put down the value of their land, and do it within a certain limit of time. So far as the valuation of minerals is concerned you call upon the owner to make a return for the Commissioners, and by that means you compel him to take the initiative. You put every mineral owner throughout the country to the expense of immediately— 1363 for I observe that no date is mentioned, and therefore I presume it means immediately—of valuing their minerals and considering whether it is necessary to put any estimate on their capital value. The objection to this new Sub-section introduced by the Government is that they have gone back to the principle which they have adopted in other parts of the Bill, so far as minerals are concerned. Secondly, I have some difficulty in understanding what is the use of a valuation of all the mineral properties in the country which the Chancellor of the Exchequer has been constantly alluding to, and how it is to take place. Is it to take place under Clause 16 as amended, in which it is provided that the Commissioners shall cause a valuation to be made of all the lands in the United Kingdom, showing their total value, because minerals are part of the land? Everybody understood in connection with Clause 16 that it only meant minerals in connection with the surface, and as one valuation. Is there to be a separate valuation of all the mineral properties in the country? It does not seem to me to be dealt with by any Clause in the Bill, and it certainly is not mentioned in this new Sub-section; so that we are in complete doubt how this valuation is to be carried out, when it is to be carried out, and by whom it is to be carried out. I would like to ask who is going to undertake it, and under what Clause of the Bill it is going to be undertaken.
§ Mr. LAMBTONI want to know what the return is which is to be furnished to the Commissioners and in what Clause of the Bill is to be found any definition of the return. It speaks vaguely of a return to the Commissioners, but we do not know what the return is, and what lapse of time there is to be before it is made. We really ought to have some explanation.
§ Mr. S. ROBERTSThis new Clause proposed by the Chancellor of the Exchequer will put landowners in very great difficulties. I am alluding to the cases where there are large undeveloped lands such as those on each side of the Midland coal seam, where you have hundreds of square miles under which the Royal Commission of 1895 declared that coal existed. Those landowners will not know whether the coal exists at all, but under this Clause they would have to adopt one of two courses. They will either have to say as a speculative thing what the price of the 1364 minerals may be, and if they value the minerals at a large sum they would be liable to be charged Death Duty, or they may adopt the other course, and say that they did not know whether there were any minerals or not. If they do that they will be caught for the Increment Duty. I am afraid this will affect a large number of owners in Nottinghamshire and Lincolnshire. There are about 1,700 square miles in Lincolnshire, where, according to the Report of the Royal Commission, coal probably exists. I am afraid those gentlemen will be placed in a most critical position.
§ Mr. LLOYD-GEORGEI really do not think there is any difficulty. Either those mineral properties have a value or they have not. It is purely a question whether in the market you would get a higher value for the property because of the presence of minerals than if you were to sell it as agricultural land. That is thoroughly well known in the market where it is. I am quite sure in Lincolnshire you would not get very much. I doubt if you would get more for your land in Lincolnshire merely because there was a suspicion that there is coal somewhere between that and the centre of the earth. It is a question of market value. If you go anywhere near the coalfields in South Wales, you will know exactly whether the land is on the seam, and you will get a considerable sum over and above the agricultural value of the land. It may be possible to work the coal, and therefore it has an appreciable market value; and, as I am reminded, the minerals are reserved constantly, and if any of the owners had died the Commissioners of Inland Revenue would assess them upon the special value of the undeveloped. There is a very considerable addition from the farms which sell there. They are worth twice or three times the agricultural value, purely and simply because of the presence of the minerals underneath the surface. I do not think there is any real difficulty in those cases in estimating the value. The owner is so fortunate as to get a sum of two or three thousand pounds. I do not think it is very hard on him to pay this tax. I do not think there is any real hardship in that. The hon. Member for Durham (Mr. Lambton) asked as to the returns. He will find all the particulars in Clause 16, which gives the general sort of information we require. The hon. Member for Ashford seems to complain because the method of valuation is different. The 1365 reason is that by far the greater part of the land of the country has no minerals under it at all. It would be no use our making this valuation in parts of the country where there are no minerals; therefore, this method is much more applicable in this case. I do not think it is any hardship on the owner at all. All he has to do is to reveal the presence of minerals.
§ Mr. MARKHAMI hope when the right hon. Gentleman appoints his valuers he will send them round to the edge of coalfields at present being worked, and rope in all those gentlemen who are daily letting coal by reason of this Bill. This valuation ought to be made at once. The sooner the valuation is made on the edge of existing coalfields the more revenue will the right hon. Gentleman get.
§ Mr. LLOYD-GEORGE30th April, 1909, is the dividing day.
§ Mr. MARKHAMThe right hon. Gentleman apparently has a different view from mine on this matter; but every mining engineer will confirm my statement that people have not paid Death Duties on coal except to an infinitesimal proportion of its value.
§ Mr. LLOYD-GEORGE moved, in Subsection (2), to leave out the word "include" ["include a reference"], and to insert instead thereof the words "be construed so far as respects the minerals as."
§ Amendment agreed to.
§ Clause, as amended, agreed to.