§ (1) Neither Increment Value Duty, Reversion Duty, nor Undeveloped Land Duty shall be charged in respect of any land whilst it is held by a statutory company for the purposes of their undertaking and cannot be appropriated by the company except to those purposes; but nothing in this provision shall prevent the collection of Increment Value Duty when any such land is sold or ceases to be so held.
§ This provision shall not be construed so as to exclude from the benefit thereof land held by a statutory company which is intended to be ultimately appropriated for the purpose of works forming or to form part of the company's undertaking but, pending the carrying out of these works, is used for other purposes.
§ (2) The Commissioners shall not require a statutory company to make any returns with respect to any such land for the purpose of the Provisions of this Part of this Act as to valuation other than as to the actual cost to the company of the land, and that cost shall, for the purposes of this Part of this Act, be substituted for the original site value of the land.
§ (3) For the purposes of the Lands Clauses Acts, as incorporated with any special Act, the amount (if any) payable by the transferor as Increment Value Duty shall not be treated as part of the costs or expenses of a conveyance of land, and shall not be taken into account in assessing the compensation to be paid to the transferor.1464
§ (4) For the purposes of this Section the expression "statutory company" means any railway company, canal company, dock company, water company, or other company who are for the time being authorised under any special Act to construct, work, or carry on any railway, canal, dock, water, or other public undertaking, and includes any person or body of persons so authorised; and the expression "special Act" includes any Provisional Order or Order having the force of an Act of Parliament.
§ Mr. RENWICK
I wish to say a few words with regard to this Clause, because it raises a point which I raised earlier in the proceedings in an important question on behalf of the commercial community. That was to exempt from Undevelopment Duty surplus land belonging to manufacturers and others, which had been secured with a view to the extension of their factories or works in future. It is very extraordinary that while the commercial and manufacturing classes have been left out, yet this new Clause is to provide that statutory companies holding similar land shall be exempt, not only from the Undevelopment Land Tax, but also from Increment and Reversion Duties. I cannot for the life of me understand why if it is equitable and proper that surplus land belonging to a statutory company shall be exempt, why similar land belonging to a manufacturing or trading company shall not be equally exempt? I do not see what virtue there is that a company is a statutory company, because my experience is that statutory companies in many cases are keen competitors of the ordinary trading companies.
I appeal to the right hon. Gentleman who is in charge of the Bill to insert words giving some concession to the ordinary trading companies or to limited liability companies registered under the Companies Act. He is giving these concessions to statutory companies, but I cannot see much virtue in the fact that a company is a statutory company. Might I remind the Committee what a statutory company at the present time does? Statutory companies, such as railway companies, become keen competitors of private shipowners. They own harbours and wharves and warehouses, they build engines, carriages and wagons, they own hotels and restaurants, and they are the keen competitors of licensed victuallers, who have to pay heavy duties. They own horses, they build lorries, they have motors and char-a-bancs; 1465 yet because they have the foresight to provide a piece of extra land for the extension of accommodation of their carriages and their horses, that piece of land is not to be subjected to the Undeveloped Land Duty. But if an ordinary owner of lorries or horses or carriages had the equal foresight to provide himself with a piece of land for the extension of his business he is to be subjected to this tax. Where is the equity of that? I do not see why the Government should meet the case of statutory companies and leave out all other companies. In the city of Newcastle, which I represent, the water company and the gas company are both statutory companies; they pay large dividends, if not enormous dividends, and their shares are at a very high premium. I took the trouble this morning to go through the list of the companies on the local Stock Exchange list, and I found that almost without exception all the statutory companies had their shares at a premium, while those of nearly all the ordinary private companies registered were at a discount. Therefore, the statutory company is better able to pay this duty than the private company.
Are the statutory companies exempted because they are more liberal employers of labour? Is it not the fact that the ordinary employer is better than the statutory company? There can be no doubt whatever but it is so. And is not the private employer much more enterprising than the statutory company. The statutory company has practically a monopoly, and it is to be protected by this Clause. The Attorney-General represents the town of South Shields, and he must know that very much of the property there belongs to the North-Eastern. Is he willing that that should escape while the land of the private owner should be taxed? This is a very important point for all private owners and manufacturers, for engine builders and boiler-makers, and all other works where they very probably require a certain amount of land for the extension of their business in the future. This may be a very serious matter also for the local authority, because if land is not available the owner of such works has to consider whether it may not be much better for him to remove his workshops or his factory. For instance, in a town like Jarrow, which has to depend entirely upon one industry, if there is not room for expansion in a town like that, the factory has to be taken away. It is a matter of pounds, shillings, and pence, and it is 1466 a very serious one for the ratepayers. Under this Clause, by which statutory companies escape, private owners who have taken the precaution to provide more land than was immediately required in the laying out of their works, will have to pay this tax. I earnestly hope that the Government will see their way to give the same treatment to the private owner as they are willing to extend to the statutory company.
§ Sir W. ROBSON
The hon. Gentleman has, I think, misconceived the purpose both of the Undeveloped Land Duty and the particular exemption which is the subject of this Clause. We exempt from Undeveloped Land Duty statutory companies not for any of the reasons that occur to the hon. Member. They may be excellent employers, but it is not the excellency of their conduct as employers that secures them this exemption. They may have shares at a premium, but that is not a consideration that need be taken into account in a matter of this kind. The reason why they are exempted is because they hold their land for a specific purpose, and they cannot apply it to any other purpose. They are only allowed to hold it for that purpose, and if they have any excess over that which is required they are under statutory obligation to sell it. In these circumstances it would be intolerable that they should be charged Undeveloped Land Duty upon land which, although it may be vacant, is ex hypothesi necessary for the purposes of their undertaking. If they have land that is not necessary it will be sold, and if not it will become subject to Undeveloped Land Tax.
If a private employer buys land he wants for the purposes of his business it is exempt from Undeveloped Land Tax, but says the hon. Gentleman, he may want to look ahead. He may buy land not for the purposes at present of his business, but he may desire to hold it up for that purpose in future. That is eminently the case in which he should pay the charge. Supposing he held up land not being used for the purposes of his business, but very necessary for the purpose of the population. Is he to be exempt from paying the tax although the land near him awaiting its purchase at higher prices is subjected to the Undeveloped Land Tax? I must defend the Clause as a whole, and I may point out that it is put down in deference to the wishes and requests of hon. Gentlemen opposite.
I do not rise to oppose the second reading of the Clause, but I am surprised at the defence made by the hon. Gentleman against the criticism of it by my hon. Friend. The Attorney-General's view is that a statutory company may hold land which it does not require provided that it will some day require it. He is of opinion, and no doubt his opinion is correct, that because it is a statutory company it is precluded from holding land not necessary for its business, which I think is a very doubtful limitation, but that is not the question. Under the existing law these companies may hold land for the purpose of their business. But the purposes of their business is denned so as to include future business, and therefore they may hold land for the purposes of their future business, but the hon. Gentleman says they are in no circumstances to be subject to the tax. If the tax is iniquitous the iniquity is precisely the same both in quality and in quantity, which you propose to put upon that portion of private property which is held up for precisely the same reason as a statutory company holds its land, namely, for the purpose of development. If the hon. and learned Gentleman had shown the slightest distinction between the two I should have not made these observations, but he has shown none. It is, of course, quite true you may imagine a case in which a private company may add to its legitimate business, the business of land speculator, and may buy land for that purpose, as much as a business man may hold it up to sell it for building land, or for some other purpose wholly unconnected with the original purpose for which the business is carried on. By all means tax that man. If big owners of land are to be subjected to the tax, then by all means put a tax on that land. It is not for that kind of transaction that my hon. Friend pleads. He is pleading for transactions which are wholly and in every particular on all fours with the ownership of land by a statutory company, which is not being used at the time, with the object that it might be some day used for some purpose. There is no difference. If it is wrong to tax a statutory company it is wrong to tax a private company, and if it is right to tax a private company it is right to tax a statutory company, and not one syllable that fell from the hon. Gentleman drew a distinction between the two cases, which, on his own admission, he must grant are identical if he says there is no 1468 machinery by which you can get a distinction between land properly held up and land improperly held up. My reply is that that very distinction can be drawn, because it is drawn in the case of these statutory companies. The Legislature says that a statutory company may hold land for certain purposes. Therefore it is quite possible to draw a distinction between the two cases. But we say if that distinction can be drawn in the case of one set of companies it should be drawn in the case of another, and that where land is ultimately used by private companies in precisely the same way as it is by statutory companies they should have the same privilege. I understand the hon. and learned Gentleman does not see the force of that argument, or does not mean to concede it, but I think I have made it quite clear that he has really given no answer to my hon. Friend.
§ 6.0 P.M.
§ Mr. JOHN DILLON
I think in this case the Attorney-General's answer is quite unsatisfactory, because if we read the words of the Section to exempt land they are "in respect of any land held by statutory companies for the purpose of their undertaking, and cannot be appropriated by the company except to those purposes." There is nothing in those words to prevent a statutory company holding the land for any number of years, providing they hold it for the purposes of their undertaking. Supposing a water company wanted to build a reservoir. They might buy sufficient land to build a second reservoir or to enable them to enlarge the first one. That would be holding land for the purposes of their undertaking. A private company does precisely the same thing. If a man is going to start a business he does not as a rule confine himself to buying just sufficient land to enable him to build a small factory, but naturally he buys a sufficient quantity to enable him to greatly extend his factory, and he buys the land when he can get it comparatively cheap. He will probably buy extra land in order to put up houses for his workmen. I cannot see on what principle the Government draw a distinction in this matter between a limited liability company or a private individual and public statutory companies. The hon. Member for Newcastle drew attention to the fact that these statutory companies are increasingly competing with private enterprise. Railway companies are starting hotels, refreshment rooms, omnibuses, and ships, and all kinds of enterprises 1469 to work in connection with their original undertakings, and, as far as I can gather, any land held for any of those purposes will be exempted from taxation. When railway companies or other statutory companies are allowed to carry on such a system of very severe competition with private enterprise or with limited liability companies, it seems to me rather cruel that they should be exempt from taxation on all lands which they allege they are holding for the purposes of their undertaking, which might be held for years, whilst a private employer holding land under similar conditions would be subject to this tax. I do not see any reason why statutory companies should be favoured in this matter over private enterprise or limited liability companies.
§ Sir W. ROBSON
The hon. Member for East Mayo (Mr. Dillon) has objected to the principle of exemption altogether, and he thinks the statutory companies should have no benefit which would give them an unfair advantage in trade competition. The hon. Member does not think my observations were satisfactory on that point, but I must leave the Committee to judge. It appears to me to be somewhat hard that a statutory company should be taxed on land which is to be regarded as undeveloped when it has no power to use it except for statutory purposes, and when it is compelled by statute to devote the land to purposes laid down by statute, and especially when it is obliged to do so within such a time as is considered reasonably necessary for the purposes of the undertaking. The Leader of the Opposition challenged the Government to indicate any distinction between the private and the statutory owner, and he said that a statutory owner is allowed to purchase land in advance of his immediate requirements. He is undoubtedly entitled to purchase land in advance of his immediate requirements, but he is not compelled immediately to build upon the land or use it for the purposes of the undertaking. He cannot hold it up indefinitely, otherwise it might be treated as surplus land, and he must devote it to the purposes of the undertaking. Those purposes are definite. There is no obligation on the private owner to devote his land to the purposes of his business, and he is not compelled to devote it to any particular purpose. Therefore he does not differ from other persons who for their own purposes are holding up the land. Under these circumstances I claim that there is a marked distinction, 1470 and one which justifies the line that has been drawn.
§ Mr. RENWICK
The Attorney-General appears to have lost sight of the second portion of the Sub-section, which reads:—"This provision shall not be construed so as to exclude from the benefit thereof land held by a statutory company which is intended to be ultimately appropriated for the purpose of works forming or to form part of the company's undertaking but, pending the carrying out of those works, is used for other purposes." That shows distinctly that the land can be used for other purposes, and I cannot see the difference between a piece of land which is bought for the extension of a factory and a piece of land bought for a railway. Why land should be allowed to lie idle for four, five, or ten years awaiting the extension of an undertaking I cannot understand. Why should such land belonging to statutory companies go free whilst land belonging to a private company is subject to this tax? Subsection (2) further provides that "the Commissioners shall not require a statutory company to make any returns with respect to any such land for the purpose of the provisions of this Part of this Act as to valuation other than as to the actual cost to the company of the land, and that cost shall, for the purposes of this Part of this Act, be substituted for the original site value of the land." It is a gross injustice that the private owner should be made to suffer whilst the statutory company is exempt. I think the two cases ought to be treated in the same way, and I appeal to the right hon. Gentleman on behalf of a large and important body, representing the trading and commercial classes of this country, to meet us in regard to this point.
§ Mr. CHARLES M'ARTHUR
It may be just that this exemption ought to be extended to private owners, but I hope there will be no opposition to this proposal on its merits, because it meets the necessities of a very large and important number of public bodies. Public bodies acquire land under Act of Parliament with a view to the extension of their undertakings. I will give the Committee one case. The Mersey Docks and Harbour Board in Liverpool acquire land with a view to the development of their system of docks, and the same thing applies to railways. They cannot sell that land, and they have to keep it, and they can only use it themselves for the purposes of their own particular business and undertaking. Of 1471 course, if this land is being used as a field under cultivation there is no reason why that should be put a stop to. If there happens to be houses on the land, there is no reason why they should be pulled down until the land is wanted. In the meantime, however, the land has to be kept in their possession until the circumstances of the undertaking require that it should be used for the purposes of that undertaking. That being so, it differs entirely, in my opinion, from the land which is used by a private owner who possesses a certain amount of control over it. I am not saying that this concession ought not to be made in the case of the private owner, but if any distinction is going to be drawn it should be in favour of those holding land under an Act of Parliament for public purposes.
§ Mr. STANLEY WILSON moved, in Sub-section (1), after the word "held" ["any such land is sold or ceases to be so held"], to insert the words "except in the case of land so held by a statutory company not carrying on their undertaking with a view to the payment of any dividend or profit out of the revenue thereof." I have put down this Amendment for the specific purpose of calling the attention of the Chancellor of the Exchequer to the case of the Humber Conservancy, which is a statutory company under this Act. This company is in a unique position as compared with any other river authority. It holds a part of the foreshore under the Crown on a 999 years' lease, and in the agreement if any of that land is sold by the Humber Conservancy one-third of the sum paid for the land has to go to the Board of Trade, and two-thirds to the Humber Conservancy. They do not sell a very great deal of land, but quite recently they sold a large portion of the foreshore for railway purposes. It seems to me to be rather a hardship if a company such as this is compelled to pay this tax upon money accruing from a sale of this character when the land is used solely for the benefit of the navigation of the River Humber. As I have already stated the Crown receives a benefit to the extent of one-third of the money received, and I cannot believe it is the intention of the Government to tax a company such as this which is run not for private profit but solely in the interests of the community. 1472 This Amendment has been submitted to the Board of Trade, and I have not heard that that Department disapproves of it. It is a very small point. It would not cause the Chancellor of the Exchequer to lose a very great deal of revenue, and this concession would be of great assistance to the Humber Conservancy. There may be other companies in a similar position, and if so I think they ought to receive a similar benefit.
§ Mr. LLOYD-GEORGE
The hon. Member has given the Committee a very special case where one-third of the profits already go to the Government Department. I think this is a case which ought to be met, but I am very much afraid that the words he has proposed would bring in many more cases than the one he has mentioned. This Amendment would not limit the exemption to the particular case he has described, and therefore I could not possibly accept this proposal in its present form. I will, however, undertake to look into the case and see what the conditions are, and I will communicate with the hon. Member later on.
Mr. STANLEY WILSON
I thank the right hon. Gentleman for his offer, and I ask leave to withdraw my Amendment.
§ Amendment, by leave, withdrawn.
§ Mr. RENWICK
It seems utterly hopeless to get any concession from the Chancellor of the Exchequer, and I decline to move my Amendment.
§ Mr. WATSON RUTHERFORD moved, in Sub-section (4), after the word "company" ["or other company who are for the time being authorised"], to insert the words "or public body incorporated by Act of Parliament or Royal Charter and."
§ I think the Chancellor of the Exchequer will agree that his intention is that this Clause should apply to public authorities incorporated by Act of Parliament or Royal Charter which are not designated as companies. There is, for instance, the Mersey Docks and Harbour Board, the Derwent Valley Water Board, and a number of other authorities which are incorporated by special charter or by Act of Parliament, and which are not companies at all. It has been held that those bodies are not companies for other purposes, and I think it is clearly the intention of the Government that they should be included in this Clause.1473
§ Mr. LLOYD-GEORGE
I have not had time to go into it, but I am informed that these words are much too wide. I think the kind of case to which the hon. Gentleman has referred ought to be included, and I am advised they are included. I agree with him in substance that those cases ought to be covered, and I will promise to look into the matter, and, if there is any doubt about that class of case being included, I shall certainly see that words are inserted to cover them.
§ Mr. WATSON RUTHERFORD
We cannot be expected to think of every possible contingency, and it is conceivable that under some circumstances the words might be too wide. We both have the same intention that bodies like the Mersey Docks and Harbour Board and the Derwent Valley Water Board should have the same rights as statutory companies under this Clause, and I gladly accept the assurance of the Chancellor of the Exchequer, and ask leave to withdraw my Amendment.
§ Mr. STUART-WORTLEY
The Derwent Valley Water Board is a special case. It is not a company, and it is not a rating authority. It is very difficult to say what it is, and we do not think it is covered. It is essentially an authority for a public object, namely, to supply water to large towns.
§ Mr. LLOYD-GEORGE
That is the very case which I was assured would come within the words of the Clause. At any rate, it ought to come within them. I think it would be covered by the words, "and includes any person or body of persons so authorised," but, if there is any doubt at all, we will make it quite clear. Certainly the Derwent Valley Water Board is one of the cases which I was assured would come within those words. They were intended to cover such a case.
§ Sir E. CARSON
Are there any cases where these public bodies exist under a charter, because, if there are, they are not covered by this Clause at all? My own impression is there are some old cases which would be done by Royal Charter prior to the time of Railway Acts and general Acts.
§ Mr. LLOYD-GEORGE
There will be plenty of time before the Report stage, and if anyone happens to know of a case of that kind which they imagine is not covered by the words of this Clause, I shall be very happy to have words inserted to protect them.
§ Amendment, by leave, withdrawn.
§ Mr. LLOYD-GEORGE moved, after Clause 26, to insert the following:—