BUDGET (1910) RESOLUTIONS.

HC Deb 23 February 1911 vol 21 cc2092-158

Order read for Adjourned Debate on Question proposed [20th February], "That it is expedient to amend the Law relating to National Debt, Customs, and Inland Revenue, including Excise."—[Mr. Hob-house.]

Question again proposed. Debate resumed.

Mr. AUSTEN CHAMBERLAIN

I desire to ask the Chancellor of the Exchequer one question which was not touched upon by the Financial Secretary the other day, and on which some doubt prevails on this side of the House. It is whether it is the right hon. Gentleman's intention to make any alteration in the Sinking Fund, or whether it will be necessary for him to have any legislation in connection with his Budget dealing with the Sinking Fund in consequence of the running of two financial years into one. My own impression is that the result of that proceeding is that there was a deficit instead of a surplus on the 31st March last, but that when the revenues were collected there was really a realised surplus of 2½ millions, which would go to swell the realised surplus for the current year. In the ordinary course that would find its way to the old Sinking Fund. I should like to know if it is the intention of the right hon. Gentleman to substract any money from the old Sinking Fund?

Mr. LLOYD GEORGE

No; in the ordinary course, unless some Motion is made, the money would naturally go to the old Sinking Fund.

Sir F. BANBURY

What does the right hon. Gentleman mean by the words "unless some Motion is made"?

Mr. LLOYD GEORGE

Unless some alteration is made subsequently in the law. I have said we do not propose to make any alteration at all.

Sir F. BANBURY

May we take that that no alteration will be made at this or any subsequent period? That is what I want to find out. Does the right hon. Gentleman reserve to himself the right later on in the Session to make a further inroad on the old Sinking Fund?

Mr. LLOYD GEORGE

The hon. Baronet is asking me a question as to my intentions regarding the next Budget. My answer referred only to the present Budget.

Sir F. BANBURY

I am afraid I expressed myself badly. I did not dream of asking the right hon. Gentleman his intentions as to the next Budget. My question had reference to the two Budgets 1909–10 and 1910–11. The position is this, the 1909–10 Budget did not become law until April or May last year, and the consequence was that on the 31st March last there was a nominal deficit of about twenty millions. In the ordinary course that deficit would have to be made up by borrowing money. But when the remainder of the taxes came in which they did in the year 1910–11 they were used to pay off the debt, which had accrued and that apparently was the proper course to pursue. But when they had done that there was a surplus of two millions odd for the year 1909–10. Now the Chancellor of the Exchequer proposes to amalgamate the two financial years into one, and I am afraid that the surplus remaining at the end of March, 1911, is the only surplus which can go to the liquidation of debt in the form of the old Sinking Fund. I would point out that when the right hon. Gentleman has amalgamated the two years it may be quite possible for him—and I do not know how he will avoid it—to merge the surplus of two millions odd of the year 1909–10 into the expenditure of the year 1910–11.

4.0 P.M.

Therefore, the only surplus is a surplus which appears on the 31st March next, whereas, as a matter of fact, there will be two surpluses, that is, if there is a surplus at the end of the year. There was a surplus on the year 1909–10, and that surplus ought to be used for the redemption of debt in some form or another, and, in addition to that, there will be another surplus which will accrue on the 31st March this year and ought to be used in the reduction of debt. What I want to ask is this, are these two surpluses going to be used for that purpose, or is the first sur- plus to disappear in the figures for 1910–11 and be used in order to make good the expenditure of that year. I hope I have made myself clear, and I should like to explain that I am not raising this in any kind of way as a party matter. I am not raising any objection to the manner of carrying on the finances of last year, I am only asking a question, and it is not as to what the Chancellor of the Exchequer is going to do next year, but whether there will be any measure for appropriating the surplus which there will be on the 31st March this year?

The FINANCIAL SECRETARY to the TREASURY (Mr. C. Hobhouse)

All that my right hon. Friend proposes by his Revenue Bill is this; there are accounts for two years which are mingled with each other. In one account there is a surplus from last year, and there may be a surplus from this year, and unless some clause is brought into this Revenue Bill, to deal with that, this would occur: there is not only a deficit in last year's borrowings, but in order to make up that deficit, say, twenty-six millions, there is a very large apparent surplus this year of a smaller sum of twenty-one millions that has to be applied in reduction of temporary borrowing, but unless my right hon. Friend brings in a clause, and without that the sum of twenty-one millions instead of being available to pay the temporary borrowings would be available and have to be paid into the old Sinking Fund. It is merely to set right a financial transaction, which involves two years and which introduced into the second of those two years an artificial surplus which would have to be applied under old legislation to the Sinking Fund and to the repayment of old borrowings when new borrowings are outstanding.

Sir F. BANBURY

I am much obliged to the right hon. Gentleman, but may I point out that I do not object to the proposal of the right hon. Gentleman in the least. I quite agree that what the Financial Secretary says is perfectly adequate, except as to the twenty-one millions which he says will have to be used in the payment of debt, because there is nothing in the old Sinking Fund Act which directs that it should be used in the reduction of Consols, therefore it has to be used in the redemption of floating debt. It could be used without this clause, which is really unnecessary. It can be used for the redemption of floating debt. But I am not quarrelling with the clause, if the right hon. Gentleman proposes to bring it in. I am not making any objection to it. What I want is a distinct understanding that the surplus which would accrue in the year 1909–10 will be devoted, as it would have been had matters been carried on in the old way, to the old Sinking Fund account, and that the surplus of this year will be devoted to the old Sinking Fund without any alteration. I do not want to use any ambiguous language which might give rise to question later on.

Mr. CHIOZZA MONEY

May I ask a question of the Financial Secretary in regard to the Income Tax? Figures were given us in regard to the yield of the Income Tax in the year 1909–10. May I ask my right hon. Friend if he can analyse those figures in order to give us a statement in relation to the Super-tax. Has the Super-tax yielded as much as it was estimated for, and can he say how the Super-tax is coming in, in the present financial year?

Mr. HOBHOUSE

I could not possibly say what is happening in regard to the Super-tax. That is a matter which will be dealt with by my right hon. Friend in his usual Budget statement. I do not think the Committee would desire me in any way to anticipate the finance statement which will be made in the ordinary course by the Chancellor of the Exchequer.

Mr. CHIOZZA MONEY

I am only applying for an explanation in regard to it, and, after all, the Super-tax, although relating to the Income Tax, was treated as a separate tax in regard to the Budget. We have had a separate statement as to the Land Tax, and it is not inconsistent, therefore, to ask for some statement as to the Super-tax.

Colonel GRIFFITH-BOSCAWEN

I desire to make a few observations with reference to the statement of the Financial Secretary the other day in connection with Local Taxation. Firstly, in regard to the concession which he says he has made in respect to local taxation I think that the hon. Members on this side of the House—my hon. Friend the Member for Fulham especially, who brought forward the question when we had the Debate on the Address—may fairly congratulate ourselves on the change of front made by the Government. In the Debate on the Amendment of the hon. Member for Fulham the Government practically shelved the whole question of giving any relief to local authorities. They simply proposed to appoint a committee upon the matter, although they did not say what that committee was to be, and whether it was to be a select or departmental or any other committee. They simply proposed to shelve the question by referring it to a committee. The other day, subsequent to that occasion, in view of the fact that the Government majority fell to 65 on that Amendment, a complete change is made, and the Financial Secretary comes down and makes a statement in regard to local finance and uses these words, that he hopes it will be a final and satisfactory settlement. I am sure, as representing a large borough, we are very grateful for any small concessions which have been made, but if the right hon. Gentleman or the Chancellor of the Exchequer think that that is a final or satisfactory settlement, I venture to think that they are very much mistaken. The Chancellor of the Exchequer says, it is not a statement he made, but I am taking the words of the Financial Secretary at the end of his speech. Let us see what the Government propose to do. They take great credit, because they are going to give to us the deficiency in regard to the whisky money this year and last year. The Financial Secretary told us that it came to about £600,000, but that, I beg to say, is not a gift at all. The right hon. Gentlemen the Chancellor of the Exchequer and the Financial Secretary, by their Budget, put on a spirit duty which spirits could not bear, and caused this deficiency. And because they are merely making it good, and enabling local authorities to carry on their work without imposing extra rates on the ratepayers, I say it is no gift whatever from the Government to the local authorities.

It is the very least that we have the right to claim, and when you consider the enormous extra burdens which are put upon education authorities every year—I might say every month—by the demands of the Government, who are causing constant increase in every education rate, in every county and borough in England, and when we consider that education has always been recognised as an onerous, a national, service, I say that this little-grant of £600,000, to make up the deficiency caused by the Government themselves is very far from being a final or satisfactory settlement. On the contrary, we shall require a great deal more to relieve the enormous burden now put upon ratepayers in respect to education in this country. Then the Chancellor of the Exchequer and the right hon. Gentleman take great credit because they have relieved the Poor Law guardians of the cost of old-age pensions, and the Financial Secretary, speaking on Monday, said that these pauper pensions cost two millions. I think the Chancellor of the Exchequer told us this afternoon that he is going to relieve the ratepayers to the tune of £1,500,000. I do not believe that that estimate is anything like the correct one. I think that what the Chancellor of the Exchequer and his friends have done is that they have practically taken the cost of the old-age pensions to the State, and have assumed that they are going to relieve the guardians up to very nearly the same sum. They entirely forget that, notwithstanding that there will be fewer inmates of the workhouses, as I hope there will be, the management and establishment charges will continue practically the same as before. [HON. MEMBERS: "No."] Yes, the charges will be very nearly the same. The establishment charges of a workhouse just as in most businesses, are very large, and are much the same, whether the business is great or small. That is a known fact in regard to a great many businesses, and it is absolutely absurd to say that these pauper pensioners will cost the State so much, and therefore they will save the Poor Law guardians a corresponding sum.

I quite agree that it will give some relief, but I venture to think the amount of relief is entirely over-estimated. As a matter of fact, if you consider what the cost of pauperism now is, and the amount by which old-age pensions have decreased it, I think it is exceedingly small. From the monthly return, published this week, it appears that the pauperism at the present time is 22.2 per thousand, whilst twelve months ago it was 22.9, so that there has been the smallest diminution in the last twelve months, notwithstanding the fact that old-age pensions have been paid and a large number of possible paupers have been saved from the workhouses. Moreover, when we consider that the party opposite and the Government are always telling us of our reviving trade and prosperity, I think the House will see that the effect of the pauper pensions on pauperism has been very small. What I claim is this, as the Royal Commission said, the cost of the Poor Law is a national burden. The Royal Commission said ten years ago: We consider Poor Law relief a national service. and I say far the greater proportion of it ought to be paid by the taxpayer generally, according to his ability, and not be placed upon the shoulders of the ratepayers. So far from this being a gift to the ratepayers, I have always held that the proposal made by the Chancellor of the Exchequer that a large part of the cost of old-age pensions, which we have always been taught to consider a national service—that a large part should be put upon the shoulders of the ratepayers is a most preposterous proposition. Though we are glad to think that the right hon. Gentleman has withdrawn this particular point, I venture to say, we do not regard it as in the nature of a gift, we regard it merely as the withdrawal of a claim which was an absurd and most unjust one from the beginning. The Financial Secretary last week, among various gifts which he said had been made to the local authorities, mentioned the sum of £420,000, which he said was the produce of the Motor Spirit Tax and the Motor Licence Tax, and he cited that as a gift to the local authorities. I deny that altogether. What is the point? This particular money is to be handed over to special machinery for a special purpose. It is quite true that local improvements may be made. I hope they will. But no part of the money will go to relieve the ordinary duties of the local authorities. You are merely creating fresh local work and providing fresh money for it, and I absolutely deny that that in any way represents a gift or a concession to the local authorities. If the Chancellor of the Exchequer would consult any of the great urban authorities or any county council they would entirely endorse my view and not take his view. While these purely imaginary gifts, which the Financial Secretary calls a final and satisfactory settlement, are being made to the local authorities, with the other hand the Chancellor of the Exchequer takes away his promise of giving them the half share of the Land Taxes.

The history of these Land Taxes is indeed most interesting. The first stage is that very large municipalities, especially, I think, Glasgow, Manchester, and other places, agitate for a special tax on undeveloped land in the town or for an increment duty on the ground that local improvements increase the value of land, and contending that the sites ought to pay some contribution for local improvements in the future. The agitation is entirely and solely that the money may be spent for local purposes. Then we come to the next stage. The Chancellor of the Exchequer brings in his great Budget. In that he confiscates the idea of the great municipalities. He proposes various incongruous land taxes, but having proposed them, he says the proceeds are to go, not to the local authorities but for Imperial purposes. If these special taxes on land are to go to Imperial purposes, all I can say is that it is taxing the same property twice over, and you are taxing a man not according to his ability but simply according to the kind of property he happens to possess. That is especially the case with the Mineral Rights Duty. That duty is nothing more nor less than a second Income Tax. [An HON. MEMBER: "No, no."] If my hon. Friend opposite holds Consols and I happen to put my money into mining royalties, why should I pay two taxes while he pays only one? Therefore I say that so far as these taxes are used for Imperial purposes they are a second Income Tax. Now we come to the third stage. The right hon. Gentleman finds pressure put upon him by his Friends below the Gangway and therefore he says "I must give something to the local authorities," and so in a very belated manner he promises that the local authorities are to have a half share of the proceeds of the Land Taxes. Then we come to the fourth stage, which is represented by the date September 27th, 1909. The right hon. Gentleman then came down with the proposal with regard to the half share. He says he does not know how to allocate it. That is the difficulty he has got into with his land taxes. Therefore he will postpone the allocation to a later date and he used these remarkable words which are well worth remembering now:— I do not think this will make any serious difference in regard to the localities. Now we come to the final stage. It has made a very serious difference, for the result of postponing the allocation is that the right hon. Gentleman has taken them away altogether. I really think we have good reason to complain on this ground. The Land Taxes from the first, if there were any Land Taxes, should have been entirely devoted to local purposes, and, for my part, provided that personal property pays a fair share of the rates, I have no objection in urban districts to a special site value tax for improvement purposes, but always provided that personal property is brought in and made to pay, as it does not do now, its fair share of the rates. That was the proposition which was made by Lord Balfour of Burleigh and his friends in the Minority Report of the Royal Commission ten years ago. They said:— It should be a special tax, it should be confined to urban districts, it should be limited in amount, it should be on all covered land and all land actually ripe for building, and it should be entirely devoted to local purposes. If we had a proposition of that sort, an entirely different proposition from what we have before the House at present, we should be adopting the German plan. We may sometimes learn something from the Germans. I believe the right hon. Gentleman himself went to Germany and he said it was very good. Why not adopt it? Instead of devoting your incongruous Land Taxes to Imperial finance, for which they were never intended, why not adopt the plan they have in Frankfort, where they have a local income tax for local purposes, where one quarter of the expenses of the town are raised from the local income tax, and one-ninth from an Increment Tax on site values. I think there is a great deal to be said for Land Taxes imposed upon that basis. In order that we may get that the first inevitable step is that we should absolutely repeal the Land Taxes for Imperial purposes, for which they never ought to have been imposed, and we should endeavour to meet the wishes of the locality by imposing a special tax merely in the case of property which is directly benefited by the expenditure of the local rates. While we, who have been trying to advocate the claims of local authorities, accept with gratitude the small crumbs of comfort that the right hon. Gentleman has given us, we are far from accepting this as a final or satisfactory settlement in any way whatsoever, and before long it will be absolutely necessary for the Government, notwithstanding all the revolutionary schemes which they have in view, to take in hand a thorough and bold reform of local taxation, and to remove from the narrow shoulders of the ratepayer those onerous national burdens that they bear now, and which they ought not to bear, and ought never to have borne in the past.

Now I want to say a word or two, not only on the effect of these changes outlined the other day by the Financial Secretary on local authorities, but I also want to say a word upon the licensing question. The Government have proposed a small change.

Mr. LLOYD GEORGE

A small change? It is £400,000.

Colonel GRIFFITH-BOSCAWEN

it is a small change in regard to the way of assessing annual values. The £400,000 is represented to us as a gift. It ought never to have been exacted. If the Government had carried out the pledges that they gave in this House when the matter was under discussion, if they had listened to the reasons which were put forward from this side, if they had accepted Amendments moved from this side they never would have exacted the £400,000. Now they find themselves in an impossible position, and they say "for the future we will not exact the £400,000, but we are not going to repay the £400,000 that we ought not to have had but did have last year." I do not call that a gift. I call it the most niggardly proposal I have ever heard. It is as if you caught a man robbing your till, and he says, "All right, I will not do it again, but I am not going to repay you what I have taken." Of course, we are glad the Government have seen that their former position was untenable; but, instead of not exacting the £400,000 in future, they ought to restore the £400,000 that they had no business to have, and the injustice of which was clearly demonstrated by Mr. Justice Channell in the Wrigglesworth case. But it is just the same with the Licence Duty as it is with the Land Taxes. It is here again simply a case of taxing a man, not according to his ability, but according to the character of the property that he happens to hold. It is bad enough to be a landlord. It is worse to be an owner of mining royalties, and it is worst of all to be a publican or a brewer. If you happen to fall under any of those categories you are to have special taxation imposed upon you, be you rich or be you poor. Look at the case of these Licence Duties. Before the celebrated Budget of the right hon. Gentleman 32 per cent. of the tax revenue of this country was paid by taxes on liquors—in fact, by the licensed trade. That does not include either their contributions to rates nor the compensation levy, which comes to some thing like £1,000,000 a year. Then the right hon. Gentleman swoops down upon the prey and imposes these enormous new Licence Duties. With what result? In Cardiff the Licence Duties have been increased 357 per cent., in Newcastle 278 per cent., in Birmingham 270 per cent., and in Leeds 266 per cent. I call it a crying injustice and a shame. It ought never to have been imposed, and it ought to be repealed.

Then look at the absurd injustice wherever these licences are levied. There is that minimum clause that in all cases the Licence Duty should be at least the minimum, whatever the annual value may be, according to the population of the district in which the house is situated. I represent a district of the Black Country where you have large towns and large urban districts quite close together. But the actual population of these districts differs. You have a large county borough of 50,000 or more. You have next door a smaller urban district of between 5,000 and 10,000. Yet in the case of two identically similar houses, with an identical trade, the duty in the one case is far higher than the duty in the other case, for no reason whatever except that, according to the arbitrary geographical division, one happens to be in a place with a population of over 50,000, and the other in a place with a population of under 10,000. I do not see how that can be defended. It seems to me just an instance of that sloppy legislation of which we have had so much in recent years. Here is another example of the sloppiness of the Government's finance. We all remember the celebrated statement of a Chancellor of the Exchequer when he imposed an enormous new additional duty on spirits of 3s. 9d. that he imposed this large round sum in order that the licensed holders might easily pass it on to the consumers, and so by passing on rather more than the duty they might be able to recoup themselves.

What about the Beer Licences, and what about the places which do not sell spirits? It is another example of that sloppiness to which I have referred, and as a matter of fact, the reduction in the consumption has been so great that the effect of placing new burdens upon a falling revenue has been to impose a charge which it could not bear. It is perfectly impossible for people to recoup themselves under the Spirit Duty, or in any way whatsoever.

Take the case of free houses. I have always understood that the party opposite are averse to the tied-house system, and particularly friendly to the free-house system, yet under the right hon. Gentleman's policy free houses are one by one being destroyed as quickly as they can be, because the tied tenant can pass back on to the brewer part of the new burdens imposed. [An HON. MEMBER: "No."] Not only can he do so, but it is expected that he should do so, according to the very words of the Finance Act. One of the results of Liberal legislation is therefore to destroy free houses as quickly as you can. The statement made by the Financial Secretary was of very great importance, and I think it will be the duty of the party with whom I act, while accepting what small concessions have been made, to fight so far as we can to the best of our ability the policy of this Budget, believing that it is based on unsound principles, and that we can have no real financial reform until its main elements disappear altogether.

Mr. GEORGE THORNE

I represent a county borough situated near the borough represented by the hon. Member opposite (Colonel Griffith-Boscawen). While listening to the hon. Member's speech, I had some difficulty to know in whose interest he particularly spoke—whether in the interest of the ratepayers or of the licence holders. He talked about the ratepayers first, but a great part of the later portion of his speech referred to the interest of the licensed holders. [An HON. MEMBER: "Why not?"] I am not objecting. I said I did not quite understand.

Colonel GRIFFITH-BOSCAWEN

I spoke in the interest of both.

Mr. G THORNE

I am speaking in the interest of the ratepayers, who are specially concerned in a matter of this description. I believe the hon. Member is entirely mistaken in supposing that this is the last word the Government has to say in reference to the relationship between Imperial and local finance.

Colonel GRIFFITH-BOSCAWEN

I merely quoted the words of the Financial Secretary.

Mr. G. THORNE

The hon. Member may have quoted the words, but he did not quote the connection.

Mr. HOBHOUSE

The hon. Gentleman opposite has two or three times called attention to words of mine. No doubt I used the words complete and final, but anybody listening to me must have known, I think, I was speaking of this particular settlement and this particular Bill. That is perfectly clear. I am quite sure the hon. Gentleman did not mean to misinterpret my words, and I hope he will not put the same interpretation on the words again.

Colonel GRIFFITH-BOSCAWEN

I beg the right hon. Gentleman's pardon. I had no intention to misrepresent him. I merely took the words as I heard them, and I must say that the word final is very large and covers a great deal.

Mr. G. THORNE

I am very glad that my intervention in the Debate has elicited a statement from the Financial Secretary, although personally I cannot see the necessity for it. The remark of the hon. Member opposite suggested that the statement made by my right hon. Friend on behalf of the Government was a complete and final settlement. I fancy that the hon. Gentleman is alone in that impression. What the Financial Secretary has just stated is in accordance with what I understood him to say on Monday, in common, I believe, with my fellow Members on this side of the House, namely, that the statement had relation to the particular proposals at the present time. The Chancellor of the Exchequer stated, if I understood him rightly, that it was his intention to face the whole question this Session, and that it is only because there are supreme matters which have now to be considered that he is prevented from doing so. I understood him to say further that next year, if it is in any way possible, this great question will be taken up, and the whole issue between Local and Imperial Finance will be fully and fairly considered. [An HON. MEMBER: "Next year."] I sincerely trust that circumstances will admit of the whole question being fully dealt with next year. Whenever it comes to be considered, I entirely agree with the hon. Gentleman (Colonel Griffith-Boscawen) that the questions of Education and Poor Law should be treated as distinctly national matters. I earnestly hope that they are going to be treated from a national standpoint, and that the local rates are going to be relieved of what are really national burdens. Everyone who is associated with the administration of local affairs knows the hindrance to which localities are exposed by the burden of the rates. In the Debate which took place the other day the charge made against the local authorities was that they are guilty of extravagance. This charge is generally based upon the whole of the rates without diffenentiating between them, and showing which part absolutely relates to local matters, and which part relates to national matters, such as education and the poor law. Not only do we find that this charge is generally made against local authorities, but we find that it is a hindrance to progress in our towns. Every town is looking out for, and endeavouring to get, fresh manufacturers into the district. When an employer visits a place he asks what the local rates are, and, finding that they are heavy, he is hindered from coming and taking his part in our local enterprise. In the interest of local enterprise and development it is absolutely essential that there should be a clear distinction between Imperial taxation on the one hand and local taxation on the other. I hope and believe the Government will undertake to deal with this question at the earliest opportunity. The hon. Member opposite stated that he was grateful for what had been done in giving concessions. I have never heard gratitude expressed in so grudging a manner. If that is the hon. Gentleman's gratitude, I do not know what his ingratitude would be. I feel a very great amount of gratitude for the concessions which have been made. Realising that it is imposesible to face the whole question this year, I am glad that what was anticipated is not to take place, and that the locality is to be relieved of the increased expense of the poor law. I took the opportunity of inquiring what benefit the concession would give in my own district, and I have received a telegram from the town clerk of Wolverhampton to the effect that, so far as that district is concerned, it will amount to 2d. in the pound. I do not know whether the hon. Gentleman opposite is grateful on behalf of Dudley, which he represents, but I express my gratitude as regards Wolverhampton and district.

Viscount HELMSLEY

Is that calculated on the number of pensioners who are going to receive pensions in the borough?

Mr. THORNE

I wrote to the Town Clerk stating the circumstances, and referring him to the statement which was made in this House. The Town Clerk has consulted the clerk to the board of guardians, and he says that he anticipates the benefit will be what I have stated. That is the information given to me in the telegram which I hold in my hand. I should like to have made a little more clear a matter in regard to which I believe there is some misconception. There has been in our district considerable anxiety by reason of the reduced asesssment in regard to public-houses. There has been some fear that this may result in considerable loss to our rates. From the telegram which I have received I understand that it is impossible to say what that will be on account of the appeals which have taken place, and that there is no immediate possibility of ascertaining. In view of the reduction I hope the Chancellor of the Exchequer will be able to do something in that matter. What I desire to ask is whether indirectly the grant of £400,000 to the licence holders will have any effect on the rates. I only ask for information in order that the Chancellor of the Exchequer or the Financial Secretary may in his reply tell the House what the effect will be in that direction. Will the granting of £400,000 to the licence holders have a material effect on the value of the houses, and will the assessment be raised in some proportion so that the ratepayers may have some benefit from that concession. If they are to benefit the fears we have entertained will be removed, while we will gain from the concession with respect to the Poor Law. I desire to express my gratitude to the Government for what they are doing now. I believe they are doing the best they can with the means at their disposal. I hope that next year there will be a settlement of the relations between Imperial and local finance.

Mr. HARMOOD-BANNER

The Resolutions before the Committee are extremely important. The hon. Member for the Ayr Burghs (Mr. Younger) dealt so fully with the figures in regard to licences on Monday that I do not propose to go at length into that matter; but I wish to say one on two words from my own knowledge with reference to the heavy charges for Licence Duties on brewers and the tenants of licensed houses. When the Financial Secretary referred to the judgment of Mr. Justice Channell in the Wrigglesworth case, it appeared that the Treasury was making a merit of carrying out the Judge's decision. That is rather a strange way of dealing with this licensing case. The Judge's decision deals with the principle upon which licences are to be assessed, and it is a principle which undoubtedly will cost the Exchequer a considerable sum of money. The Treasury virtually say: "We are not going to carry the appeals further, but we are going to give the licence holders a gift which will cost us about £400,000 from our Licence Duties." That applies to the future, and not to the past, but if the decision of the Judge is right now, why do not the Government adopt it, and apply it to all those who have suffered so much in the past? I think we have a right to appeal on behalf of those licence holders to be treated in the same way according to the decision of the Judge and according to what is evidently equitable and right.

I have, according to my experience and business, a great many chances of seeing what these Licence Duties do. They penalise the licence holder. My business is that of an accountant. I am aware, from some of the accounts I have seen lately, that those duties have imposed in one instance an added charge of £11,000 on the brewers. It is all very well to say they get it back from the licence holder; that is not the fact. The brewer has no redress. In another case £15,000 charge is added, and in another case £19,000. In one case the addition sweeps away the ordinary and preference dividend. In the other two cases it largely reduces the dividend which the shareholders had. This £400,000 would give some relief. Why should not the relief go back? Why should it not apply to the past just as much as to the future? The decision is undoubtedly a correct one. It is an absurd position to take up that if you add a heavy Licence Duty to a house therefore the rent of the house would remain the same. The rent of a house must be according to the profits that the house can make. If the duty is put on the house the profit must be less and the rent payable on that house must be less also. Therefore the rent falls, and the Licence Duty must be reduced. I was very pleased to hear the hon. Member for Wolverhampton (Mr. G. Thorne) speaking of the effect of the legal decision upon the municipalities and the county councils. The loss will be heavy on both these bodies in the reduction of the assessments upon which rates are levied. Like him, I am unable to obtain full information, but I am quite certain it is a penny, and I am very nearly certain it is twopence. Therefore, the gift going to be given by the removal of the pauper disqualification and the payment of that charge by the Imperial Exchequer will be swept clean away by the loss that the municipality will suffer through the application of the Wrigglesworth judg- ment. The charge to the brewers and the licensed houses is so heavy—it is quite apparent that it is unfair. Even with the animus which the party opposite have against all those who have put their money into breweries and licensed houses I can hardly think it is their wish to sweep away the debenture interest and preference dividends or the ordinary dividends which the shareholders ought to receive. In the three cases I particularly mentioned there is no doubt whatever that would be the result. Those cases which happen to be well known to me are not cases in which there has been any inflation of value such as would justify the statement that big profits were made one day, and, therefore, they ought to be prepared to make a loss at the present moment. I was very much gratified to hear the speech of the hon. Member for Huddersfield (Mr. Sherwell). I think his suggestion that this Duty should be assessed upon the receipts was one well worthy of consideration, even at the present moment. It absolutely removes injustice and removes the effect of the Licence Duty payable on assessed value which makes it not in the interests of the brewer or the licence holder to put up large and well-fitted houses for their business.

In reference to the Super-tax, I think we are all receiving it in the spirit in which it was sent to us. I cannot say we all like it, but I think that the general sense of the community is that the fairest method of exacting all taxes is by taking a proportion of the profits which we make. In this Super-tax we adopt rather an extension of that principle. But accepting that principle I want to preach what I have often said in this House, that is, that the ascertaining of profits should be put on a fair and reasonable basis, such as any member of the community adopts to ascertain his true profit from his business. We all know that the profit as ascertained by the Income Tax Commissioners is not based on that at all. It is based on what we can squeeze out of the taxpayer. Every device is put forward for bringing in various matters and assessing him on them, and for calling any losses losses of capital, and refusing to allow any abatement on them. In this particular case of the Super-tax there have been some gross injustices. The Super-tax is assessed upon the basis of the assessment made for 1909, and in ascertaining that the profits for the three years, 1906, 1907, and 1908 are taken. That is an ex post facto basis so far as concerns the case which I have under review. In the Act it is stated that the assessment of 1909, based on the three previous years, must be taken as the basis on which Super-tax is paid. I have more than one case in which an absolute loss has been made that year. In one particular case there was a loss of £22,000 in 1909, which swept away nearly all the capital of the merchant who was interested, and when the assessment for 1909 is taken on the trading of 1906, 1907, and 1908, and the man who lost £22,000 in 1909 is assessed on the profits of the three preceding years the whole of his capital is swept away. The excuse of the Income Tax Commissioners is not that that is a right or proper matter. The excuse is that that Super-tax is so assessed because the man failed to comply with some little formality in the account for 1909, which would have altered the back period, and thus have allowed him to raise this question. I do hope, the Act having been passed after the period when the assessment was made, the Chancellor of the Exchequer will give some attention to these points, and will see that on this question of Super-tax something as regards the action of the Commissioners is done, so that in paying a Super-tax a man may feel that he is paying on a fair basis.

As one interested in a municipality, I wish to make a few remarks upon the action of the Treasury in reference to this Wrigglesworth case. That action, as an hon. Member on the opposite side mentioned, is going to defraud the ratepayers of a very large sum of money in the shape of reduced assessment on public property. As regards these gifts which are said to be given, the Whisky Duty to the Education authorities, and the payment of the pauper pensions, it is rather like the case of taking away from a man his watch, chain, and seal, and then presenting the chain to the education authorities, the watch to the Poor Law authorities, and leaving the municipal authorities, who have the burden to pay, a great many extra payments for their benefit. That is the position at the present moment with these contributions for which the Treasury now take credit. Surely this House understands that it has the power over all municipal matters; it has the power to say to the municipality that it must pay so much money, and we know that it does, and that it imposes extra duties which must be carried out irrespective of cost. We know, also, that this House has the common purse except as regards the rates, and that from time to time it has imposed those duties upon the ratepayers, and made no contribution whatever to the relief of rates. We all know that the man who has to pay the rates is not the man who seems to pay. The shopkeeper has to take his stand somewhere where he pays his £1,000 or £2,000 rent. His rates are assessed on that, but his profits are not in proportion. The owners of works and of collieries have to take their stand with assessments for very large sums of money upon buildings and machinery which are erected for the purposes of business and for the good of the inhabitants of the labouring classes, but they get a profit proportionate to the amount which they expend. If the works do not succeed they are sold for scrap and go out of existence. The result is, as regards rates, that the ratepayers now have to pay all the taxes which this House imposes upon municipalities or counties, and they receive no relief whatsoever, and the charge goes on the wrong shoulders. The ratepayer is not the person who ought to pay the cost of the relief of lunatics or vagrants, or of the administration of justice. The cost in all those cases falls upon the ratepayer simply because the old custom of the country has been to place upon the ratepayer certain duties and to-give him a certain contribution from the Exchequer and leave him to do the rest.

5.0 P.M.

The local duties for which the ratepayers-have to pay have gone on in creasing, but the Imperial contributions have decreased. As regards these contributions, we have only to look to the last few years, since-the present Government came into office, to see what has occurred. First, when the present Prime Minister was Chancellor of the Exchequer, his action with regard to the licencing duties created alarm, and it was quite plain that the taking away these licence duties for the Imperial Exchequer, and then raising them, would probably mean a loss to the local authorities. That was met by a compromise. The present Prime Minister, when Chancellor of the Exchequer, said he would pay the average of that year, and that on that average he would continue the Exchequer contribution. In the following year, on this question of the licence duties, which operated to the detriment of the municipal authorities, an attempt was made at a species of compromise, and, finally, when it was seen there was nothing to meet the increased local charges, the present Chancellor of the Exchequer informed us that half of the Land Taxes would be employed in relief of extra local burdens arising from the removal of the licence duties. What has been the case? Like the old story in "Punch," of the lawyer and the oyster, the Government takes the oyster of these Land Taxes, and hands to the county councils and municipal authorities the two shells. We can do nothing whatever. The Government has now removed the Land Taxes from us and taken them into the possession of the Imperial Exchequer, for the purpose of pauper pensions and the Whisky Duty. This question is one that requires a good deal more attention than it gets The ratepayer is not the taxpayer. To put charges upon the rates for the purposes not properly belonging to them is not a fair method of dealing with the question of many of the duties which appertain to the general taxpayer. The increase in the charges is most apparent to anyone who looks into the facts. I have been chairman of the finance committee of Liverpool for some time, and I will give you a few of the figures in connection with the local finances in order to show the facts in relation to the Exchequer contributions. First there is the question of county asylums, which in their nature should not be a charge in any way upon the rates, and, in regard to that matter, in Liverpool in 1895 the cost was £14,000; in 1911 the cost is £36,500, an increase of £22,500. The constabulary in 1895 cost £49,000; in 1911, £97,000, an increase of £48,000.

In that period what was the difference in Exchequer contribution. The Exchequer contribution in 1895 was £16,194, and in the present year the only amount we can get from the Exchequer contribution by way of relief to Liverpool—part of it goes to education and other charges—is not £16,000 but £11,000. The whole of the figures show that whereas during that period the local charges have gone up, charges which ought really to have been borne by the Imperial Exchequer, and which have been imposed on the municipalities by this House, those charges have increased by 89 per cent. from the amount at which they stood when they were first imposed, while the contribution from Imperial sources has only increased by 19 per cent. That is an enormous difference. We were told the other day that it is a matter which cannot be controlled, that both parties have been trying to arrange it, and that it is not one party or the other party which is to blame, but both parties who are equally to blame. We have suffered worse during the last six years; we have more burdens placed upon us, while the Imperial contribution is steadily going down. The engagements made in 1907 and 1908 have been actually broken. They were engagements that we should not suffer, and now we are face to face with the fact that we are called upon to pass a resolution which proposes that we are to take the average of 1909 as the proper Exchequer contribution in respect of those charges which have increased by 89 per cent. We are to take this as a proper contribution. We are to get no more. We are to wait some time until the Treasury wakes up and thinks it has enough balance of money to meet local demands. In the municipalities, Conservatives and Liberals alike have looked forward to these Land Taxes as a source of relief; but now, instead of that, these Land Taxes are to be taken from us and are to be used for places in which we have no interest. The Land Taxes of Liverpool are to go to some out-of-the-way Welsh places. We are not to have those taxes in connection with our expenditure on the widening of roads and on facilities for our commerce, and they are to be spent elsewhere. But we are to have the burden of this 89 per cent. increase on local charges, which will reach 100 per cent. Increase very shortly. The contribution from the Imperial Exchequer has dropped to 19 per cent., and will go down to 15 per cent., and probably 10 per cent.

We have suffered, I was going to say something in the nature of trickery, but I will not do so, though one has to use strong expressions with regard to the conduct of last year. We have been fooled by the Government as regards the licence Duties, which have been taken away from us. Parliament will doubtless impose other duties upon us, such as the feeding of children; they will cast all sorts of duties upon us, but they will very carefully not add one penny to the receipts which we ought to have; and then they will turn round upon us with the statement, "We have not got your money; we have given it away to some other persons." We know very well that the proposal in regard to old age pensions is not going to create a very great amount of reduction in the charges on the poor rates. We do know that the estab- lishment charges will continue. There was some laughter on the other side when it was said that the establishment charges would go down. Establishment charges will not go down; they will remain, and great numbers of those who are already in the workhouse will prefer to remain there sooner than take their pension and go elsewhere. But the great point of controversy before us is whether it is fair between man and man that we, sitting here, with the power in our hands, should throw extra burdens on the municipality without giving extra relief. It is the future, it is this year and the last two years, the last six years, the last ten years with which we are concerned. If these burdens which have been imposed had been met by contributions from the Imperial Exchequer in relief, then I should not have had to bring before this House the fact that our municipal burdens have gone up by about 90 per cent., while the relief which is given is only a miserable 20 per cent.

Mr. AINSWORTH

I should like to know if there is any possibility of some relief being given to licence-holders in Scotland, where the hardship is greater than in other parts of the country. Hon. Members know that in Scotland the hotels carry on a business which is largely seasonal; that is to say, except for four months in the year it is far more to the interests of owner and tenant that such hotels should be closed altogether. As the House probably knows, the rule at present is that where the receipts from liquors are less than one-third of the entire takings it is an hotel licence, but where the receipts from liquor are above one-third of the total takings' then the hotel becomes a public-house, and cannot get the benefit of the hotel licence, though a large amount of capital may have been spent. I am bound to say that in all the cases that have come under my notice in my own Constituency, and which I have been able to bring before the Treasury, I have received the most considerate and courteous treatment from the officials. I am sure the House will recognise that there is a special hardship on owners and occupiers of establishments of the kind to which I have referred. You may have a case of, say, £20,000 being spent in the building of a hotel for the accommodation of visitors in the season. The hotel of that kind is not carried on with the object of the sale of liquor, but if the drink sold during the season exceeds one-third of the total receipts the hotel does not get the benefit of the terms of the Finance Act. A thoroughly representative deputation of licence holders in Scotland made a proposal which, I am told, has the assent of the whole licensed trade of the country, and, I believe, also of the Scottish Members on which ever side of the House they sit. That proposal was that the licence should be fixed not on the buildings, or the rental, or the proportion of the drink to the total receipts, but merely on the total amount of drink sold in the course of the year. If a settlement of that kind could be adopted by the Government a difficulty in Scotland would be put an end to, and the superior class of house would be encouraged while the inferior class would be discouraged. I sincerely hope my right hon. Friend the Secretary to the Treasury and the Chancellor of the Exchequer will give this matter their earnest attention. I can assure them the whole licensed trade of Scotland are at the back of the proposal. As to the extension of the old age pensions, I was surprised to hear an hon. Member say that the putting of the cost on the taxes would not benefit the guardians, because the indoor charges in some workhouses were practically fixed. The great source of expense is the outdoor relief, and that is exactly the kind of relief which will be reduced by the payment of the old age pensions, so that the boards of guardians will be relieved in their expenditure. In regard to valuation, the increase of the area of valuation will increase the source from which the rate is derived, and will thus largely improve the position of the local authorities. I cannot understand why any hon. Gentleman opposite who understands the proposal should fail to see that the Government proposals are largely in relief of the local rates.

Captain SPENDER CLAY

I should like to draw the attention of the Chancellor of the Exchequer to cases of very great hardship that have occurred owing to the licensing clauses of the Finance Act. The cases are of what is known as free houses. The free house is one which I have always understood hon. Members opposite had great sympathy with, but it is those cases which are hit the hardest owing to the incidence of the licensing taxation. Why I say that is because the tied house has the support of the brewer behind it. The brewer, although he may be severely handicapped, yet may be able to distribute his losses, and although he makes less profits, and although shareholders receive less dividends, yet he is not entirely knocked out of business. With regard to the free house, the case is entirely different, since the man's losses are concentrated, not distributed. He has got to depend entirely on his own resources, and if by any chance he happens to be engaged in any other business, such as the tobacco business, that business must be also injured owing to the expense to which the man is put. I wish to take a case of very real and very genuine hardship, and I sincerely hope that the Secretary to the Treasury may be able to take notice of it, and perhaps give it his sympathetic and kind consideration. It is a case in which a man has got a licensed premises, part of which are used as a bar and the other part for the tobacco business. I must quote some figures to show how intensely unfair this taxation has been in cases of this kind. The business in connection with the bar was comparatively very small. In the four years, 1907–11, the whole of the takings in the bar amounted to £1,603 17s. Id. That included mineral waters and eatables. Different brewers were paid £657 19s., and £135 was paid for mineral waters, making £792 19s. That leaves for the four years a profit at the bar of £811 18s.1d., subject to the deductions for the eatables which were supplied. The figures I have given are at the disposal of the right hon. Gentleman and also the names. I cannot give the figures as to the eatables at the bar, because I am told the figures would largely depend on the appetites of the persons. Where a man had a large meal, I take it that he was charged. Another reason why I cannot give this figure is that the man and his family eat some of the food that came from the bar, and therefore it would be impossible to give the correct figure.

The Committee will therefore see that the profits from this business amount to £209 19s. 6d., or, rather, that amount less the cost of the eatables. Now take the tobacco business: The man's takings as a tobacconist in the four years amounted to £12,169 4s. 7d., or over £3,000 a year; so that there is a big tobacco business and a small liquor business. What is the taxation he has to pay on the two businesses? Before he gets the tobacco at all he is heavily taxed on that, and he has to take out a licence to sell tobacco. Before the Budget this man paid £3 10s. for an on-beer, licence, and, after the Budget, £46 13s. 4d., or thirteen times as much. What is the justification for this taxation? I have heard various proposals from Members of the Labour party as to what they would do with the incomes of those fortunate individuals who have over £5,000 a year, but compared with the wildest of those proposals this taxation means confiscation. The Chancellor of the Exchequer has declared that landowners have no grievance when they say that the ½d. in the £ on undeveloped land will check its development; but what is to be said of this taxation, which amounts to 3d. in the 1s. on a man's undeveloped business? You are making this man pay a Super-tax on his business at the rate of 5s. in the £1, in addition to the 9d. which he has to pay on earned income, and his rates, compensation levy, and other outgoings. What is the effect of that? In the course of the Budget debates it was frequently stated on this side that as a result of this taxation mortgagees would get anxious. That is exactly what happened in this case. The mortgagees began to think that the place was not worth the money they had advanced; they called in their mortgage, and this unfortunate man was put to an expense of £80 to renew the mortgage. I Gave always understood that Members opposite condoned this sort of taxation on the ground that it was temperance reform. In my opinion, it is the very negation of temperance reform. It is the most intemperate legislation ever produced in this country.

Another case which I will give very briefly is that of a hotel in a fairly large town. I imagine it was an old coaching establishment; it has good sized buildings and does a good trade. A few years ago less than ten, I think, the present owner paid a large sum for the hotel to the previous owner, and, in buying it, he naturally took into account the fact that the Licence Duty amounted to £50 a year. To-day, however, the Licence Duty is £250, and the property has, of course, depreciated in value to that extent. These cases might be multiplied indefinitely. They may be found in every constituency, and similar instances were constantly brought forward by Members on this side of the House in the course of the last two Budget Debates. I sincerely hope the Chancellor of the Exchequer will give some sympathy to these cases of real hardship. I shall be glad to place all the figures at his disposal, and I think he will then realise that, whatever his intentions may have been, his actions have been attended by hardship and oppression.

Mr. McCURDY

My object in rising is to call attention to a number of points in regard to which I hope the Government will find it possible to amend the Finance Act of 1910. I am in the very unusual position for a Member of this House of having voted for a Finance Bill without having had any opportunity of suggesting alterations or proposing amendments thereto. Under these circumstances I am sure the Chancellor of the Exchequer will feel that Members who like myself entered Parliament in January, 1910, ought to be allowed a fair opportunity for making criticisms upon the Finance Act which was then passed. I might define my position as that of a Radical Member, sympathising with the taxation of unearned increment even to a much higher degree than the 20 per cent. embodied in the Act, and also sympathising with the proposals for the nationalisation of land. Approaching the Budget from that point of view, I have one or two criticisms to make. I heartily sympathise with the object of the Land Taxes as repeatedly laid down by the Chancellor of the Exchequer. Take, first, the Increment Value Duty. It has been stated on every platform of the country when these taxes have been explained, that by the Increment Value Duty it was the purpose of the Government to obtain for the community a portion of the unearned increment due to no expenditure or labour on the part of the owner, but entirely to the expenditure or enterprise of the community at large or to the growth of population. Section 1 suggests that it was the intention of the draughtsman to carry out that purpose, for it is there stated that. "subject to the provisions in this part of the Act, there shall be charged, levied, and paid on the increment value of any land, a duty … at the rate of £1 for every full five pounds of that value." The question then arises how is it proposed to ascertain whether there has been any increment of the kind contemplated by the Government when the Budget was being defended. The obvious method would have been to have provided for a valuation, to ascertain whether or not any unearned increment of the kind I have defined had in fact accrued. Unfortunately, that method was not adopted by the draughtsman. In Section 1 we have the declaration that unearned increment is to be taxed, and there the draughtsman leaves it for ever. In Section 2 he provides that, for the purposes of this Act, increment value is to be deemed to be something else. Increment value is to be deemed to be the amount, if any, by which the site value of the land as ascertained in one way upon one occasion, differs from the site value of the land to be ascertained in another way and upon another occasion; and, unless we should still be keeping too close to the realms of reality, the site value of the land which is to be so deducted is to be taken as something else. I do not know whether Members realise what enormous trouble has been imposed upon Courts of Law, by this very objectionable way of legislating. Instead of legislating for a definite purpose and defining that purpose, you provide that one thing is to be deemed to be another, and that that other thing is to be deemed to be something else. It is as if the Chancellor of the Exchequer were to be deemed to be the Leader of the Opposition and the Leader of the Opposition were to be deemed to be, say, the Member for South Salford. It is legal, but it is a very confusing way of arriving at what you want. But what follows? The draughtsman proceeds to substitute for an attempt to value the unearned increment this method—that there shall be imposed a tax upon a certain gross profit after there have been taken from that gross profit certain statutory deductions thereafter contained in the Act. The result of that is that in certain cases the gross profit, after the items you are entitled to deduct have been deducted, will coincide with the unearned increment which it is the object of the Government to tax; but there are undoubtedly other cases in which the result will be that a tax of 4s. in the £ is imposed upon certain gross profits from which no statutory deductions whatever can be made, and in cases in which there has been not only no increment of value whatever but an absolute decrement of value. Let me take an illustration of that with which we are all familiar. In the constituency which I represent I believe there are more freehold owners of houses in proportion to the population than in other towns in the British Isles. Take an ordinary row of suburban houses in an ordinary Midland town, laid out a few years ago when the idea of town-planning had not penetrated to this country. The houses are built out to the kerb, and average from twenty-six to forty to the acre, upon land which was doled out to the long-suffering public by a generous land-owning class at prices ranging from £2,000 to £4,000 per acre. All beyond were open fields; but this land was "held up" in the iron grip of monopoly. This Act, I think, will do something to break down that monopoly. The land was doled out at a price which, in my own experience, ranged from £2,000 to £4,000 per acre. This was a price at which the builder had no option whatever but to crowd upon the land houses which must inevitably, and in a short time, tend to become slums. What is the position of the small freeholder who owns a few of these houses to-day? There is, due partly to the provisions of the Finance Act, and due partly to the Town Planning Act, a breaking-up of this monopoly of building estates around our great towns and cities. There is to-day plenty of land in the market on the outskirts of Midland towns which can be purchased at half the extravagant and extortionate prices which were obtained by landowners for their land some ten years ago. The effect is—so far as the purchaser of these houses is concerned—that the land upon which the houses stand would, of course, if unbuilt upon, command a lower price in the market to-day than the price actually paid for it some years ago. As has often been pointed out, bricks and mortar have a tendency to depreciate rather than to appreciate. Let me give the case of a class of house of which I am thinking in a Midland town. The land and house together cost £200 or £250. Probably to-day the market value of that land and house is something like 20 or 30 per cent. less than the sum originally paid. This class of case is one in which hon. Members will observe there has been an actual decrement in the value of the land in question. What happens under the Act? I should be very sorry to repeat with any confidence the interpretation of any Clause, because, by common consent, the Act shares the characteristic of nine-tenths of the Acts for which this House has been responsible during the last twenty years. It is difficult to construe the meaning of the Act in this most difficult and complicated subject. What would be the position? Let us take £1,000 worth of this property, houses and land. Assume that this block cost £1,000 ten or fifteen years ago. The site value has been assessed, and the Government valuer has put that site value down at £200. The owner takes advantage of the clause in the Act which was meant for his protection. He says: "I have paid this money within twenty years, and I am entitled to have the site value as it was when I bought it." "Very well," replies he valuer." I value the house with the land to-day at £700: £200 for the site and £500 for the house. You say the site was worth £300 when you bought it; have it so. That brings the figure to £800"—£300 for the site and £500 for the house. Supposing the owner sells the property for £900, he loses £100. Then says the Commissioner, "Bricks and mortar cannot increase in value; we valued your bricks and mortar at £500 and your land at £300 at your own request. The bricks and mortar must still be the same; your land must have gone up." Consequently, that provision which was undoubtedly intended by the Government to give protection to the purchaser of property within the last twenty years, when it comes to be construed—and it must be construed—turns out to give him no protection whatever. On this part of the case let me point out another section of the Act, which reads very extraordinarily when one considers how this Act may be made to apply to small houses. If we turn to the Valuation section, Section 25, Subsection (4), paragraph (e), we find that for the purpose of arriving at the site value of the land that there should be deducted, Any sums which, in the opinion of the Commissioners, it would be necessary to expend in order to divest the land of buildings, timber, trees, or other things of which it is taken to be divested for the purpose of arriving at the full site value from the gross value of the land, and of which it would be necessary to divest the land for the purpose of realising the full site value. 6.0 P.M.

Just see how that applies. It is quite easy to see how it does apply in the case of a place with a few farm buildings. The Government desire, and properly desire, to ascertain the site value as building land. Before the roads can be made, and before the new estate can be developed, it is necessary to clear away some of the existing buildings in order, as the words of the Act put it, "to enable the owner to realise the full site value of the land." Now let us take the case of our small houses. Take the case I have quoted. The site value is now declared by the Government to have risen from £300 to £400. The value of the house is put at £500. The owner is entitled to take into consideration the cost of taking the house down for the purpose of arriving at the site value, but what about the loss of £500 involved in the operation? As the Act is drawn, the owner of house property will be taxable upon an increment whenever under the circumstances of the case the value of the property exceeds the amount of the site value, though it is demonstrably impossible for him to realise that site value. So long as only cottage property is on that land the value is fixed by the land which can be obtained. Assuming that the site value is maturing, is ripening, and becoming suitable for either shop or business purposes, it is impossible for anybody to realise that site value until it has passed beyond the value of the house property which it would be necessary to pull down in order to secure it. There is another class of case in which I am afraid the Act requires considerable amendment. That is the case of building estates. One of the unfortunate results of the method adopted by the draftsman of the Act is in Clause 2 to ascertain the increment value: "That it shall be deemed to be the amount (if any) by which the site value of the land, on the occasion on which Increment Value Duty is to be collected exceeds the site value on the 30th April, 1909," is that the valuers are invited to do a subtraction sum in matters which are not fairly capable of being subtracted one from the other. One of the first results, if that section referred to stands without amendment will be that, whereas the original site value will have been made upon a wholesale basis, the subsequent site value from which will be deducted the increment, will have been made upon a retail basis, and there will be an apparent increment which does not exist at all. Let me give the House a concrete illustration. A building estate of sixty acres, at Esher, in the county of Surrey, was bought, some eight years ago for £600 per acre. The owner spent £200 an acre in making roads and sewers. That brought the expenditure up to £800 an acre. At the time that the owner purchased that estate for the purpose of developing it and of building houses upon it the retail price of the land in the same parish ranged from £1200 to £1,500 per acre. The draftsman of this Act does not appear to have grasped the fact that there must necessarily be a wholesale and a retail price for land wherever it is sold. Because the price of land—that is, what it will fetch—depends entirely upon the rate at which you can rely upon its being taken up in plots for building purposes. The calculation of the purchaser of that estate was that if he could sell his land for £1,200 or £1,500 per acre—which was then the price ruling in the neighbourhood—that payment of £600 would enable him to develop the estate and in a sufficient number of years to make a profit on the transaction. What is the net result? To-day an acre of land will be sold on that estate at £1,500. The owner is entitled now to have it valued. He is entitled to arrive at the assessable site value, and to take from that something in respect to the £200 per acre which has been spent on roads. I am not aware of any other deductions to which he is entitled. Apparently the £600 taken as the original site value in 1909 stands, and, if a good plot is sold for £1,500 under this Act, apparently the difference between the two sums is to be treated as gross profit upon which a tax of 4s. in the £ is to be levied. I need hardly say that is not the intention, as everyone present knows, of either the Chancellor of the Exchequer or of the various hon. Members who from this side of the House and in and out of the House have supported this measure and these taxes. Amendment is clearly necessary, for under the Act the owner of that estate is entitled to no allowance for the necessary loss of interest which he must be subject to in the course of the development—assuming that development takes place normally and in the ordinary course. I come to another difficulty in the Act which I suggested to the Chancellor of the Exchequer requires amendment in the interest of people who are actually endeavouring to develop building estates in this country. It is that as regards building estates where, say, there are 150 plots of land to be disposed of on varying terms in the course of a year, it should not be necessary, on each transaction, with the possibility of delaying the completion of the transaction by waiting for duties to be assessed——

Mr. LLOYD GEORGE

You need not wait a single hour, so long as you supply the particulars. When the particulars are supplied there is no need to wait at all. It is a matter entirely for the vendor. I have been making some inquiries into this matter, and I find the system works admirably. There is no delay upon that account.

Mr. McCURDY

I am very much obliged to the right hon. Gentleman, and I fully acknowledge the accuracy of the correction; but at the present moment I think I am accurate in saying that we have arrived at a stage at which actual claims for Increment Value Duty are being made in connection with these matters, so far as my information goes, it may be exceptional, but such claims are made. I entirely withdraw my suggestion that there may be harassing delays in having the matter dealt with, but I still suggest that at any rate as regards building estates, it would be a very much simpler and more satisfactory method of procedure if once a year, or once in two years, or once in three years, or whatever the period that may seem good to the Chancellor of the Exchequer, the Government Department could be compelled to make a valuation showing what is the increment value obtained on an estate in the past twelve months, and let that apply to all transactions during the following twelve months, and so onwards. One of the grave and serious difficulties is this, that when a man is engaged in developing an estate at the present time, he has no means of knowing what is the claim that will be made against him in respect of any transaction, and although that may be unfortunate with regard to an isolated transaction, it is much worse in the case of a man whose profit depends upon the margin he will obtain upon a multiplicity of transactions on an estate.

I ask the Government to consider one or two other points on which I suggest amendment is capable, and would be reasonable. In the first place I regret the method which has been adopted by the draftsman for carrying out the avowed purpose of putting a tax upon Increment Value. I think it is a method which will not operate in the way in which it is desired to operate on all occasions, and I suggest if Section II. is, as I assume it is, to remain the law as to the method of ascertaining the Increment Value under that section, there ought to be an overriding Clause providing that in cases where no Increment Value has in fact accrued, no Increment Value shall be levied, giving in all cases to persons chargeable with Increment Value Duty the option of having a valuation with the view to finding whether there has been any Increment Value or not. I suggest that in order to meet the hardship, I pointed out in the case of small houses, there should be an amending proviso to the Act, by which it should be provided that Increment Duty shall not be chargeable upon Increment Value which it is impossible for the owner to realise. The principle of this is admitted in Section 25, Sub-section (4) (e), and it only wants to receive a reasonable extension to do away with what I believe is a very great hardship in the case of small property owners in this country, because it must be remembered that while the Act places a tax of 4s. in the £ on the profits of the dealers in small houses, where no possible Increment Value in the land can be suggested, it gives no allowance or corresponding abatement in case of loss which may have been made in other similar transactions. Finally, I suggest that the option might fairly be given to the owner of a large estate to have a periodical valuation made by the Government at certain intervals. It makes the greatest possible difference to any one dealing with land to know that he will only have to pay one-fifth or one-third, or even the whole of the ascertained Increment Value that has accrued, instead of an unascertained sum payable out of gross profits, irrespective of whether they represent a profit to him, and wholly irrespective of whether there is any increment value or not.

There are one or two points with regard to Undeveloped Land Duty which I shall mention quite shortly. A case has been put to me by a number of builders in my own Constituency. They say we purchased building land ten years ago for the purposes of our trade. They did not buy it at agricultural value; they bought it at its building value, and have been doing their best with it ever since. They lost the interest on their money, and they say, "We would lose money now if we sell it, and we do not see why we should be called upon to pay Undeveloped Land Duty. We pay the full value price on which we are doing our best to get a profit." I suggest that is a case which might be met by providing that the Undeveloped Land Duty should only be paid upon what I may call the agricultural value of an estate, and that where the holder of land can show that he has paid the full building price, no Undeveloped Duty shall be charged for a period of years. Where the price paid is a price between agricultural and building value, the value could be ascertained.

I regret that the Act should, in my judgment, require amendment, or require the frank criticism which I have endeavoured to give it. The Solicitor-General will understand that I am speaking only too accurately when I say that in recent years there have been cases, not one only or a few, but many cases in which the expressed intention of Parliament, as understood by those responsible for piloting a particular Bill through the House, and as understood by those responsible for criticising it in its passage through the House, is repeatedly set at naught when the Act comes to be construed in the courts. Every hon. Member can think of an instance for himself. That is a deplorable fact with regard to ordinary legislation, but I venture to think that in a Finance Act imposing taxes upon the subjects of the Crown it would be more deplorable than in any ordinary Act if it should be found that when the Act came to be construed we have been placing a burden upon industry and upon individuals which was never contemplated by the Government which introduced the measure or by hon. Members who took part in the Debates. For that reason I venture to press upon the Government that they should, as far as possible, by Amendments, which I regard as of a purely declaratory character, make it perfectly plain what is the Increment Value they seem to tax and make it clear that the form adopted by the draftsman shall not be allowed to operate in the unjust way I venture to think it might do as it stands.

Mr. CAVE

We have listened with great interest to the speech of the hon. Member opposite, who is, I understand, a supporter of the principle, if principle be the right word, of these Land Taxes, and who has obviously special knowledge upon the subject. He has made an impartial study of the Act, and he has found that the result of the Act is to produce in certain instances great injustice. The result is, he says, that Increment Value Duty is levied where there is no Increment Value, and that in that and in other respects hardships ensue. I feel bound to say that important as are the points which the hon. Member has read, there is not one of them that was not raised on this side of the House during the course of these Debates. But I am gratified that of late hon. Members opposite are giving a fair consideration to these points, and if the hon. Member who has just spoken, and others who think with him, will put down the Amendments which they think right, they will be supported by Members on both sides of the House who share the same view with them.

I want to bring only two points before the Committee which arise upon these Resolutions. One is, I hope, non-controversial. The other may have some controversial matter in it. I understand it is proposed to deal with Reversion Duty in cases where the lessor buys out the lease, or where the lessee buys the reversion. I did not gather from the right hon. Gentleman that he proposed to deal with the case where the lessor accepts the surrender of existing leases and grants new leases instead. On many excellently managed estates there is a continuous process going on of accepting the surrender of leases with perhaps forty or fifty or more years to run, and granting a long lease, in some cases running into 999 years, nearly equivalent to the freehold. I think that that is a process to be encouraged, because it gives greater security to the lessee who is glad to have a longer lease, but this Act is operating towards hampering and preventing transactions of that kind, in this way. When you take the surrender of a lease you are treated, of course, as having succeeded to the property in possession, and you are chargeable with Reversion Duty upon the value of the property in possession under a clause of the Act. I know you are allowed discount of 2½ per cent. for every year unexpired of the lease surrendered. There is this limit upon that discount: that whatever the number of years to be surrendered is, you cannot get a discount exceeding 50 per cent. of the Reversion Duty. That operates very harshly, because 2½ per cent. per annum on a maximum of 50 per cent. does not give you more than twenty years in all. If you take a surrender of a lease forty, or fifty years old, then you are not getting full discount, and you are paying Reversion Duty on a value which you have never received That has actually arisen in practice. I have had quite a number of letters about it, and now the Government are dealing with the Reversion Duty I hope they will consent to deal with that hardship to which reference was made the other day. That point I think is non-controversial.

I want to refer to another point which has a little controversy in it, and that is the Amendment which is going to be made in the Act relating to Licence Duties, a change which has been necessitated by the decision in the Wrigglesworth case. I think the facts of this case ought to be pointed out more in detail. The new Licence Duties are levied upon the annual value of the premises. In some cases it is half the annual value, and in the case of beer-houses one-third of the annual value. There was in the Finance Bill a provision providing that the duty on the licence should not be allowed as a deduction. We pointed out until I am afraid we wearied the Committee how unfairly that would operate. Everybody of experience knows that before the Act, when you were determining the annual value of premises, you did take into account the fact that the premises were licensed, and therefore capable of earning considerable income. On the other hand, you were bound to take into account the fact that in order to earn that income the licensee had to pay Licence Duty, and it was suggested as being grossly unfair to assess a man on the value of his house as a licensed house and not allow him to deduct the amount paid for the licence, without which he could not get his profits at all. The answer given by the Law Officer on behalf of the Government was that they were only perpetuating the existing practice. There seemed to be an impression that under present conditions there was no deduction of Licence Duty, and that this proposal made would make no difference to the practice. Our arguments were not acceded to, and the Bill went through with those words in it of which we complained. What happened? Very soon after the Bill became law a circular was issued by the Inland Revenue Commissioners giving to the Finance Act exactly the interpretation which we had ventured to place upon the Bill, and repudiating the contention put forward from the Treasury Bench. What did the circular of the Board of Customs and Excise say? It said:— The Board accordingly will not recognise any claims to a reduced rate of Licence Duty for 1910–11 solely on the ground of a reduction in the assessment upon which Licence Duty is based; they will only entertain such a claim to the extent that it can be shown that the reduction of the assessment is due to causes other than the increase in the Licence Duty. For the purpose of the Licence Duty they say "you must not deduct the amount of the Licence Duty from the assessment." "We will assess you upon the basis of the full assessment without any deduction of the Licence Duty." That was directly contrary to what was said in the Debate, and it meant simply throwing over the interpretation which was put upon the Bill by the Government. I want to know how that circular came to be issued. Of course, complaint was at once made to the Chancellor of the Exchequer, and it was pointed out to him what the Law Officer had said and that the Board of Customs and Excise were acting directly contrary to what was said in the House. The Chancellor of the Exchequer took some months to consider the matter, and then he wrote saying that:— He sees no reason to withdraw or suspend the issue of the demand notes for payment of Licence Duties, which are in accordance with the usual legal practice: but that if, as the result of any legal decision given in the near future, it should be found that the mode in which the annual value has been determined is not correct (which he understands is not anticipated by the Commissioners of Customs and Excise, having regard to the terms of Sub-section (1) of Section (44) of the Finance (1909–10) Act, 1910), any charge in excess of the charges declared to be illegal will, if paid, of course be subject to subsequent adjustment. The Chancellor of the Exchequer said in effect, "We do not believe the circular is wrong, but if it turns out to be wrong there will be a subsequent adjustment." The extra duties were paid in the month of July last, and another moiety was paid in October last upon the higher basis. Then came the decision of the court. The matter had been taken into the court in the case of the King v. Wrigglesworth, and the court was asked to say exactly what this proviso meant. The Government have not been very fortunate in their appeals to the courts, for there has been case after case within the last few years where some Government Department has received the condemnation of one or other of our courts for its action mainly because the present Government, more than any of its predecessors, is rather apt to endeavour to override what we all of us think to be fair to individuals. They are not careful enough of the interests of the individuals, and too anxious to get something extra in the shape of money or power. I can mention two or three such cases. There was the Swansea case, where the Education Department had to be told by one of our courts that they must do equal justice.

Sir RUFUS ISAACS

That case is under consideration in the House of Lords, and it will be argued to-day or to-morrow.

Mr. CAVE

I was not aware of that fact, and, therefore, I will leave the Swansea case alone. There was the Weir Hospital case, in which the Charity Commissioners got into a certain amount of hot water. Then there was the Archer-Shee case where the Admiralty took a technical point in answer to the claim of a subject and they were told by the Court of Appeal that they must allow the facts to be tried before the technical point was dealt with and they could not be allowed to put an, end to the proceedings until the facts of the case were actually ascertained. We shall hear more of that case before many months have passed. I need not refer to Form IV. case, another celebrated instance in which the Government attempted to stop litigation at the outset and to prevent the question being determined by the Court. Leaving other Government Departments, look at the Inland Revenue Commissioners themselves. There is the case known as the Crown Brewery case which went into Court with the result that costs were awarded against the Commissioners on the ground that they had acted unreasonably. What happened in the Wrigglesworth case? Their fate again was rather curious, because, while Mr. Justice Channell agreed with the contention of the Treasury as to the meaning of the Finance Act, he made certain observations as to what the effect of this construction was, and his observations have brought about the proposal which is now before us. What did Mr. Justice Channell say? I will read a few words of his judgment. He is referring to the proviso dealing with the deduction of the Licence Duty:— But then what in the world do the words mean? It says: 'In the determination of that value the duty on the licence is not to be allowed as a deduction.' I cannot think that one can say that that is from mere ignorance. That was rather hard upon the Government, because those words were found in the original Bill. Mr. Justice Channell goes on to say:— I think it was very possible it was—but somebody who did not understand it (I am sure I do not know and I do not care, and it is not material to know what the real history of this Act is), possibly may hare suggested an amendment. But the words have got there, and I do not think one is justified when interpreting them in saying that they have no meaning. Whatever their meaning is—I confess I do not know what it is—it seems to me to alter the basis of valuation. The valuation for this purpose is something different to what it was before. I think it is arbitrary if it means that which is suggested, that in getting at the value you are to bring in on the one side the profits which are obtained by means of the licence, and yet are not to put on the other side the Licence Duties you pay in order to make those profits. That is obviously unjust, there is no doubt about that, and such as one would not think any body of honourable men could deliberately have intended. We have the Court itself saying it could not believe that any body of honourable men meant to take the course which in fact the Board of Customs and Excise were taking and which in practice was supported by the Chancellor of the Exchequer. That is not only a justification of the course which we took in this House, but it has had the effect of producing a complete change of front on the part of the Government, and the right hon. Gentleman is now proposing to alter the law in the manner we suggested. The right hon. Gentleman said that all the Government proposed to do was to clear up the doubt which existed as to the meaning of the statute. I am not at all sure that that is quite the appropriate expression. There is really no doubt what the statute means. It means an unjust exaction from members of the trade which the Government no longer see their way to making. I want to make it quite clear that the change proposed is no concession at all in the ordinary sense of the word. To some extent, although not to the full extent, it is simply bringing the law in accordance with what the Government said when they introduced the Bill, and I do not think it is right to call it a great concession to the trade or to anyone else. I think we ought to know how it came about that the circular to which I have referred was issued. How is it, when in this House a Minister has put a certain construction upon a Bill and the Bill has been passed on that basis, the Government issue a circular on the very opposite basis? How is it that the circular was not either stopped from the beginning or immediately disowned when action was called to it, so that the word of a Minister in this House might be made good? If you admit that the exaction made has been an unjust exaction, and one which you did not intend, how cart you keep in your pockets sums which were levied by that exaction? The proposal is to adjust the figures as from 1st October last. A moiety was paid on the 1st October upon the higher scale. It is proposed to adjust that when the second moiety comes to be paid and only to ask for the difference between the amount actually paid and the full amount upon the lower scale now proposed. That, of course, so far as it goes, is perfectly fair, and I have not a word to say against the fairness of the basis now proposed for the future. What I want to point out is that on the 1st July last the sum which the Government estimate as in question, £400,000, was exacted from the licensees and exacted from them upon the footing of a construction of the Act which they themselves now repudiate. If that is an improper and unfair exaction, are you or are you not going to refund it? I cannot see how the Government can fairly answer that question in the negative. One would like to know exactly what the Government propose. If they are going to retain this sum, and therefore swell the receipts from this source, which do considerably exceed the estimates on which the Bill was obtained, how do they defend their action in this House? This is a matter which I think we are entitled to bring forward, and it is one on which we are entitled to have an answer.

Mr. HOBHOUSE

Before I proceed to deal as fully as I can with the questions which have been raised, I should like to refer to what happened earlier in the day, when an hon. Friend (Mr. Atherley Jones) moved the adjournment of the House. An understanding was come to—if I may for a moment address myself to the right hon. Gentleman opposite (Mr. Austen Chamberlain)—that we should take the whole of to-day for the discussion of these Resolutions. The adjournment having been granted, that arrangement has been somewhat interfered with. I would suggest to the right hon. Gentleman opposite and to hon. Gentlemen on the other side of the House, that, if they, in order to bring the discussion on these Resolutions to an end to-night for certain, would consent to give us all the Resolutions by 8.15, we, on the other hand, would give them an undertaking that at the close, after the discussion on the Adjournment, we would ask for no other business at all, and we would give them to-morrow a time equivalent to that consumed to-night by the discussion on the Adjournment. I hope I make myself clear. I think that would be a fair equivalent. If they would, if I might so suggest, at the end of to-morrow's discussion give us the Report Stage of these Resolutions, the remainder of to-morrow would be taken up with the usual discussion upon the Supplementary Estimates.

Mr. FELL

That would be curtailed.

Mr. HOBHOUSE

I am not quite familiar with all the arrangements for business, but I rather think that is not the final day for the discussion of Supplementary Estimates. I hope, before I proceed to discuss the Debate this afternoon, I may obtain some answer from the right hon. Gentleman opposite.

Mr. AUSTEN CHAMBERLAIN

I think the Government and the Committee are put in a position of some difficulty through no fault of their own. On Monday we had more than two hours subtracted from the time which the Government had proposed to allot to us that day owing to a question of privilege, and at the close of the evening I appealed to the Prime Minister for further time in consequence of that interruption. He was good enough then to propose that we should Report Progress at 11 o'clock, and continue the Debate on the Resolutions on Thursday, giving the whole of that day to the Committee for discussion. If we do that, he said, I hope the Report Stage will he taken pro forma on Friday. If that is the general understanding I will move to Report Progress. After consultation with as many of my hon. Friends as I could manage to consult at the time, I, on their behalf, accepted that arrangement, but, of course, we did anticipate we should have had the whole of to-day. Now, again, through no fault of the Government, and certainly through no desire of theirs, but by one of those Parliamentary accidents to which these arrangements are liable, the evening sitting is practically subtracted from our to-day's work on financial business, and we are placed in this difficulty. By general consent at that time, and as one of those arrangements made across the floor of the House which all parties most scrupulously keep, we agreed to finish the discussion tonight. If we carry it on after 3.15 that may be beyond the power of any one, for if the adjournment lasts up to eleven o'clock, as the Eleven o'clock Rule is not suspended, we cannot resume these Resolutions, and the arrangement which we made would break down.

Mr. HOBHOUSE

Moreover, the right hon. Gentleman and the Committee will remember we cannot, in respect of financial Resolutions, take the Report on the same day that the Committee stage is ended.

Mr. AUSTEN CHAMBERLAIN

We could not make good the failure to finish the Committee Stage to-day by taking the Committee and Report Stages to-morrow. The right hon. Gentleman, under those circumstances, proposes, on behalf of the Government, that, instead of taking the Report Stage pro forma, as we had previously arranged, we should have time given us at the commencement of business to-morrow equivalent to that which we lose to-night. If we lose to-night from 8.15 to eleven o'clock, we should be entitled to have about two and three-quarter hours' discussion at the opening of business to-morrow on the Report Stage. I think, under the circumstances in which we are placed, that is a very fair offer from the Government, and I think we on this side of the House, ought to accept it. There has been, as the right hon. Gentleman has seen a great desire to speak on these Resolutions on both sides of the House, and I am afraid, whatever arrangement is made, all the speakers who have something worth saying will not get in at this stage. I think, however, that is a fair proposal on behalf of the Government, and that we ought to accept it. I hope those, who, on one side or the other, find themselves precluded from bringing their points before the notice of the Committee at this stage will have ample opportunity when we come to the Budget Bill.

Mr. HOBHOUSE

I am very much obliged to the right hon. Gentleman.

Mr. AUSTEN CHAMBERLAIN

One other word, in order that there may be no misunderstanding. Of course, the arrangement we make does not cover the Supplementary Estimates.

Mr. HOBHOUSE

I quite understand.

Viscount HELMSLEY

Of course, I am very anxious to accede to the arrangement proposed, but it seems to me, hon. Members are being asked to give up a good deal. They are asked to give up the Committee Stage, which is a valuable stage because they have an opportunity of getting an answer from the Minister. I would ask whether the Government could not see their way to let us have the Committee Stage continued to-morrow (Friday), on the understanding that some day next week the Report Stage should be taken pro forma.

Mr. HOBHOUSE

I quite appreciate the difficulty in which hon. Gentlemen opposite are situated, but I do not think we could really agree to that, and for this reason: As I pointed out, we cannot take the Committee Stage and the Report Stage on the same day, and, if we give the whole of to-morrow for the Committee Stage, we lose a whole day on the Supplementary Estimate, whereas, under the arrangement I have suggested and which the right hon. Gentleman opposite is good enough to accept, we only lose half a day on the Supplementary Estimates.

Viscount HELMSLEY

If there was an understanding that the discussion on the Supplementary Estimates should begin at three o'clock to-morrow, we could take more time for the discussion of the Resolutions in committee.

Mr. HOBHOUSE

That is practically what we are offering. As a matter of fact, I do not think any Members of the Committee have spoken more than once this afternoon.

Viscount HELMSLEY

Except the right hon. Gentleman himself.

Mr. HOBHOUSE

I do not think, except for an interjection across the floor of the House, that I have intervened all day. I can assure the Committee that, for my own sake, as well as for theirs, such remarks as I may make to-night will be as brief as possible. I think, on the whole, we must adhere to the arrangement which I have suggested, and which has been accepted on the other side. The hon. and learned Gentleman who spoke last (Mr. Cave) concluded his remarks in almost the same strain as that in which the Debate was opened, by saying the Government were making no concession to the Licence Trade. Now is not the time, if I may use the expression, to split hairs as to whether when you give back to a trade or to a particular interest a sum of £400,000 a year you do or do not make a substantial concession; but of this much I am quite certain, that if that amount had been continued to be taken out of the resources of the trade we should have heard a great deal of the pecuniary hardship and injustice inflicted upon them, and no one would have more eloquently and ably put forward that case than the hon. and learned Member himself. Therefore, whatever view we may take of the decision of the House on the Finance Act, or whatever view we may take about the language of Mr. Justice Channell, I think it must be conceded we have conferred a considerable boon upon the trade. I will only venture to say, with regard to the language of Mr. Justice Channell, that I do think it is very regrettable that any person occupying a judicial position should make use of that judicial position to reflect upon the intentions of this House.

May I say something about the Reversion Duty, which was also alluded to by the hon. Member opposite? He wanted to know whether the statement which I made upon the Reversion Duty included the case where the lessor accepts the surrender of the lease with a view to granting a new lease. Anyone who has studied the working of leasehold tenure of land in this country must be aware of the great number of cases where it is to the distinct advantage of the occupants of houses that as occasion arises the lessor should, as a matter of fact, come to terms with the lessee for the resumption of the lessee's interest. One can easily imagine great building estates, and small ones if you like, where the landlord is anxious to get the outstanding lease into his possession in order that he may rebuild the property and put it in better order than it is at the present time. For my own part, I confess I should be very anxious that that case which has been put by the hon. Gentleman should be included in our Clause, and his suggestion, which was already in my mind, will certainly be taken into account when we come to draft the words of the Act. The hon. Member added something about discounting 50 per cent. It is not our intention to limit the discount in the way he suggested The hon. Member may rest assured that the discount will be on the basis of 4 per cent.

Mr. CAVE

I should like to be allowed to say I hope it will not be thought that in my observations I suggested that the learned judge cast any reflection on the intentions of the House. Nothing was further from my intentions.

Mr. HOBHOUSE

I should like next to deal with the speech made by the hon. Member for Dudley (Colonel Griffith-Boscawen). The hon. Gentleman talked about "preposterous propositions," about "crumbs of comfort," and "imaginary gifts." I do not think anybody who followed or who has read the remarks I made at the beginning of the week could really call the contribution which the taxpayer is making to the ratepayer a small crumb of comfort or a preposterous proposition. The hon. Gentleman talked about the taxation of land values for the purpose of relieving the rates as being a preposterous proposition. Has he ever studied the report of Mr. Chaplin's Commission, which, if my memory serves me aright, suggested that land values should contribute no less than one-half for that purpose. If the hon. Gentleman will only read the report of that Commission he will, I am certain, withdraw the expressions he made use of earlier in the evening.

Viscount HELMSLEY

The hon. Member is not in his place, but the right hon. Gentleman is, I think, misrepresenting what he said.

Mr. HOBHOUSE

I think not. I took down the expressions the hon. Member used at the time.

Sir PHILIP MAGNUS

To what Commission is the right hon. Gentleman referring?

Mr. HOBHOUSE

To the Local Taxation Commission. We have given substantial relief to local rates. I have not the actual statistics for the various towns and boroughs throughout the country, but when you take off from the guardians of the poor a charge which, at the lowest computation will amount, before the 1st January, to £1,500,000, it must be quite clear there is a substantial contribution to the rates and a very great relief to the ratepayers. It has been suggested that my estimate is greater than is justifiable, but I can only take the actual figures of the cost so far as we can gather them, and I say that on the lowest possible basis it amounts to the sum I have stated.

Mr. HARDY

I should be glad if the right hon. Gentleman will give us the proportion of indoor and outdoor paupers who are calculated to come under the scheme.

Mr. HOBHOUSE

I have not got the actual figures, but if the hon. Gentleman will put a question down on the Paper I will endeavour to get the information. I was asked the other night by the hon. Member for East Mayo as to how Ireland would be affected by this question. My information is to the effect that there are something like 17,000 disqualified pauper pensioners, 16,000 of whom were in receipt of poor relief immediately before the 1st January, and the estimated saving to the rates in respect to these people may be put down as £114,000, and in respect of the potential paupers it may be put down at £104,000, so that properly speaking the saving to Ireland through our proposal will be £220,000, a very substantial contribution to the ratepayers of that country.

Sir P. MAGNUS

Will the ratepayers receive the whole of the £1,500,000 which the Treasury will save?

Mr. HOBHOUSE

Yes. There is no doubt some saving clause with regard to persons who contribute to the cost of maintenance of relatives in the workhouses, but, against that, the expenditure of ratepayers in various localities will cease to that extent. We do not give them back the money which they are spending, but they will cease to expend it. Then, too, there is the question of the cost of Poor Law institutions. That is included in the sum which we have quoted. It is really no imaginary gift that I have stated we, as representatives of the taxpayers, are making to the ratepayers of the country. I wish to say a word as to the statement made by my hon. Friend the Member for Wolverhampton, who was a little bit afraid of the effect on the ratepayers of the reduced assessment of houses. But as has been pointed out, this concession of £400,000 must indirectly come back to the ratepayer as, while the licensee is relieved of taxation to that amount, he is able to pay, and does pay, an increased rent upon which rates will be levied, and thus to that extent the ratepayer will be indirectly relieved. One of the hon. Members for Liverpool, speaking on the licensing question, suggested that the Government was intentionally hard upon the licensed trade, and that it was in consequence of the legislation of the Government that there had been a considerable fall in the values of licensed property. It so happens that within the last few days there appeared an interesting article in "The Times" pointing out what are the real causes of the fall in the securities of the brewing trade. I took note of it at the time. I had become so familiar with the accusations brought against us that I thought it was worth while to study an article written from a purely business point of view and not from a party point of view. The writer, like all writers of these articles, is anonymous, but he pointed out that there were several causes which contributed to the fall in value. The first, he said, was the severe competition among the brewing companies for the acquisition of licensed premises, a boom which led to fancy prices being paid for tied houses. For a time, he added, real values were left out of consideration, but the inevitable reaction followed, and the fall was due to that and not to hostile legislation.

Mr. YOUNGER

Hostile legislation had not taken place then.

Mr. HOBHOUSE

Perhaps the hon. Member will let me finish what I was saying. There was a boom and there was a reaction——

Mr. YOUNGER

It was before the Budget.

Mr. HOBHOUSE

Perhaps the hon. Gentleman will listen to the words of a contributor to "The Times," a business statement by a business man writing and speaking for business people. It was a special article in the Commercial Supplement to "The Times," which I think may be regarded as even as great an authority on business as the Noble Lord the Member for the Thirsk Division of Yorkshire.

Viscount HELMSLEY

Why not?

Mr. HOBHOUSE

The article goes on to deal with the subsequent history of these undertakings, and points out that, although there was a recovery in brewery stock, there followed another fall consequent on dread of legislation. Legislation came, and what then took place? There was a recovery of brewery stocks, and it will be noted that that recovery dates from the time of this imaginary gift, this trifling concession of £400,000. [HON. MEMBERS: "No, no."] Well, that is stated clearly in black and white.

Sir F. BANBURY

Because it is in black and white it does not follow that it is correct.

Mr. HOBHOUSE

It really is interesting. But I would like to ask the question, is it a fact that brewery shares have gone up, or have they not? The hon. Member opposite laughs. I repeat the question.

Mr. WORTHINGTON-EVANS

I laughed at your taking as your authority an article which may be intended to sell shares.

Mr. HOBHOUSE

I did not know that "The Times" had fallen quite so low as that, and I doubt very much whether any other Gentlemen in this House would make such a suggestion. It may be some may, but I confess I should have thought not. What is curious is that there is this recovery after legislation and not before. I only desire in reference to this matter to bring to the attention of the House not a statement made for party purposes, not a statement by a partisan, or by a Member of the Government, but the actual facts in connection with this question.

7.0 P.M.

Mr. YOUNGER

Will the right hon. Gentleman assume a V-shaped depression? The introduction of the Budget sent down all these brewery stocks to a certain point. They have risen to a certain extent, but not anywhere near the point at which they stood before the introduction of that legislation.

Mr. HOBHOUSE

That may be true. No shares jump up in the market and fall, and recover in ten days or a fortnight. But the tendency is upwards. The fall was not due to legislation. The original fall was due to over-speculation and bad trading, and that fact has become more widely known.

Mr. YOUNGER

The right hon. Gentleman misunderstood my interruption.

Mr. HOBHOUSE

My hon. Friend who sits for Argyllshire (Mr. Ainsworth) drew attention to the case of a Scotch license-holder, and he suggested to us that the License Duty should be fixed on the total amount of drink sold. I think he will remember that a discussion on that point took place in the House when the Bill was going through Committee, and my right hon. Friend clearly stated then that he did desire that the license holders should pay a direct contribution, and that they should not put it off on the consumers. He was not able to accept an Amendment which was then moved. I have not had an opportunity of consulting him since, but I cannot at the moment hold out any hope that what the Chancellor of the Exchequer rejected many months ago, he will accept now.

Mr. AINSWORTH

Will the right hon. Gentleman be kind enough to consult him again?

Mr. HOBHOUSE

Yes. Then the hon. Member for Tonbridge drew the attention of the House to a case of licensed premises being used partly for the purpose of licensed trade, and partly for the purpose of some other business, I think particularly for the sale of tobacco. As he explained the case, I confess that upon the first blush of it it appeared to me to indicate some degree of hardship but I should have thought, from the description he gave of the case that the owner was protected under one of the sub-sections of the Act. If however, he will bring the case to my notice, I will very gladly go into it myself, and see whether it is possible under the general principles of the Act to meet the particular hardship of which he complains. Then we had a very interesting speech from the hon. Member for Northampton, who raised a great number of points in connection with the operation of the Act as it applies to site values and original site values, and he gave me an intimation that later on he intended to move certain Amendments in the Act. In particular he dealt with the case of the difference between the rise, fall, and rise again of the site value. My right hon. Friend the Chancellor of the Exchequer dealt with that particular case under the twenty years' Clause, and he gave an undertaking to this House. I repeat that pledge on his behalf, and I think if it is carried out in the spirit in which it was offered it probably meets the whole of the case, which was so well put by the hon. Member in the House this afternoon. I am anxious not to detain the House, as there are several other Members who wish to speak, and our time is somewhat limited. No doubt we shall see Amendments foreshadowed in speeches this afternoon put down when we come to the Committee stage of the Bill. It is easy in a great measure of this sort to point out errors and mistakes. I do not know a Government which has not had the misfortune to run up against errors and mistakes—mistakes of judgment and errors of fact—but considering the wide range of legislation and the number of subjects dealt with, once the principle of the Act is admitted. I think there have been as few blunders and errors and as few hardships in administration under this Act as under any Act that has ever been passed.

Mr. HARDY

Before answering the right hon. Gentleman I would refer to an interruption I made a few minutes ago, and I think it would be very desirable that this House should be very clearly informed as to how the estimate of the Government has been obtained in connection with what is called the relief of local taxation. The right hon. Gentleman in his Budget speech took it at £1,500,000 real saving, £500,000 potential saving, making it £2,000,00, and that sum has varied backwards and forwards, and it has changed, and on one occasion it came down to £1,250,000.

Mr. HOBHOUSE

I may point out that so long ago as 1909 the sum of £2,000,000 was mentioned by the Chancellor of the Exchequer and was repeated by the Chancellor of the Exchequer in his Budget statement this year, and those statements do not vary from the statements which I made in introducing these Resolutions and subsequently.

Mr. HARDY

I should like to know how-it is confirmed by the facts, and how the expectations are maintained, now that they are realisable, because the whole question depends upon the proportion which has reference to outdoor relief, which can be reckoned, to indoor relief, as to which there would be serious doubts in ascertaining it with anything like accuracy. We know that there are many elements to be considered in connection with indoor relief which make it impossible to say how far the guardians are going to receive the benefits which it is stated are going to be given to them. Already it is the fact that of those who took pensions, and who were in the first instance tabulated as a relief to the rates, a number have come back to the workhouses again, and claimed relief from the guardians. Therefore, it is not a matter in connection with indoor relief which can be treated in the light manner in which the Government have always treated it in giving us various round sums without any details of the manner in which they have been built up from estimates. I desire, notwithstanding what the right hon. Gentleman has said, to still make the protest in this House, that the House in no way, in all the discussions on the Budget did accept the contribution to the guardians as part of the old age pensions scheme. It has always been stated by the Government, that the House came forward and accepted that, but it has always been protested against by a very large number of Members in this House, and as soon as the country knew anything of it, there was an almost unanimous protest sent forth by the Guardians as to what was almost entirely an Imperial contribution Therefore, I think it is necessary to emphasise that matter so as to make it clear what our position is when we come to deal with the larger question of local taxation. Knowing that the time is extremely limited I only desire to raise at this moment one special case for the right hon. Gentleman's consideration in connection with the Mineral Rights Duty. I did raise the question at the time when the Budget was before the House, pointing out the hardship which is now involved by the fact that the Mineral Rights Duty is charged exactly the same upon the owner who works his own minerals, and the owner who leases his minerals. That puts the mine owner, who has bought minerals and who is working those minerals under an unfair handicap with his competitor in trade who leases his minerals from a lessor. I am not going back upon the justice of the tax. I do not wish to argue as to that, but it is quite clear, if you take the simplest case of minerals, say worth £100 in the case of the lessee, he knows exactly what value he has to put on his minerals when he works them—namely, £100. Supposing the minerals belonged next door to a lessor he cannot take them at the same price as his competitor, as he has placed upon him the extra Mineral Rights Duty, which he has to pay. Whatever may be the effect in the future I only ask the Government at the present moment to protect those who entered into engagements in the past, and to say that they, at all events, should not be placed under an unfair handicap with competitors in the same trade by having to pay this additional Duty, which their competitors have not to pay. If the suggestion of the hon. Member for Argyle is to be carried out, and the Mineral Duty is to be the one to fall back upon when the Government desire more money, then I say that this grievance will become a very much more serious one, and will involve the abandonment of seams which are not of a particularly lucrative character. This has been a matter of correspondence with the Chancellor of the Exchequer, and I must say I was rather surprised that in the reply to a question which was put to the Chancellor his Secretary put this position, that there was no hardship because the lessor in leasing his minerals would be very careful to put the tax upon the lessee, and by that means avoid paying Duty himself. Therefore, it was said there was no real grievance, because the lessee had to pay the money, but I thought that the whole object of the Government was to secure that these taxes should not be placed upon the coal, which is the raw material of every industry in the country, but here we have the Government themselves suggesting that it is quite clear that the lessor may shift the burden upon the lessee and lessor and lessee are in exactly the same position. I am surprised that the Government did take up that line of answer in regard to what I consider a real grievance, and I wish the right hon. Gentleman to look into this, and so far as past contracts are concerned to secure that the owner, who is taking the whole risk and responsibility of a very risky trade, should not be handicapped and prejudiced by this tax, which the Government has merely put on for the purpose of charging a certain amount of taxation on the men who take no risk at all. On that ground I venture to put the case before the right hon. Gentleman.

Viscount HELMSLEY

I should like to mention the point connected with the Land Taxes which was referred to by the Secretary to the Treasury in replying to the very able speech of the hon. Member (Mr. M'Curdy). I am sure we on this side welcome the hon. Member as a new recruit to the critics of these Land Taxes of the Government, and I think I shall not be alone in expressing the wish that he had been here during the Parliament of 1909 in order to try and persuade the Government, perhaps more effectively than we were able to do, as to the injustice which would accrue from some of those taxes. It appears to me that the hon. Member is one of the first land nationalises holding these views whom I have heard, and into whose mind some glimmering has begun to enter that theory is a very different thing from practice. If he can draft such Amendments as will carry out the theory which he has in view, and yet not work the injustice which he has so ably exposed, I am sure the House will congratulate him as a very clever Member indeed, for so far no one has been able to do so. The Secretary to the Treasury has repeated to-day, with emphasis, the pledge, and I think it is a very satisfactory pledge, given by the Chancellor of the Exchequer with regard to what is called the twenty years' back clause, and I hope when the Bill comes to be amended the Government will insert some amendments which will really ensure that no Increment Duty under any circumstances shall be payable if, as a matter of fact, the owner has lost money instead of snaking it over a particular property. Another question which I raised on the Debate on the Address, and to which hitherto we have had no answer, was the question of deductions. I introduced to the notice of the House certain letters which prove that in estimating site value the valuers were, according to my views, going contrary to the Act in that they were setting off the value of the materials against the estimated cost of removing them in order to arrive at the site values. Any one who has read the Act will think that the owner is entitled to have deducted the cost of removing the materials which are on the site in order to arrive at the site value, and I read letters in which it was stated by a certain owner of property that the valuer told him he had instructions to set the value of the materials against the cost of removing, and to assume therefore that there was no deduction to be made, as the Statute expressly declares. I should like to have an answer from the Government as to whether that is the Government's interpretation of the Act. We asked the Attorney-General upon that point, but he was unwilling to give us an answer, because he said he had not formed a considered opinion upon it.

I wish to say a few words upon the relation between the local authorities and the Imperial Exchequer, and in spite of the satisfaction with which the Secretary to the Treasury regards the position, I am bound to say that in my opinion the Government seem to have been rather shifty over the whole question of what was to be done with the proceeds of the Land Value Duty. The right hon. Gentleman (Mr. Austen Chamberlain) the other day said he was speaking from memory, but he believed that the promise to give half the proceeds of the Land Value Duties to the local authorities was long precedent to any mention of any deficiency in the whisky money, and I think it was suggested by the Government that that was not the case, and that the promise had always been that the whisky money deficit should be made up by the proceeds of the Land Value Duty. That is not the case, because I have here the words of the promise of the Chancellor of the Exchequer, which was made on 22nd June, 1909. That was on the second day of the Committee stage of the Budget. I will read it:— There are Amendments down on the Paper for the allocation of a portion of these Land Taxes for local authorities. That is a matter which has been pressed upon me, notably by my right hon. Friend the Member for the Forest of Dean, in almost every discussion we have had. I agree that it is a matter of the first importance. I cannot now discuss the merits, bat I have always thought localities have an undoubted charge upon these Land Taxes, and the Government are disposed favourably to consider the Amendment, which, I think, stands in the name of the hon. Member for Bolton, for dividing these taxes equally between the locality and the Exchequer. I cannot at the present moment enter into the reason for the special division, and I cannot discuss at present the methods of allocation. The Government are prepared to accept the principle of that Amendment. (An hon. Member: Of all the taxes?) Yes of all the Land Taxes, Undeveloped Land, the Mineral Tax, the Reversion Tax—the whole of the Land Taxes. That was the first occasion, as far as I have been able to trace, when this promise was made by the Chancellor of the Exchequer. It is obvious that there could have been no mention of the whisky money at that time, because the deficit in the whisky money did not occur until a year afterwards. If any further confirmation is needed, I have here a copy of the financial Resolutions passed by this House:— That there shall be charged on the Consolidated Fund in each year a sum equal to half the proceeds of the duty levied in respect of ground values, including Mineral Eights 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. That was on 20th April, 1910. Even then there was no mention of the whisky money deficit. The first mention by the right hon. Gentleman of the Land Taxes being given as a set-off to the deficit of the whisky money occurred on 30th June, 1910, exactly a year after the original promise had been made. Then, speaking of the deficit of the whisky money, he said:— It is unsatisfactory that the efficiency of education in this country should depend upon the quantity of alcoholic liquor consumed. Therefore I think the time has arrived for putting these things on a firmer and more permanent basis. I promised last year that part of the Land Value Duty should be allocated for this purpose. I ask hon. Members to notice how erroneous that statement of what his promise had been really was. He said:— I promised last year that part of the Land Value Duty should be allocated for this purpose. He promised nothing of the kind. What he promised was half the Land Value Duties without any bargain whatever, and it was the distinct understanding on which these duties were passed, certainly on the part of Sir Charles Dilke, that half of these duties should be allocated to the local authorities without any conditions whatsoever. Now they seem to shift their "view upon the point every day, because only last Monday the Secretary to the Treasury, speaking of this, also seemed to confuse the Land Value Duties and the whisky money. And he said, speaking of the amount which he gave to local authorities in lieu of whisky money this year:— We resume half the Land Value Duties from 1909–10. £245,000, and for 1910–11, £300,000. That comes to £545,000, so that there is a small balance in favour of the local authorities of £40,000 a year."—[OFFICIAL REPORT, 20th February, 1911, col. 1589.] He takes up what the Chancellor of the Exchequer said in June last, and makes out that the deficit of the whisky money is being made up in lieu of the Land Taxes. That position was thrown over altogether by the Chancellor of the Exchequer at question time to-day, because in answer to a supplementary question from me he said "No; but what we did say was when we brought in our Budget in 1909 we would charge the local authorities something for the removal of the pauper disqualification for old age pensions." Now it is upon that ground that he is putting it—that he is not giving half the proceeds of the Land Value Duties to the local authorities. If we received a contribution from local funds, which will be a substantial equivalent for the relief which would be afforded by withdrawing such a large number of paupers from the rates, something might be done to remove a crying hardship.

Mr. HOBHOUSE

I do not quite understand what the Noble Lord's complaint is. Is his complaint as to amount or as to machinery? I understand it is as to machinery, and not as to amount. It is not that faith was not kept with the local authorities as to the extent of the relief, but he disapproves that we shifted our ground as to the machinery adopted or as to the way in which local authorities will receive that relief.

Viscount HELMSLEY

I will show in what way I object to the proposal, and why I think the Government have been shifty upon it. It is only mentioned now for the first time that this relief of the paupers is going to be a set-off against the half of the Land Value Duties which they were to have had. I object to it because it really amounts to very little at all. In the first place, no one ever thought, in spite of that vague enunciation in the Budget speech, that the local authorities were going to be asked to contribute. I do not think anyone in the local districts ever thought for a moment that they were to be asked to contribute to the happiness of those who were then disqualified. They may have thought they would have to continue paying a smaller amount to the pensions instead of to the maintenance of the paupers in the workhouse, or for out-door relief. But although that concession may be of certain value in large towns, it is of really little value whatever in the rural districts. As far as I know, it would have been far preferable if the Government had stuck to their original intention. At all events, it seems to me that the whole position has been very unsatisfactory, and in any case I should have thought the Government would be compelled to make their pension scheme take over these paupers, and that, in addition, we should have had what was promised; and this is the real reason of my complaint. The proceeds of half the Land Value Duties were promised by the Government explicitly, without any condition of any sort or kind. It is not only amount, and not only machinery, but it is a bit of amount and a bit of machinery, and I certainly think the local authorities, far from being grateful, have no cause for gratitude in any shape or form.

I am very disappointed, after what has been said in the Debates during the last few years, that no reform of local taxation has yet been brought in by the Government. The position seems to me to become worse and worse. A Resolution was passed in 1908 by this House that that reform demanded the immediate attention of Parliament, but so far that immediate attention has not been given to it. In the course of the Debates this Session the question of local taxation has occurred once or twice. I do not think anybody has pointed out, so far as I am aware, what proportion of these national services are paid out of local resources and what proportion is paid out of Imperial resources. I think the figures are very striking. Of the total expenditure of the local authorities 82 per cent. is defrayed from local sources and only 18 per cent. out of Imperial taxation. That includes education. In the matter of education actually more comes out of the Imperial purse than the local purse, and if you exclude education the percentages are 92 per cent. out of local sources and 8 per cent. out of Imperial taxation. That is for those services which have been described as national in character, namely, education, Poor Law relief, police, and main roads. The cost of pauper lunatics is included in Poor Law relief. Therefore, the position is that with every Act passed in this House, and every stiffening up of Administration which the President of the Local Government Board is compelled to make the burden upon the local authorities becomes greater, and I am disappointed that they are only to get this modicum of relief, which is far less than they were led to expect by hon. Gentlemen opposite, and that no reform is yet in sight.

As regards the grievance of the agricultural ratepayer, it is greater than that of the urban ratepayer. I am not going into the whole question, but the fact remains that the agricultural ratepayer, in spite of the Agricultural Rating Act, pays now eight and a-half times more than anybody else possessed of a similar income, and but for the Agricultural Rating Act he would be paying seventeen times more. That is because the agricultural tenant has to use so much more rateable property. I think no reform will be satisfactory which does not manage in some way to put some of this burden on personal property. The Royal Commission reported that the difficulties were almost insuperable. I cannot accept that view, and it seems to me that a local Income Tax must be brought within the region of practical politics. It is only by assessing people according to their capacity to pay that you will put local rating on a satisfactory basis. As to the increasing expenses put upon local authorities, I will give the right hon. Gentleman one instance. The collection of charges for licences, as the right hon. Gentleman knows, was imposed upon local authorities. They were given a grant which was supposed to be adequate for the purpose, but in my own county there is a deficit as between the grant given and the expense actually incurred of £226 6s. 3d. Hon. Members may say that is very little in the huge sums dealt with by county councils. That may be, but it shows what is being done. It shows that the grant is inadequate, and that the extra burden has to fall upon the ratepayers.

I should like the right hon. Gentleman, or whoever answers for the Government, to give us some more information about the Committee which was promised the other night to inquire into the question of local taxation. We should like very much to know what sort of committee it is going to be, what is to be its constitution, and what is to be the reference. Personally, I do not know why a committee is to be appointed. You have the Report of the Commission of 1901, and I do not know that much is to be gained by this Committee. There is a point with regard to Income Tax I should like to state. The right hon. Gentleman will recollect that farmers are assessed under Schedule B, which is practically an automatic assessment—that is to say, they pay on income calculated at one-third of the rent. They are subject to the usual abatement, and if the rent is less than £480 they do not pay any Income Tax. In 1907 there came the question of earned and unearned incomes. Incomes assessed under Schedule B were certainly earned and ought to be charged at the 9d. rate, but it was provided by the Act that claims had to be put in before 30th September in order to prove that the total income was below £2,000. As the right hon. Gentleman is aware, farmers do not realise the necessity of making returns, and, as a matter of fact, they do not make them. Though no returns were made, the sur- veyors allowed the usual abatements which the farmers were accustomed to have and assessed them on earned income at the 9d. rate. That happened only last summer, and that confirmed the farmers in their belief that it was not necessary to make claims before 30th September. Last year was the year of the new Quinquennial Assessment. Every farmer who did not make his return before 30th September this financial year is charged under Schedule B at 1s. 2d., because he did not make a return. That is a considerable hardship to farmers who did not realise the necessity of making the returns. It is obvious that the income of a farmer is earned, and, as a matter of strict justice, it should be assessed at the 9d. rate. It is hardly credible that they have been assessed in some cases at the 1s. 2d. rate, even where they have been allowed abatements. It is obvious that if they are allowed abatements on the new assessment their income cannot be £2,000. Even when this has been brought to the attention of some of the surveyors the farmers are still being assessed at the 1s. 2d. rate. I think, in the circumstances, the least the Government can do is to extend the time during which farmers may make a claim to be assessed at the earned income rate, or, still better, they might say that income assessed under Schedule B, which is the farmers Schedule, should be held to be earned income. There is not one farmer in a great many who has an income of £2,000 a year, and if he has that income, the rest of it does not come from farming, and Income Tax is tapped at the source. Even if the Government did lose a little on the few isolated cases where there are incomes of £2,000, I think they would only be doing an act of justice to farmers by assessing income under Schedule B at the earned rate. I hope I have made that point clear. It is a grievance which is felt considerably by a great many farmers, and I hope the right hon. Gentleman will take whatever steps he can to prevent the continuance of the injustice.

Mr. WORTHINGTON-EVANS

Just now I interrupted the Financial Secretary when he was reading an extract from "The Times." I did not know whether it was from an advertisement in "The Times" or a leading article I have ascertained since that it was from a leading article. I should not have made the remark I did make, had I known it was from a leading article.

Mr. MUNRO-FERGUSON

An hon. Member opposite referred to the hardships in connection with the taxation of mining royalties in England under the Budget. I do not think the hardships are very severe in England. I think, considering the source of the income it is a moderate tax. I would remind English mining royalty owners that they get off easier than my fellow countrymen. The Scotch mining royalty owners pay their share of local rates, while the English mining royalty owners do not. I agree with the hon. Member for Argyllshire (Mr. Ainsworth), who said that if a system of licences could be devised on a scale to put the levy on the amount of liquor sold it certainly would be a satisfactory way of dealing with many of the difficulties with which we are confronted under the licensing system. I understand that there are difficulties but certainly from the point of view of local administration the suggestion is one which is worthy of the fullest consideration. The Noble Lord (Viscount Helmsley) has referred to the incidence of local taxation, and to the fact that local authorities would be placed in a serious position in the country districts but for the Bating Relief Act. Had it not been for that Act I believe there would have been ere now an adjustment of local taxation. As regards the incidence of local taxation, I would ask how local authorities will stand in the matter of their half, as they regard it, of the Land Values Duty under the Act. I think the speech of the Secretary to the Treasury will alarm a good many local authorities. The view I took was that In return for the Old Age Pensions Act the local authorities should give up all claim to their half of the Land Value Duty, but the local authorities are not inclined to give away what they imagine to be their part of the bargain under the Budget. They view with great alarm any proposal to take away their share of the duty. Although the relief to the poor rates will be very considerable under the Old Age Pensions Act, I do not think it is possible yet to estimate what the economy will be. I think it will take some time to find out. Nor do we know at present what the Land Value Duties will be. They may be only half a million to-day, but they may be five millions before very long. I think as a temporary measure for the Treasury to take the Land Value Duties might be quite defensible, because the difficulties of distributing these duties after they receive them would be very considerable. I do not see how for a year or two they could be distributed on any sound footing. What the local authorities are anxious to know is that if these Land Value Duties are drawn by the Treasury and not distributed, that does not mean that there is a bargain between the local authorities and the Treasury now which upsets the old understanding that half of these Land Value Duties should be used for national services which are performed locally.

The cost of these national services performed locally is increasing enormously. It has increased rapidly since the year 1901. In 1901 we had the Report of Lord Balfour of Burleigh's Commission and the Report of Sir George Murray, in which the increase on the local authority was clearly set forth. Since then the increase of local burdens for Imperial services has progressed rapidly, and it is becoming very difficult for the local authorities to find money in order to carry out the minimum of local requirements. Therefore if, as the right hon. Gentleman the Secretary to the Treasury said, it is very undesirable to raise more taxation, I say from the point of view of the local authorities it is certainly no less undesirable to have to raise additional rates. I do not think that the local authorities would mind their half of the Land Value Duties going to the Treasury if it was understood that it was a temporary expedient. On that understanding I think there would be no opposition to the proposal. At the same time, on behalf of these local authorities, with which I am very closely connected, I would express the hope that we shall be able to deal before very much longer with this whole subject of the incidence of local taxation. We shall have to deal with it at the earliest possible moment. I do not doubt the earnestness of the right hon. Gentleman in endeavouring to carry out a reform of the incidence on a comprehensive scale. Owing to the elections and the difficulties of distribution of the proceeds of these taxes, there is no blame to the Government on account of the delay there has been in tackling this matter. All we should like to know is that at the earliest possible moment it will be carried out, and that due consideration will be given to the fact that national service cannot be financed entirely out of local resources. We shall have to have, I think, something in the nature of an Income Tax for local requirements. Taxes fall so unevenly, very heavily on the slum and on the poor man and the thrifty, and comparatively lightly upon the great financial houses in the city, that the community should pay for national services as they pay for Imperial taxation, according to ability to pay. In that way only will the local authorities be relieved from a condition of great financial embarrassment and be able to carry out their work. I think the House will agree that the work of the local authorities is one side of progress which we can least afford to see weakened. The action of local authorities is even more important than the action of this House, and a fair adjustment of the whole system of local taxation would do an immense deal to strengthen the efficiency and activity of the local authorities.

Mr. HUGH BARRIE

As I do not think that any Irish Member has spoken this afternoon, I wish to refer to the local taxation account, and how the Government propose to deal with the exhaustion of that fund which has so upset the finance of Irish departments during the financial year about to end. Although local authorities in Ireland had been informed by certain asylum authorities who were closely watching the finances of the local taxation account, it was not until September last that we received an intimation from the Government that, owing to the exhaustion of the usual amount flowing into that fund, the Government would only be able to provide us with 68 per cent. of the Grants which we had calculated as certain to be received in the financial year. Protests were immediately made from all local authorities in Ireland. The Chief Secretary received a deputation of the representatives of these authorities, and it then transpired that it was the intention of the Government that the usual extra sum of £79,000, which, under the Local Government Act, was specially provided for this fund should be paid in the usual way. Now we find, in the financial clauses which we are considering this afternoon, that the Government propose to reinstate the local taxation fund to the amount that they have lost through the diminution of the Whisky Duty and of that only. I say that this certainly will be disappointing and discouraging to Irish local authorities, because, so far as we can make out—and the Treasury has not shown any great willingness to give us the necessary figures on which to base our calculations—we shall find ourselves docked of something like 16 per cent. of the sum necessary to meet our financial obliga- tions for the year ending 31st March, and we shall be docked in the next financial year even of a larger sum, because we have to admit regretfully that the demands upon the local taxation fund are annually growing in Ireland. I think the Chancellor in his short speech on Monday, when he referred to the wastefulness of the present system of these grants, did not intend to convey any reflection, as his remarks were interpreted to convey, because I venture to say that no greater care could have been taken by local authorities throughout the country, and I believe in Ireland fully as much as in England and Scotland, than has been taken by these authorities during the last ten years. I am here to-night on behalf of these local bodies to say that we hope that even now it is not too late to appeal to the Chancellor, when he is making this reinstatement of the money lost through the operation of the Budget, that he should contribute the sum which we roughly calculate at £30,000, which would place the fund at least on a sound basis for the next few years. It is not a large sum for one who is dealing with so many millions as he is, but if the fund is left as he now proposes to leave it, what is going to happen is that we shall find ourselves—I speak for the moment as a county councillor—forced to strike a rat" of at least 2d. extra in the coming year to meet this deficiency. If that necessity is thrust upon us it will be a discouragement to local authorities to go on with the work which we have been doing with so much efficiency in recent years. We cannot hope to improve our services particularly in regard to raising the general standard of our own lunatic asylums, and do all the other work which has been laid on local Boards unless we get this recognition from the Government. There is, in addition, which I venture to say to the Chancellor of the Exchequer he has not taken into account, an obligation undertaken by the Chief Secretary on his behalf the other day in this House. The authorities of the Richmond Lunatic Asylum have taken legal action to recover one quarter's Government allowance which was never paid for the first quarter of 1899. They have succeeded in that litigation, and the Chief Secretary intimated from his place the other day that the Government did not propose to contest that decision. That involves a new demand upon the local taxation account of £37,000. If that Resolution is left as at present it will involve a still further increase in the local ratings for the coming year. I venture to appeal very respectfully to the Chancellor that he will bear these matters in mind, and that when he is giving this additional Grant to Irish authorities he may add for this year the £30,000 which we calculate we shall be short to the £37,000, so that we have the amount necessary to put our funds in proper shape for the current year.

Mr. LLOYD GEORGE

It is necessary for me to speak now, as we hope to conclude the Debate by a quarter past eight o'clock and to have a discussion on the Report to-morrow. With regard to the questions that have been put by the hon. Member who has just sat down about the Irish demands, I will promise to consider very carefully the suggestion which he has made. They are matters of very great importance, and I should not like to give a decision upon them without very much more reflection than I have been able to give up to the present moment. I should like to say a word about what fell from the Noble Lord (Viscount Helmsley) with regard to what happened in the case of Schedule B in reference to the farmers who through pure inadvertence have not put in their claims and have not got the full benefit of the reduction they would otherwise have been entitled to. Unfortunately, as the right hon. Gentleman (Mr. Austen Chamberlain) knows from his experience at the Treasury, these cases of inadvertence are constantly cropping up through persons not making their claims in time, and if you begin making exceptions it breaks down the whole machinery of the Income Tax. The Noble Lord suggested that in this case the farmers had a very good excuse for supposing that it was not necessary for them to put in their claims by the prescribed date. If that is the case, then I admit that they are in a totally different category from the cases of inadvertence. I shall certainly look into the matter with a desire to meet the views of the Noble Lord on that point. He also asked me another very important question with regard to local taxation. I have myself appointed something in the nature of an informal Departmental Committee to go into the whole question of local taxation. That was at a time when I was still under the impression that it could be dealt with this year. It was a committee of experts, town clerks, clerks to county councils, and people who had expert acquaintance with the working of local taxation. Until the matter had been fully investigated the Government would have been very ill-advised in framing their particular scheme or method of dealing with this question so full of difficulties and pitfalls.

8.0 P.M.

Therefore, it was very desirable to take the definite advice of men who had spent their lives in dealing with this problem. There are the questions of Land Value adjustment, the broadening of the basis of taxation, and many other questions arising under the present grant on which it would be very well for the Treasury to have expert advice. I am not sure even now that it would not be infinitely better to have a Committee of that character appointed than anything in the nature of a Commission to take evidence. That is really what is wanted, to get men like these to give advice as to the best method of dealing with the points from a practical point of veiw. I think it would be best to have a Committee on which such gentlemen could be appointed. I must not be taken, however, as announcing the decision of the Government, but rather as offering a suggestion for the opinion of hon. Gentlemen opposite, and that of the Noble Lord (Viscount Helmsley), who has taken a very keen interest in this matter, in order to see whether they will not agree that the appointment of such a Committee would be the best means of dealing with the subject.

Viscount HELMSLEY

I hope the right hon. Gentleman will bear in mind the particular importance of agriculture being very well represented on that Committee. Although, of course, other ratepayers have also their grievance agriculture has a special case.

Mr. LLOYD GEORGE

I quite agree; I really had that in mind. I meant to have on the Committee the Clerk of a county which was of a purely agricultural character. I will take into consideration the Noble Lord's representation on that subject. As to the question raised by my hon. Friend the Member for Leith (Mr. Munro-Ferguson), I thought I made it clear the other night that the retention of the Land Duty by the Imperial Exchequer was regarded by the Government as a purely temporary expedient. It is a very difficult matter to know how to deal with Land Values for the simple reason that we cannot say whether the value has been created by the particular community or locality in which they arise, because increment of great towns may spread miles beyond the boundaries. The first question to consider is not merely when you come to an allocation of the whole of the Land Duties, but when you come to consider the whole problem, the much more difficult question of whether or not you are going to broaden the basis of taxation and the trouble which will arise on the question of area. These two questions which are full of difficulty can only be settled by having the practical advice of experts—men who have been in this business all their lives. I will bear in mind the suggestions of the Noble Lord.

Viscount HELMSLEY

There was the other point which I put to the Attorney-General—whether the cost of the value of materials can be considered?

Mr. LLOYD GEORGE

That is a legal question, which I have left to the Law Officers, and it will be dealt with by the Attorney-General to-morrow, as it involves a legal opinion.

Mr. A. C. MORTON rose——

Mr. HOBHOUSE

We have to get these Resolutions through by agreement by a quarter-past eight, and as it will take some little time to put them to the Committee, I hope hon. Members will allow them to be taken.

Mr. A. C. MORTON

What does the right hon. Gentleman mean by agreement? We settled on Monday that there should be none of these agreements. I have been waiting here two hours, and I have as much right to speak as anybody else. It is all very well to say that there will be a discussion to-morrow, but the right hon. Gentleman surely knows that frequently to-morrow never comes in these matters. To-night is what I have to deal with. It is all very well to make an agreement to finish by a quarter-past eight o'clock so that Members can go away, I suppose for the rest of the night, and do not care what happens after. What I object to is what we have been told about the agreement as to when the Vote was to be taken. I do not at all recognise the right of anybody to make such an agreement as will shut hon. Members out from speaking on matters in which their Constituents are concerned. With regard to the incidence of local taxation, I have heard talk about it as long as I can remember. I do not wish to blame the present Government too much because, unfortunately, the Irish question and the House of Lords question seem always to take up our time. Until they are disposed of I suppose we never shall have time properly to consider what concerns the United Kingdom. I remember, as long ago as 1880, going with a deputation to see Mr. Gladstone on this very subject of the incidence of local taxation. He told us he quite agreed with our statements, but he said the Irish question blocked the way; and from 1880 to the present moment the Irish question has continued to block the way, and I suppose will block the way until it has been disposed of.

There is no doubt at all that this matter of local taxation ought to be attended to. My hon. Friend has mentioned the Scottish case with regard to licences. How are you to calculate the true licence value? The trade interest in Scotland, I think, have put it very well, namely, to calculate it on the amount of liquor sold. I believe that it is the only fair way. If you put the Licence Duty on both food and temperance drinks in licensed houses, I think it is hardly a fair method, unless you are going also to put a Licence Duty on temperance hotels and institutions of that sort I do hope, therefore, that the Government will consider the case, and will endeavour to meet us when the Bill comes up. Much as I am in favour of Temperance I do not believe in persecution, and I would act fairly to the drink interest. In regard to the reduction of assessment by the new Licence Duty being deducted from the rateable value the right hon. Gentleman the Secretary to the Treasury told us that there was some recompense in some way which, I confess, I could not understand. But I know we are told, on very good authority, owing to the new Licence Duty, that the general ratepayer will lose in London about £155,000 per annum. I should like to know how that is going to be remedied. The Government, who are taking the licence money, ought to recoup the local authorities for any loss occasioned by the new legislation. I hope the Government will not take away what they promised to the local authorities, namely, one-half of the Land Tax. That was a promise which ought to be fulfilled. The mere fact that the Government are going to do what they ought to have done at first, to give relief in regard to paupers in connection with the old age pension, ought not to affect their promise with regard to the Land Tax in any shape or form whatever We do not want the old age pensions mixed up with the Poor Law. In conclusion, I do not wish to delay the Committee in coming to a decision on these Resolutions, but I do hope that this is the last we shall ever hear of any agreement made behind our backs which would prevent our having liberty of speech.

Question put, and agreed to.