§ Resolution [23rd February] reported,
§ "That it is expedient to amend the Law Relating to National Debt, Customs, and Inland Revenue, including Excise."
§ Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."
§ Mr. FELL
On the Report stage we have an opportunity of referring to a matter which was not discussed in Committee, namely, the tobacco duties. It will be remembered by old Members that the question of the increased tobacco duties did not receive any great discussion or consideration at the time the increase was imposed; therefore we have the greater reason now for raising the matter and expressing our opinion upon it. Even at that time the tobacco duties in England were higher than in any other country, I believe—[An HON. MEMBER: "No"]—but in the Budget two years ago they were still further increased, and they remain unaltered in the Budget we are now discussing. We had hoped that after the experience of a year's working of the increased duties the Government might have met the people affected by them. There has been great discontent, and, unless something is done in the next Budget, that discontent will probably revive and assume a very acute form.
There are three points to which I wish to refer. The first is the damaging effect these duties have had upon the trade. I 2222 hope the Financial Secretary, when he replies, will not rely upon the fact that the Imperial Tobacco Company is doing good business and making satisfactory profits. That is not the point in question. It is not whether that great tobacco trust—one of the three great trusts in this country—is making good profits; it is whether the retail traders throughout the country are not suffering great hardships through the heavy duties upon tobacco, which have materially decreased consumption and profits. The Imperial Tobacco Company, whose report I was reading the other day, have undoubtedly made large profits, but the chairman stated that they had been most prejudicially affected by the Budget, and that they had succeeded in maintaining their profits only by their increased business in foreign countries, where I believe they have branches and conduct a large business. I understand that in the East there is an immense wave of cigarette smoking; the Chinese are said to be taking to smoking cigarettes in the place of opium. The question, however, is that of the small trader. There is not a borough Member who has not many of these people in his constituency; and very few borough Members have not received representations from these traders as to the effect of the increased duties. A calculation has been made as to the decrease in the number of pipes of tobacco smoked in the first year after the increase of the duty; the number may be fabulous, but it ran into millions. Every retail trader will tell you that he has suffered a decrease in trade and in profits. Traders in my own Constituency have told me that they have the greatest difficulty in keeping the trade alive, and in making profits on which they can subsist. Their profits have decreased to diminishing point, and in a country increasing as we are in numbers and in wealth, if a trade is even stationary, that trade is going back. Tobacconist licences have actually decreased during the last year by some 800, as compared with the preceding year. That means that 800 of these small shops have been closed, and probably 1,600 people thrown out of work. [An HON. MEMBER: "No."] That their have been a very large number cannot be doubted. The Financial Secretary, who has the latest figures, will be able to tell us how many licences have been granted this year, and what the reduction in number is. It is to the interest of the Government that all the trades in the country should be prosperous, unless they are absolutely 2223 deleterious, and it is not suggested that this trade would come within that description. We have constantly heard it argued that tobacco is the working man's one luxury. I hope the Government, with its abounding revenue, of which it is continually reminding us, will see its way to give some assistance to these retail traders throughout the country, who are at present in a very awkward position, many of them with bankruptcy staring them in the face. There is a second point I wish to raise: that is the effect—because it is such an admirable example—that a duty had on tobacco.
This is an old matter which has come up several times for discussion. The results are now perfectly apparent, and the deductions we can draw are so perfectly clear that I do not think the case can be stated too often. At the time that the right hon. Gentleman the Member for East Worcestershire (Mr. Austen Chamberlain) became Chancellor of the Exchequer in 1904 or 1905, the greater part of the tobacco that came into England came in stripped—that is to say one process of manufacture was already completed. The right hon. Gentleman saw it would make no difference to the price of tobacco in this country, but would help the English people and the English tobacco manufacturers if a reasonable duty was placed upon stripped tobacco. He altered the duty slightly by placing 3d. on the stripped as against the unstripped. The result was perfectly marvellous. Within 18 months of that time, whereas before three-quarters of the tobacco that came into this country was stripped, the figures of stripped and unstripped were reversed. The tobacco that previously came in stripped was stripped in Bristol, Birmingham, Liverpool, and other towns. The result, I am told—though the figures are difficult perhaps to estimate—that upwards of 15,000 men and women, who had not previously had it, obtained work in the factories of the towns I have mentioned, and in the North of Ireland. It was a material difference to these people, and it made no difference whatever to the price of tobacco in this country. Unfortunately, the right hon. Gentleman was only eighteen months or a couple of years in office; then a change came. The very first year that the present Prime Minister was Chancellor of the Exchequer he altered that duty back again, giving this benefit again to the foreigner. The foreigner 2224 took advantage of the concession, and the proportions between stripped and unstripped tobacco have gone back to their old figure, the 15,000 people have had to get work elsewhere or join the ranks of the unemployed. I will not enlarge upon the latter, but I do say that it is the most remarkable result that I have ever seen of the effect of a small duty or preference. Towns in Virginia where this tobacco used to be stripped were prosperous. When this slight duty on stripped tobacco was established an Englishman who went through some of these towns called attention to their altered condition, and said: "It is curious to see grass growing in the streets of an American town." [An HON. MEMBER: "You can see grass growing in the streets of English towns, too."] The English traveller was told: "Yes, this is the result of the small duty that has been put on stripped tobacco; the work of stripping used to be done in this town. It is being done now in England."
§ Mr. FELL
No, there were more than one. A good many letters have been written on the same thing. The people of Virginia said: "It is quite right, we can't grumble; England must look out for herself and her own people; she has done so in this case." Now they are busy again in these towns in America, and there are a good many unemployed in England. I do not want to make a Tariff Reform speech. The Chancellor of the Exchequer is now here, and I go back to the point, and ask the right hon. Gentleman if out of the abounding revenue that I know he has some help cannot be given to the tobacco trade? Particularly would I ask for the small tobacconists and dealers throughout the country who at the present time are, many of them, almost insolvent, their trade having fallen off to such an extent that they can, they say, hardly make both ends meet. I ask the right hon. Gentleman if he will consider whether something cannot be done; whether he cannot hold out some promise of relief to these poor people; and whether when this duty comes up again for discussion under the present or the next Budget some modification may be made?
§ Mr. CHARLES ROBERTS
I am afraid I am not qualified to follow the last speaker in his remarks on the tobacco trade, and about the grass growing in the streets of Virginian towns. But I should like to 2225 raise one or two points on the Licence Duties which have been criticised on both sides of the House. In one particular case I confess I think it is possible to do something. That is the case of the small seasonal hotels—that do a purely seasonal trade. I know that in the Budget of last year there were concessions to meet that particular case; both in the text of the Act and in the schedules. But I have fairly frequently heard licensing justices say that it would be a real advantage to them if there could be not a yearly licence but a half-yearly licence to meet this case. In the Bill of last year an arrangement was made for the duty to be paid in two instalments; but if really there is only a demand for alcoholic liquors during one part of the year, it is not a very desirable thing for the arrangement of the duties to be such as to presuppose a demand for alcoholic liquors that does not exist during half of the year. I should have thought that the proposal for half-yearly licences would have met that case—to some extent at all events—and would have had rather important social results. Perhaps I may submit the suggestion to the Chancellor of the Exchequer. Secondly, I want to comment briefly on the Wriggles-worth case. It has been referred to on the other side as though there was something dishonourable and unjust in inserting the words complained of in Clause 44 of the Act of last year to the effect that the Licence Duty shall not be allowed as a deduction in estimating the assessment. I think it is quite possible to argue, if you like, that the arrangement therein proposed caused the Licence Duty to be excessive or more than the Chancellor of the Exchequer wished in accordance with his estimate. I utterly fail to see that there is anything either unjust or dishonourable in it. It had the effect of raising the assessment. If you charge a low duty on a high valuation it may be really much the same as charging a high duty on a low valuation. The words may have had the effect, if you like, of raising the valuation beyond the point at which it would have been if the old law existed. I think these words had the effect of keeping the assessment at a higher point than it otherwise would have been, but I do not see how it really amounts to more than that. For instance, if you had kept the old valuation and charged Licence Duty on a basis of 55 per cent. it would have the same effect. It is simply a financial expedient by which you get 2226 £400,000 more than you meant to get in the coming year. It really comes to this, that the Chancellor of the Exchequer has charged the licensed trade £400,000 more last year than this year. I do not see anything dishonourable in that. I want to know what will be the effect of allowing these deductions, for I notice in some of the trade papers that they expect that if the assessment is coming down in virtue of the duties as at present charged that that would in itself again lower the duties, and consequently you will have apparently two figures perpetually adjusting and readjusting themselves in a way not contemplated. That is what they expect, and I hope that point will be regarded. I do not think the Chancellor of the Exchequer's concession has any ulterior or social effect at all. I think this is merely financial. In many of these cases of taxation there may be ulterior social effects, but I do not see any in this, except for one effect which I think it may have.
I have noticed some of the Licensing Benches have been attempting to correct what they seem to regard as the errors of this House and to suspend the compensation levies on the ground that in their opinion the Licence Duties have been extravagantly high. If they take that action of suspending the compensation levy they are going beyond their province in taking matters into consideration which are really outside the scope of their tribunals. I only hope that one of the indirect effects of this concession may be to remove the impression from their minds that it is their province to try and correct what they are pleased to regard as our mistakes. Although the trade is very free with these complaints they have got quite recently a considerable amount of concessions and abatements. In the first place they have got large discounts off these Licence Duties by abatement in the rateable value; they have got in a recent case the establishment of the principle that they may deduct their compensation levy for purpose of estimating Income Tax, and on the top of that they have got this £400,00. I think in the circumstances the boom in brewery shares is quite explainable. There is another point which has been urged upon the Chancellor of the Exchequer from both sides of the House. He has been asked is it not undesirable to retain the present basis for ascertaining Licence Duty—the basis of annual value, rateable value, or 2227 Inhabited House Duty or Schedule A. I have always agreed that is an entirely wrong basis but the Chancellor of the Exchequer said last year he only took it as a provisional basis. I quite admit that when you are charging premises—buildings, stables, land—instead of intoxicating liquors you may be doing an injustice to the houses that are trying to develop a trade other than the liquor trade, and I have always said that that basis led to very considerable anomalies which ought to be got rid of. But the point made by both sides is there ought to be a new basis, and instead of the basis of annual value there ought to be a tax upon the gallon or the barrel. I thing that is fundamentally wrong because it leads to confusion of ideas. The question is: Do you really wish to tax the monopoly or the consumer? If you put a tax upon the gallon or the barrel the trade will raise its price and get the extra tax out of the consumer. The consumers may drink less, but I am not particularly desirous of getting indirect taxation from the consumer in that way. I think the monopoly value of the licence which, in spite of clubs, is a very real thing, is the real subject for taxation, and that is what we wish to tax; and if you are going to put a tax on the barrel or the gallon you must realize that what you are doing is taxing the consumer instead of the monopoly. I want to tax the monopoly because it seems to me to be a legitimate subject of taxation.
Neither side has done full justice to Clause 44 of the Finance Act of last year, in which the Chancellor of the Exchequer did provide the real basis for these Licence Duties—namely, the basis of annual licence value. That is not fully understood. The annual licence value means the annual value of the house, excluding the value of the land and buildings, and leaving as the subject matter of taxation the annual value of the trade done in the house. That is exactly what we want to get at, and if you tax upon that basis you will get a taxation which is exactly in proportion to the trade done for each individual house, irrespective of the premises and the land and buildings. I trust the Chancellor means to stand by that basis. He applied it to hotels and restaurants and to public-houses over £500 annual value, and I hope that valuation is getting on. In the circular issued to the trade he may have asked for more figures than were really necessary to get a proper valuation upon that basis. 2228 I cannot believe that it is impossible to get that valuation, because we are doing it every day in the ordinary work of compensation. We know that it is quite easy to obtain, and when it is obtained, I believe you will get a system of taxation which is really just to the trade, one which avoids all these anomalies, and proportions the tax to the amount of the trade done. I hope this valuation is going on. I know it is not possible to make the change in the present Bill, but if in a future Budget, the Chancellor of the Exchequer is able to shift the taxation from annual value on to annual licence value I believe he will, in that way, get a really logical basis for the Licence Duties.
§ The SOLICITOR-GENERAL (Sir John Simon)
My hon. Friend will, I am sure, excuse me if I do not follow him in the arguments he has just addressed to the House. I wish to deal with the point raised last week by the Noble Lord opposite and which was mentioned again at the conclusion of the Debate yesterday, when the Chancellor of the Exchequer said that he would prefer to leave it until to-day to be dealt with from this bench. The point is this, and it has been put with great force by the Noble Lord: It is a question which arises under Section 25 of the Finance Act, 1909–10, and it has to do with the proper calculation of the deduction to be made in respect of clearing a site before you arrive at the assessable site value of the land. Complaint is made because the Department concerned takes the view that you must have regard to the further question as to whether the materials so removed from the site are materials which a person proposing to buy the site would give money for. It is said that that is a matter which the Section takes no account of, and it is further asserted that if account is taken of it in the way the Department thinks to be right some injustice is done. It seems to me that upon both these points there is something to be said on the other side. While I do not wish to adopt a controversial tone, I am sure hon. Gentlemen opposite would like to hear the other point of view. For that purpose it is necessary to look at the Act of Parliament, Section 25 of the Finance Act, Sub-section (4), paragraph (e), which provides that in arriving at the assessable site value of land there are to be various deductions made. You are to deduct any sum which, in the opinion of the Commissioners, it "would be necessary to expend in order to divest the land 2229 of buildings, timber, trees or other things of which it is to be 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."
I ask the House to note the final words. Assume that you are attempting to arrive, in accordance with the Act of Parliament, at what the assessable site value of a piece of land is which has got upon it some broken-down cottages, or trees or hedges or anything else. Plainly, the principle must be the same whether it happens to be trees or hedges or old buildings. As an illustration, I will take the case of old buildings. You desire to arrive in this case at the assessable site value of the land, and the Act of Parliament says that a deduction may be made in respect of clearing the site. Suppose a builder is considering what he would pay for this property. For the purpose of the valuation it may be, and I should have thought in many cases would be, that the builder would not give any more for the bare site than he would give for the property as it stands with the broken down buildings upon it. The Act of Parliament, therefore, says that if you are going to make a deduction in respect of clearing the site it must be a deduction of the sum necessary to be spent in order to divest the land of things "of which it would be necessary to divest the land for the purpose of realising the full site value." Assume that a builder is considering whether he is prepared to buy a site, and that site has upon it certain property. There may be on that site material of substantial value to the builder on the spot which would not be worth much if sold for use elsewhere. The builder may say to the owner, "If you will let me have this property as it stands I will give you £1,000 for it." The owner may retort, "Yes, but supposing I was to clear the site and keep the materials would you give me more?" If the builder says, "Yes, if you go to the trouble of clearing the site I will give you more," then there must be a deduction of the sum spent upon removing the obstacles from the site "of which it is to be divested for the purpose of arriving at the full site value." If the full site value is £1,000, whether you present the builder with the property bare, or whether be takes it "lock, stock and barrel" and makes the best use of what is on it, it appears to the Department that such a deduction is not justified under the Section 2230 because it is not necessary to remove those particular things in order to realise the full site value of the property. You may say that after all these buildings or trees are the property of the owner, and become the property of the purchaser when he has finished the transaction. That is quite true, but it does not militate against the fact that this Section does not require that the site should be cleared of everything upon it in all cases; it only requires that the site should be treated as cleared if it must be cleared in order to get at the full site value. If you can get the full site value without clearing, it is quite proper and not unreasonable to say that the full site value is to be arrived at without assuming the taking away of things which would not if they were taken away make the site more valuable. I want to make it quite plain that while that is the view the Department take, and a view which can be expounded clearly, I hope, and reasonably, it is not necessary in an Act so complicated as this to say that this is the only view which an intelligent person can take. I do not claim to lay down the law dogmatically as to everything that is contemplated in this Act of Parliament. The view taken by the Department has not hitherto been challenged. There was a clause put in the Finance Act providing for an appeal if the calculations were thought to be wrongly made, and this is one of the calculations covered by that right of appeal. While, of course, the Noble Lord is within his rights in raising this question, and asking what view we take, I, on my side, am entitled to point out that hitherto the method adopted has not been challenged and carried to an appeal. Why is it that, although this point is made in the House of Commons, it is not a point which so presses upon the mind of those affected by these valuations, that they are challenged? What is the risk which a man runs who has buildings upon his land when the assessable site value is going to be estimated? He does not run the risk of Undeveloped Land Duty, because the land is developed. The risk he runs is Increment Duty; and, in order that that risk may be small, he wants his assessable site value put high. If it is made low—certainly, it is made artificially low—then, since you start from a low level, the risk of being hit by the Increment Duty is greatly increased.
It is a little surprising to me that the Noble Lord the Member for Thirsk and the right hon. Gentleman the 2231 Member for East Worcestershire (Mr. Austen Chamberlain) should, not merely in the course of the long discussions on the Budget, but within the four corners of the: same speech, begin by saying they attack the Department because they have, in defiance of reason and justice, put these valuations too low, and then go on to say they further complain because the Department do not make sufficient deductions, and thereby leave the valuations too high. I see the Noble Lord here, and, in order to make good my point about this, allow me to call attention to his own observations in respect of these matters, so recently as Tuesday of last week, February 14th. The House will remember there was a debate on the Address devoted to the Land Taxes, and the Noble Lord made a speech which we all realised was a contribution of great value. In the course of that speech, in the same small bundle of the day's report, I find these two passages. The Noble Lord pointed out that the valuers had declined to deduct, for the purpose of arriving at the site value, all he thought ought to have been deducted, on the ground which I have just indicated, and he read the letter which he had received, and which put the point so clearly:We observe that yon hare made no allowance for the cost of clearing the site: no one would undertake the work without being paid for it."—[OFFICIAL REPORT, 14th February, 1911, col. 905.]What is the point of that? It is that the Department is doing wrong, because it does not deduct enough, and that, if you do not deduct sufficient, the original site value is too high. The Noble Lord so much impressed the right hon. Gentleman the ex-Chancellor of the Exchequer (Mr. Austen Chamberlain) that when he came to speak about the matter he used this language:—Is not that absolutely iniquitous?"—[OFFICIAL REPORT, 14th February, 1911, col. 993]What is iniquitous? Putting the assessable site value higher than the Noble Lord thought it ought in the circumstances to be put. If I go back only a few pages, I find the Noble Lord in the same speech, whilst not impeaching the good faith of valuers, complaining that the valuations were put artificially low! That may or may not be so, but really you cannot have it both ways. You cannot at the beginning attack a Department because it has by artificial means reduced the assessable site value to too low a level, and yet later on in the same speech complain that they are equally guilty in respect of exactly 2232 the same assessment because they have neglected to make deductions and have thereby put it too high. The real truth is that the Noble Lord has fixed his attention upon a case which is not normal; and, whatever the right view may be, clearly we must have the same view for all cases. He has taken the case of a man with an orchard, who, according to his view, must be regarded as though he had gone to the expense of removing his trees. He wants to claim credit for the value of the trees, because he is afraid of Undeveloped Land Duty. The normal case, of course, is that of urban land. If you say the Department ought not to have regard to the fact that the builder will give just as much for the site before it is cleared if he gets the material as he will give for the bare site after it is cleared if he does not get the material, then you put the builder in the unfortunate position that, instead of starting with a comparatively high value which will save him from the risk of Increment Duty until there is a rise beyond that figure, he will start at an artificially low figure and be immediately exposed to the danger of Increment Duty. That is the difficulty which presents itself to us in accepting the view put by the Noble Lord. Let me say it is clearly not a case in which the Department is justifying some harsh construction in order to screw money out of the taxpayer. I am quite willing to admit it is a method of calculation which is convenient both for the Department and the taxpayer from the point of view of simplicity, because the House will see that, if the method adopted is right—and nobody has appealed against it yet—then, in the case of property which has upon it some old buildings, all it is necessary to ask is: Will the builder take the property as it stands, lock, stock, and barrel, and give for it as much as for the bare site if the buildings were removed? That obviously assists from the point of view of simplicity, though it has not got the slightest value from the point of view of the Chancellor of the Exchequer. If the Noble Lord can induce one of those who asked for this point to be raised to challenge the matter and take it to an appeal, and if it be decided that the view the Department has taken is wrong, I do not think my right hon. Friend the Chancellor of the Exchequer need mind very much. The only result will be the Increment Value Duty will attach to the property 2233 sooner than otherwise, and that might or might not give satisfaction to the persons on whose behalf the Noble Lord has raised the matter. I trust that in putting this explanation before the House it will be understood that in this matter the Government and the Department are not in the slightest degree set upon the construction under discussion. All we say is that the construction which is to be put upon this Act of Parliament must be the same for land which has buildings upon it and for that which happens to have trees upon it. I invite the Noble Lord to consider whether I am right when I say that most of the cases which are affected are cases in which the taxpayer will profit. These are the reasons why the Department has taken this view, and I ask the Noble Lord to bear in mind that effect must be given to the last words of the Section, which, as I read them, do not require the calculations to be made in every case, but require them to be made if the sum you deduct is deducted in respect of that "of which it would be necessary to divest the land for the purpose of realising the full site value."
§ Viscount HELMSLEY
I am obliged to the Solicitor-General for his explanation, but I am bound to say it still leaves me very much in the dark. I do not think that those who are opposed to these Land Taxes take the view that the course I advocate would be to the benefit of Exchequer and not of the taxpayer. The hon. and learned Member seems to have lost sight of the very important point that these deductions are to be the same in both cases, when you are arriving at the original site value and the assessable site value, and although it is to the advantage of the owner of the land that the site value in the first instance should be put fairly high, it is not the case when the assessable value has to be arrived at on the occasion or when the increment becomes due. Take the case of the site value of an orchard. The deductions that are made include everything growing upon it, even to the cost of valuing those things. But if the owner erects some buildings upon the land, and it is again valued in fifteen years' time for increment, then the hon. and learned Gentleman will see that the value of the materials is of the greatest importance. That is a consideration which I should like to urge on the Government, and I think it quite disposes of the learned Solicitor-General's argument. As a matter 2234 of fact, the view the Department has hitherto taken is in favour of it, and not against it. I do not know what the hon. and learned Gentleman means by saying that the action of the Department has not been challenged. From the letter I read the other day it seems to me that if the valuer in that case did his duty he must have referred the matter to the Department. I have had letters since I last addressed the House on this subject pointing out that people are deterred from appealing because they realise that they may easily spend more than the tax amounts to. They therefore submit to a possible grievance in the future rather than incur the immediate present expense of going to law.
It surely is far better that these Bills should be framed in this House so that their meaning may be clear rather than that the unfortunate taxpayers should be driven to litigation. I do not think the words quoted by the Solicitor-General as to what it would be necessary to divest the land of for the purpose of realising the full site value bear out the interpretation placed on them by him. The words, "realising the full site value" appear to me to be a technical phrase. Sub-section (2) of Section 25 gives a very close definition of the full site value. Let me read that Section:For the purposes of this part of the Act, the site value of land means the amount which the fee simple of the land, if sold at the time in the open market by a willing seller might be expected to realise if the land were divested of any buildings and of any other structures (including fixed or attached machinery), on, in or under the surface which are appurtenant to or used in connection with any such buildings, and of all growing timber, fruit trees, fruit bushes and other things growing thereon.In fact before you can deal with the site value you must reduce the land to prairie condition. It is no argument to say that the buyer may prefer to buy the site with the bricks and mortar upon it: you have to deal with the abstraction of site value and you must make the deductions specified in the Section. I hope the Government will give further consideration to this point.
§ Sir ALFRED CRIPPS
I should like to say a word in reference to the legal point raised by the Solicitor-General. I willingly grant that he raised the point in a conciliatory spirit but I do not agree with his interpretation. No doubt, as regards the Section to which he referred in connection 2235 with the assessable site value you have to consider the question of clearing the land if it was necessary for a defined purpose. I agree with the learned Gentleman but that does not meet the difficulty. The point has come before me several times. No doubt landlords would prefer to pay the small amount in volved rather than enter on such costly litigation as might be involved in raising a typical case for a man could not be worse advised than to enter into litigation of that sort seeing that it is generally carried right on to the final Court of Appeal. Suppose, however, you have a site which is going to be cleared—which it is necessary to clear. I do not think it makes any difference whether it is bricks and mortar or fruit trees. The site may be cleared apparently for nothing, as the person who clears the site is usually contented with the advantages he derives for what he clears away, whether it be trees or building material. That is how the difficulty arises. It is in a case where there has been in connection with the clearage of a site something which ought to be allowed as a deduction in arriving at the assessable site value. It is quite true that in many cases of that kind money has not passed, and the consideration has been given in a different way. I am sure the Solicitor-General will not mind my giving him a specific instance of a case of that kind in which some allowance should be made for the cost of clearing the site in order to arrive at a true estimate of the assessable site value. It makes to my mind no substantial difference whether money is paid or whether you give the man in substitution for money, and as his reward for clearing the site the old building, or what is to be found on the site.
§ Sir ALFRED CRIPPS
I do not use the word technically because I do not think that is right, but I put it as it is used in the ordinary sense. Supposing expense is incurred—in fact incurred—in the way I have indicated, does he not think it ought to be taken into account in arriving at assessable site value. With great respect for the opinion of the learned Solicitor-General I think that is clear both from the Clause and the whole construction of the Act. But I want to go a little bit farther. The Solicitor-General seems to think that 2236 the Department are justified in departing from the terms of the Act if on the whole their departure may be considered to be in favour of the taxpayer. That would appear to be the result of his argument. He told us that we are making complaint of a construction which might be to the advantage of the taxpayer. In the first place I protest against construing an Act of Parliament in this kind of way, whether it is in favour of one party or the other. You have to see what this House meant, and the meaning of the words is clear. But I think also the learned Solicitor-General is wrong in the illustration which he gives. He says as regards the Increment Duty, it is to your advantage to have a high assessable site value, but as regards Development Duty, it is to your advantage to have a low site value. That is obvious, but it is clear that whether you interfere in one direction or another, the taxpayer is unfortunately charged. But let us look at the point made by the Noble Lord, and the answer of the Solicitor-General. I think the Solicitor-General is wrong, at any rate, in regard to the great majority of cases. I say that in the majority of cases, where you are dealing with a cleared site for the purposes of the Land Tax, the owner is at least equally interested in the charge or burden of the Undeveloped Land Tax as he is in the Increment Tax, and indeed he may be much more. Let us take the case of the cleared site—cleared no doubt for the purposes of building—but let us suppose that a mistake has been made, which often is made, and although it has been cleared for building it is many years before buildings are actually erected upon it. Under those circumstances to put the site value higher than it ought to be under the terms of the Act is not to the advantage of the purchaser who is taking the land for business purposes but unfortunately has made a wrong calculation is not able to carry out his building scheme. The result is this, you at once get into a fog and endless difficulty if instead of interpreting the Act as it is, you begin to think whether in particular cases, particular people may or may not get a particular advantage. I urge the Solicitor-General again to look into the point, and into the particular point I raise, that the whole expense incurred in clearing the site should be taken off and not taken into consideration in arriving at the assessable site value. 2237 That is the one point which is made, and it ought to be determined with his assistance by this House, and ought not to be dealt with in such a way as to invite a particular landowner to embark upon a very expensive litigation.
One of the hon. Members opposite called attention to the assessment of licensed premises, and he confused two things; first, the basis of assessment and secondly the rate at which the duty must be imposed. Surely you must effectually distinguish between these two matters, and that is the misfortune, error, and injustice of the case to which he referred. When you are putting a tax upon property you must in the first instance rightly and truly ascertain the true value of that on which your tax is to be assessed, and it is absolutely impossible to do that if you by that right of enhancing the assessment may lower the duty. That is wholly wrong in principle from beginning to end, and whenever you put an assessment on, whether for rating purposes, for Licence Duties, or Income Tax, it is essential in the cause of justice and fair play to have that assessable amount properly ascertained in the first instance. After you have ascertained that, the amount of rate or Income Tax you impose is a separate matter. Therefore we were justified in what we have said more than once from this side, that there was great injustice—I do not want to use the word dishonesty, it is not applicable—a portion of which has been put right by the promise of the Chancellor of the Exchequer, but a portion of which is left unremedied because the light hon. Gentleman will not make good these thousands of pounds which have been raised on this wrong basis. I should like to allude to one other point before we leave the Land Taxes on this Report stage. As I understand as matters stand now none of the produce of these Land Taxes will under any circumstances be used for local purposes, and I want to make my final protest. Taxes of this kind ought to be allocated to local purposes and local purposes only, and since you have adopted the attitude which has been taken up in the discussion of these Resolutions that no part of those funds ought to be allocated to local purposes at all, really the last excuse and justification that can logically and properly be put forward on behalf of these Land Taxes disappears. One could understand in a locality where increased expenditure has given rise to enhanced value that there 2238 there is a ground for asking for an Increment Duty and charging it upon increment. But directly you make it an Exchequer charge, and an Exchequer charge only, you come to the naked reality that you are picking out a particular form of property which has nothing to do with the ability of the taxpayer to bear the particular tax, and you are putting on that property a special burden and charge which, if put on at all, ought to be borne equally by all classes of property, irrespective of the character of the property and irrespective of who the particular owners under any particular conditions may be.
§ Mr. J. M. HENDERSON
I should like to call the attention of the Chancellor of the Exchequer to what the results have been of this valuation under Section 25. In the first place, I think the method of valuation must really be made a very great deal more simple than it at present is. If you take Section 25 and see what process you are to adopt in order to get at the value, you require to find no fewer than seven factors. You have to find the gross value, the divested value, the full site value, the total value, the assessable site value, the amount which may be deducted for fixed charges, and the amount to be deducted for works executed. If you take the Section and work it out in the formulæ—I do not wish to cast any reflection on the intelligence of the House, but I do not think there are twenty hon. Members who could do it successfully—you get this. The gross value, minus the divested value, equals the full site value. Gross value, minus deduction for fixed charges, equals the total value. Total value, minus divested value, plus the works executed, equals the assessable site value. Of course, that is not valuation. That is an algebraic equation, and the curious thing about it is the results which are springing up. I have here half a dozen provisional valuations which have been sent out, and they are curiouser and curiouser. The first one brings out the assessable site value at minus £5. The next one brings it out at minus £11, the next at minus £23, the next one at minus £20, and there is another at minus £8. Of course, that may be perfectly correct, but every algebraic student knows that by algebraic equations there is no difficulty in proving that x equals x plus y, which, of course, is absurd. What is the meaning of this minus quantity? If you tell ft man that his property is worthless, I think that is as far as you need 2239 go. It is no consolation to him to know that it is worthless minus another quantity behind that. We have been told that the acitvity of the community creates that site value and I want to know who creates this minus value. But if you are going to make the minus quantity—and I expect that is what the Treasury is after—the datum line, I think you will get into trouble. If the community has put down a man's value beyond zero the community cannot say we will take 20 per cent. of the difference between the minus and zero, because they are only replacing what they themselves took away. For instance, suppose the minus quantity is £100, and the man sells the property hereafter for £100 more than the gross value is to-day. That, observe, only brings it back to zero. The assessable site value is still worth nothing. But you say to him, "Well it is not worth anything yet, it is at zero, but we have brought it back from minus, and we want £20 out of the £100." I am entirely in favour of the Increment Tax, but if you are going to make it a success you must not bring it about by a system of valuation which no fellow can understand. At least the ordinary man in the street cannot understand it. Thousands of them are minus quantities. What are people to think about them? To tell a man that his property is worthless, that is all right, but to tell him it is £20 less than worthless is apt to confuse him and create a feeling in his mind that somehow or other someone is going to get the best of him. I appeal to the Chancellor of the Exchequer to make this valuation quite simple. I recently saw a surveyor's book, and I copied out the columns. There are twenty-one columns of values which this man has to find before he can find the assessable site value. It is really not wise for your own purposes. I am entirely anxious that this should be a successful tax, but it cannot be successful if you environ it with all this difficulty, and you come to two or three factors which you must value, and which more or less must be guesswork. I should have thought there would be a perfectly simple way of getting the gross value for that, deduct the value of the houses and any easement that there may be and come to a figure which is the site value. There cannot be any difficulty in it. But to environ it with a lot of formulae is, I think, not a wise policy. I should like to say a word to my friends below the Gangway. They are going 2240 to revolutionise the whole world and bring about a new heaven and a new earth through the taxation of site values. What are they going to do with these minuses? These are all town values. One is a house at £51 rent with a feu duty of £5. The owner is told his assessable site value is minus £10. I have said over and over again that if you take away the improvements and the buildings for agricultural land there is nothing left and the amount of minuses which will come out in the country will be astonishing.
One word with regard to local taxation. The learned Gentleman (Sir A. Cripps) said the local authorities ought to get the benefit of the Land Taxes. I think the corporations and the local authorities have not gone deeply enough into this question because, if they did, they would see that the Increment Taxes and the Land Taxes, with one exception, will be subject to great fluctuations. There will be a large amount one year and in the next year or two there may be very little or no yield at all. Under his proposal the Chancellor of the Exchequer is giving them a steady income. But there is one argument which will appeal to hon. Gentlemen. The principal of these taxes up to the present time is, I believe, the mining royalties. Are you going to give to Rhondda Valley alone and to Taff Vale alone, all the taxation on mining royalties that comes out of them, or are you going to give it to the towns? If you were once to adopt the principle of giving the tax to the locality you would give the great bulk of the tax imposed in London to the Corporation of London, which does not need it, while there are hundreds of towns where small increment takes place which would never get anything at all. If they get a contribution from a general fund I think the local authorities will be very well off. It is not the towns at all that make their own increment. Take the City of London, where the biggest increments arise round the Bank of England and the Stock Exchange. It is the juxtaposition of the Bank of England and the Stock Exchange that gives the increment value. Remove them to Westminster and the value of land in the City would go down 50 per cent. at once. You have no right to say that land creates value for the City of London any more than for the whole of London. The same remark is true in regard to other towns.
As to the Licence Duty, I wish to impress on the right hon. Gentleman the desirability 2241 of introducing a system under which the duty will be assessed on the amount of the sales. I could mention dozens of anomalies which occur under the present system—cases where one man pays very much more than another man, though the one who is paying the smaller amount is doing the bigger trade. You can never remove anomalies and give satisfaction until you adopt a simple system of charging the duty on sales. I would ask the right hon. Gentleman to tell us when the valuation for the £500 houses, and also the valuation for hotels are coming out. I think there is a good deal of uneasiness and vexation which could be remedied if those responsible for the work would make haste and give the valuations which have been promised.
I cannot agree with the hon. Gentleman opposite (Mr. J. M. Henderson) in saying that the Mining Royalty Tax ought not to go to the counties where they are paid. Certainly in Warwickshire, where taxation is getting extremely heavy for various reasons, and chiefly owing to the enormous demands by His Majesty's Government, there would be a very great saving to the county if we could get some of the Mining Tax paid over for local purposes. I wish to support the appeal made yesterday by my hon. Friend the Member for Dudley (Colonel Griffith-Boscawen) on the subject of the Mining Taxes. I have reason to believe that the Chancellor of the Exchequer, when he instituted these Mining Taxes did not wish to penalise those people who, by their own initiative, develop minerals in this country. But that is exactly what this mining taxation does, and I think the country should now thoroughly understand the immense impost placed upon the mines. A person who finds the money and develops minerals is placed in exactly the same position as the person who owns mineral property and gets somebody else to do the job. I know that the people of the country wish taxation to be fair, and I do not think that they have had brought before them properly the immense amount of special taxation which is put upon those who have to pay mining taxation. In the first place they have to pay Income Tax, they have to pay very much increased Death Duties on the estates, and, in addition, they have to pay this Mineral Tax yearly. People who have money in stocks and shares, and who do nothing for the employment of the community, are not taxed in the way 2242 people who own mines are taxed. I wish to point out to the Financial Secretary to the Treasury that in the new districts where minerals are being developed there are an enormous number of small landlords who have to be negotiated with some way or other in order that their land may be brought into a colliery. It is not only the big people who are caught by this taxation, but also the little people. I know a number of people who will be very much hit by this taxation. I would point to the case of people who have bought land, not at its agricultural value, but at its mineral value, who have had it for some time, and have been getting an inadequate amount out of it. Now, when perhaps this land is going to be developed and some increment is going to be given to it, they are to be mulcted in this way. A distinguished engineer in Birmingham has written to me as follows:—By Clause 20, of Finance Act, 1910, Mineral Rights are to be levied upon the rental value or rent, consequently it is very unfair under any circumstances to make the mine owner pay, as the Commissioners of Inland Revenue are doing on taxes in every case, and rates where they are paid by the owner as in ironstone mines.
For example if the gross rental value is £10,000— The lessee deducts Income Tax @ ½ £583 6 8 Land Tax may amount to @ 1/- 500 0 0 £1,083 6 8The whole of this £1,083 6s. 8d. goes to the State, and yet a demand for 1/- on each £1 of it (£64 3s. 4d.) is made upon the owner of the mine for Mineral Rights Duty.The owner incurs expenses in the ascertainment of the amount of the rent in connection with the survey and management of the property out of which the same arises, and which amounts usually to one-twentieth part of such rent. As a much larger allowance is made in the case of all other rents, and in fact a still further allowance in some cases, in this same Finance Act, 1010 (see Section 69), it is only reasonable the lower proportion of one-twentieth should be allowed on Mineral Rents. This simply gives to the owner who works his own mines the same rights that are claimed above for the owner who leases. This refers to Section 21 of the Finance Act, which provides that a lessee who has subleased, and paid the taxes, may deduct the same from his payments to the superior landlord or owner.This is a case which the Government might very well take into consideration. If the hon. Member (Mr. Master-man) will allow me I will give him the paper so that he may see the case presented in a more concrete and better form than I can express it.
We have heard a lot about the accretion of value caused by the working of mines in various localities. But there is another side to the question. When you open a colliery, a quarry, or ironworks, there is a great deal of decrement which also goes on at the same time, for which no allowance whatever is made. For instance, a 2243 beautiful district which might be good for residential purposes may become utterly unsuited for residential purposes owing to the works which may exist in the neighbourhood. You cannot make a pit head a beautiful thing. You cannot make works in connection with mining anything but a disfigurement to the country-side. So that while underground the owner of minerals may receive an accretion of income, as regards the surface of the ground there certainly is a decrement. Another result in these districts of opening collieries and other works, such as a certain kind of brick works, is that in a short time the whole of the trees begin to die. That is a very considerable decrement to the district. And whereas the bark of oak and other trees, when cut down, is worth a certain amount, in these districts where the trees are saturated with smoke the bark is worth nothing at all. Although the owner of these minerals may be receiving extra money from the working of these minerals, yet at the same time the rates in the district increase to a very large extent, so that there is the other side to this question which should be looked at. I am very sorry that the Government have so thoroughly refused to give to these localities which are to pay the benefit of the taxes in which they are mulcted. If they acted fairly they would do as they proposed in the first instance, and give half of these taxes to the localities which had to pay them.
I do not think it has been brought out in this House how very hard this Undeveloped Land Duty will affect people who live in districts near country towns, and who, presumably, are rented at low rents. My district happens to be a developing district, and I can speak with a certain amount of knowledge and experience. There are in certain districts in England near large and increasing towns cottages with comparatively large gardens of half an acre or so which are rented at low rents. I can give concrete examples if you wish from more than one district. They get their house and garden in some cases I know from as low as three shillings a week, and sometimes even under that. The policy of good landowners to my mind is never to increase the rent to a sitting tenant, and if possible not to do it at all. These particular houses, and the gardens which surround them, are near an increasing town. One of these Commissioners comes down and says, "You have these houses and gardens. They may be very 2244 good for the people who live in them, but we might develop them, we might increase these towns." Who is to suffer? The landowner does not suffer. He can either sell his land and get a very much increased interest on the sale value of the land which he has sold, or, if he chooses, he can increase the rent and tell the people who suffer that it is due to the action of His Majesty's Government, who, while acting on their theories, have not understood the effect of this Act. The persons to suffer are the wretched people who live in those houses and who would go on living there comfortably if it had not been for the action of His Majesty's Government. The same applies to market gardens and allotments in the neighbourhood of towns. If the hon. Member will take the trouble to go through the developing parts of Warwickshire, which I know by heart, he will find in the neighbourhood of the large towns, market gardens, allotments, and accommodation land, which it would be not a benefit but quite the reverse for the people to lose, and which are sure to be taxed under this taxation unless the proposals are very much modified.
Another point has been placed before me in a letter from a Birmingham gentleman who represents a great deal of interest in property. He says:—What I am after is to decrease the capital value of undeveloped land in urban districts by the amount with compound interest contributed by the owner in certain rates paid in respect of land ever since it has been subject to them.The point which he makes is this: say there are 100 acres, ten acres of which will be subject to Undeveloped Land Duty, while the other ninety will not be, yet because these ninety acres as well as the ten acres are in an urban district they will be subject to a certain rating which they would not be subject to if they had not been in that district. My correspondent thinks, of course, that the money which has been spent on the ninety acres in rates in that district should be taken into account in depreciating the amount of taxation, the increment and other taxes, which would be laid on the other ten acres that are adjacent to the ninety acres that form part of the same property. I have no doubt that the hon. Gentleman on the Treasury Bench will adopt a non possumus attitude as regards that, but there is the case, and I will put him in correspondence with my friend. I have no doubt that they intend to be fair. We hear all over the country that the Government only intend to do what is fair with regard to land 2245 But they ought to hear both sides. I will put them into communication with my correspondent and they can go into the case fully. The Government at the present moment have got a large majority in this House; they can do what they like. We are in a minority; how long we shall be I do not know. The day may come when we shall be in a majority; but before that time I do ask the Government to do what is fair and just. They have initiated these Land Taxes. If there are points in them which are not fair and just, as I have tried to prove, if there is injustice done to certain people in this country, I ask the Government, with their majority, to look into these cases and not adopt a non possumus attitude.
§ Mr. J. A. BRYCE
I want to impress upon the Government very strongly the objection of the large local authorities of Scotland, and particularly the burghs which I represent, to the withdrawal from local taxation of the produce of the Land Value Duties. Several hon. Gentlemen yesterday and to-day have alluded with force to that consideration, among them the hon. Member for South Bucks (Sir A. Cripps). My hon. Friend the Member for West Aberdeenshire (Mr. J. M. Henderson) thinks these local authorities have not taken into sufficient consideration all the benefits which they might derive from the exchange which has been offered by the Chancellor of the Exchequer For instance, the hon. Member for Wolverhampton said yesterday that his borough was going to gain on the rate of 2d. in the assessable value by the exchange offered by the Government. That may apply to certain boroughs in England, and to certain local authorities over the country, but it does not follow that the effect will be the same in every individual case. I think that the Scotch boroughs must be supposed to look pretty well after their own interests in regard to what they are getting in exchange for what is being taken away from them. Besides, they have to look to the future and to the time when the public services they will be called upon to render will be a great deal larger than at present. Social conditions may have to be improved to such an extent that the amount of the burden removed in respect of pauper disqualification under the Old Age Pensions Act will not be of as great value as it is at this moment. I do not know what the effect in particular boroughs in Scotland may be in regard to this exchange, but you can 2246 well imagine, when these boroughs in Scotland claimed, from the first, that the whole of the land values should be allotted to local authorities, that they are disgusted to think that the half of the taxes which was offered to them by the Chancellor of the Exchequer is now going to be withdrawn. The boroughs in Scotland demand that if the Chancellor of the Exchequer is going to take away the remaining half of the land duties from them, there should, at all events, be made up, independent of that, any deficiency in the new sums paid into the local taxation accounts, so that education may not be made to suffer. That appears to me to be an extremely reasonable claim.
I am probably in agreement with the hon. Member for West Aberdeenshire in regard to the imposition of the Licence Duty. The hon. Member for Argyllshire yesterday asked that the Chancellor of the Exchequer should again reconsider the point, which was so very strongly put before him from a great number of quarters in this country, with regard to the way in which the Licence Duty should be charged. It has been universally pointed out that there should be some other method substituted by which the payment would be on the amount of liquor sold or on the amount of liquor taken into the shop or hotel. In the case of hotels particularly, the present system works most injuriously. There are great numbers of hotels in Scotland open only for a short time during the year, and the amount of liquor sold in them is extremely small in proportion to the revenue. In such cases it would be an enormous relief, as in a great many other cases also it would be an enormous relief, including public-houses which are conducted in a most reputable manner if the payment were made, not upon the rental value, but upon the amount of liquor taken in or consumed. I understand that there is an objection on the part of the Chancellor of the Exchequer to give a working basis on outturn or on in-take, but surely, if he wishes to take something on a house as apart from liquor, there might be some system devised by means of which an adjustment could be made which would be fair to all parties. I hope the Chancellor of the Exchequer will take an early opportunity of reconsidering the whole question.
§ Mr. MAURICE HEALY
I desire to say something on the Irish aspect of this question in regard to the Licence Duty. It is to be regretted that we have not on the 2247 paper the particular proposal which the Government makes. I am not sure that I clearly understand that proposition myself. On the whole it seems to be a proposal arising out of some litigation which has taken place in England as to the basis on which the licensed houses ought to be assessed for the purpose of local taxation. As I understand, though you would hardly expect it in a Budget Resolution, the proposal of the Government is dealing not with Imperial revenue, but municipal revenue—that is to say, it is to be an Amendment of the law relating to the principle upon which public-houses are to be assessed for the purpose of local taxation. It is perhaps unfortunate that we have not more in detail the particular proposition which the Government submit, but, so far as I understand, it seems to me to be a proposition which is unjust to Ireland, because it proposes to give relief to England and relief to Scotland, but is to do nothing to modify the rigour of the Act of last year, so far as that Act applies to Ireland. I understand that what the Government propose to do is this: There has been some litigation in England on the question as to whether in valuing a public-house for the purpose of local taxation, the amount of the Licence Duty should be taken into consideration in making the assessment. It is proposed by the Government, I gather, to formally enact what the Law Court decision declares, that the Licence Duty shall be taken into consideration, and it is proposed to limit that enactment to England and Scotland, and not to apply it to Ireland. The ground upon which this is done, it appears, is that the valuation basis of assessment of licensed houses in Ireland is plus 20 per cent. on Griffiths' valuation under the Act of 1380, and that it is alleged makes some difference in the case of Ireland, rendering it unnecessary to apply the Amendment of the Act to that country. The proposal of the Government deals with the existing basis of taxation. We had a great controversy last year as regards the proposed new valuation, and, as I interpret the Finance Act, it is to provide for a new valuation both in England and Ireland of public-houses.
The present proposal of the Government, I understand, relates to the valuation which has been made, the form of the return under the existing law, and the principle upon which public-houses are 2248 valued under the existing law. The public-houses are valued on very much the same principle in England and Ireland under the existing law. In England the valuation is, as I understand it, in most cases the valuation for the purpose of the Inhabited House Duty, and the valution in those cases is very much what the rent is that is paid for the house, making certain deductions for taxes and insurance and repairs and amounts of that kind. Those are exactly the principles of Griffith's Valuation. If that be so, and if the Government have found it necessary, owing to the outcry raised by the trade in England, to give relief to an amount estimated yearly at some £400,000, I am utterly at a loss to understand why Ireland should be excluded from the benefit of that grant. In some parts of Ireland Griffith's Valuation, though technically and theoretically founded on the rent, is in practice somewhat lower than the rent. It was for that reason that in the Act of 1880, it was provided that in assessing houses for the purpose of Licencing Duty 20 per cent. was to be added to the valuation. The Government have preserved that 20 per cent. They still insist on it, and it was added roughly with the idea of placing the valuation in England and Ireland on very much the same basis. Seeing that that addition is still made, there seems to be no reason whatever why any amendment of the law that is to be made in England should not also be made for Ireland. Particular reference has been made by the Member for East Mayo (Mr. J. Dillon) to the case of Dublin and Belfast where there has been a recent revaluation of those cities, though Dublin is not yet finished. In Belfast the revaluation has been completed for some years. Where all the houses in those cities have been revalued on modern principles, and in view of modern conditions, and in view of modern rents, I do not understand why, if the English publican is to be made a present of £400,000 a year because of his outcry, no corresponding concession should be made to Ireland. We will understand the Government's proposal better when we see it on the Paper, and more clearly how far my view is correct that this enactment is to relate solely to local rates and not to Imperial taxation. We will understand also whether this amendment of the law applies to the existing valuations as well as to the new valuation which the Government propose to make. No 2249 doubt we will have some further explanation, and more satisfactory opportunities of discussing the particular proposal when we see it in concrete form. I think, even at this stage, it is necessary to make some protest against the proposal to exclude Ireland from the benefit of this concession which is about to be made.
The next topic to which I wish to draw attention is that of the question of local grants, and especially the question of the local grant for intermediate education. When the right hon. Gentleman the Secretary of the Treasury was making his statement last Monday he was interrupted by the hon. and learned Member for Waterford (Mr. J. Redmond), and asked if he could give details of his proposals so far as they related to Ireland. In reply to that interruption the right hon. Gentleman promised that before the Debate closed he hoped to be able to supply the Committee with the figures which would throw some special light on the case of Ireland. That has not yet been done, and certainly neither in reply to questions, nor in the statement of the right hon. Gentleman yesterday, was there any attempt made to give us the figures for which the hon. and learned Member for Waterford asked. I am sorry we have not those figures, because it is a matter of the most enormous importance to Ireland. The hon. Member for East Mayo, when this was first in Committee, entered a protest against what the Government proposed to do, and, so far, I have not observed any reply to the statement of the hon. Member. Our case in this question is this: We all know the somewhat haphazard, inconsiderate way in which this House has dealt with intermediate education in Ireland. It was touched for the first time in 1878, when the Irish Members were not so strong in this House as they are now, and when a very small and very moderate measure, which was the foundation of the intermediate education system, was passed. That gave us, for the purpose of intermediate education, the interest on a sum of money taken out of the Irish Church surplus, and amounting, I believe, to between thirty and forty thousand pounds per year. In the year 1888 the Conservative Government introduced a Bill dealing with licensing which had its successor in the Licensing Act of 1903. There was a proposal at that time taxing whisky 6d. extra in the gallon to form a fund for the purpose of reducing the number of licences in the United Kingdom. 2250 That proposal was defeated in Committee. The Government had the money in their hands, and they did not know what to do with it. They decided to allocate that 6d. per gallon, or, as it was called, the "whisky money," for the purpose of intermediate education both in Ireland and in England. Without that sum it would have been practically impossible to carry on intermediate education, because since 1878 the number of pupils in the intermediate education system has largely increased; the schools have increased, and the expenses have enormously increased. It would have been quite impossible for the Irish intermediate system to have gone on, on its original basis, with the payment of from £30,000 to £40,000 per year, and if this particular Grant had not been made in the year 1888 it is quite certain that Parliament, in or about that time, would have found itself compelled to supply for the purpose of intermediate education money from some other quarter. The revenue derived from the 6d. per gallon increased year after year until 1900, when it reached its maximum, and realised for the purposes of intermediate education in Ireland over £70,000. Since then there has been a slight decline, which the Secretary to the Treasury puts at 2 per cent. But what the Treasury have done is to take as their standard for the Grant for intermediate education in Ireland the lowest point it had ever reached, leaving out the exceptional year 1910. What justification is there for that course? It is not pretended that the Grant, when it amounted to £70,000, was excessive. It is notorious that it was not enough, and that the Intermediate Education Board year after year found itself unable to discharge the duties cast upon it by Act of Parliament, particularly in the matter of inspection. Eight or ten years ago a Commission, which inquired into the whole question of intermediate education in Ireland, unanimously reported that inspection was absolutely essential. The Board adopted the Report, under which the system of examination, which had been their sole method of supervising intermediate education, was to be supplemented by a system of inspection, and they called upon the Treasury to provide the means. The Treasury, however, replied: "You may inspect as much as you like, but we decline to supply the funds." In consequence, for three or four years the Intermediate Board have found themselves unable to give effect to the Report of the Commission. Although the system 2251 of inspection has not been established, it has at any rate been initiated, the Board having appointed one or two inspectors, but it will be quite impossible for them to continue the system if their Grant is to be cut down in the manner proposed. It should be noted that Great Britain, particularly England, receives for the purpose of intermediate education not only this whisky money, but also a large additional subvention, corresponding to which there is no similar Grant to Ireland. We have in this matter a distinct and monstrous grievance in that England and Scotland are annually subsidised by Parliament by a large Grant out of Imperial funds, whereas Ireland receives no such Grant, and, in addition, the Treasury now propose permanently to fix the amount given for intermediate education at the lowest point it has ever reached, except in the entirely exceptional year of 1910. I hope when the right hon. Gentleman replies he will be able' to supply the information asked for by the hon. and learned Member for Waterford. Great hopes were raised in Ireland by the statement made by the Chancellor of the Exchequer some months ago in reply to a deputation, and we all believed that when he made his proposals this year he would suggest some satisfactory arrangement which would put intermediate education on something like a sound financial basis. Instead of that we are met with a proposal which will practically have the effect of leaving intermediate education in Ireland bankrupt.
Passing to the question of old age pensions, I have been utterly unable to understand the basis of the figures given by the Secretary to the Treasury when he estimated the relief to boards of guardians by the extension of old age pensions to the inmates of workhouses at 7s. 6d. per head. The average cost of maintenance of a pauper in an Irish workhouse, excluding clothing, is less than 4s. per head per week, according to a return of the Irish Local Government Board. It varies from 3s. 9d. to 4s. 1d., to which a small sum, perhaps a few pence, must be added for clothing, but certainly you cannot possibly add 3s. 6d. for that purpose. I do not understand that there will be any large reduction of establishment charges. The master, matron, schoolmaster and clerk will be paid exactly the same salaries as before; the relieving officer and the whole of his staff will remain exactly the same; in fact, I do not believe there will be the saving 2252 of a single penny in establishment charges. I do not at all minimise the advantages of the arrangement, nor do the representatives for Ireland, by which the Government have saddled themselves with this extra cost of old age pensions. I consider it satisfactory. But I consider its beneficial effects have been exaggerated, and I do entirely question that it will confer on Ireland the benefits which have been suggested.
A word as to the Increment Duties and Stamp Duties. In Ireland the former duties are a matter of less importance than in England, for considerably less revenue will be raised there than will be raised in other parts of the United Kingdom. I do wish to draw the attention of the Government and of the right hon Gentleman, not so much to the financial burden that these taxes cause, as to the enormous inconvenience which they have introduced, I think unnecessarily, into all conveyancy matters. There was a great controversy last year as to whether or not these duties affected agricultural land, and the Government said very positively that they did not. For my part, I never questioned it. I never dwelt on the suggestion that these duties might possibly affect agricultural land—directly. But, I ask, if it is perfectly clear that these duties do not affect agricultural land why is every deed in Ireland affecting agricultural land to be regarded as if it were subject to Increment Duty? An enormous number of conveyances in a country like Ireland relate to agricultural land. The number of eases in which increment accrues is but a small part of the whole. Parties having to do with these conveyances are put to the same trouble, delay, and expense as though there was Increment Duty assessed on agricultural land. I ask the right hon. Gentleman whether some simple amendment of the law cannot be introduced, which will remove that almost intolerable burden in the method of conveyance from professional men and from the parties specially interested; and I would almost say from the backs of the Revenue officials themselves. I am at a loss to understand what purpose is gained for the revenue by imposing upon the Revenue officials of Ireland the necessity of examining for Increment Duty the hundreds and thousands of conveyances which admittedly can never furnish to the Government a single penny in the shape of taxation! This matter is widely deserving of the consideration of the Government. At present delay and trouble are involved. It may 2253 even involve loss, for we in Ireland are affected by this matter in a way in which most parts of England are not affected. We in Ireland have a system of registration of conveyances. It may be a matter of greatest importance as between two parties, each having competing interests, as to whose conveyance is registered first. Sometimes half an hour in the registration of a deed may make all the difference in the right of the parties claiming under the deeds. Very often there is competition between the creditors and other parties interested in land as to who should get in first, and all that is made difficult by this necessity for having deeds regarded for Increment Duty, even though it is admitted that no Increment Duties can ever be paid upon them. It is a pity that in this complex matter of Land Duties a mistake should first have been made, but I would ask the right hon. Gentleman to consider whether something could not be done to remedy this state of things, which in Ireland has become almost intolerable. A final point I wish to raise is in relation to the Stamp Duties. I was glad that it was proposed to extend the concession which the Chancellor of the Exchequer made last year in respect of all conveyances where the consideration was under £500. In the Finance Act of last year the doubling of the Stamp Duty applied to all conveyances. On pressure from all parts of the House, the right hon. Gentleman was good enough to say that he was willing that the increase in the Stamp Duty should not apply, as I have stated. That was a very useful concession. It was much appreciated, and was also an advantage to the right hon. Gentleman, in that it did not involve very much sacrifice of revenue. It conferred substantial benefit on poor people. I congratulate the right hon. Gentleman on the fact that he is prepared to extend that proposal, not merely to the case of the consideration of conveyances under the £500, but also in the case of premiums paid on leases. But I would call the attention of the right hon. Gentleman to a third case which I think he might also consider in the same connection. Following the analogy of the £500, and the exemption of premiums on leases, there is the case of the voluntary conveyance. The right hon. Gentleman has doubled voluntary conveyances in all cases. That doubling applies both where the value is under and where it is over £500. If it is just that the Stamp Duty on conveyances and premiums on leases should not be doubled, I think the logic 2254 of the case inevitably involves that voluntary conveyances should get similar treatment where the consideration as to the value of the property comes within the same limit of £500.
§ Mr. PRETYMAN
Before I address myself to the points which I wish to put before the House, may I very strongly endorse the appeal made by the hon. Member (Mr. Maurice Healy) in regard to the point in reference to gifts being exempt. I have had two particular instances given me where a small portion of land had been given for charitable purposes, and where the Government Stamp Duty had to be paid in one case because it was a little over £500. In one case it was land, in the other it was land already covered by a house. What happened was this. A gentleman, a resident of Felixstowe, built a cottage hospital, and presented it to the town. It was going to be handed over in the ordinary way, when it was found that that could not be done, because the Government Stamp Duty had not been satisfied. That caused delay. What I suggest to the right hon. Gentleman the Chancellor of the Exchequer is that all deeds of under £500 should be exempt, but that gifts for charitable purposes should be exempt even above £500. I throw out that for his consideration, and I think it is thoroughly deserving of attention. What I particularly rose to ask is this, that when we come to the Second Reading Debate we may have a clear and real answer upon a very important point, not covered by Amendments moved in these Debates. I mean the question of undervaluation, and also how the site value is to be calculated upon the occasion. These are two points upon which the actual working of the Finance Act up to date is causing the greatest difficulty and trouble and anxiety in the country. It has been two or three times suggested by Members below the Gangway on the Government side that the cases of undervaluation quoted are isolated instances, and that undervaluation is not general. The evidence is overwhelming that undervaluation is general, I could not for a moment say universal; but complaints reach me from many parties and districts saying that houses are being undervalued, and greatly undervalued. I will give the Chancellor of the Exchequer a case now which may be an isolated case, but it is a very strong one as to the way these valuations are to be carried out, and I think the Chancellor of the Exchequer will attach more importance to a concrete case than to generalities.
2255 The person who sends me the information is Mr. Hubert J. Monckton, solicitor, near Birmingham, and the information is in regard to two freehold cottages and gardens in the parish of Northfleet, with the weekly rate of 2s. 6d. and 3s. 6d. The property was held by trustees up to the 13th April, 1909, and owing to the death of the tenant for life the property-was sold on 17th April, 1910, a year later. It was sold for a sum of £420. Estate Duty at the rate of 3 per cent. was paid, and Legacy Duty at the rate of 10 per cent. became payable. So there you have 13 per cent. Death Duty payable upon £420. The value of that property, which was estimated at £420 for Death Duty is now put at £233 for Increment Value Duty. That is only an example of what is happening, and it very naturally follows that there is a great sense of injustice felt.
I quoted a case in the Debate the other day—not a single isolated case—of a building society in Mountain Ash, in Wales, and that ought to arouse the special sympathy of the Chancellor of the Exchequer, where 100 workmen belonging to a building club had built 130 houses at a cost of £270 apiece. These houses are now valued at £200.
§ The CHANCELLOR of the EXCHEQUER (Mr. Lloyd George)
I should like to explain I accept at once from the hon. Member what he states, but I have made some inquiries, and the case which he has given for Mountain Ash requires explanation. If the hon. Gentleman tells me that each of these houses cost £270 to build, of course, I accept his statement; but what I am told is it does not cost the builder anything like that sum to build them. In many of these cases the houses are sold at very extravagant prices, as arrangements have to be made to allow the workmen who buy them to pay back at so much a month or so much a year. That makes the transaction precarious for the vendor, and he charges his price, but £200 does represent the real value, I am told. That is the kind of explanation I have heard, but if the hon. Gentleman has other and further details I shall make inquiries. May I make another suggestion to him. I should like to see one or two of these valuations really tested. After all the Referees are not appointed by us; they are appointed by the Lord Chief Justice, and he has taken very peculiar care to select some of the very best men in the country. The Treasury pay fees 2256 that make it impossible to have anything but the very best men. I think it would be very desirable if a few test cases were decided, and would serve a very useful purpose. The valuers surely do not undervalue. It is quite impossible, of course, to fight this matter out across the floor of the House. A question of this kind ought to come before the court. I simply make that suggestion.
§ Mr. PRETYMAN
I am very much obliged to the right hon. Gentleman, and I have no quarrel either with his interruption or with the suggeston he made. With reference to the gentlemen appointed as Referees, I absolutely indorse every word that he has said concerning them, and I am perfectly sure, as far as the Land Duty is concerned or anyone else who takes an interest in the matter, they absolutely accept the opinion that these Referees are the best, or, at any rate, are as good as could be obtained in the country. But may I point out this is a matter of tens of thousands of valuations, and it will mean revaluation again all over the whole country. I ask the Chancellor of the Exchequer to look into a small but rather amusing point which arises out of the claim made by the Solicitor-General that 40,000 valuations have been made in one district, that sixty days have expired, and that no appeals have been made. I have been looking at the dates between the time the first valuations were served and the expiration of the sixty days, and I find that it averages about seventy-nine valuations a day in that district. The Chancellor of the Exchequer was rather indignant with me for suggesting even seventy valuations per day.
§ Mr. LLOYD GEORGE
What I was indignant about was the suggestion put forward that these seventy valuations were made in the office without any visit being paid by the valuer.
§ Mr. PRETYMAN
I will not pursue that point, because I do not want to say anything controversial now. I want to emphasise this question of undervaluation, and I think the suggestion of the Chancellor of the Exchequer is a very good one. Many appeals are being lodged already against this low valuation, and they will come before the Referee. I wish to emphasise the point that these cases concern innumerable poor people who do not employ professional advice. I know one case of a man in Newcastle who made it 2257 his particular business to develop cottage property, and he has had served upon him notices for a provisional valuation of his houses. Within a day or two of the sixty days notice running out this builder goes to the owner of a similar block of property and shows him his valuation, and he asks whether he is right. The other owner happens to be a solicitor with considerable knowledge of the management of land, and he tells his friend that he considers the valuation he has made very much below the proper figure. The man further asks, "What have you done with your block," and his friend replies, "I have not had notice of a provisional valuation served upon me at all." That shows that this valuation is being carried out in a very peculiar way. One owner has valued his property, and in another case the whole sixty days runs out without another owner being served with notice. Look at the position in which those two owners are placed. This arises because the valuation is being carried out in a hurry, the result being that cases arise where notice is not served. In some cases the valuations are being carried out without any serving of forms at all. They call upon the people who own the property and ask them to arrange the matter. I spoke to a gentleman at Newcastle the night before last who had been asked for a duty of £80 upon the sale of a house, and he told me that he had never had any document for a provisional valuation served upon him. He had had no Form VII., or any other notice. In this particular case, the demand has come down from £80 to £18, and he still refuses to pay. I do not blame the valuer. The evidence that reaches me is that these valuers are men with whom no fault can be found, but they have been given an impossible task. They are doing their very best to serve the State and meet those whose property has to be valued as fairly and as reasonable as possible. I have no complaint to make against them. It is very difficult, I know, but we are bound, in bringing these matters before the public to state the facts. I make no attack upon the valuers, and even in this particular case I do not say the valuer is in a tremendous difficulty. Probably some of them are afraid of putting a figure upon paper which they may not be able to sustain. The Income Tax Commissioners do not do that because they know exactly what they can claim. They do not interview people and ask, "What are you prepared to pay? "They simply demand in 2258 black and white the sum which the State-has a right to demand. At present the whole process of this valuation is in absolute confusion, great inconvenience is being caused, and the persons who are short of information and knowledge on these questions believe that a low valuation means a low tax, as it always has done, with the result that they are going to allow their property to be valued too-low without an appeal. This is important because the low valuation will be taken as a precedent in the case of other people. That is what will hoppen. This point will be very largely cleared up if the Chancellor of the Exchequer when he speaks on the Second Reading of this occasional Budget will make it perfectly clear how this Site Value Tax is to be carried out. If he can do that, we shall know better where we stand, and probably things will, to some extent, straighten themselves out. If the right hon. Gentleman had been in the House a little time ago, I think he would have been amused at the speech of the hon. Member for West Aberdeen (Mr. J. M. Henderson), who stated that similar-specific information had reached him in regard to the valuation of original site-values. The hon. Member mentioned cases which gave minus quantities of £23 and £12; consequently, if owners give their property away for nothing they will still be chargeable with Increment Value Duty. [An HON. MEMBER: "No."] Apparently that appears to be so. There is another small point I wish to refer to. The right hon. Gentleman has allowed a deduction of 10 per cent. from the original site value. Where it happens to be a minus quantity the right hon. Gentleman will see that another minus quantity becomes an addition. Therefore, the 10 per cent. will have to be added, and if there is a minus quantity of £20 for an original site value, the sum upon which the duty will be payable in that case will not be £20, but £22. That is a point which certainly requires attention. I cannot help calling attention to a very remarkable speech affecting this legislation delivered by Lord Carrington and reported in to-day's "Times." He says that this kind of legislation is admirable in theory; it falls only upon the rich; it taxes only unearned increment and taxes only held-up land. In practice, people who are neither very rich or receiving much unearned increment and who are not holding up land are beginning to feel oppressed and are calling out. Lord Carrington had to appear at a dinner of the Yorkshire Union of the Agricultural Club. The 2259 Noble Lord was in a difficult position, I must admit, because he had at the same time to appear as a Member of the Cabinet and as an apologist for the Government, and he had also to deal with this question, in his capacity as a landowner, with the actual concrete situation which exists in regard to agricultural land, where it is being put into the market by the present owner. The attitude adopted on the Government Bench has been that the tenant farmer is more anxious to get rid of his oppressor, the landlord. If the Chancellor of the Exchequer looks back at some of his own speeches, and more especially his Queen's Hall speech, he will see that he admitted that he had started out to tax this class of agricultural landlord out of existence. The words are on record. The Chancellor of the Exchequer must admit that words of that description, spoken by a responsible Minister, must be taken seriously by those whom they are likely to affect. No doubt, as the result of that partly and more particularly as the result of the actual legislation for which the right hon. Gentleman and his friends are responsible, a great many owners of land are putting it into the market. I am delighted to hear the cheers of hon. Gentlemen opposite, and I hope the tenant farmers throughout the country will take them to heart. It is rather difficult to reconcile the speech of Lord Carrington, as representing the party opposite, with those cheers. May I ask the hon. Gentlemen who cheered to kindly give their attention to this sentence of Lord Carrington:—It was quite natural that the feeling of security which had hitherto existed among farmers on most large estates should be undermined, and that tenant farmers were haunted with the dread of being turned out of the homes that they and their fathers had occupied for generations.That is how this position presents itself to Lord Carrington as a practical agriculturist.
§ Mr. PRETYMAN
There are several other sentences. I will read straight on:—The gentlemen whom he had asked to serve on the Committee which he was appointing to consider the matter would be representative of all interests," etc.I do not think that affects the point.
§ Mr. PRETYMAN
It is a matter of ordinary practice that before land is sold formal notice is given to all the occupiers. Otherwise, you cannot get possession. I do not think that affects the point. That is somewhat in the nature of a red herring I think. The point is that an owner of land is told he is going to be taxed out of existence, and a commencement is made. He thinks it is desirable to clear out, and hon. Gentlemen opposite think that a most desirable conclusion. [HON. MEMBERS: "Hear, hear."] Perhaps they have not got that practical knowledge of the position of tenant farmers on agricultural land which enable them to judge the real result as apart from the theoretical. The tenant farmer's position is, as Lord Carrington suggests, that he and his fathers have for generations been enjoying security. The owner can now, unfortunately, get more interest and greater security for his money in other directions. The strength of English land has been that it was the best security in the world. That position has now gone. Hon. Gentlemen opposite are doing their best to entirely destroy it. I hope these words of Lord Carrington will bring home to the hon. Gentlemen opposite, as no words from these benches can bring home to them, the real consequence to the tenant farmer of the action they are taking throughout the country. Lord Carrington there said:—There was at the present time a widespread feeling of uneasiness and insecurity amongst farmers, partly in consequence of the administration of the Small Holdings Act, and partly as a result——
§ Mr. MARKHAM
If you have ten small holders in the place of one farmer, surely you are going to benefit the community?
§ Mr. PRETYMAN
That is too large a question to go into now. It depends entirely upon circumstances. It depends upon how many labourers the farmer was employing and are turned out. It depends upon whether the particular land in question was more suitable for small holdings or for larger cultivation. There is no general rule. I entirely admit there may be cases where ten occupiers will do better and get more out of the land and employ more labourers than one occupier. But surely the hon. Gentleman opposite would not contend that is always the case. There are innumerable cases where it does not apply. Lord Carrington says here:—There is a widespread feeling of uneasiness and insecurity among farmers, partly in consequence of the administration of the Small Holdings Act, and partly as a result of the number of cases in which large estates were being offered for sale by their owners.2261 I will only quote one sentence more—The breaking up of large estates he, as a landlord and agriculturist, considered a very serious matter, and he implored them to take it into their earnest and serious consideration.His Majesty's Government having wrought this wrong are now amusing themselves by appointing a Committee to see how it may be remedied. We on this side, know how it can be remedied, and it will be our duty to do our utmost to apply that remedy. The only remedy is to get rid of those who have done it and to replace them by those who will be able to defend their legislation equally in this House and when they get among the practical people whom it may affect.
§ Mr. LLOYD GEORGE
I do not think it would serve any useful purpose if I were to follow the hon. and gallant Gentleman in the very highly controversial passages of his speech with which he has diverted the House for the last five or ten minutes, but I certainly thought, when we heard all that about Lord Carrington, there was at least one passage in his speech in which he had said something about the Land Taxes. But not a word. It all referred to small holdings and to other matters which have absolutely nothing to do with the Budget of last year. The hon. and gallant Gentleman seems to think that something hasbeen done, either in the Budget or in the small holdings legislation, which has had a very great effect in depreciating the value of agricultural land. On the contrary, the value of agricultural land is going up steadily. I remember discussions in this House within the last few years when it was the duty of my predecessor, Lord St. Aldwyn, when he was Chancellor of the Exchequer, to bring forward a proposal for relieving all agricultural land, and in the course of his speech he pointed out that agricultural land in many districts was a drug in the market. What is happening now, more especially during the last three or four years when we have had a Government which has been attacking landlords, which has been depriving them of their property, and which has been making agricultural land valueless? The value has gone up steadily and steadily. The hon. and gallant Gentleman knows what has happened in Essex during the last three months. There have been a good many sales, and extraordinarily good prices have been obtained for agricultural land.
§ Mr. LLOYD GEORGE
I am pointing out that the legislation of Liberal Governments has not prevented natural causes operating; that the value of the land has gone up steadily, and that the landlords, very wisely from their own point of view, finding that this a good time to sell, are doing so. What does that mean? It means that, in spite of all the agitation which has undoubtedly created a sense of uneasiness—and I should have been much surprised if the very well organised agitation during the last two or three years had not created such a sense of uneasiness in the minds of a very large section of the public as to the effect of our legislation—there is no difficulty experienced in finding purchasers at good prices for agricultural land everywhere. I can assure the hon. and gallant Gentleman the farmers in my own part of the world are not at all alarmed in that regard, but that they still invest in land whenever they get the opportunity. The reason why they do not do so to a larger extent is that prices are so high as to be quite prohibitive. The hon. and gallant Gentleman seems to think that Lord Carrington stated something quite inconsistent with what I ever said. Lord Carrington said that the farmers were very alarmed because of the insecurity of their tenure. That is exactly what I have been saying for some years.
§ Mr. PRETYMAN
May I ask the right hon. Gentleman, in all fairness, to read Lord Carrington's precise words. His lordship said the exact opposite. He said the farmers had had security for generations, and were now afraid of losing it.
§ 3.0 P.M.
§ Mr. LLOYD GEORGE
I have not the extract here, but I accept, of course, the version given by the hon. Gentleman. May I, however, point out that this feeling of uneasiness did not begin this year. On the contrary, farmers had been agitating for years for security of tenure—at any rate, in my own part of the country. The hon. and gallant Gentleman talked as if this were the first year of land being put on to the market. Bui for years it has been the policy of landlords, especially in the county with which I am associated, to sell land. For the last twenty or thirty years that has been going on, and that, in itself, has created a feeling of insecurity because the farmers are afraid of losing the farms which their ancestors have held for generations. These, I find, were the words used by Lord Carrington:—In view of these facts it is quite natural that the feeling of security which has hitherto existed among 2263 farmers on most large estates should be undermined, and that tenant farmers should be haunted with the dread of being turned out of the homes that they and their fathers had occupied for generations.I agree with Lord Carrington that on most of the large estates the farmers have always enjoyed a great sense of security. Indeed, I have never stated that they have not done so.
§ Mr. LLOYD GEORGE
I have said, and I repeat, that on some of the large estates the farmers, not only have a sense of security, but are treated with every fairness.
§ Earl WINTERTON
No; the right hon. Gentleman has invariably been fair in this House, but his supporters have not been fair, either in this House or in the country.
§ Mr. LLOYD GEORGE
Legislation of a punitive character is intended for protection against a minority who take advantage of their position to oppress others. That is really the case with security of tenure. Legislation is not needed in the case of many tenants, because the majority of landlords do treat their tenants fairly. But there is a minority, driven, perhaps by stress of circumstances, to take too full an advantage of their powers in order to exact extortionate rents or drive the tenant farmers away. These are the cases in which there is insecurity of tenure, and very probably recent circumstances may have created a fuller sense of insecurity than the tenant farmers had felt before. But, after all, it is an old story.
That is all I wish to say with regard to the controversial points raised by the hon. and gallant Gentleman. I want to make one or two observations with reference to the non-controversial part of the speech. With regard to undervaluations, I repeat I should rather like to see these cases tested. There was one quoted earlier in the proceedings, a case at Plumstead. I have seen the valuer in that case; he is a very careful man, and he assured me he is quite prepared to defend his valuation before an 2264 independent tribunal. I think it is rather a misfortune that some of these cases have not been tested in that way, instead of being brought before the House, as neither the hon. Gentleman nor I have the material with which to try them. He comes to me with a case and says, "Six months ago this property was bought for £400." That is really no proof of value; it is evidence to a certain extent of value, but when he makes that statement he knows perfectly well it is quite impossible to test it here; it can only be met by a counter-statement by myself. There is only one way of testing it, and that is by getting the Referees to visit the property and adjudicate on it. I would urge the hon. and gallant Gentleman to take that course.
§ Mr. PRETYMAN
Might not the right hon. Gentleman in a case of this kind, where great doubt prevails, arrange for the costs in one or two test cases to be paid by the Crown?
§ Mr. LLOYD GEORGE
I have already assented to that suggestion in one or two matters, but if it to be done in regard to every possible matter of contention between the Crown and its subjects I think it would become a rather serious question for the revenue. I will, however, consider the point. The hon. and gallant Gentleman has rather criticised the valuers because in certain cases they have valued at the rate of seventy or eighty per day. What I am assured by competent valuers is this: you may value in certain neighbourhoods, and find it impossible to dispose of more than three or four cases per day; for instance, take the cases of farms where there are a good many considerations, as to the different kinds of soil and so on to be taken into account; you may not be able to value more than three or four tenancies a day. But take the case of a row of 100 houses all as like as each other as two peas, built on the sama plan, and within an inch on the same amount of ground. If you value one or two of these you really value the whole lot, and you can dispose of such cases in about one-fifth of the time necessary for valuing a farm. The House does not imagine that a valuer can get through 100 tenements a day they think that if he does so, he scamps his work. I asked a man the other day, of very great authority and experience, and he told me that if he were valuing the City of Manchester, he could value it in a very short time, because the houses are so much alike in the vast majority of streets. 2265 There is the same site value, and all you have to do is to measure the frontage and then there is a certain value appertaining to the land in a certain street. There is no difficulty as far as that is concerned. The hon. and gallant Gentleman complains about the number of valuations, but I hope he will bear in mind what I have said, when he considers this matter.
§ Mr. LLOYD GEORGE
What really has that got to do with it? I cannot characterise such an interruption. I suppose it is meant to be amusing.
§ Mr. LLOYD GEORGE
Supposing you have fifty houses on one side, and fifty on the other, it would not take as long as if you had those fifty tenements scattered over a wide area.
§ Mr. LLOYD GEORGE
Surely then your valuation on one side will take that into account, but the hon. Gentleman knows perfectly well that he could value 100 houses in the day like that, in a very short time.
§ Mr. LLOYD GEORGE
Does the hon. Gentleman mean to say that he would have to value each individual tenement of the whole 100?
§ Mr. LLOYD GEORGE
Then all I have to say is, that valuers of just as great experience as himself assure me that that is not the case.
§ Mr. LLOYD GEORGE
After all, the hon. Gentleman knows perfectly well that these valuations have been conducted in the case of houses. He knows the time which is 2266 taken to make a valuation for a public authority in a town, and I have consulted men who have done that—first-rate men, men of great position, who have been valuing in great cities like Manchester, Liverpool and London—and they assure me that that is their method of valuation, and that no valuer would ever dream of doing anything else. The hon. Gentleman pits his authority against them. For the moment, I prefer their authority, and I know something about them. The hon. and gallant Gentleman, in his criticism, was very careful to say that he made no attack upon the valuers, and all I can say is, they have been very carefully selected. They have been picked out of the very best men available, and if the hon. and gallant Gentleman can offer any criticism in regard to them and point out a man whom he does not think is up to the right standard, I shall make inquiry, and I shall be very much obliged to him. I can assure him, however, that they have been picked out of the very best material available in this country, and they have been chosen without any regard to party. I am perfectly certain—although I have never made inquiries—that if their politics were inquired into, it would be found that there were more belonging to the hon. Gentleman's party than to that to which I belong. I am certain that that is the case, and therefore there is no party bias. I am perfectly sure that the valuation will be a perfectly fair one, as I am desirous it should be in order that it may be permanent. I want to make this valuation of a character which will be respected and have the confidence of all parties in this country. I want to make it a valuation which will command the confidence of all the owners of property in this country, and I welcome the hon. Gentleman's criticism because I am very anxious in regard to this matter. Every criticism that can be passed in regard to this valuation I shall certainty inquire into, and if there is any ground for the criticism I shall do all in my power to set the matter right, as it is a matter of the most vital moment that this valuation should command the confidence of all classes of the country who take part in questions affecting land. I hope that it will be valuable evidence which owners of property will be glad to quote.
I hope I have dealt with most of the points to which the hon. Gentleman has called my attention, but I should like to say one word in regard to the public-house 2267 valuation, referred to by my hon. Friend the Member for Lincoln. He very properly has said that we, charged upon a higher valuation a year ago, and have now decided to charge upon a different principle. That is purely a financial matter. That year we wanted certain revenue, and we were strictly entitled to charge it, but in this year we are content with less, and so we have altered the system, which we are at perfect liberty to do. That is a financial matter, and the Treasury is entitled to choose either method without being open to any reflection that it is doing anything unfair. I should like to enter into that matter later on, but if I may say so now I think that the class of criticism which imputes robbery and spoliation to the Exchequer because it imposes a tax upon any particular branch or class of the community is singularly unfair. Take the 1s. export duty on coal. In some cases it wiped away 50 per cent. of the profits of certain colliery proprietors. It closed certain collieries, and it reduced wages. You may say it was an unfair tax you may say it was an injudicious tax, but no one on our side said that the Chancellor of the Exchequer of that day was a robber and a thief. The same thing applies to the Sugar Tax. Take the duty of 4s. 2d. on sugar. That duty took away half the profits of some manufacturers in this country. In some cases it absolutely stopped the dividends of the manufacturers, depriving them of all their profit. No one suggested that the Chancellor of the Exchequer for the time being robbed those particular manufacturers. That is one of the operations of a tax.
§ Mr. LLOYD GEORGE
The hon. Gentleman says I attacked the licensed trade and called them "brigands." I ask him to give me a quotation.
§ Mr. LLOYD GEORGE
The hon. Gentleman was good enough to interrupt me by saying that I called the publicans of this country "brigands." I have asked him to name a single occasion on which I have done it. He has neither justified his statement, nor has he had the decency to withdraw it.
§ Mr. LLOYD GEORGE
The hon. Gentleman surely, when he has made a charge of that kind and said I called them "brigands," must have had some occasion in his mind. If he is simply going to rummage and find out some other expressions which he thinks are tantamount to that, he has brought the charge first, and is going to look up the evidence afterwards. I am not at all surprised. I was showing that it is very difficult to arrange these taxes in such a way that some industry is not touched. I think it is unfair to attack the Exchequer as if it were guilty of robbery and spoliation because the taxes are arranged in such a way that some industry or the other is to a certain extent damnified. I have been pressed as to the question of the revaluation which was provided by the Act of 1909. The difficulty there is this. I agree that it is very much fairer that you should tax the publican upon the basis of the business which he does. I have seen, especially during the last two or three years, many cases of houses which are very highly rated, but where business is small, and on the other hand cases where the houses are very lowly rated, but where the business is very considerable. It is obviously unfair that a man should have to pay more-for highly-rated premises with a small business than for premises rated at a low value where the business is more considerable, but the difficulty is that publicans do not keep accounts, and hon. Members would be amazed at the class of house which does not keep accounts. Even very-considerable houses keep no accounts at all and they find it very difficult to give even an estimate of the business which they are doing. That is really the whole difficulty which is experienced by the Excise 2269 authorities in arriving at a valuation on the basis of the business done. It is fairer to the trade. I have undertaken that if there is a revaluation the Government will so adjust the Licence Duty which is imposed that the trade as a whole would not pay more than it does at the present moment. What really will happen will be that some of the houses which are doing a big trade will pay more and some which are doing a small trade will pay considerably less. We are not losing sight of the fact, and I hope, at any rate, possibly in a week or a fortnight, that we shall have the provisional valuation of hotels and houses above £500 issued. I am not at all sorry for that because the hotel keepers were unduly alarmed because the notices served upon them were naturally, in the first instance, notices upon the basis of their assessment, and they were under the impression that they were to pay a half of their assessment. Whereas, as a matter of fact, when they come to the valuation which will be in their possession in a week or a fortnight they will have to pay one-third or one-fifth.
The hon. Member (Mr. Fell) asked me a question which is really not for this Budget but for a future Budget. I am not sure that anything can be done. He did not suggest to me anything practical. I, should like to know what his suggestion is. I listened very carefully and I thought he would end up with some sort of practical suggestion. I do not think it is anything whatever to do with the revenue. The reason why these small people are suffering is because the great combines are driving them out of the market. That is the grievance of small traders everywhere. There are great combines in every trade and every business. The revenue cannot possibly do anything there and I cannot think of anything which the hon. Gentleman could suggest which would enable me to assist them at all. After all you cannot give them a subsidy, that is perfectly obvious, and I do not see what else could be done. I only wanted to make these one or two statements, and I very much regret that I should have been drawn into any controversial statement at all, either upon publicans or the other, because it was certainly not my intention.
§ Lord HUGH CECIL
I understand that there is an understanding that the Debate should now terminate, and I have no desire to go behind that; but it is rather a pity that the two Front Benches should make understandings of that sort. It is 2270 bad enough that private Members should have their rights interfered with by Motions formally made and put from the Chair, and if what remains of their opportunities are taken away by understandings or regulated without their consent by distinguished Gentlemen on the two Front Benches, I think they have a grievance. The matter has been settled, but I think——
§ Lord HUGH CECIL
I am not suggesting that there is anything in the least underhand. I am not making a contentious speech, but the right hon. Gentleman has made some violently contentious statements, from which we dissent. The reply to a speech of that kind would, I believe, be called a rejoinder, and we cannot give it now. I only hope that in any arrangements which may be made between the two Front Benches more regard will be had to the rights of private Members, who are not consulted in these matters.
§ Question put, and agreed to.