HC Deb 01 August 1912 vol 41 cc2445-79
Mr. MASTERMAN

I beg to move the Second Reading of the following new Clause:—

An approved society within the meaning of Part I. of The National Insurance Act, 1911, and any branch of such a society, shall be entitled to exemption from Income Tax in respect of the income derived from any funds or credits of the society under that part of that Act or any investment thereof, and the Insurance Commissioners, the Scottish Insurance Commissioners, the Irish Insurance Commissioners, and the Welsh Insurance Commissioners shall be entitled to a similar exemption in respect of any income derived from any funds held by them, or under their control or management, under or for the purposes of that Act.

(2) The exemption granted under this Section shall be claimed and allowed in the same manner as in the case of income applicable and applied to charitable purposes, and shall be in addition to, and not in derogation of, any other exemption under any other Act.

This Clause is purely an uncontroversial one. It is practically the inevitable result of passing the National Insurance Act of last year. Up to now the funds of registered friendly societies and trade unions have been exempt from Income Tax. This merely extends the exemption to all societies which become approved societies under the National Insurance Act. I may point out to the Committee that it only applies to funds which are comprised within the limits of the approved society, and not to any funds which exist outside. The result will be that any saving which is made by these funds, not being subject to Income Tax, will be applied entirely for the provision of benefits for the working class population who possess incomes of under £160 a year.

Mr. CASSEL

I do not desire for a moment to oppose the Second Reading of this Clause, but I should like to ask the right hon. Gentleman specifically whether it is intended that this exemption should apply to sections as well as to societies. If the right hon. Gentleman says so, or if the learned Attorney-General tells the Committee that in his view it does extend to sections, then I shall not press the point further, because I shall rely on the fact that if hereafter it were held that it did not so apply, the Government would amend the Clause so as to include sections. Obviously it is only fair, if you have companies forming sections, that those sections should, so far as Income Tax is concerned, be on the same footing as other approved societies. There is one other point which I should like to mention. In a sense it is perhaps anticipating the Amendment I have put down to the Clause, but only in the sense of ascertaining really whether the scope of the Clause will permit of my moving it. I quite recognise it is fair that all these societies should be put on the same footing. Previously, apart from this new Clause, only registered friendly societies, trades unions, and industrial provident societies would have been exempt from certain schedules of the Income Tax. I apprehend that the intention of this Clause is to exempt them from all schedules of the Income Tax. I should like to have the views of the right hon. Gentleman the Secretary to the Treasury, as to whether it exempts them from Schedule A. What I desire to say is, that this Clause still leaves inequalities. It leaves certain registered friendly societies at an advantage over other societies in respect to taxes other than Income Tax. Take, for instance, Land Duties. Under Section 37 of the Finance Act, 1909–10, registered friendly societies are exempted from the periodical valuation for Increment Value Duty, and are exempted—I agree it is not a very large exemption—from Reversion Duty and from Undeveloped Land Duty in respect of premises actually occupied by them. I say that exemption is not a very large one, but, such as it is, it ought to apply to all societies equally. If the State establishes a number of societies, carrying on precisely the same business, under precisely the same regulations, then I submit with regard to all matters of taxation, whether Income Tax or Land Taxes, it is fair that all should be put on the same footing. What justification can there be for exempting from the periodical valuation for Increment Duty registered friendly societies and not exempting from it an unregistered friendly society or section. If the Government treat them as equals, as regards Income Tax, they ought to carry out the same principle with regard to all the Land Taxes, and Stamp Duty as well. I do not know whether a Clause is limited by its marginal note, and I should submit that the proper marginal note for this new Clause ought to be—"Exemptions of funds under National Insurance Act, 1911, from taxation." If we have a marginal note of this kind, then I should be in order in moving an Amendment giving a similar equality in regard to other taxes. Marginal notes, I take it, do not affect the interpretation of a statute.

The CHAIRMAN

The hon. and learned Gentleman has really been discussing his Amendment, rather than the Clause. I agree with him that the Clause is not governed by the marginal note, but, at the same time, the Amendment he has put on the Paper will not be in order on this Clause, though it would be in order as a separate Clause.

Mr. CASSEL

In that case I would simply make these observations on the Second Reading. I should like a clear and distinct statement as to whether, in the view of the Government, this includes "sections" as well, and if it includes Schedule "A", as well as the other schedules? If I cannot move my Amendment to this Clause, I hope the right hon. Gentleman will consider the point I put forward.

Mr. C. BATHURST

Before the right hon. Gentleman replies, I would remind him that he has again, and not for the first time, forgotten the existence of organisations known as "associations" or federations of societies. The Commissioners, in their recent circulars, have attempted to make the associations a body with a much stronger link than was originally intended before the Bill was before the House, and to constitute them into a federation of a much more substantial character having funds in their hands. The Commissioners say it will be desirable that these county federations of societies—of which the Chancellor of the Exchequer has encouraged the formation—should have funds in their hands, and possibly should themselves hold the sums which, after the valuation, will have to be applied towards making good the deficiency of any of the societies that are in an unsatisfactory financial position. It is clear that this Clause if it is to be comprehensive, ought to include "associations" as well as the societies to which these words will refer.

Lord ROBERT CECIL

I confess I do not feel quite so clear as some hon. Members that this is a desirable change in the law. As I understand the law at present, friendly societies, trades unions, and provident societies are all exempt from Income Tax. Substantially, the effect of this Amendment is to exempt the insurance companies acting as approved societies under this Act. I do not wish to say a word against the insurance companies, but, in point of fact, there is no doubt in the mind of anybody that though they are practically prohibited from making a profit by the operations under the Insurance Act, they unquestionably are going to make a very large profit—[HON. MEMBERS: "NO"]—by coming into the Act, otherwise they would not be coming in. We know, from the Secretary to the Treasury, that they have got the bulk of those new members who have come into Approved Societies under this Act. Therefore this would be a boon to the insurance companies who work the Act. I do not think it is quite right to give that boon to these companies I do not want to say a word against them but, after all, they are ordinary commercial companies, working for profit. On this particular part of their business they do not make a direct profit, but an indirect profit. That is to say that a company working for profit, if it is also doing work which is approved by the Chancellor of the Exchequer to-day, is not to pay Income Tax. I do not think myself that that is so clear a proposition as it appears to be considered on the Treasury Bench, and in other parts of the House. I should like to have a very clear statement of the grounds which the Government have for thinking that the Prudential and the other insurance companies could be freed from any Income Tax because they are carrying out work under this Act.

Mr. MASTERMAN

I will not trouble the House with more than a few words. The hon. and learned Gentleman asked two questions, one of which was if this Clause included sections of approved societies.

Mr. CASSEL

Sections of companies?

Mr. MASTERMAN

The other was whether we could accept his Amendment; or, if his Amendment were out of order, whether we would be prepared favourably to consider it if it were brought up as a new Clause. The section is the approved society under the National Insurance Act, and, therefore, every section, as an approved society, is exempted. But the company of which the section is the approved society is not exempt and that is my real answer to the Noble Lord (Lord Robert Cecil) who thought we should exempt great industrial companies.

Lord ROBERT CECIL

Oh no, I never thought that.

Mr. MASTERMAN

No profit of any sort can be made by the approved society. All the results of the money which is paid, cither by the employer, the employee, or the State, must go for the benefit of the insurance of the people. Every farthing that is paid into an approved society must be kept absolutely separate. The other question I was asked was about associations and federations. If these two are approved societies, they will be exempted under the Clause. If they are not approved societies, their funds will come from approved societies which will have already obtained that exemption. This exemption applies to the funds and credits of the societies, and so far as we can see at present there will be no approved societies that will be holding land. That, I think, will be the answer to the hon. and learned Member for St. Pancras (Mr. Cassel). But if, when his Amendment Is raised, he can give reasons to show that there will be legal power on approved societies to invest in land, I will gladly give his Amendment favourable consideration.

Mr. C. BATHURST

The right hon. Gentleman has not appreciated my point. An asociation under Section 39 is an association of approved societies. Whatever new nicknames the Commissioners choose to invent, an association is an association of approved societies, and if money is paid by these societies to their association, and that association chooses to invest this money, I ask whether this Clause will apply to the invested money of the association or approved societies?

Mr. MASTERMAN

I do not think there will be any money invested under those conditions except the investments of the approved societies which make up the association. If it is not an approved society, Income Tax will be already collected.

Mr. C. BATHURST

But if it is invested by the association there will be nothing to prevent Income Tax on the income of these invested funds being paid over again?

Mr. AUSTEN CHAMBERLAIN

I would submit one point to my hon. Friend (Mr. Bathurst). It is, of course, perfectly true that these insurance companies are not taking up work under the National Health Insurance Act as a matter of pure philanthrophy, but as another part of their business, but is that a reason for taxing them when doing a business for which you do not tax other associations? As regards the money which is collected under the National Insurance Act, they cannot make any direct profit on that. Any profit that they make is indirect, in the growth of their other business. I do not think that because they get an indirect profit, on which they will pay Income Tax, they should be asked to pay Income Tax on something on which they cannot make a profit. I hope my Noble Friend will consider that, and perhaps not press his point.

Mr. PETO

May I ask the right hon. Gentleman (Mr. Masterman) if he will kindly explain what is the real reason for this Clause? If the Income Tax is, as it originally was proposed in the Act of 1842, a tax upon property, and if no approved societies could be a society trading for profit, I want to know where are the profits on an approved society which the right hon. Gentleman is going to exempt from Income Tax? That is the first point which I want to put. The second point is—taking the case of the Prudential, which is the case. Lord Robert Cecil was thinking of. What is the meaning and reason of a special Clause being brought in to say the Government will not charge Income Tax upon profits which cannot ex-hypothesi exist. It seems to me the most extraordinary proposal to put in a special Clause to exempt societies, which cannot make a profit, from a tax which is supposed to be a tax on profit.

Lord ROBERT CECIL

I certainly do not desire to put the Committee to the trouble of a division, but the matter is very obscure and difficult to follow. I do not see myself what, on the face of it, is the real meaning of this Clause. I can understand very well that it may be convenient for a company working for a profit to have such a Clause to protect them from any enquiries made by the Revenue Officers, but the real point is that if you have a company working for profit, and give it a State subsidy, you get into all sorts of difficulties. It puts the company in a very difficult position. I am quite sure this is thoroughly unsound, and this discussion shows one of the respects in which the whole policy of the Government is unsound, and leads to very serious result. We shall have to raise the subject on a subsequent occasion, but I will not trouble the Committee to divide now.

Mr. ROYDS

had the following new Clauses on the paper:—Section 25, Sub-section (4) (b) of The Finance (1909–10) Act, 1910, shall have effect, and shall be deemed always to have had effect as if the words "other than agriculture" had been omitted from such Sub-section, and any valuations made before the passing of this Act shall be amended accordingly.

It is hereby declared that for the ascertainment of the full site value of agricultural land under Section 25, Subsection (2) of The Finance (1909–10) Act, 1910, no regard shall be had to the presence of buildings suitable for agricultural occupation on other lands, such other lands being deemed to be divested of any such 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.

The CHAIRMAN

The next Clause increases the charge on some persons and therefore comes under the rule I have laid down. It appears to me that the effect of this Clause, while relieving some persons—that is to say lowering the taxation on those who have to pay under the Undeveloped Land Tax—it must at the same time increase the taxation of those who pay Increment Tax. I will hear what the hon. Member for Sleaford has to say as to whether these Amendments would not increase the charge on any one.

Mr. ROYDS

My first Amendment has reference only to the valuation of the site value of agricultural land—the sum at which site value has to be assessed. My Amendment solely relates to agricultural land pure and simple, which is exempt from Increment Value Duty altogether, and which is also exempt under the Land Duty. Therefore, my Clause does not affect in any manner the payment of Increment Value Duty or Undeveloped Land Duty, but solely refers to the value placed on the site of agricultural land. Site value is not at present the subject of taxation under the provisions of the Budget, but it may be the subject of taxation in future. My Amendment has nothing to do with present taxes.

The CHAIRMAN

I am afraid that part of the Clause is outside the scope of the Bill. The hon. Member has not quite answered the point I asked him to address himself to. Is it not the case that an Amendment which lowers the valuation would have the effect that when that land, although agricultural now, became building land in the future, or land of such value as came under the Undeveloped Land Tax, if taxation on some persons were reduced it must at the same time increase the tax on other persons who happen to become liable? Will the hon. Member keep himself to that Point of Order?

Mr. ROYDS

It is quite true that if my new Clause is accepted it might have the effect of lowering the datum line on which Increment Value Duty is calculated on agricultural land, but if the datum line were lowered it would not have the effect of placing any new burdens on other persons. I must admit that it might have the effect of increasing Increment Value Duty in respect of this particular land.

The CHAIRMAN

That exactly answers my point. In some cases it would increase the tax.

2.0 A.M.

Mr. JAMES HOPE

Would it not be possible to put in a proviso to the Clause stating that it shall not have effect in the case of Increment Duty? I think such a proviso could be moved and then added to the Clause. Would that be in order?

The CHAIRMAN

I do not think it would. If the hon. Member gave a little more thought to it he might achieve his object by dealing with the tax on collection by way of an additional deduction. He might deal with it in that way similarly to the case of Income Tax instead of on the valuation. As it stands, it comes under the Rule. The third Amendment is in order.

Mr. PRETYMAN

I think in considering the matter it should be borne in mind that the curious difficulty in which we find ourselves arises from the fact that the Government have included what were purely valuation Clauses in a Finance Bill. We find ourselves in the serious position that because of the action of the Government, which is contrary to precedent, so far as I am aware, we are unable either now or at any future time under the Standing Orders of the House to propose any Amendment in the valuation Clauses of the Bill. The matter is serious; it is of the greatest importance, and I think, Sir, if you will consider it from that point of view, you will see that my hon. Friend has a very strong case; because this possible increase of taxes, if it is possible, does not apply to the present taxpayer, it does not apply to the owner of the agricultural land, it relates possibly to the future. It appears to me that the ruling is stretching a point against my hon. Friend. If there is a matter of doubt, it should be given in favour of the House, especially in view of the peculiar circumstances in which we are placed, this being the only method in which this valuation question can be raised or an Amendment moved upon the subject. It is said that the effect of these two Amendments so far as they relate to agricultural land, or what is now called agricultural land, may be to increase the burden upon the subject. But it is only a remote contingency, when that land becomes at some future time building land. That is all that we are now considering, and if that strict view is taken it will absolutely preclude us from moving any Amendment upon the method of valuation. I think we have a right to ask you, sir, to take that matter into your consideration and see whether you cannot allow this Amendment to be moved.

Lord ROBERT CECIL

May I submit this point? During the passage of the 1909–10 Budget there were a number of Amendments moved by the Chancellor of the Exchequer and by the hon. Gentlemen on this side of the House bearing upon the datum line. It was never suggested by anybody that these Amendments were out of order, which they would have been, if the suggested rule were applied which is to be acted upon now. I grant that the proposals might presumably increase in the far future the taxes which would be levied by a future House of Commons or future Chancellor of the Exchequer, upon the subject. But the very point which my hon. Friend wishes to raise was raised by the Chancellor of the Exchequer in the Amendments moved in Committee on the Budget I refer to. He then varied the level of the datum line.

Mr. LLOYD GEORGE

I moved them to meet the case put by Members on that side of the House.

Lord ROBERT CECIL

Probably so. But whether you vary it up or down you will have the possibility of an increase. You would either increase the Undeveloped Land Duty or the Increment Land Duty. If this ruling is to hold good, you could never vary the datum line, and if that be so, the Amendments to the Bill of 1910 were really all out of order.

The CHAIRMAN

I may inform the Committee that I have given a good deal of careful consideration to this point. All my personal inclinations were in favour of allowing the moving of these Clauses, but I convinced myself that I could not do so, if I were to safeguard the well known rule of the House. The Noble Lord's point, the case he refers to, was one of the first which occurred to my mind. I remember the Debates which took place on that occasion, but the difference was that there you were working under a Committee of Ways and Means Resolution. I have looked up that Resolution, and I find that it was right in that case to allow the Amendment of the Valuation Clauses or of the datum line. That point was raised. In this case it is clear that if you diminish the tax on some persons it must involve an increased charge on others.

Mr. PRETYMAN

It may—

The CHAIRMAN

Over the whole country? I asked would the Amendment increase the charge or not, and the hon. Member admitted that it was so.

Mr. PRETYMAN

It might.

The CHAIRMAN

Even so. If it might, then my duty is clear.

Mr. ROYDS

My Amendment would—

The CHAIRMAN

The hon Member must not debate the Clause on the point of Order. I listened to him at some length on the point of Order. I will see in a moment if there is any other point which is purely a point of Order.

Mr. AUSTEN CHAMBERLAIN

I was reluctant to intervene until the general question which had been raised about the first Clauses was disposed of. What I wish to submit is that, accepting your ruling, as I understand it, against the first Clause, it does not apply to the second Clause. Perhaps you will hear my hon. Friend on that; it is a general point of Order.

The CHAIRMAN

Yes, I will hear him upon the second point relating to the second Clause, if he wishes to say anything upon the point, whether it might not increase the charge upon some persons.

Mr. ROYDS

I must apologise to the Committee. I have to read my Clause. The object is simply to provide that no regard shall be had to the presence of buildings on adjoining lands. I am speaking now of the second Clause.

The CHAIRMAN

We are not now dealing with the first Clause. We will regard that as settled.

Viscount HELMSLEY

Before we leave the first Clause may I ask a question? I understand it is out of order to move this alteration. Would you be good enough to suggest, for the benefit of Members of this House, on what occasion and under what circumstances it is open to them to move any Amendment to the Budget altering the method by which Increment Duty is collected?

The CHAIRMAN

The hon. Member will find on the Paper several proposals which are in order. They alter or reduce the taxes without having the defect of raising anybody elses taxes. He will see that a number of these are in order.

Mr. LANE-FOX

On what occasion can this point be raised. Where or when will we have a chance of discussing the point whether an alteration can be made in the method of valuation.

The CHAIRMAN

The hon. Member must move on a Resolution of Ways and Means.

Mr. PRETYMAN

Can a private Member move a Resolution? He cannot do so if it imposes a burden on the taxpayer.

The CHAIRMAN

You would have to get the King's recommendation.

Mr. PRETYMAN

It means that it cannot be done. When a tax like this is imposed, which, if the property increases, imposes a tax in one direction, and, if the property diminishes, imposes a tax in another direction, then it is absolutely impossible for any private Member of this House to move any Amendment to that tax in one direction or another. That is exactly the position here. Let the Committee consider. Here is a Valuation Clause, which is introduced in a Budget and can only be discussed on a Budget. The effect of altering that valuation up is to increase the tax in one direction, and the effect of altering the valuation down is, it may be, to increase the tax in another direction. What I submit is that we are, for the first time in the history of this House, in a position when no private Member of this House can, under the rules of the House, move to reduce a tax. It has always been, I believe, the first and highest privilege of this House, that any private Member here can raise a grievance, and surely the commonest form of grievance is the grievance of taxation. Here we have a tax imposed in a form in which it is impossible, and your ruling makes it impossible—

The CHAIRMAN

The hon. and gallant Gentleman is going a little too far in arguing with me as if I introduced the Budget of 1909. He will understand that I am here solely to administer the rules of the House to the best of my ability, and I always endeavour to find, if I can, an opportunity in favour of the minority, as I conceive it to be my duty to do. May I once more put the point, and I think it will meet the hon. Member? Nothing that has been said could change my view of my duty. The hon. and gallant Gentleman has just said that you could not propose to reduce either of these taxes separately and individually.

Mr. PRETYMAN

The valuation.

The CHAIRMAN

I want to point out that we are approaching other new Clauses on which it will be in order to deal with these taxes.

Mr. PRETYMAN

That matter can be raised in some other manner. I agree absolutely that we can move to reduce, either the Increment Tax or the Undeveloped Land Tax in a sense. What I was complaining of, or pointing out, has resulted from your ruling, that no one can move any Amendment to the valuation, which is what we desire to alter, and not the tax. My hon. Friend pointed out that his object in moving the Amendment was not to affect either the Increment Duty or the Undeveloped Land Duty, but his sole object was to alter the valuation. The effect of your ruling is that because the two taxes exist, one of which is increased by raising the valuation and the other by lowering it, we cannot move any Amendment.

The CHAIRMAN

The hon. and gallant Member is quite correct. He has only been stating to me what is obviously the case with regard to valuation. As I have said, I did not make that rule. It is one which if I allowed it to be broken in one case, I must allow it in every ease. I should then be destroying one of the most important rules governing the whole finance of the House, namely, that an additional tax may not be imposed without a Resolution in Ways and Means.

Mr. AUSTEN CHAMBERLAIN

May I ask you a question with reference to the first Clause on the Paper. I am not going to dispute the ruling you have given, but I should like to know whether my hon. Friend would not be in order if he moved it in this form: "For the purposes of Undeveloped Land Duty, Section 25," and so on. On that he can raise his question as to what is a proper valuation, and, so limited, he could not raise any man's tax in the future.

The CHAIRMAN

There would be two different valuations.

Mr. AUSTEN CHAMBERLAIN

Two different dates.

The CHAIRMAN

I think probably that would be in order, but it could not be moved at this point. If the hon. Gentleman had shown that it would not raise any man's tax it would be in order.

Mr. AUSTEN CHAMBERLAIN

I desire to submit to you on the point of whether it would raise any man's tax that clearly the lower the valuation the less must be the Undeveloped Land Duty. If you lower the original date, no doubt you may considerably increase somebody's Increment Value Duty in the future. When you lower the datum line for the Undeveloped Land Duty you may lower some people's tax, but you cannot raise it to anyone. If that be so, why is it not possible to raise the new Clause in that amended form?

Mr. LLOYD GEORGE

It is perfectly clear that that does involve setting up two separate valuations. The Amendment outlined by the hon. Gentleman certainly does not do anything of the kind, because that involves setting up very elaborate machinery for the purpose, clearly showing that for the purpose of Undeveloped Land Duty something should be done which involves an additional charge, because it involves a new valuation.

Mr. PRETYMAN

That is not a charge on the subject.

Mr. LLOYD GEORGE

It involves separate machinery and a separate valuation. It is clear that valuations of agricultural land which have been made up to the present would have to be re-made. It would involve machinery and it would involve cost. At any rate an Amendment of that kind ought to be framed in such a way as to be practical. It does involve re-casting the valuation and having two valuations. There is no machinery in the Amendment outlined by the hon. Gentleman for the purpose of doing that. I submit, in the first instance, that the Amendment ought to contain machinery, otherwise it is an absurd Amendment. In the second place, I submit it cannot be done because it involves an additional cost on the State.

The CHAIRMAN

In regard to the second point, I think it is an additional charge on the taxpayer. With regard to the other point, it seems to me to be a matter of merits, rather than of order. My impression is that it would be in order, and if it is brought up in that form I will give it consideration. My present impression is that it will be correct.

Sir G. YOUNGER

Cannot any hon. Member move a slight alteration to Amendments on the Paper?

The CHAIRMAN

The Amendment can only be moved after the new Clause has been read a second time, and if the new Clause is out of order, it cannot be read a second time.

Mr. ROYDS

On the point of Order. I was taken by surprise by this objection, and I am afraid I did not give quite the best explanation that I could. I can now give a very much better one. In no circumstances whatever could this new Clause, if introduced, have the effect either of increasing or diminishing any man's taxation. If I can prove that to your satisfaction, Sir, I gather that the Clause would be in order. This Clause has reference only to the period during which agricultural land remains agricultural land. After it ceases to be agricultural land, and becomes building land, then the Clause which I now propose to read relating to the period or time after which it becomes building land is provided for by the last part of Section 25 of the Finance Act. It is to this effect:— Where any works executed or expenditure incurred for the purpose of improving the value of the land for agriculture have actually improved the value of the land as building land, or for the purpose of any business, trade, or industry, other than agriculture, the works or expenditure shall for the purpose of this provision be treated as having been executed or incurred also for the latter purposes agricultural land must be treated as having teen excepted. After that land has became building land, this Clause covers the whole of the points which I wish to provide for in my new Clause. After it becomes building land, there is no difficulty at all. All these improvements are entitled to be deducted under that Clause; it is only while it remains agricultural land that it is necessary for me to ask for this new Clause, and during that period neither Undeveloped Land Duty nor Increment Duty could possibly be payable. Therefore, my Clause has no reference whatever either to the increasing or diminishing of any duty.

The CHAIRMAN

I am still convinced that it would result in an increased charge.

Sir G. YOUNGER

Is it impossible that the hon. Member can move this Clause with some other words added now?

The CHAIRMAN

I said if it could be brought up in a form which would meet the points, then of course I would consider it. As it stands it is out of order, and cannot be moved.

Viscount HELMSLEY

Is it not in order for an hon. Member to alter his Clause on the Paper in such a sense as to bring it within the rules of order without seeking a new place on the Paper?

The CHAIRMAN

Certainly, but not such a considerable alteration as this must be.

Mr. AUSTEN CHAMBERLAIN

I understand, Sir, that the point of your ruling is that these Clauses are out of order because they may impose an additional charge upon some taxpayer. I submit that that is not the case of the second Clause. The effect of the second Clause would no doubt be to reduce the datum line in certain cases where the value of a farm is not dependent on its farm building, but for the purpose of valuation they are removed, and thrown into a neighbouring farm on one side or the other, and those farm buildings are then counted as if existing for the purposes of the farm. Closely followed the same process would be required in each farm in turn. Under these circumstances the datum line is kept much higher than it would be otherwise. The Clause would reduce the datum line, but when the property became taxable credit would have to be given to the owner for all the value created by his expenditure at any time—for all the value created by these buildings. Therefore it could not be an expense upon the taxpayer.

Sir RUFUS ISAACS

The point seems to be exactly the same as the one on which the Chairman ruled just now. The whole point deals, in this Clause, with reducing the datum line, and if the datum line is reduced, the consequence would be that if at a later stage there is occasion on which the Increment Duty would have to be paid it would necessarily follow that there would be an increased amount of Increment Duty to be paid. The right hon. Gentleman meets that point by saying that that would be met by the credit for the buildings. Let me point out how it stands in this very Clause 25 (4), in the paragraph after E. It reads:— Where any works executed or expenditure incurred for the purpose of improving the value of the land for agriculture have actually improved the value of the land as building land, or for the purpose of any business, trade, or industry, other than agriculture, the works or expenditure shall, for the purpose of this provision, be treated as having been executed or incurred also for the latter purposes. The consequence of that must be, if you have reduced your datum line in the first instance, when you come to deal with it as building land you necessarily must put on it building value, and consequently you do impose a further charge on the tax-payer.

Mr. AUSTEN CHAMBERLAIN

It does not follow at all. The right hon. Gentleman states that if the datum line is reduced the charge must be raised. My whole contention is that under this Clause the datum line could be reduced without the charge being raised.

Sir RUFUS ISAACS

I think that is not quite doing justice to what I did say. I said if the land is subsequently built upon then there must be increment.

Mr. AUSTEN CHAMBERLAIN

Suppose it is not.

Sir RUFUS ISAACS

That is an old point and was dealt with just now by the Chancellor of the Exchequer.

Mr. AUSTEN CHAMBERLAIN

Then the right hon. Gentleman cannot say that it does not rise if the land is not built on. His contention is that it must rise if the land is built on. It is not rendered less valuable by already having a habitable dwelling upon it.

Sir RUFUS ISAACS

May I point out that the Clause says "such other lands being deemed to be divested of any such buildings"? I do not know whether the right hon. Gentleman means it to be other lands.

Mr. PRETYMAN

I think it is perfectly clear that the valuation affected is the valuation of the buildings which are on the land and not the value of the buildings on other lands.

Mr. AUSTEN CHAMBERLAIN

The buildings with which this deals are not the buildings on land which is considered to be divested of buildings. It is a very difficult matter to explain as a point of order. It is much easier to argue as a point of justice. My point is this: It does deal with the buildings on other land—not on the land which is valued. The buildings on the land which is being valued at the moment are dealt with under the original Act. They are divested, but, by assuming the buildings on other lands to remain, you give a fictitious value to the land you are actually valuing, and which you are divesting. Therefore, it does directly concern the valuation of the land which is being valued and not of any other, but inasmuch as the person is entitled to the credit of the value of those buildings or any value they give to the land, I still submit there can be no new charge on the subject under this Clause.

The CHAIRMAN

Then I understand the right hon. Gentleman's point to be that, whereas it lowers low value, it to the same extent must lower the upper value, and therefore the amount of the tax cannot be increased.

Mr. AUSTEN CHAMBERLAIN

That is so.

Mr. MASTERMAN

The situation is really quite simple, if I may say so, to those who have been considering the matter. The right hon. Gentleman quite frankly admits this lowers the datum line on the original valuation. It is impossible that other buildings which have raised the value as agricultural land on the original site value can increase the value of the land as building land when the occasion arises. Where the land is sold as building land, or is actually built upon as occasion arises, then the subject will have to pay a greater amount of Increment Tax than he would have to pay if this Clause were not in.

Viscount HELMSLEY

The whole thing appears to be governed by Sub-section (d) of Section 2 of the principal Act which draws attention to the deductions desired to be made on the occasion. I submit that the contention that the presence of the neighbouring buildings cannot affect the value on the occasion is not accurate, and that if these buildings affect the original value the same buildings must also affect the value when the occasion arises—in fact, it may have the effect of diminishing the charge, and I think that is the effect it would have.

The CHAIRMAN

I must say it does seem to me that a different case is made out as compared with the preceding Clause, and although, if I had to give a verdict at the moment, it would be that this Clause has the same effect, I confess after the discussion I have some doubt in my mind, and in that case I think I must give the benefit to the minority and allow the Clause to be moved.

Mr. ROYDS

Section 26 of the Finance Act, 1910, requires a valuation to be made of all land in the United Kingdom, showing separately the total value and the site value respectively. Total value is more or less the market value. Site value is supposed to represent the value of the land in its unimproved state. Both those values are to be estimated as on the 30th April, 1909. All the valuations are to be presumed to have been made on the same day. Section 25 of the Act defines the different values. Full site value is supposed to represent the gross value of the land if divested of buildings and other structures. The point to which I wish to draw attention is this: it is the practice of the valuers in valuing a farm or agricultural holding for the purpose of ascertaining the site value to divest the particular farm—the unit of valuation—but not to divest the buildings on the adjoining farm, although the Act provides that all those valuations are presumed to be made at the same time and on the same day. The result of that is that the site value of every farm, the unit of value for the time being, includes the value attributed to buildings on adjoining sites.

I hope the Chancellor of the Exchequer understands and appreciates the point, because I cannot suppose it can be otherwise after the repeated assurances he gave to the House whilst this Act was the subject of discussion, that it was the intention and desire of the Government only to tax the unimproved value of the site, and that the fullest credit should be given to the owner of all land, agricultural or otherwise, for all improvements, on, in, and under the surface, and for all farm buildings, works of reclamation, etc. In valuing these sites, the site value as at present arrived at includes value attributable to buildings on adjoining sites, with the result that the site value of a particular farm, which is the unit of valuation, is increased. I cannot do better than mention the case of a particular farm which I mentioned some weeks ago. It is a simple straightforward case of typical valuation which may apply to any farm in the United Kingdom. We had in that case a farm valued at something under £5,000, total value—it was about 200 acres—and on this was a farmhouse and buildings worth about £2,000. It is worthy of note that in the case of that farm it was fen land which had been drained at great expense, about £10 per acre. We have that £10 an acre, which came to £l,790, and the buildings were worth something like £2,000, which was something like £4,000 altogether. Some other deductions had to be made. The total deductions ought to have been about £4,300, and the sum actually allowed was £540. The reason for that low sum of £540 was that no allowance was made for the cost of drainage or reclamation works.

The Chancellor of the Exchequer told the House that the Clause 25 which he introduced would satisfy the agricultural interest, and on that occasion numerous Amendments by agricultural representatives were withdrawn. He stated over and over again that agricultural owners would have the fullest credit, whether the land was used for agricultural purposes or not, for all expenditure on reclamation works, sluices, drains, and works of that character, as well as buildings. That is not the actual case. No credit is given, in spite of the remonstrances that have been made. I attempted to move a Clause to deal with one part of it, and it was ruled out of order, but I am at liberty to make a few remarks upon it by way of illustrating my present argument. The intention of Parliament was to ascertain the true site value, and no value attributable to the presence of buildings, whether on the unit of valuation, or on adjoining farms, should be taken into consideration. The true unimproved site value of the land should be ascertained. Under the present practice, a wholly fictitious site value is arrived at. The object of my Amendment is merely to remove that anomaly and to assist valuers, to enable them or to compel them to value the unimproved site without taking into consideration the existence of buildings upon adjoining farms. This practice has arrested building and other improvements upon agricultural estates.

The owner of an estate has a farm, say of 300 acres, for which he receives £1 an acre rent, that is £300 a year, and he proposes to cut that farm up into small holdings. He divides it into five farms of about sixty acres each, and erects five houses and necessary buildings. If the cost of each set of buildings was £500 the total would be £2,500. He now lets that land, for which he had been receiving £300 a year, for £1 10s. or £1 15s. an acre instead of £1, not because he is charging more rent for the land, but merely to provide interest at a moderate rate upon his outlay upon buildings. These buildings having been erected, we next come to the periodical valuation of the site. The valuers come round and say: This land which was rented at £1 an acre is now bringing in £1 10s or £1 15s. They value these small holdings separately. Small holding No. 1 is now let at £1 10s. an acre. They divest that small holding of the buildings upon it, but they say that in consequence of the erection by the owner of buildings on these four other sites, each of the tenants of the small holdings would be quite ready to take between them sixty acres more at the same rent as tenant No. 1 now pays, and up goes the site value in consequence of the rent being raised from £1 to £1 10s. or £1 15s., and thus a charge is made wholly upon the owner's own improvements in an attempt to establish small holdings.

I put forward that case as a practical illustration of what comes of taking into consideration value which is attributable to adjoining sites. It comes to this, that every single building which is erected on an agricultural estate improves the site value of the adjoining land, because although the adjoining land, which is the subject of the valuation, is presumed to be divested of the buildings upon it, yet that adjoining land is supposed to get the value of these adjoining buildings, and in some way is supposed to be entitled to make use of that value, whether it belongs to the same owner or to some one else. It is difficult to make the matter clearer. It is easy to arrive at the site value of agricultural land if you adopt the proper method. There is one class of land, intermingled with agricultural estates, which for years past has been assessed and valued by most competent persons, local persons, on its unimproved value. I refer to woodlands. Woodlands, when they are assessed at their unimproved value, are only assessed at 2s. 6d. an acre. That represents what I believe to be, in the opinion of these local assessors, the unimproved value of the land. Site value is supposed to be the unimproved value of the land. The woodlands are assessed for unimproved value and valued at 2s. 6d. an acre. Owing to the present extraordinary method of valuation, agricultural land is practically valued at something approaching its market value. If credit were given for the improvements of the owner, and if in valuing the land no value was attributable to or derived from adjoining buildings, instead of the site value and the agricultural value approaching one another they would be as wide apart as the Poles. The practice in England seems to be to over value the site value and the practice in Scotland seems to be to value site values at minus quantities. In this Amendment I am proposing to remove one of the present anomalies and to assist the valuers to arrive at the true site value.

Mr. MASTERMAN

The hon. Gentleman has made quite clear to the Com- mittee what his intention is both in this Clause and in the Clause ruled out of order to which he has made allusion. He has repeated arguments used in previous debates in connection with the Inland Revenue Vote and Land Valuation. He is not in the least concerned with the present taxation of land. What he has in his mind is that the Government intend to put some kind of tax or rate in the future upon some kind of State valuation of land, and he is very anxious that the site value established in the valuation should be altered, not in view of the present taxation, but in view of some future taxation which he fears. Sufficient unto the day be the good or evil thereof. I recommend that the hon. Gentleman should wait until these proposals, if any, in due time are submitted and then consider whether they propose an equitable method of taxation on an equitable definition of site value. What he proposes to do is to take away the relief put in the Bill in order to give, some help and assistance to those who own agricultural land.

What is the actual proposal? We propose to continue the valuation as it is going on at present; that is to find the full real site value of the land—the value of a unit of land with the value removed from it which is attributable to the buildings on it. We are ascertaining, in other words, what would be the value at which the land would be sold if there were no buildings on it. What the hon. Gentleman is asking us to do is to put into our site valuation a value which is not the true site value of the land, but the site value of the land, as if there were no buildings suitable for agricultural occupation in the whole of the country, and when you have divested it of all trees, etc. That is not true site value. It is a site value which would be practically impossible, if not entirely impossible, to arrive at, and, if you did arrive at it, it would be practically useless for any purpose. What we are doing is to ascertain the actual site value of the land divested of buildings on the 30th April, 1909. Whether we should adopt this or any other system of valuation if we adopted some other system of taxation is not for the Committee to consider at the present time.

Mr. PRETYMAN

We have just heard an amazing statement from the right hon. Gentleman, the Secretary to the Treasury. What have we been told by him and his Friends in the last few weeks? What we have been told is that when they propose some future tax, that would be the time to begin the valuation on which that taxation was to be based, whereas we have been told by the Chancellor of the Exchequer—

Mr. MASTERMAN

I never said anything of the kind. What I meant to say was this. It is no use on the present Finance Bill our discussing a unit of valuation which is being used now in the light of a purely hypothetical possibility of what it may be used for under other circumstances which have nothing whatever to do with this Bill.

Mr. PRETYMAN

What the right hon. Gentleman says now practically amounts to the same thing. What I was about to remark when I was interrupted was that I did not think the right hon. Gentleman would have said it if his colleague the Chancellor of the Exchequer had been present at the time. The Chancellor of the Exchequer knows perfectly well that there is no practical defence against this Amendment. He is never tired of telling the House and the country—it is with him a constant theme—that the object of this valuation is a future great purpose of taxation. What the right hon. Gentleman the Secretary to the Treasury tells us is that the valuation can be dealt with when the future great purpose of taxation is realised, and that it is no use discussing this valuation now at all except with reference to existing taxation. Then, when we complain of the enormous cost and ridiculous yield of the present taxes, why tell us that, the valuation is not to be considered in reference to the present taxes, but in reference to a great future proposal of which we continually receive hints from hon. and right hon. Gentlemen on the other side. When we take the Chancellor of the Exchequer at his word and say we will move an Amendment which is not concerned with present taxes, but only has reference to this future purpose of the right hon. Gentleman whatever it may be, then we are told we are all wrong.

3.0 A.M.

You cannot ride two horses at once. If this valuation is not concerned with a greater purpose, why are you valuing the agricultural land at all? It is perfectly obvious. Now let us take up a practical issue. Does the Secretary for the Treasury mean to tell the farmers and landowners of this country that this is what has happened? I am glad to see the Chancellor of the Exchequer here and I ask him whether this is the way in which he considers the agricultural value of the land of this-country should be ascertained—that is to say, the true value of the agricultural land. There is nothing in the Act, and I defy him to point to any single word in it which justifies this proceeding. What they are doing, and what the Secretary to the Treasury has to try to justify, is this: When the valuers go over a farm they divest in imagination that farm of the buildings, and then all the buildings on the adjoining farm are imagined to be standing. You go to the owner of the land and say, "Here is a piece of land worth £3,000. It is quite true you spend £1,000 on building on it, but if these buildings are taken down, the occupier of the adjoining buildings will be willing to farm this land; and therefore these buildings do not really affect the value of the land at all." Then you pass to the adjoining farm and re-erect the buildings you have previously divested yourself of in imagination, and divest yourself of the buildings you have previously counted in. By that process you actually do in practice eliminate the whole value of the buildings in the country.

Does the right hon. Gentleman tell the agricultural industry in this country—because they know something about this—there are a great many Members of this House who do not really understand what the Chancellor of the Exchequer is doing; I am sure there is not a single right thinking Member of the House who will get up and defend this when he understands it—that what he is doing is to obtain a real value of agricultural land in this country? He is doing nothing of the kind. He is, in practice, divesting agricultural land of all the buildings. He takes off one building at a time, and he uses the other buildings for the bit of land on which the previous building was. Then he comes and takes off a new building, and uses the other other building for that. By that means he actually eliminates the whole value of improvements and buildings from agricultural land. Has he any right to do that? I claim that this Amendment does not alter the law, because nobody can maintain, until this matter has been fought out in the Courts of Law—and I am sure the Attorney-General will not venture to say so—that it is perfectly clear in the Act of Parliament that that procedure is the right procedure, and that you have the right, by that means, to deprive every owner of land of the value of the buildings which he has erected.

If that is the law, it is not clear. It ought not to be the law, and it is the duty of the Committee to see it is not the law, and that by this side-wind, and—if I may say so without offence—by this underhand means, owners are to be deprived of the value of buildings which they have erected. One point which hon. Gentlemen opposite are never tired of pointing out is the desirability of small holdings. It is quite obvious that where you have small holdings—or, rather, where small farms exist which are not technically small holdings, but which are from sixty, eighty, to 100 acres and are a very desirable size—in that case you absolutely eliminate the whole value of the buildings, because there are always other buildings close by from which that land can be farmed on. Therefore, technically, under this procedure, the value of the land with buildings is identical with the value of the land without buildings. If you come to large farms, of anything up to 800 or 1,000 acres, then it is clear that two such large farms could not be thrown together and all farmed from one set of buildings without a great reduction in the value of the land. Therefore the effect of this procedure is directly proportionate to the size of the holding. Hon. Gentlemen opposite are very keen on erecting houses for the agricultural labourers. These are all included; they are all agricultural buildings, and all affect the value of the land. They are all divested, and the more buildings and cottages you erect the more you will be rated under this procedure. I should like to hear some better reasons from the Front Bench opposite than the ridiculous reasons given by the Financial Secretary, and perhaps the Chancellor will kindly tell the House how he justifies this procedure which is being carried out by the Valuation Department.

Mr. CASSEL

I have been quite amazed to hear that the valuers are valuing property, because quite apart from this I wonder if the Attorney-General thinks them justified under the Act as it stands. What you have to value is a statutory unit of occupation, and for the purpose of that valuation you must assume that it becomes a statutory unit. You have not got the right to assume that a farm next door is joined on to another unit of occupation. You have to take that one unit and value it as a separate unit, quite irrespective of what the owner of the piece of land adjoining would do. As long as you keep it as a separate unit it is perfectly obvious that it must be unjust, first to deprive one farm of its buildings and to say to the man next door "we will take that piece of land, put it together with your farm, and then reverse the operation." That could not be intended by the Act, even as it stands, because it provides for the valuation of separate units of occupation. If that were open to doubt I think the right hon. Gentleman himself, if he considered it, would see that the law ought to be amended in that respect.

Viscount HELMSLEY

The tone of the Financial Secretary in answering to this subject is rather unfortunate, and that only shows how very bad it is for this House to discuss this question at this hour. It would have been far better if Progress had been reported some time ago. It is unfortunate we should have to discuss these questions when the representatives of the Government are, if I may say so, in a state of nerves. If the right hon. Gentleman had refreshed himself a little more as to the utterances of his colleagues he would not have made the speech he did. He need not be surprised that we are anxious that the valuations made under the Finance Act of 1909–10 should be the correct valuations, and that they should approximate to some of those statements which the Chancellor of the Exchequer has constantly made about it in the past. What we are anxious to avoid is that there should be a fictitious valuation put on agricultural land for a great variety of reasons. I think I shall have the Committee with me when I call attention to the fact that the threats of using this valuaion for new kinds of taxation are not so dim and distant as the representative of the Treasury would have us believe. I have here in my hand a very interesting document. It is a paper, I believe, circulated by the Land Values Group. At all events, it is called "Land Values." It is a very interesting account of the dinner given the other day to an hon. Member who advocated the taxation of land values. The dinner was attended by the Lord Advocate, and it would be interesting to hear what are the Lord Advocate's views as to whether this new valuation is to be used for the purpose of altering the existing system of taxation. He said many other things. He gave this bit of advice. "Be clear, be simple, be explicit, be direct. Express your minds frankly and freely, and give the reason for the faith that is in you in language intelligible to the meanest intelligence." He also said he observed that this movement had caused consternation—

The CHAIRMAN

I do not see what this has to do with the Finance Bill.

Viscount HELMSLEY

It has to do with the speech of the Secretary of the Treasury, who has often called in question the desire of Members on this side to get the true valuation of the land on the hypothetical basis that that valuation was to be used for other purposes, and it is in answer to this observation that I call attention to certain statements which go to show that Members of the Government have other views in mind, although they are not following the advice of the Lord Advocate in being either clear or explicit as to what their intentions are. We are still more justified because I saw a letter on this occasion was received from the Parliamentary Secretary to the Board of Education who I suppose speaks with a certain amount of Government sympathy. At all events, it has not been brought to our knowledge that the Government repudiated what he said.

The CHAIRMAN

We must not discuss the question of future proposals.

Viscount HELMSLEY

I think if you will allow me to proceed you will see it is very strictly concerned with these proposals. The Parliamentary Secretary to the Board of Education said that the land valuation was in order to enable a new basis of taxation to be established. North-West Norfolk and Hanley, he said, showed how rapidly opinion was maturing in different parts of England. Unfortunately at that time he had not the opportunity of mentioning Crewe. At all events that shows that hon. Members on this side, when utterances of that kind are made by Members holding responsible positions in the Government, are well within their rights in saying that the Government have ulterior motives in this valuation.

Therefore I think we ought to take every opportunity to point out to the Government the very unfair methods their valuers and themselves have adopted in arriving at this hypothetical valuation of land. In the first place, as regards this particular question, it does seem to be very absurd to say you must value each bit of land as if all the rest of the land in the country were standing exactly as it is, with the buildings upon it. It seems to me that if you are going to arrive at the site value—the prairie value of the land on a certain occasion—you ought to do it as if the buildings on the adjoining land did not have any effect on the value. If you wish to arrive at the site value, which is a purely hypothetical value, that is the way you should do it. Of course, what the landtaxers want to do is to scoop into what they are pleased to call the site value all the value which has been due to improvements, because they have sufficient glimmerings of common sense to realise that unless they do scoop in a good many things that legitimately should be called improvements, they have nothing left to tax. I think it is well known to a great many Members on both sides of the House that, as a matter of fact, the prairie value of land is non-existent at the present moment, and land has very little site value. The whole rental derived from land in the majority of cases represents but a very low interest. On these grounds I support the Amendment.

Mr. JAMES HOPE

Really we must have some expression of opinion more authoritative on these proposals than we have had so far. Apart from all ulterior motives and ulterior proposals, and anything else hypothetical in that way, I do submit that the present system of valuation betrays an ineptitude verging on imbecility. Take two plots of land—A and B. In valuing A, divested of all buildings, growing crops, improvements, and the like, there, has to enter into the corner of your eye the buildings on B. When you come to B you have to divest it of all buildings, etc., but to remember there are buildings on A, so that A neutralises B, and B neutralises A. The two things are mutually destructive.

Sir G. YOUNGER

The right hon. Gentleman knew perfectly well that when the Budget was passed some such system as this would be adopted in regard to agricultural land. I have looked through the Amendments proposing to alter the definition. The right hon. Gentleman has not exactly carried out what he indicated. I asked him then why he had departed from the definition Clause in the Land Values (Scotland) Bill twice passed in this House by his own Government. I suggested he departed from it because he knew that no values would be left to tax at all. That definition has been adhered to, and yet it is the definition of the apostles of this movement, Mr. Shaw, who was then Lord Advocate, and the present Lord Advocate. They were there on that bench when the Member for the City of London got that definition arranged and agreed to. The right hon. Gentleman has learned more wisdom, and he now thinks that is the real inference to be drawn from that definition.

Mr. LLOYD GEORGE

Hon. Gentlemen who have brought forward this particular proposal agree that what they want is the real site value. Do they lay down anything approaching real site value by this Amendment? What is their claim? You have got to treat these two units, not merely divested of the buildings on one, but on the adjoining farms; that they shall also be stripped of fruit trees and crops. You have to presuppose a unit, a farm without any building situated in a desert. That does not give you the real site value. There are to be no adjoining farms, no cultivated farms anywhere near, no buildings anywhere near, no cottages for agricultural labourers anywhere near.

An HON. MEMBER

Hear, hear.

Mr. LLOYD GEORGE

There you are. He accepts that. Does he really mean to say that would give you the market value?

Mr. PRETYMAN

The site value.

Mr. LLOYD GEORGE

The market value of the site.

HON. MEMBERS

No, no.

Mr. PRETYMAN

That is not the site value.

Mr. LLOYD GEORGE

I am trying to get at the real site value.

Mr. PRETYMAN

It is a statutory conception.

Mr. LLOYD GEORGE

When you come to value tenements in a town—

Mr. PRETYMAN

Site value.

Mr. LLOYD GEORGE

I am examining the case of hon. Gentlemen not because I think it is necessary, but in response to an invitation from them. If I am to do so I must be allowed to proceed. That is what it comes to. Suppose you are valuing a house, you are to suppose that it stands absolutely alone there; no other house near it, no shops, no streets; you are to value that house and that site and to suppose there is no other building anywhere near. Does the hon. Member mean to say that the site value of a particular object is obtained in that way. It is a perfectly absurd proposition. I ask the hon. Gentleman does he agree with his followers. I ask that because the hon. Member behind him admitted that that was what it did mean.

Mr. PRETYMAN

Site value. That is not market value.

Mr. LLOYD GEORGE

If you want to get real site value, you would get it by presupposing that there are no buildings anywhere near. Is that the proposition? No cultivation, no hedges, no fruit trees; no anything else. That is not inconsistent with saying you must divest that particular plot of buildings before you can ascertain its site value. That is what the hon. Gentleman calls an insane proposition. It is an insane proposition which has been working well in New South Wales and New Zealand almost in the same words as those of this Act of Parliament. I only spoke in response to an invitation from those who create all these difficulties.

Mr. PRETYMAN

The right hon. Gentleman is responsible for the introduction of site value and he is responsible for all these difficulties. We are not responsible for them, but we are responsible for our suggestions to meet them.

An HON. MEMBER

There is no difference.

Mr. PRETYMAN

He has pointed out one difference in his speech. He pointed out that we should not arrive at the true site value. Is that what your valuers were trying to arrive at. Before the Referee, counsel for the Commissioners argued that it was a statutory site value, that it had nothing to do with true site value. It was a statutory conception on which the tax was to be based. But we have to do with true site value in this House. The House has to do with the methods of valuation that are being adopted, and the results of that valuation to the taxpayer on the present and the future. The right hon. Gentleman is very wise to bring the matter on at three o'clock in the morning when no report is issued and he hopes the agricultural industry will not get to know of this Debate. We are perfectly satisfied with the explanation, in this respect, that we desire that the agricultural industry, those engaged in it, who are practical people, should know the difference between the statutory conception of site value and true site value. They know what it costs to put buildings upon the land, and they understand the difference clearly. It has been made clear that the methods which have been adopted and have been supported by the Chancellor of the Exchequer and the Secretary to the Treasury, the methods which are aimed at by this Amendment, are methods by which practically the whole of the money which is spent by owners of land in erecting agricultural buildings is to be disregarded and confiscated. Let it go forth that every owner of land who erects cottages, erects farm buildings, spends money upon repairs, changes the size of the holding, improves the equipment of the existing holding, is doing so at his peril.

Mr. LLOYD GEORGE

expressed dissent.

Mr. PRETYMAN

He may shake his head, but that does not alter the facts. It is perfectly clear that anybody who spends any more money upon land in the future does so at his peril, and I for one am extremely glad the country will be enabled to understand that, and that these owners and occupiers will know exactly what the practical position is.

Captain CLIVE

The Chancellor of the Exchequer seems to have in his mind a particular site value, which he and other hon. Members opposite have described as desert site value. If you divested agricultural land of all the improvements and buildings upon it it would be a desert; that is their case, but I do not agree with that. It would still have a certain value then and that is what we on this side understand by site value. He seems to have in his mind taxable site value. There is not enough to be got out of that, and therefore he talked of a site

value which was to include the value of cottages. Even his Act did not suggest that. It said that from the site value of the land, buildings should be divested, trees and other improvements upon it. There is a great difference between town site value and country site value. In one case the site is in a street which has buildings upon it and it has a considerable value because of the neighbouring buildings. But when we come to a farm you cannot fairly include in site value, the value of the buildings upon it or the building upon an adjoining farm. That only gives a certain rateable value, a certain facility in being let because of the buildings adjoining. Surely the site value is that contained in the words of the Act, the pure value of the farm divested of buildings before any money had been spent upon it or upon the neighbourhood.

Mr. CASSEL

The right hon. Gentleman has not dealt with the point. The Amendment does not express the real grievance. You have separate units in occupation, and you do not for the purpose of valuation continue to treat them as separate units; you assume that the houses and the buildings upon adjoining pieces of land give a value to that unit. That is what the valuers are doing.

Mr. LLOYD GEORGE

That is the Amendment.

Mr. CASSEL

I say the Amendment does not deal with the real objection. It is the real grievance that they are valuing in this way. If the valuers are valuing in this way it is absolutely monstrous, and, moreover, it is absolutely contrary to the provisions of the Act itself. If they are, it is not attempted to be defended, and is in fact indefensible.

Question put, "That the proposed I Clause be read a second time."

The Committee divided: Ayes, 68; Noes, 191.

Division No. 187.] AYES. [3.32 a.m.
Ashley, Wilfrid W. Castlereagh, Viscount Glazebrook, Capt. Philip K.
Baird, Lawrence Cave, George Gordon, John (Londonderry, South)
Balcarres, Lord Chamberlain, Rt. Hon. J. A. (Worc'r.) Goulding, E. A.
Banbury, Sir Frederick George Clive, Captain Percy Archer Greene, Walter Raymond
Barlow, Montague (Salford, South) Clyde, James Avon Gretton, John
Barnston, Harry Craig, Captain James (Down, E.) Gwynne, R. S. (Sussex, Eastbourne)
Bathurst, Charles (Wilts Wilton) Dickson, Rt. Hon. C. S. Haddock, George Bahr
Bennett-Goldney, Francis Dixon, Charles Harvey Hall, Fred (Dulwich)
Bigland, Alfred Eyres-Monsell, B. M. Helmsley, Viscount
Boyton, James Fell, Arthur Henderson, Major H. (Berks, Abingdon
Bridgeman, William Clive Fitzroy, Hon. Edward A. Hewins, William Albert Samuel
Burn, Colonel C. R. Gibbs, G. A. Hills, John Waller
Cassel, Felix Gilmour, Captain John Hope, Harry (Bute)
Hope, James Fitzaian (Sheffield) Pease, Herbert Pike (Darlington) Stanier, Beville
Kyffin-Taylor, G. R. Peto, Basil Edward Talbot, Lord Edmund
Law, Rt. Hon. A. Bonar (Bootle) Pole-Carew, Sir R. Touche, George Alexander
Lloyd, George Ambrose Pollock, Ernest Murray Warde, Col. C. E. (Kent, Mid)
McNeill, Ronald (Kent, St. Augustine's) Pretyman, Ernest George Wheler, Granville C. H.
Malcolm, Ian, Pryce-Jones, Colonel E. Wright, Henry Fitzherbert
Mason, James F. (Windsor) Remnant, James Farquharson Younger, Sir George
Mills, Hon. Charles Thomas Rutherford, Watson (L'pool, W. Derby)
Morrison-Bell, Capt. E. F. (Ashburton) Salter, Arthur Clavell TELLERS FOR THE AYES.—Mr.
Newman, John R. P. Sanders, Robert Arthur Royds and Mr. Hicks Beach.
Nicholson, William G. (Petersfield) Spear, Sir John Ward
NOES.
Abraham, William (Dublin Harbour) Hancock, John George Nolan, Joseph
Acland, Francis Dyke Harcourt, Robert V. (Montrose) Norman, Sir Henry
Addison, Dr. Christopher Harmsworth, Cecil (Lufon, Beds) Nugent, Sir Walter Richard
Ainsworth, John Stirling Harvey, T. E. (Leeds, West) O'Brien, Patrick (Kilkenny)
Allen, Rt. Hon. Charles P. (Stroud) Harvey, W. E. (Derbyshire, N.E.) O'Connor, John (Kildare, N.)
Armitage, Robert Haslam, Lewis (Monmouth) O'Connor, T. P. (Liverpool)
Arnold, Sydney Havclock-Allan, Sir Henry O'Doherty, Philip
Baker, Harold T. (Accrington) Hayden, John Patrick O'Donnell, Thomas
Baring, Sir Godfrey (Barnstaple) Hayward, Evan O'Dowd, John
Barnes, George N. Hazleton, Richard (Galway, N.) O'Kelly, Edward P. (Wicklow, W.)
Beauchamp, Sir Edward Henderson, Arthur (Durham) O'Malley, William
Benn, W. W. (Tower Hamlets, S. Geo.) Henry, Sir Charles O'Neill, Dr. Charles (Armagh, S.)
Bentham, G. J. Herbert, Col. Sir Ivor (Mon., South) O'Shaughnessy, P. J.
Birrell, Rt. Hon. Augustine Higham, John Sharp O'Sullivan, Timothy
Boland, John Pius Hobhouse, Rt. Hon. Charles E. H. Outhwaite, R. L.
Booth, Frederick Handel Hogge, James Myles Parker, James (Halifax)
Bowerman, Charles W. Horne, Charles Silvester (Ipswich) Pease, Rt. Hon. Joseph (Rotherham).
Boyle, Daniel (Mayo, North) Howard, Hon. Geoffrey Phillips, John (Longford, S.)
Brace, William Hudson, Walter Power, Patrick Joseph
Brady, Patrick Joseph Hughes, Spencer Leigh Primrose, Hon. Neil James
Brocklehurst, W. B. Isaacs, Rt. Hon. Sir Rufus Pringle, Wm. M. R.
Brunner, John F. L. John, Edward Thomas Radford, G. H.
Burke, E. Haviland- Jones, Edward R. (Merthyr Tydvil) Raffan, Peter Wilson
Burns, Rt. Hon. John Jones, Henry Haydn (Merioneth) Raphael, Sir Herbert H.
Buxton, Noel (Norfolk, N.) Jones, William (Carnarvonshire) Rea, Walter Russell (Scarborough)
Buxton, Rt. Hon. S. C. (Poplar) Jowett, Frederick William Reddy, Michael
Byles, Sir William Pollard Joyce, Michael Redmond, John E. (Waterford)
Carr-Gomm, H. W. Keating, Matthew Redmond, William (Clare, E.)
Chancellor, Henry George Kellaway, Frederick George Richardson, Thomas (Whitehaven)
Clancy, John J. Kelly, Edward Roberts, Charles H. (Lincoln)
Clough, William Kilbride, Denis Roberts, G. H. (Norwich)
Condon, Thomas Joseph King, J. Roch, Walter, F. (Pembroke)
Cornwall, Sir Edwin A. Lambert, Richard (Wilts, Cricklade) Roche, Augustine (Louth)
Cotton, William Francis Lardner, James Carrige Rushe Samuel, J. (Stockton-on-Tees)
Craig, Herbert J. (Tynemouth) Law, Hugh A. (Donegal, West) Scanlan, Thomas
Crawshay-Williams, Eliot Lawson, Sir W. (Cumb'rld, Cockerm'th) Scott, A. MacCallum (Glas., Bridgeton)
Crooks, William Lewis, John Herbert Seely, Rt. Hon. Col. J. E. B.
Crumley, Patrick Lundon, Thomas Sheehy, David
Cullinan, John Lynch, A. A. Shortt, Edward
Dawes, J. A. Macdonald, J. Ramsay (Leicester) Simon, Sir John Allsebrook
Delany, William Macdonald, J. M. (Falkirk Burghs) Smith, Albert (Lanes., Clitheroe)
Denman, Hon. R. D. Macnamara, Rt. Hon. Dr. T. J. Smyth, Thomas F. (Leitrim)
Devlin, Joseph MacNeill, John G. S. (Donegal, South) Sutherland, J. E.
Dillon, John Macpherson, James Ian Sutton, John E.
Donelan, Captain A. MacVeagh, Jeremiah Taylor, Theodore C. (Radcliffe)
Duffy, William J. M'Ghee, Richard Tennant, Harold John
Duncan, C. (Barrow-in-Furness) McKenna, Rt. Hon. Reginald Thorne, G. R. (Wolverhampton)
Edwards, Sir Francis (Radnor) M'Laren, F. W. S. (Lines., Spalding) Verney, Sir Harry
Elibank, Rt. Hon. Master of M'Laren, H. D. (Leicester) Wadsworth, John
Esmonde, Dr. John (Tipperary, N.) Markham, Sir Arthur Basil Wardle, George J.
Esmonde, Sir Thomas (Wexford, N.) Marks, Sir George Croydon Webb, H.
Falconer, James Marshall, Arthur Harold Wedgwood, Josiah C.
Farrell, James Patrick Masterman, Rt. Hon. C. F. G. White, J. Dundas (Glas., Tradeston)
Fenwick, Rt. Hon. Charles Meagher, Michael White, Sir Luke (Yorks, E.R.)
Ffrench, Peter Meehan, Francis E. (Leitrim, N.) White, Patrick (Meath, North)
Field, William Molloy, Michael Wiles, Thomas
Fitzgibbon, John Mond, Sir Alfred M. Wilkie, Alexander
Flavin, Michael Joseph Money, L. G. Chiozza Williams, John (Glamorgan)
George, Rt. Hon. D. Lloyd Morgan, George Hay Wilson, Rt. Hon. J. W. (Worcs., N.)
Gill, Alfred Henry Morison, Hector (Hackney, S.) Wilson, W. T. (Westhoughton)
Gladstone, W. G. C. Morrell, Philip Yoxall, Sir James Henry
Greig, Colonel J. W. Muldoon, John
Guest, Hon. Frederick E. (Dorset, E.) Munro, Robert TELLERS FOR THE NOES.—Mr.
Hackett, J. Murray, Captain Hon. Arthur C. Illingworth and Mr. Gulland.
Hall, F. (Yorks, Normanton) Nannetti, Joseph P.

Question put, and agreed to.

Mr. AUSTEN CHAMBERLAIN

I beg to move, "That the Chairman do report Progress, and ask leave to sit again."

Mr. LLOYD GEORGE

I think I promised when the right hon. Gentleman appealed to me about twenty minutes past eleven that we would not sit very late. Therefore, carrying out that promise, I am prepared to agree to the Motion now made by the right hon. Gentleman, especially as there are one or two more Orders which we have to get through after this.

Committee report Progress; to sit again to-morrow (Friday).