§ Mr. HAYES FISHER
I beg to move, as an Amendment to the Address, to add, at the end the words,But humbly represent to Your Majesty that this House regrets that, 189 having regard to the rapidly growing cost of education and other Services of a predominantly national character which has been accentuated by the additional duties cast upon local authorities by the legislation and departmental administration of the last six years, involving heavy and increasing burdens on local rates which press with special severity on the ratepayers of London, Your Majesty's Gracious Speech contains no announcement of measures to give effect to the recommendations of the Royal Commission on Local Taxation made in the year 1901 in favour of a large increase in the subventions from Imperial funds in aid of local expenditure upon national Services or to compensate local authorities for the loss of rates owing to the reductions of assessable values of licensed premises as the result of The Finance (1909–10) Act, 1910.I rise to move the same Amendment which I had the honour of moving last year. It is the same Amendment, because the same situation—
§ Mr. WEDGWOOD
On a point of Order. May I ask your ruling, Mr. Speaker, as to whether the Amendment which the right hon. Member is about to move puts out of Order the Amendment which stands earlier on the Paper in my name, and which relates to the same subject?
§ Mr. SPEAKER
This Amendment does not put the hon. Member's Amendment out of Order. This Amendment is very much wider in its scope than that of the hon. Member.
§ Mr. WEDGWOOD
Then, in, that case, shall I be in Order in moving my Amendment, which deals with the relief to be given to the local authorities, after this Amendment is disposed of?
§ Mr. WEDGWOOD
May I ask your ruling as to what methods are adopted in selecting Amendments for discussion? My Amendment stands fourth on the list on the Notice Paper, and that of the right hon. Gentleman stands about tenth.
§ Mr. SPEAKER
The order in which Amendments stand on the Paper is nothing. The most important Amendments are very often put down last. The Amendment taken yesterday stood a considerable way 190 down the Paper. The hon. Member need not attach any importance whatever to the order in which Amendments stand upon the Paper.
§ Mr. HAYES FISHER
From the ratepayer's point of view the position is rather worsened than bettered from last year. New services of a preponderatingly national character seem to be in sight for the unfortunate ratepayer year by year. No new corresponding Grants seem to be in sight. He has to rely for any relief, long overdue, on anything that may happen in the coming Budget, or perhaps on the Report of the Departmental Committee that is now considering the whole question of the relationship between the Imperial and the local exchequers. His position is embittered by the disappointment which he naturally feels at the slowness with which the Government proceed to redeem the pledges which, two years ago, they made so explicitly to the ratepayers. I am very glad that on this occasion we have the presence of the Chancellor of the Exchequer. A year ago the right hon. Gentleman was prevented by illness from being present. I may remind him—if he needs the reminder—of the very explicit promise of 1910, that he did not believe it would be possible to postpone the question beyond this year. In 1910 the right hon. Gentleman said:—Whoever stands at this box next year will have to deal with this problem, and deals with it thoroughly.And the right hon. Gentleman is aware that an equally explicit pledge was given on behalf of the Government in the other House by Lord Crewe. I need not quote that pledge: it is acknowledged to have been given. On 13th February, 1911, in the absence of the Chancellor of the Exchequer, a reply was made by the then Secretary to the Treasury, whom we all congratulate on having been moved into the Cabinet, and on having obtained the distinction he so well deserved by his long services to this House and to the Government. The Secretary to the Treasury then said he fully accepted the position, and he went on to say the suggestion had been made that a small Committee should be appointed to deal expeditiously with the 191 subject that the Government were anxious to accept that proposal. His words were:—We must proceed expeditiously, and the Government will appoint a small Committee to go, as soon as possible, into the points that stand over in order that the pledges given by the Chancellor of the Exchequer, by the Prime Minister, and by the Leader of the Government in the other House may be kept and redeemed in good faith as they were made.We have got the Committee, but the Committee I certainly had in mind was not the kind of Committee given, but a Committee that would take up the conclusions of the Royal Commission of 1901, and would adjust those conclusions in pounds, shillings, and pence to the present day; would take up the representations of the Majority and Minority Reports, both of which recommended Grants from the Imperial Exchequer, in the one case of two and a-half millions, and in the other one and a-half millions, for the immediate relief of the ratepayers, and which should have reported in the autumn of last year, so as to enable the Chancellor of the Exchequer to give effect to its Report, if its Report should be in favour of giving some immediate relief, as I fully expected, to the ratepayers. We accepted that Committee with gratitude when we first heard of it, but our gratitude gradually became less. We asked for two things, let me remind the Chancellor of the Exchequer. We asked first that a Departmental Committee should be appointed to deal expeditiously with the Report of the Royal Commission of 1901 and by "expeditiously" we meant at least within a year, and that the Report should be available for the Chancellor of the Exchequer when framing his Budget for the year. Will it be? I shall ask that presently. We also asked that there should be an interim Grant made particularly to meet the many increases due to national Services, and the many increases demanded by this House for the extension of those Services. On that occasion the Government majority went down to 65, and there is no doubt about it if it had not been for the forms of the House compelling hon. Members to vote for the Government or turn them out on an Amendment to the Address, that Amendment would have been carried in the House, so strong was the opinion of Members on each side that this question of relief of the ratepayers is long overdue. Hon. Members have long given promises to their constituents that they would do everything in their power to 192 obtain some redress of the grievances from which the ratepayers so long suffered.
The Committee was appointed, and from that moment to the present time I confess there was a very great feeling in our minds that we did not get at all what we expected. When we looked at the composition of the Committee we had every reason to be dissatisfied from the point of view of the ratepayers. There is a contention as between those who represent the ratepayers and the municipal authorities on the one hand, and the Government on the other, as to what proportion of the burdens held by the Royal Commission to be preponderatingly national, such as Poor Law, Education, and Police, should be found out of the Exchequer, and what proportion should be found by the local authorities. To determine a question of that sort, you ought to have a fair and impartial tribunal. I look at the Committee now, and I ask whether it could be expected that the local authorities would be satisfied with the composition of that Committee. The Committee consists of thirteen Members, seven out of the thirteen were Government officials. Very soon afterwards one of the others, Mr. Harper, became a Government official, and he was the only representative allowed for London. We had a shrewd suspicion at the time that he would soon become a Government official, and our suspicions were well founded; he has lost such independence as would be lost by one becoming a Government official. I say nothing about the character, or ability, or experience of Mr. Harper. I have nothing to say against him except that he has become a Government official, and is not, therefore, in that independent position from the point of view which the ratepayers of London have a right to expect in the only representative allowed them on that Commission. What has become of the others? Three of them have got Government appointments since. Mr. Rodgers has been appointed a Small Holdings Commissioner. Mr. Hughes has been recently appointed Chairman of the Welsh Insurance Commissioners. These have come under the Government ægis and Government protection. There are practically only two that can be fairly said to represent the municipal authorities, and one of these is an Irishman, and the other for the most part has been absent from the whole of the sittings of the Committee. I ask the right hon. Gentleman the Chancellor of the Exchequer whether in this dispute between the Government and the 193 municipal authorities would he, as representing the Exchequer, or would I, when I was Secretary to the Treasury, have been satisfied if the municipal authorities had been allowed to nominate the tribunal that was to decide this great question, and would the right hon. Gentleman have been satisfied with the kind of representation that would have been given him, taking the proportion in favour of the local authority as it now is as that in favour of the Government. We are not satisfied with the composition of the Committee. Then all kinds of rumours reach us about its sittings. Why there should be any rumours at all I do not know. We are told they are taking evidence on matters that may lead to an entire revolution in our rating system, and the whole of its basis and structure. Why they should sit in secret and take evidence without affording opportunity for confirming or rebutting it for the life of me I do not know.
It seems to me most extraordinary that this tribunal should sit in this way and adopt a procedure of this secret kind which may result in either revising or absolutely refusing the well-founded report of the Royal Commission which sat for no less than five years. It is one of the most extraordinary things this most extraordinary Government has done. We have to rely upon rumour, and rumour is very strong that this Committee is largely concerning itself with the very difficult and complex question known as the single-tax system of rating which is associated with the hon. Gentleman who represents Newcastle-under-Lyme, and I hope we shall hear him in this Debate. If that be the case, it seems to me that the simpler proposition has been entirely overshadowed by the learned evidence given on this very complex question of the taxation of site values. I should like to know whether the Government share the view of the 170 gentlemen who attended upon a deputation not long ago which was received by the Prime Minister and the Chancellor of the Exchequer, that no relief can possibly be given to ratepayers until this very vexed question of a single tax on site values is settled, if it ever is settled. One of the objects of this Debate is to get to know whether the Government are prepared to ask for an interim Report. If this Committee is going to spend some years, as the Royal Commission did, looking into all these difficult questions and taking evidence from all the interests concerned, will the Government 194 ask the Committee to give an interim Report, so that they may carry out their pledge to expeditiously deal with this question? Will they ask for that Report so that it will be in the hands of the Chancellor of the Exchequer in time for him to give effect to it in the Budget, which we hope will be before the House of Commons some time before August. That is an important matter from the point of view of the ratepayers. I hope we are going to have the Budget about Easter this year, but even in that event there would be time to obtain an interim Report and give effect to its recommendations.
When I asked this question in autumn last year, I was informed by the then Secretary to the Treasury, who again has had a move, that no interim Report was to be asked for. I hope the Chancellor of the Exchequer will review that decision, and see the importance of no longer delaying this matter from the point of view of the ratepayers, who are looking for some immediate relief from their present burdens. I hope we shall hear from the Government to-day whether they share the views held by the hon. Member from Newcastle-under-Lyme and the 170 Members of Parliament associated with him, that no relief can be given to the ratepayers until the whole of this question of site values is settled. I would remind the Chancellor of the Exchequer that he said it would be quite impossible to institute a tax of that kind until the whole of the land of the country had been valued, and he held out no hope of this being accomplished until the year 1915. If the ratepayers are to wait for relief until the year 1915 I think they will put a very different interpretation hereafter on the word expeditiously. I would like to ask the hon. Member for Newcastle-under-Lyme a few questions upon the single tax on land which, as I understand it, is to produce all the rates hereafter. All rates are to be abolished on buildings and everything else but land, and by a single tax on land you will be able, it is claimed, to supply the ratepayers with their present and future needs, and you will in this way be able to free the breakfast table of all taxes on sugar and tea and matters of that kind, and the Chancellor of the Exchequer, we are told, is about to enter into a perfect golden harvest if he will only let the 170 gentlemen who hold those views enforce those views upon him. I should like to ask the hon. Member for Newcastle-under-Lyme whether he will enlighten the House as to whether it is intended that 195 this tax should apply to all agreements and contracts at present in existence, or does he favour the tearing up of existing contracts? This is no novel question, for it was fully gone into by the Royal Commission in 1901, and out of the fifteen Commissioners only one put forward a Memorandum reporting the view held by the 170 gentlemen who promote this idea of a single tax on site values. A very well-known judge—Judge O'Connor—said he would have nothing to do with this proposal so far as existing contracts were concerned. His words are of very great weight, and I will quote them. He said:—The last point which remains to be considered is that relating to existing contracts. As to this it is manifest that equity requires that all existing contracts should be absolutely respected. It may be that many of them will have to run, not for years only, but for lives and longer. No matter, for although there would appear to be, according to the view taken in this Report, much that is inequitable in the present arrangements, and much that calls for change in the interests of the public, yet a disregard of contractual relations would be a more serious injury to the public than even the existing system of rating.Those are very weighty words, and I recommend them to the attention of those who are forcing that view of a single tax on site values. If that tax is not to be put upon existing owners, because of their contracts, upon whom is it to be put? It must inevitably fall upon the occupiers, many of whom it was the design of both the Majority and Minority Report to relieve. Some would get a benefit, but those who most needed it would be the very persons upon whom you would put a new burden. I would like to ask the hon. Gentleman whether this new system is to apply to agricultural land. The Chancellor of the Exchequer has made some incursion already into the domain of taxing site values, but even the right hon. Gentleman, yielding to the pressure of this House, did not dare to put that new tax on land which had merely an agricultural value. Is it now proposed to put this new tax on land which has an agricultural value only? We should like to know something about those points. Do those who favour this new method of taxation throw over all the conclusions of both the Majority and Minority Reports? Do they abandon the theory that taxation should be raised for onerous services according to the ability to pay?
§ Mr. HAYES FISHER
I am not quoting the exact words, but does the hon. Mem- 196 ber deny that they reported that taxation ought to be put on persons for onerous services according to their ability to pay? I ask the hon. Member to read that report. I think I have made that statement perfectly fairly, and I ask the hon. Member is he going to throw over that doctrine, or is he only going to apply it to landlords and owners of land? Are those who are forcing this view upon the present Government going to give up the doctrine, which I hold very strongly indeed, that personalty should be relieved of all that share of the charges which they now pay under the Poor Law for education, police, and matters of that kind, solely and entirely through the contributions which they make through Imperial subventions. Once do away with Imperial subventions in aid of rates for education, for police, and for matters of that kind, and personalty no longer makes any practical contribution towards any of those great services, although the owners of personalty are just as much interested in the welfare of the children as a national asset as are the owners of land; and, for my part, I say when we do come to readjust our fiscal system we ought to look to it and see that the owners of personalty pay their fair share of all these national charges and for all these national purposes. Supposing any such system as that came to be adopted, let us apply it to education. Education in the counties is paid for as to 50 per cent. by the taxpayer and as to the other 50 per cent. by the local ratepayer. Shift the whole charge on to a tax on land—that is to say, if only the land is taxed for the purposes of education—and tens of thousands of people who have large amounts of personalty will be almost entirely relieved from paying any of this national charge for the welfare and the education of the children. These are four questions to which I should like someone at all events to give me an answer to-day. I am not shutting my mind altogether to any new system that may be considered fair to all by which we might obtain something from owners of site values whose values have been largely increased by money spent by the local authorities. I am perfectly open to consider any system by which a fair amount may be extracted from their pockets for local purposes when the expenditure by the local authority particularly and specially benefits that class of property. I am only for the moment arguing two things: first, the difficulties in the way of overthrowing the whole structure 197 on which rating has been built up in this country and which has lasted through centuries; and, then, against using that as an excuse for delaying the relief which has long been promised to the present ratepayers for the burdens which are increasingly being thrown upon them.
Last year I presented this House with many figures in relation to Imperial Grants, Exchequer contributions, the increase in local rates, and matters of that kind. I do not propose to repeat them. Those figures can be found, if anyone is curious on the subject, in the pages of the OFFICIAL REPORT. All I desire to do is to restate shortly the case that these services of a national character are continually increasing in cost, and that at the same time this Government, beyond all other Governments, has departed from the almost rule of the Treasury that new expenditure of this kind should be largely met by Grants from the Exchequer. I say, in addition, that the burdens within sight for the local ratepayers are increasing every year. I will only give one or two instances. We have even under the National Insurance Bill the possibility of heavy deficiencies which may have to be met by the local ratepayers. There are things which are absolutely more certain than that. Only at the very end of last Session the Government came forward with a Bill to take another 2d. in the £ out of the ratepayers of London for expenditure on the police. We are perfectly willing to give them the 1d., but we are not willing to give them the 2d. until we know two things; first, that that 2d. will be required for London, and for the expenditure on the police for London purposes; and, secondly, that the Government are willing to shoulder some portion of that responsibility themselves, and to give something in the way of a Grant on the basis of the contributions which they give already, or, at all events, on some basis which shall be fair as between the ratepayer and the taxpayer. There is 2d. in sight. Again, at the end of last year we were confronted with a Departmental Order from the Board of Education, calling upon the ratepayers of London to spend 4½ millions of money, capital expenditure, and an amount in maintenance expenditure which, taken together, will mean a 4¼d. rate for the purpose of reducing the size of the classes in London under Article 14. I am not going to argue against the merits of this proposal. From an educational point of view, there is 198 very much to be said for it. What I say is that the ratepayers have no control over these huge masses of expenditure which are thrown on them by this House. I go further and say the House of Commons itself is losing all control over expenditure. Very few Members of this House know what is going on in connection with Article 14 and the compulsory reduction of classes under Article 14. There is practically no control by this House. The House years ago practically tells a Department in the State that it can force the ratepayers into any number of millions of expenditure, and the matter is then very likely never again discussed unless it be on the Education Vote, and we all know the Education Vote may not practically be taken at all, or at all events only two or three hours may be given to it.
§ The CHANCELLOR of the EXCHEQUER (Mr. Lloyd George)
It depends upon the Opposition.
§ Mr. HAYES FISHER
I know it rests with the Opposition as to whether it should be put down, but I guarded myself by saying there might be no practical chance of controlling expenditure of that kind. Those Debates, when put down, have a tendency to develop on lines of singular unimportance to the community, and matters of absolutely first-class importance very often occupy very little of the time given to any subject in this House. I believe I have the House with me when I say that the Government by one Act of Parliament can put a Department of the State in a position of such power that they can by one single Departmental Regulation, made possibly more by the permanent officials than by the political officials, practically order and compel the ratepayers to spend millions of money upon some new object. It may be a right and a wise object, but the ratepayers have no control, the county council has no control, and the House of Commons has practically lost control. The thing is done by a stroke of the pen almost before the House of Commons has time to be consulted or the voice of the people in any way known. I am not going to argue against the policy of cutting down our classes from something like fifty to forty: our educational system will, I think, be rendered more efficient thereby. But the same power that can compel that to be done can compel in a very few years' time that your schools shall be pulled down and reconstructed with a view to cutting the classes 199 still further down to thirty or to twenty. That is a very large matter of expenditure, and a considerable amount of the time of the House ought to be given to it in order that hon. Members may properly understand it. A new 2d. rate for the police is in sight of the London ratepayers. My hon and noble Friend (Viscount Helmsley) will speak on that from the provincial point of view. A new rate of 4½d. is in sight also to carry out one single article of the Education Code—a burden for really a national service. These services are increasing in volume, and I submit that I have made out a case in regard to the right of the ratepayer to immediate consideration and inquiry into the present arrangements. It is not sufficient to tell the House that a Departmental Committee has been, and is still, sitting, and may go on sitting on this question for several more years, and that when you get the Report of that Committee you will consider whether or not you will give some relief to the unfortunate ratepayers—a relief which was promised years ago, a relief which they have been expecting ever since.
I hope we may hear from the Chancellor of the Exchequer—if he intends to await the Report of the Committee—that he is prepared to give an interim Grant which will cover some of this large expenditure on the children in connection both with the reduction of the size of the classes and with their medical treatment—matters which the Prime Minister has declared to be optional on the part of the county council. But if the Chancellor of the Exchequer will only read some of the reports and memoranda sent by the Education Department to the London County Council he will realise that it is making the matter a little more than optional on the part of the council, and that an enormous amount of pressure is being brought by the Board of Education to bear upon county councils in order to make medical treatment follow up medical inspection—as I have always argued it should, unless you are going to waste your money. That I submit is a national charge which should not fall on the education rate, but should be largely contributed to by the nation itself, whose interests are mainly concerned in it. I hope that when the Government have satiated their appetite for destroying ancient institutions they will give some of their leisure hours to repairing and reconstructing the fiscal system of this country so far as it relates to the iniquities which exist between tax- 200 payer and ratepayer. I hope still further the day may come when this House will give much more time to the control of its finances than it has done during the past few years, and to the reconstruction of our whole financial system, so that many of these grievances may be removed and many of these inequalities be redressed.
§ Viscount HELMSLEY
I desire to second the Amendment which has been so forcibly moved by my hon. Friend; and, in the first place, I should like to associate myself with what he has said about the appointment of the Committee of Inquiry into the question of local taxation after what has occurred since 1901. I look upon that Committee as nothing more nor less than shelving the question, and I cannot help feeling that the Chancellor of the Exchequer and the Government were well aware that that was one of its main purposes. The Report of 1901 gives very full information as to the whole question, and it has been constantly pressed on Parliament since that date that some effect should be given to their recommendations. It seems to me that there was no occasion at all to appoint another Committee to go further into the question and to make more inquiries when we have so many inquiries already made which up till now have been perfectly fruitless in their results. It is also disquieting to hear rumours which have been in circulation that this Committee is inquiring very largely into the question of the taxation of site values. It seems to me that this question of the single tax is a purely theoretical question which bears no real relation when it is examined to the necessity of raising revenue for local purposes. I cannot help thinking that the theory put forward by the United Committee on the Taxation of Land Values is quite mistaken; it is based on entirely wrong premises. It goes on the assumption that all wealth is derived from the land. Yes, but what land? In an economic sense no doubt all wealth is ultimately derived from land, but it is quite untrue to say that all wealth is derived from the land of this country. Yet it is upon that assumption that the whole theory of the taxation of land values is based. That theory entirely ignores the accumulated capital and all other forms of wealth which exist in this country. The United Committee have issued a great many leaflets in the course of the year in which they make all sorts of extravagant promises, and in which they suggest that by the taxation of 201 land they are going to produce a sort of Elysium on earth and are going to make land far easier of access to the people of this country. These promises are very dishonest for several reasons, one being that they cannot be fulfilled even if the proposal of a single tax were put into force. They are also dishonest because they go on the assumption that the State should own all the land of the country. [HON. MEMBERS: "No, no."] At any rate the Socialists act on that assumption, and the hon. Member who interrupted me and his friends the single taxers act on the assumption that the present rents should be taken from the existing owners of land and that the land should be taxed up to its full annual value. I have read many of the leaflets, and that, I submit, is the assumption underlying them. They suggest that the whole profit derived from land should be taken from its present owners, and they hope to get round the dilemma pointed out by Mr. Gladstone when he talked about the nationalisation of land as to whether those who advocated it intended to take it without paying for it—they hope to get over this dilemma by taxing it up to the hilt of its annual value. I say that these views are dishonest, and even more dishonest than the views put forward by the Socialists, who support their case on the ground that the land was originally stolen from the people. I wish to give a few extracts from the leaflets issued by the United Committee.
§ Viscount HELMSLEY
The United Committee for the Taxation of Land Values—a body which issues a considerable number of leaflets, and which colleagues of the right hon. Gentleman support on public platforms. Here is one extract:—The lands of Great Britain must be placed at the service of the men who will work it. Until that is done nothing will do any good to farming. Dukes, marquesses, earls and other landlords are far too busy with other things to manage the land and rents of the whole country properly. … They have ruined agriculture over and over again, for agriculture is only another name for farmers and labourers. They have made life a hell for these people, making them skip round the country with high rents and haughty, disdainful treatment.If there are those who think that bears a true relation to the facts, I would call their attention to the Report of the Departmental Committee appointed by a late colleague of the Chancellor of the Exchequer, Lord Carrington, to inquire into the 202 reasons for the sales of agricultural land throughout the country and to take evidence upon what should be done to safeguard the position of tenant farmers. I do not wish to quote the whole Report, but it is very obvious from that Report that the whole weight of the evidence goes to show that these wretched people, who have had such haughty and disdainful treatment, are only too anxious to remain, if they are allowed to do so, under the same system as in the past—that is to say, farming their land under the landlords of the country. When the question of the increased sales of estates is dealt with in the Report, this is what it says:—In the opinion of the majority of the witnesses who appeared before the Committee, the increase in the number of agricultural estates which have recently been offered for sale is partly due to a feeling of apprehension among landowners as to the probable tendency of legislation and taxation in regard to land. Whether this feeling of apprehension is well founded or not, it undoubtedly does exist. It would appear that one of the primary causes of the want of confidence on the part of the landlords, and their desire to sell the whole or portions of their agricultural estates, is the accumulation of and the fear of the effect of recent, legislation.I leave it to the Government to reconcile their appointing of that Committee, which recognised an admitted evil in the breaking up of estates, with the opinions of their colleague, the Lord Advocate, when he speaks for this Committee, who advocate this land values taxation. This is what one of their leaflets says:—Seeing that official reports state that the taxation of land values has broken up large estates in the Colonies, encouraged the settlement of small farms and stimulating building, will you urge that all land in this country, whether used or unused, should be taxed on its value, as a means of breaking up the large estates and obliging landowners to place land at the disposal of the people?This Committee and the Lord Advocate who support these theories, and a good many other Members of the Government, are frankly trying by this propaganda to bring about the breaking up of large estates when another Member of the Government is appointing a Committee to inquire into the question how the evils brought about by their conduct are best to be remedied. No doubt the Chancellor of the Exchequer, with his usual fertility of imagination, will be able to reconcile these two opposing views.
I said I was going to show to the House how these proposals of the United Committee for Taxation of Land Values would work out in practice if they were adopted, and for that purpose I have taken a parish which has been valued, not by myself. I do not say that the figures are mine. They have been got out by an expert valuer. 203 He has taken the parish, the existing rateable value, and the rates levied, and has shown what would be the effect if the rates instead of being levied under the system at present in vogue were transferred to the site value, as is suggested by those who favour this theory. He divides this parish into various classes of property. I will take that class of property described as cottages and land adjoining. That class of property, instead of paying £67 8s. 3d. in rates in the year, would pay under the site-values system £101 17s. 4d., or an increase to those who lived in these cottages of £51 11s. 10d. That is one of the results of this system. I want to make it perfectly clear that this is arrived at on the basis that the same sum is raised on the taxation of land values as is actually raised at the present time. Take farm land. Under the present system of rates £118 12s. 2d. is paid in rates on the farm land which come under the review of this valuer. Under the system of the taxation of site values it would have to pay £1,084 5s. 5d., or an increase of £965 13s. 3d. Therefore you get these two results, that on cottage property and on farm or agricultural land you increase the rates by an enormous amount, and it is already the grievance of those who farm agricultural land that they are at present paying far more than their share of what ought to be paid for local purposes.
§ Viscount HELMSLEY
Farm-houses and buildings would be rather less, but the man who would get off lightest of all is the millionaire who is possessed of a house and stables in the country. I have a detailed statement here to show that such a house would pay a considerably reduced sum in rates if site value were taken as the basis than if the rates were based on the rental. It is a possible proposition, even for this House to consider, that all the local revenue of the country should be raised by one form of property only, and that a more limited form of property than that on which the revenue is now raised. Whether you look at it from the point of view of theory, where you see it is based on a fallacy, or from the point of view of practice, where you see the net result is to increase the payment due from those who now pay and are so heavily overburdened, the House must recognise that it is not only unfair and 204 unjust, but that it is positively the most foolish proposal ever put forward in a sane Legislature. Under this proposal of the land taxers even the buildings are to be to a large extent released, and the whole of the tax is to be raised on the land. All the rest of the property in the country, all the wealth of the country, is not to contribute one iota to local taxation, but is to escape entirely free. What will be the result of that? It can only ruin all those at present interested in the land, which could hardly be the object of this House, and it must react unfavourably upon the community in a great variety of ways, which I need not detain the House by going into this morning.
To come away from the question of site values, the special grievance of the ratepayer remains, and I think it is one which must appeal to all sensible men, and that is that they contribute so large a proportion of the money required. I find, if you take the figures which come under review of the Income Tax collectors for the year 1908–9, which is the last year for which figures are available for comparison, the total was £1,009,935,000. A large amount of deductions have to be made from that owing to smaller incomes and other allowances which are not made in respect of rates, and, therefore, to compare like with like. I am going only to make those deductions from that income which comes under review on a similar basis to those which are made in respect of rates. Therefore you get these figures, that the net income for the purpose of Income Tax, less the deductions that are allowed in the case of rates, amounts to £946,000,000 odd, and the rateable value upon which local rates are levied amounts to £254,000,000 odd. That leaves £692,000,000 of income which contributes not a penny towards local rates. There is another way of comparing that. Compare the gross income of the country with the gross estimated rental. The gross income of the country is £1,009,000,000. The gross estimated rental for England and Wales, Scotland, and Ireland is £315,000,000. Deducting these two you get the figure £694,629,000, which very closely corresponds to the other figure which I quoted. That goes to show, arriving at it by two alternative methods, that there is an amount of income in this country which comes under review for the purpose of Income Tax closely approximating to £690,000,000 which does not contribute one penny towards rates. It is that amount of money which 205 we think ought to be got at for the purpose of contributing towards local taxes, and if all ratepayers have this grievance against all Income Tax payers, if real property has this grievance against personal property, there is an equal and a subdivided grievance, as it were, between the owners of different kinds of real property, because you find that agricultural land, by the very fact that so much of it is required for the purpose of the business of farming, pays more in rates than any other kind of property when those who live upon it will be possessed of a similar income. That is the point. The man who pays on the house which he lives in, on the estimated rental, may have an income amounting to hundreds of thousands. The farmer who has to pay a large rental equally, because he has to employ a large quantity of land for the purpose of his business, has to pay, very likely, a similar amount in rates.
The House has recognised this by the Agricultural Rates Act to a certain extent and, limited as that relief was when it was given, it is now wholly insufficient, and of course the farmers, like other ratepayers, have to contribute in higher rates, spread over the whole area to make up that part of the deficiency which is not met by the Agricultural Rates Act. That is of course common knowledge to everyone in this House. The relief given by the Rates Act is £1,330,000, and the remainder of the deficit which has to be made up by other ratepayers, including agricultural ratepayers, is something like £2,000,000. Then the Agricultural Rates Act was never said to be anything more than a temporary relief. It was a makeshift to give some relief to the very overburdened agriculturists until something more permanent could be done. Nothing more permanent has been done from that day to this, and meanwhile the burdens have increased enormously, the Grants have not increased in like proportion. I have here the percentage of what is contributed out of rates and what is contributed out of Exchequer contributions to the total expenditure of local authorities, and I find that now 74.2 per cent. is contributed out of the rates and 25.3 per cent. out of the Exchequer contributions. We maintain that a far higher percentage ought to be paid out of the Exchequer contribution. When you realise that the local authorities have increased their expenditure, exclusive of loans, from £44,000,000 in 1884–5 to £121,000,000 in 1908–9, and when 206 you realise that during that time their debt has increased from £173,000,000 to the huge sum of very nearly £512,500,000, closely treading on the heels of the National Debt, which is about £700,000,000, it should be recognised that something ought to be done to relieve the ratepayer, more especially when you remember that very much of this expenditure is not by the wishes of the ratepayer but is forced upon him by this Legislature and by the standard which this Legislature insists should be kept up. I hope this Committee will put aside all the theoretical ideas about taxation of site values, and will really come down to bedrock to examine what relief can be given. There is first of all the taking over of the national Services. I think myself that the possibility of calling in a sort of local income tax should not by any means be excluded from purview. I cannot help thinking, however much you may take over the national Services, you will not put local rates upon a satisfactory or a fair basis until you rope in personal property into the payment of rates and until you devise some system by which some kind of local income tax can be levied for the purpose.
§ Mr. WEDGWOOD
I beg to Move to amend the proposed Amendment by leaving out the words,or to compensate local authorities for the loss of rates owing to the reductions of assessable values of licensed premises as the result of The Finance (1909–10) Act, 1910,and to insert instead thereof the words,and urging the hastening of the valuation of the full site value of the land now being prepared under the Finance (1909–10) Act in order that the increased subvention may be levied in the only just and effective manner.I have not the slightest intention of doing anything which could possibly call down on my head the charge which has been levelled against me. I am quite certain that Members of the House who know me know that such a thing is not what I should be likely to do. I want to reply, as far as possible, to the arguments brought forward on the other side against those of us who have been giving evidence before this Commission. First of all I agree entirely with the hon. Gentleman who urged that the proceedings of this Committee on Local Taxation should be made public and should be printed. I only hope that when they are made 207 public the hon. Member who moved the Amendment and the Noble Lord who seconded will read the evidence given by me before that Committee in order to clear their minds of one idea at any rate, and that is that we who advocate a single tax for local rating wish to do anything unjust. The Noble Lord will never be able to repeat to us on this side of the House the charge that we want to be unjust to the landlords. I think we have a right to ask that before charging us with any desire to do anything unjust you should understand your adversary's case. Read it, and if you disagree with him, argue fairly, and not simply charge him with injustice or a desire to ruin anybody. The question as to what assistance can be given by the Imperial Exchequer to local authorities has been before the country for the last twenty years. It has been brought up by the Royal Commission which reported in 1901. Both of the hon. Members opposite who spoke of the Report of the Royal Commission seemed to have forgotten that the Report was by no means a unanimous document. There were no less than three Reports of that laborious Royal Commission. There was the Report of Judge O'Connor which was simply a single-tax report; there was the Report of the majority of the Commission, which was in all respects in accordance with the wishes and desires of the hon. Member for Fulham (Mr. Hayes Fisher) and the Noble Lord (Viscount Helmsley); and, lastly, there was the Report of the minority. It is true that the Minority Report carried far more weight than the Majority Report. It was signed by Lord Balfour of Burleigh, Sir George Murray, Sir Edward Hamilton, and Professor Stuart. The minority reported on the lines upon which the whole subsequent agitation as to the rating of land values has been based. After that Commission reported in 1901 Bills were Drought before the House of Commons repeatedly—a Conservative House of Commons—urging that land values should be rated. These Bills passed their Second Readings with Conservative votes, and when the hon. Member for Fulham comes forward and says he believes that in certain cases it would be right to rate land values he is only echoing what many Members of his own party actually supported in the Lobby of this House. The very fact that the hon. Member for Fulham supports the rating of land values in certain cases should make him very chary indeed of 208 saying that the proposition we are now putting before the country is unjust. When the Royal Commission reported in 1901 that by no means closed the investigation of the subject. It is the custom on the benches opposite to pass over in silence the Report of the Select Committee, presided over by the Lord Advocate, on the Land Values (Scotland) Bill, which consisted entirely of Members drawn from both sides of this House. That Committee reported in favour of changing the basis of rating so that rates should be levied on land value alone, instead of the annual value of land and buildings together. It is on the Report of that Committee that the subsequent agitation as to the rating of land values has gone. I cannot help thinking that the right hon. Gentleman who moved the Amendment has never read the Report of that Committee or the evidence which was given before it, I am quite certain the Noble Lord has not read it, because he got up and defended a local income tax—a suggestion which was simply pulverised in the evidence given before the Select Committee.
§ Viscount HELMSLEY
I am perfectly aware of what the Report says. At the same time, it has become more and more clear that something of the kind will have to be done.
§ Mr. WEDGWOOD
May I ask if the Noble Lord has read the Report of the Select Committee on the Land Values (Scotland) Bill?
§ Mr. WEDGWOOD
I was saying that you had not read that Report or the evidence given before the Committee.
§ Mr. WEDGWOOD
The right hon. Gentleman did not recommend a local income tax. That theory was pulverised by the Report of the Committee. If the Noble Lord would read the evidence he would see that the proposal is wholly impracticable.
§ Mr. WEDGWOOD
I am sorry I was not told that this Debate was coming on. I will read the cross-examination of Mr. Harold Cox by the Secretary for Scotland (Mr. McKinnon Wood):—I understood you to say that in your opinion, with the qualifications that you expressed in your answers, all rates are ultimately paid by the landlord?—Yes, they tend to diminish his income.209They tend to diminish the rent that he receives?—Yes.At the end of your evidence you suggest that the true remedy for the present state of affairs is to substitute, as I understand, a general income tax for rates?—Yes, a local income tax.That income tax would fall upon land, buildings, and other forms of personal property?—I would rather put it, as I am sure the chairman would put it, that it would fall upon all persons, from whatever source their income was derived—wages and everything.Then you would agree, of course, that an income tax like that would free the landlord from the personal burden of rates which you think he ultimately bears?—Yes.And you think that would be a fair system?—No, I do not think it would be a fair system; but my evidence, through some slip, was stopped at that point. If you read on in my précis you will see that I provided for that point.I merely take your evidence as you gave it to-day?—I have got your point on the very last page of my précis. There I say distinctly what you say: that this charge would relieve the landlords of their ultimate liability for all rates on fixed property, and therefore, in addition to a local income tax, there would be established a local death duty on fixed property, and also local taxes on transfer.Have yon considered whether that would absolutely meet the difficulty of putting new burdens on other people and relieving the landlords?—One would try to adjust it as equally as one could. I am not in the least anxious to relieve anybody from his existing burdens, except so far as yon relieve the whole community together. Where a man has contracted to pay a rate he ought to pay it.But this is not a question of contracting; this is a question of taking an existing burden off the shoulders of the landlord and putting it on other people?—Yes.And you suggest trusting to luck to get it back again?—I would not trust to luck.You do not get it back until succession to the property or death takes place?—Yes.I am glad to have it clear that that is your suggested adjustment of local rating?—But I do not propose that you should immediately substitute a local income tax for all existing rates. I propose as a practical measure that you should put on your local income tax for any new increase that you want in revenue, leaving local rates as they stand to be gradually replaced.That is to say, that no increase of rating, in your opinion, should fall upon the land?—Yes, I would not increase local rates at all.So that your theory is the exact opposite of the theory of the people who advocate the taxation of land values?—Yes.They wish to put more on the land on the basis of land value, and you wish to put less?—I believe that there is no reason why persons who own land should be taxed at a higher rate than other personsAnd if there is going to be an additional tax, do not let it fall on the landlord, but let it fall on other persons?—No, I do not want to relieve the landlords; I say let it fall all round. I am very strongly opposed to relieving landowners, and I think that much recent legislation has been very unjust.You would agree with me that the effect of a general system of Grants from the Exchequer is to put a new burden on the taxpayer and relieve the landlord?—Yes, I hope the Committee clearly understand that I do not want to relieve existing landowners of their existing burdens.
§ Viscount HELMSLEY
I do. May I explain that I do not think that that in the least controverts what I have said, because I do not agree that the rates ultimately do fall on the landlord. A great many farmers now pay them.
§ Mr. WEDGWOOD
It is a matter of economics. Perhaps you would like the 210 opinion of Mr. Henry Chaplin on that point. This is what he said in the House of Commons on 27th February, 1891:—The occupier pays a certain sum for the use of the land, and in that sum are included rates as well as taxes. The effect on the owner is that if the rates are high he gets less rent, and if they are low he gets more rent, and I maintain that it would not be difficult to show that ultimately the whole burden of the rates falls upon the owner of the land and upon nobody else.Do you want any more? This is the opinion of the late Lord Goschen:—It has been correctly held as an axiom that rates on lands constitute a kind of rent charge upon those lands for the benefit of the public. You, however, ignore these hereditary burdens altogether. … Your plea includes the relief of the owners of land from burdens which they had borne for centuries, which have entered into the selling value of those lands and have been taken into account in every transaction connected with them.
§ Mr. WEDGWOOD
When you buy or inherit land you buy or inherit certain responsibilities and liabilities. Among the liabilities are the upkeep of the poor, and the charge for education, and main roads. Those liabilities are taken into account in the purchase price you are prepared to pay for land.
§ Mr. WALTER LONG
The hon. Gentleman ignores the fact that the charge for the maintenance of the poor was levied on personalty as well as realty, but personalty now escapes by Act of Parliament passed annually by this House.
§ Mr. WEDGWOOD
The right hon. Gentleman knows perfectly well that personalty has escaped for 200 years, but when land has changed hands the liability was perfectly different, and they knew they had to bear the Poor Rate. The right hon. Gentleman who introduced this asked four definite questions which I would like to answer. The first was: Is there sufficient land value to pay the local rates? That question shows that the right hon. Gentleman has not read any of the economic arguments or any of the pamphlets brought forward in favour of this change, because after all what we are doing is not attempting to levy an additional charge on property. We are merely saying that those rates which are at present levied upon property should be levied in a different way upon that property; that you are not going to raise a larger sum total in the year than was raised before. You merely call upon the different ratepayers to contribute according to a different scale. You are asking them to con- 211 tribute not according to the annual value of the composite subject but according to the sale value of the land alone. There is no increased charge put upon the owners of property than if all the land is at present put to its best use in the locality. There would be no decrease in land value by reason of the change in the tax.
The present land value is land value subject to the payment of so many thousand pounds a year towards local taxation. If you are not going to raise more than that so many thousand pounds after the change the land value will still be subject to the charge of so many thousand pounds. It will really mean that the money is being levied in a way to encourage the development of the property instead of in a way to discourage the development of the property, and it will mean that a man who is holding his land back from use, the man who is keeping his land ripening for building or the landlord who starves his land of labour and capital, those people, because they are not making the best use of the land, will pay more, and the owner of the property which is thoroughly developed, the man who has made two blades of grass grow where one grew before, the man who has put up good farm buildings, will be called upon to pay less than at present. In that way land values as a whole will not be reduced by the change in the system of taxation, provided that, as happens at the present time, land values are not bolstered up by an artificial reduction in the supply of land available for use. Of course, if many free landowners round a town will not sell the land then the value of the land of the good landowner who is supplying the land is artificially bolstered up by the withholding of the other land from use. I quite admit that this change in the basis of rates by unlocking the land of the free landowners who hold up land reduces the price that the other good landowners would be able to get at present, but in that sense only will the total value of land be decreased by the change.
§ Mr. WEDGWOOD
The basis upon which we propose to levy the rates is not the assessable site value where minus values are shown, but the full site value which will not take into account feus, tithes, or any permanent charge upon the land, so in that case there would be no 212 negative site value. That only arises where you deduct from the full site value the capitalised value of the feu or the chief rent upon the land. I think it was the Noble Lord who said that the change would be for the benefit of the millionaire who owns the large house in the parish. He took the case of the village of which we have heard so much, which has been valued by Mr. Chester Eves. The whole evidence has been given by him before the Committee, and it can all be read when the evidence is published. I wish to deal with the case of the millionaire who owns a large house in the parish. I will take as a concrete example the case of Chatsworth. The house and grounds at Chatsworth are rated at £712 a year. Around Chatsworth there are 427 acres of park land. That is assessed at 10s. an acre. Outside that again there are 419½ acres of woods and plantations which are assessed at £95 15s. a year, which works out at just about 4s. 9d. an acre. So that there are some thing about 850 acres of land there assessed at under £1,000 a year, or just about £1 3s. per acre. I have not got the figures for farms of land outside, but I should expect that the figures for them would not be much less than £1 3s. an acre, so that even in the case of Chatsworth where the house is worth I suppose up to £500,000, the alteration in the basis of rates will not mean any relief in local rates to the owner of the house. But, of course, if you take a millionaire who not only is the owner of the one big house in the parish but is the owner of property in London as well, such as Devonshire House, you will see there how the change in rating will lead to—
§ Mr. PRETYMAN
I would point out that the hon. Gentlemean is not taking the case given by my Noble Friend. The hon. Member is taking the case of a mansion together with a large quantity of land. My Noble Friend gave the case of a millionaire who owns a house with very little land.
§ Mr. WEDGWOOD
I am very much obliged to the hon. Gentleman. I am taking the case of a mansion with a large amount of land, but you will see that it is a mansion worth £500,000. I will deal later with the case of the millionaire who has a house with half an acre of land, and it will be seen that the same principles hold good. The next question asked by the hon. Member for Fulham was whether we respect contracts or not. If he will 213 read the evidence he will again see that the people who pay the rates at present will pay them in the future, but they will merely pay them on the new basis, and, therefore, there will be no call for contracts to come in. Then I come to the justice of the change, which is the most important thing of all. The whole basis of our argument is not that you should tax people according to their ability to pay, but according to the benefits they receive. When you go into a shop to make a purchase the shopkeeper does not charge you for the service he renders according to whether you are a rich or a poor man When you go to a dinner you are not charged a guinea or half-a-crown, according to whether you are a duke or a peasant, but according to the actual value of the dinner. It is much better to charge people according to the value of the benefit received, than to tax them according to their income from whatever source it may be derived. According to this system of taxation, for the first time people will be charged according to the benefits received from the expenditure of public money. Where expenditure of public money on a park benefits the landlords, they will pay higher rates because of the benefits received, and the authorities would be perfectly justified in placing the rate for that park on the land value of the district. In the same way, a cheap tramway service benefits the community and increases the land value, and we are justified in taxing that increase of land value caused by the expenditure of the money of the community on the tramways.
I come to the case of the Poor Rates, and I say that the expenditure of money by the guardians increases the value of land. It must be so when you come to take the origin of the Poor Rate. When the Poor Rate was first instituted the country was swarming with tramps, and the landlords who ruled the country in those days were perfectly justified, from their point of view, in instituting the Poor Law, in order to do away with the insecurity to life and property which resulted from these roving bands of tramps. Even now, if we abolished in this country the Poor Law, and the tramps had nowhere to go to, and there was nothing for them but to starve in the streets, the people who would suffer would be the landlords and not the people of the country. The whole of their property would diminish in value because the people would not choose to live in a locality where there was no 214 relief from Poor Rate. In the same way, with regard to education. Where a man gets his children educated for nothing, he is prepared to pay a higher rent than he otherwise would, in order to reside in that locality. But if everyone had to pay for the education of his children the amount which now comes out of the rates, people would not be able to pay big rents; the rents would be less, and there would be the burden of education upon the workers. When you come to two places, a town where the rates are high and the government is good, and another where it is evilly governed and taxes are non-existent, you will see at once that larger rents are paid in the well-governed town in preference to paying the cheaper rents, and living in the badly governed town with all its inconveniences. You see, therefore, that good government and wise expenditure of the rates has translated itself into land value; so that we are perfectly justified in basing the rates on land value. We tax not according to the ability to pay, but according to the benefits received.
I come now to the house of the millionaire, with its half-acre of land. A man will pay less under this system than he is paying at present in the particular locality where the house is situated; but in the particular locality from which his money comes he is likely to be a good deal more severely reached than he is at present. You tackle his income at the source, and not according to the use he makes of his income. [An HON. MEMBER: "How?"] He gets his income from mines, from town rents, or from other sources, and you deal with that income at its source. In dealing with it according to the use made of it and the benefits received you are not doing any injustice. You are encouraging a man to put up a good house; he employs bricklayers, furniture-makers, paper-hangers, and plasterers; he increases the employment of the community. By inducing him to build a good house you are increasing the employment of the community and the wealth-producing power of that community, and you never can be far wrong if you increase the wealth-producing power of the community. In regard to agricultural land our proposal is to give the local authority, whether in town or country, the power to levy the rates on land value instead of on the present composite subject. The county council in the North Riding I do not suppose would put rates on land values, but in the West Riding I think they would.
§ Mr. WEDGWOOD
The present assessment area. If the parish council levies the rate on the parish, it will be able to use the new site value of valuation as the basis on which they have the right to levy. Each rating authority will have the option of levying their rates in the way they choose, and there will be no dictation or compulsion on local authorities.
§ Mr. LANSBURY
I beg to second the Amendment to the proposed Amendment. It is not necessary to go into the subject at great length, after the speech made by the Mover. So far as London is concerned, this is a very important question. I understand most hon. Members opposite who represent certain poor London boroughs are with us in demanding that land values in London should be used for the relief of rates. The question is not one that affects only the workmen. It affects as well, and to a very large extent, the smaller manufacturers and the smaller shopkeepers. We are sometimes told that some of us on this side are not very practical in the propositions we make to the House. I venture to say that there is no more practical proposition, from the point of view either of the small employer or the small shopkeeper, than that the ground landlords of London should bear some share in the administration of the affairs of this great Metropolis. In each of the boroughs of the Tower Hamlets—or rather in the divisions of the boroughs of the Tower Hamlets, and certainly in West Ham—every small shopkeeper feels increasingly the burden of rates that are placed upon his shoulders, rates for certain purposes which are more or less national, but which they are bound to face all the time. Suppose you take off, as we are all bound to admit that the Government did take off, a very large proportion of Poor Law expenditure through the granting of old age pensions, yet the mere upkeep of places like West Ham, or places like the Tower Hamlets or Bethnal Green or Shoreditch, from the point of view of cleansing, of sanitation, lighting, and all other necessary services, is an increasing burden on those people who happen to remain there. We have all to remember that one of the things happening in London just now, and it has been the tendency for the last thirty years, is that anyone who can afford to live outside does so. Thus the shopkeepers have only the very poor, 216 or the comparatively poor, to rely on as their customers, and, on top of all that, they have to bear this burden of practically the whole of the cost of upkeep.
Take the case of the small manufacturer who puts up his factory, or puts in another piece of machinery, which is at once assessed at the rateable value, while a tax is levied on the industry that the man is trying to conduct. The result is that in every one of those districts, whether well administered or badly administered, they are crying out about this burden. The ground landlord all the time gets off scot-free. I do not want this afternoon to call him names or to say anything about him, except that he gets off without paying a cent towards the upkeep of the district from which his ground rents are drawn. I will repeat something for the benefit of hon. and right hon. Gentlemen opposite, which I stated to the House last year, and which is an absolute fact. In the East End one of the most noted of the ground landlords is selfishly holding his land until the whole of the leases can fall in, when the property that other people have built will drop into his hands, in order to destroy the whole site and erect mansions to let out in flats for the Jewish population that it is hoped will come out to live there. This particular gentleman is a member of a church which he will be very eager in the Upper House to defend just now. That church appealed for a little piece of land, but because it would spoil his plans for developing the land that little piece has not been forthcoming, and the church has had to keep itself right away down a back street where it is practically useless. Not only does this gentleman, and hundreds of others like him, not bear his share in local work or local administration, either in paying for it or in giving service to it, since they pay and do nothing at all, but the people who stay there and pay ground rents to him improve his property, and without whom his property would be absolutely worthless, and build houses and build factories, put in sewers, make streets light, provide education and recreation for the people who live there. All that is done to better and improve the land on which the people are living, and from which those ground rents are drawn. There can be no equity in that. This is not a question of landlordism or no landlordism. It is a question of making the landlord bear his fair share of the cost of improving the property from which he draws his rents. Therefore I want to shift the burden of rates on to them entirely and off 217 the industry of the people who do the work of the community, and to put them on the backs of the landlords, who, so far as I can see, in the East End only draw the ground rents. I have great pleasure in seconding the Amendment to the proposed Amendment.
§ Lord ALEXANDER THYNNE
I regret that the hon. Member for Newcastle-under-Lyme (Mr. Wedgwood) should have moved his Amendment at such an early stage in the proceedings because I recognise that it will, to a great extent, limit the discussion before the House. At the same time I do not think that there is anything incompatible in the hon. Gentleman's Amendment with what is, after all, the main object which my right hon. Friend the Member for Fulham (Mr. Hayes Fisher) has in view. I hope that the representative of the Treasury will note that throughout this discussion from this side of the House up to the present, and I believe from all quarters of the House hereafter, it will be seen that what the local authorities in this country really desire at the present moment is an undertaking from His Majesty's Treasury on three points. In the first place, that we shall receive from the Departmental Committee which is at present sitting an interim report; in the second place, that His Majesty's Treasury will take an early opportunity, and I may say by an early opportunity we hope in the next Budget, to give an interim grant to meet the more urgent aspects of this very serious question. The third point is a point which I am sure the Mover of the Amendment will agree with, and that is that we hope that His Majesty's Treasury will see their way to publish the proceedings of this Departmental Committee, and at once. A very curious state of things has been revealed this afternoon. Most of us, and in fact I may say all of us on this side of the House, are completely in the dark as to what is taking place on that Departmental Committee. But I think we have had indication that there are Members on the other side who are in a more fortunate position with regard to this matter.
§ Mr. WEDGWOOD
Directly the Committee was announced I asked to be allowed to give evidence. In course of time I was called and gave evidence, otherwise I know nothing about it.
§ Lord A. THYNNE
I do not wish to make any personal attack on the hon. 218 Member, but he disclosed during the course of his speech that he was fully cognisant with Mr. Eves' evidence and with his cross-examination.
§ Lord A. THYNNE
That does not alter the fact that some hon. Members on the other side stand in a more fortunate position with regard to the Committee than we do on this side of the House. What is really important is that there are a number of very competent gentlemen throughout the country engaged in local government who are very deeply interested in this question who would like to follow the proceedings of this Committee day by day. It is very difficult indeed to master an intricate question of this sort when it is presented to you in the form of several volumes of evidence at the conclusion of the sittings of a committee. It is far more easy to master such a question if you are enabled to see the evidence, as is often the practice in regard to Departmental Committees, at more frequent intervals. I do not wish to follow the hon. Member in the academic discussion with which he introduced his Amendment, but I could not help being interested in noticing that he based a great part of his argument on the contention that taxation of this character should be calculated on benefits rendered and not on capacity to pay. The whole range of recent writers on finance, from Professor Bastable, the great English authority, to Professor Wagner, who enjoys a reputation no less great in Germany, and Professor Leroy Beaulieu, the eminent French economist—they have all laid down explicitly that the one sound basis of taxation is capacity to pay, and not the benefits received. In fact the whole of my contention against the present system of rating in this country is that it is to a large extent based on the benefits received and not on capacity to pay. Is the hon. Member who seconded this Amendment, and who is interested in London affairs, prepared to accept the theory propounded by the Mover as the sound theory for London Government? If he is, what happens to the whole principle of equalisation of rates in London?
§ Mr. LANSBURY
I regret that I was not paying the attention I ought to have been, and I did not catch the Noble Lord's question.
§ Lord A. THYNNE
I was asking, if the hon. Member accepts the theory that the basis of taxation should be the benefits received, how can he contend that the West End of London should be called upon to pay a substantial contribution towards the cost of administering the poorer districts in the East End?
§ Mr. LANSBURY
Because the West End draws its dividends and its profits from the East End, and spends them in the West End and other places.
§ 2.0 P.M.
§ Lord A. THYNNE
That is a very remote and intangible contention. It is the first time that that argument has been brought forward in support of the principle of equalisation. Those of us who have supported that principle hitherto have done so on the precise ground that the capacity to bear taxation was greater in the richer districts than in the poorer districts. I think the Secretary to the Treasury will agree that the whole principle of equalization of rates in London depends on the bedrock principle of taxation being based on capacity to pay. In regard to the case of Chatsworth, the Mover of the Amendment quoted picturesque figures as to the value of the mansion itself as compared with the small assessment for local rates. I will leave out the very common and right contention that the low assessment of the land and a house of that character does not really materially affect the problem, because the probability is that the occupier of such a mansion as the principal ratepayer in the district. The point I wish to make is that rating is based on rental, and the rental value of a house of this character is practically nil.
§ Mr. WEDGWOOD
I was not saying that the owner of Chatsworth had unfair treatment. The fault is in the system of rating. I complain, not of the duke, but of the system.
§ Lord A. THYNNE
Quite so. I was pointing out that a house of this sort is not, so to speak, an article of common consumption, and there is no standard rental. Such a house would be a very difficult house to let, and it is very problematical what the rental would be. In 220 many cases it has paid the owners of large houses to let them for comparatively small sums in order to save the cost of upkeep. Take the parallel case of Trentham, which also is a very costly house, and probably cost nearly as much as Chatsworth to erect. Not only has it not a rental value, but nobody will take it as a gift.
§ Lord A. THYNNE
That I cannot tell. I am glad that the consideration of this question has not been confined to London. We all recognise that London has a very great grievance and suffers under a sense of injustice in regard to this matter. But the position is just as acute with regard to local authorities in the provinces, and I should like to deal with the matter from the point of view of the county borough and the administrative county. Whenever the representatives of provincial authorities meet in conclave, one of the principal questions for discussion is always the relation between Imperial and local taxation. Only yesterday the Council of the Association of Municipal Corporations met, and the principal resolution passed was to this effect:—That in view of the constantly increasing amount borne by local authorities for services of a national character, while Government Grants-in-Aid remain stationary, they wish to urge by fresh representations to the Treasury and the Chancellor of the Exchequer the necessity of more adequate relief to local burdens, the weight of which—And I call special attention to this particular clause:may compel local bodies to decline to accept fresh duties of a similar nature unless furnished with adequate Grants with which to discharge them.That, especially the latter part, is a very serious resolution to have passed. Let me remind the right hon. Gentleman that this Association is not political in any sense of the word. It is very largely composed of what I may call prominent municipal civil servants. It is very largely composed of town clerks, and it is reinforced by gentlemen who take a prominent part in local government in their own districts. Many of these—I will not say the majority—are fervent admirers of the Chancellor of the Exchequer, and are in hearty agreement with his general policy. Another very significant fact regarding the importance of this question is what transpired in the Debate last year on a similar Amendment to the Address. If the Secretary to the Treasury will recall what happened last year he will remember that on both sides of this House there was, I will not say an attack, but general criticism of 221 the Government. From his own benches various Members interested in local government besought the Chancellor of the Exchequer to give them some relief. There was then perhaps the most healthy manifestation of independence of opinion that I have had the pleasure of witnessing since I have been a Member of this House. That that independence of opinion did not find expression later that same afternoon in the Lobby may have been due to the weight of the party machine, or may have been due somewhat to the delusive promises with which the Chancellor of the Exchequer concluded the Debate.
The result, as all Members of the House are aware, of the discussion was a Departmental Committee which has been sitting in secret conclave during the last few months. As I said at the beginning of my remarks, we are not asking now for a fresh inquiry. We are making three definite requests. We are asking for an interim Report from that Committee. We feel it has already sat sufficiently long to enable it to make some interim Report. We are asking for interim Grants to meet the more pressing necessities of the case. We are, above all, asking for publicity to be given to the proceedings of this Committee. We feel that the time for inquiry has passed. We feel that the whole question of social reform in this country is being held back by the condition in which local authorities find themselves. I would ask the House to consider for a moment the position of a member of a municipality under the existing state of affairs. Every year Parliament is placing new burdens upon his shoulders. He is called upon as as individual to give up more and more time to local administration. At the same time, Parliament year by year places further and further burdens upon the local authorities. You are thus placing a double onus upon the shoulders of those responsible for municipal administration—more demands upon the time of the individual member, and more demands upon the local public purse. The member finds himself in this position: he may be a zealous enthusiast for social reform; he may recognise that in the interests of the health and good government of the town or city that it is his privilege to live in, a heavy expenditure is necessary for purposes of housing or for public health generally; but the pressure from the ratepayers, whose representative he is, is so great that he finds he is obliged to curtail his expenditure, and he is not able, with 222 the best will in the world, owing to that pressure from the ratepayers, to administer some of the Public Health Acts as efficiently as he himself thinks they ought to be administered. The reason for that is not far to see. It is due, in spite of frequent promises from the Chancellor of the Exchequer, to the failure of the Treasury to meet their obligations in this matter.
I do not wish to trouble Members with any very elaborate figures but the House will remember that when the Royal Commission of 1901 reported they made certain not very drastic recommendations. Not one of those recommendations have yet been given effect to. Eleven years ago this matter was urgent and vital! No effect in the intervening years has been given to these recommendations. If some effect had been given oven to the recommendations of the Minority Report considerable relief would have been afforded the local authorities, and the position today would not be so acute as it is. Let me point out that if you compare the expenditure in the year 1892, and that for the year ending March, 1908, on Services which were either defined by the Royal Commission to be wholly or partially national in character, or which fall under that category, you will find that in that period they have increased by 85.2 per cent. During the same period the Grants from the Imperial Exchequer have only increased by 18.7 per cent. That in itself shows the way in which Parliament to-day is ever pressing further burdens upon the shoulders of local authorities without giving them the funds with which to discharge those extra duties. I may point out that during the period 1890–91 and 1906–7, whilst there has been an increase in gross expenditure of 125 per cent. there has only been an increase of 38 per cent. in rateable value, and there has been a general rise in rates to the extent of 114 per cent. I think these figures are sufficient for my purpose to show that the position is becoming acute, and is deserving of the very serious attention of the Chancellor of the Exchequer.
I feel that the Amendment moved by the hon. Member (Mr. Wedgwood) does not really meet the question we have to consider at the present moment, because it is not a question of adjusting the rates as between respective ratepayers, but it is a question of trying to bring home to the large class who at present escape rates altogether their responsibilities. I should like to point out what a large proportion 223 of our national wealth at the present moment escapes these obligations altogether. I believe it was computed some years ago that land and houses in this country constitute about 20 per cent. of national property. The rates at the present moment of expenditure for local purposes is borne to the extent of 82 per cent. by one class of property only. In order to show that that class of property bears an excessive proportion of this expenditure more than it ought to be called upon to bear, if it was calculated in proportion to its capacity to pay, I may point out that this same class of property only bears 17 per cent. of national expenditure. That is to say, that when you assess these obligations of property on its capacity to pay as you do in relation to national expenditure you only feel justified in calling upon it to bear 17 per cent., but when you bring it under the old-fashioned and anomalous system of rates existing in this country you call upon it to bear 82 per cent.
My third argument is that the yield of a penny in the £ in Income Tax is equal in amount to about threepence in the £ on rates, and the argument I deduce from that is that about two-thirds of the property assessed for Income Tax to-day escapes these local rates altogether. Under our present system of rating the way you tax a man forms no criterion at all as to the amount of wealth he possesses. Take the two best-known instances. Take a landowner and a house owner in this country who pay a very large sum in rates and take a man who is equally wealthy, perhaps more wealthy, but who derives large proportions of his income from abroad. His capacity to pay taxation may be greater than the landowner and house owner, yet the one escapes altogether, while the other has to bear practically the whole burden. When we take the criterion suggested by the hon. Member opposite, namely, the benefits received, surely we may claim that in such matters as education, poor law, main roads, police and other Services which were classed by the Royal Commissions as preponderatingly national in character that the man deriving his income from foreign investments has as real an interest in the efficient maintenance of these Services as the large occupier of land in this country.
Successive Chancellors of the Exchequer and successive writers on finance have devoted a great deal of attention and in- 224 genuity to attempting to place some part of this burden upon the owners of movable property in this country. I cannot sympathise with the Noble Lord who seconded the Amendment to the Address in his suggestion for local income tax, because, personally, I do not believe that local income tax would be practical in its operation or would meet the case. I may point out that the general conclusions that everybody has come to on this matter is that the only way you can deal with this question is either by means of Grants-in-Aid from the Imperial Exchequer or by Parliamentary assigned revenue as adopted by Lord Goschen. It is therefore from the point of view of adjusting the taxable relations between the owners of immovable property and the owners of movable property, who at present escape practically scot-free, that I ask the Chancellor of the Exchequer to consider this question. In conclusion, let me say those of us who are interested in this question from the point of view of the local authorities desire to emphasise this point, that it is not a question of abstract justice as between those two classes. At the present moment the whole question of social reform and local administration is so handicapped and retarded by the inability or refusal of the Treasury to meet this point that the matter in some of the great industrial centres, especially where housing is required, has become very serious, and it is for that reason that we ask the Chancellor of the Exchequer not to wait until he is able to produce a complete solution of this question, but we ask him in the forthcoming Budget for an interim Grant to meet the pressing need of the present time.
§ Sir LUKE WHITE
The discussion this afternoon must have impressed Members of this House that the question of local taxation is one of the most difficult and intricate questions that can be undertaken. In considering the Amendment and the Amendment to the Amendment, I may say I occupy a somewhat independent position. I have always looked upon the question of local taxation not from a mere party point of view, but from the position of the ratepayers of this country, and I shall certainly give my vote against the Amendment to the Amendment, because I think we should get no further in our claims if we supported that proposal than where we stand at the present time. In fact, I do not think that the Amendment to the Amendment is in any shape or form a practical proposal. 225 The hon. Gentleman (Mr. Wedgwood) who moved it must admit that his proposals would simply allow every rating authority throughout the country to either carry out or abstain from carrying out his principles if embodied in an Act of Parliament. I think we should have more confusion then than we have at the present time with regard to local taxation. I now come to the Amendment before the House. If it is pressed to a Division I certainly shall give my vote in favour of it, but I hope and trust that the Chancellor of the Exchequer this afternoon will make an announcement that some Grant will be made to meet the great expenditure which is now being borne by the local ratepayers in regard to national Services. We have had reference made to the Reports of the Royal Commission. Anyone who has studied and given careful consideration to these Reports will recognise that if one thing was made clear in the Minority and Majority Reports it is this: that with regard to local rates they should be considered from the point of view of national Service and local service, and they reported that expenditure on national Services should be as far as possible in accordance with ability to pay, and should fall upon the national Exchequer, but that expenditure upon local services should fall upon the locality in proportion to the benefits rendered. It is admitted in all quarters of the House that national Services include education, poor relief, main roads, police, and other Services. At the present time it is quite true that the National Exchequer does provide and does give to local authorities throughout the country Grants-in-Aid of each of those national Services, but we say they do not give sufficient for the purpose; that the local burdens with regard to these Services have been so increased, especially with regard to education, that to-day there is an outcry for some more generous Grants from the National Exchequer towards the expenditure on local Services than exists at the present time. We are willing to wait until this question of local taxation is dealt with, and we await the report of the Departmental Committee which is now sitting, but we say that in the meantime and before that report is issued, and before we have other legislation, there is an increasing demand, and we ask to-day through this Amendment that some higher Grants should be given in aid of local taxation than are given at the present time.
226 In considering this question of local taxation various points have been considered to-day. I appeal for extended Grants not only to our large towns, but to all the urban authorities throughout the country. I specially ask for an extended Grant to our great counties and agricultural districts. I remember the occasion when agricultural land received a Grant equal to one-half the rates as they existed in 1896 under the Agricultural Rates Act. I heard some laughter below the Gangway when that question of the Agricultural Rates Act was mentioned, and there was an observation to the effect that the amount given under that Act did not go to the people who ought to have it, but that it went to the landlords of the country. I do not represent the landlords, but I do take an active interest in all questions affecting agricultural land. When I first obtained a seat in the House of Commons now twelve years ago, I stated then and I repeat now, that there may have been a few exceptions here and there, but on the whole the people who got the benefit of the Agricultural Rates Act were the people who were occupying the agricultural land of this country. I remember ten years ago when that Act was placed upon the Statute Book, it was to exist for five years, and during that time Parliament pledged itself to deal with the whole question of local taxation. I remember that Parliament did not carry out its pledge, and at the end of five years a proposal was made that the Agricultural Rates Act should be renewed, and I think I was the only hon. Member sitting on the Opposition side at that time who supported a renewal of the Agricultural Rates Act. I have lived to see a Liberal Government renew that Act, and it remains upon the Statute Book to-day. There may be reasons why they did renew it, and there was a very good reasons why they opposed its renewal in the first instance.
In our agricultural counties you have a large urban population as well as a large rural population. The principle of the Agricultural Rates Act was that in 1896 you gave from the local authorities to the National Exchequer an equivalent of half of the rates then borne by agricultural land, and you rated land henceforth at only one-half its value. The principle adopted then ought to be carried out now, and it is to-day a great injustice to the urban population in our counties that agricultural land is not receiving from the National Exchequer one-half the rates 227 which exist to-day, but only one-half of the rates as they existed in 1896. In dealing with this question of local taxation we have to remember that it is best for the success of agriculture, best for the interests of the landowner, the farmers, and the agricultural labourers, that we should endeavour as far as we possibly can to make agriculture successful. We can do something towards this by relieving it of these national burdens which it ought no longer to bear. In these days we are often told that if you place a tax upon an industry that industry can pass it on to the consumer as the case may be, and the person paying the tax will recoup himself from the purchasers to whom he sells his goods. That cannot be done with regard to agricultural land, because the price of agricultural produce in this country is regulated by the importation of produce from abroad; and therefore we ought to look upon this question in a different light, and remember that the more we can make our agriculture successful, the more we benefit, not only our agricultural districts but the great teeming populations in our great cities and towns. I hope that the Amendment to the Amendment will be rejected, and I trust that we shall hear from the Treasury Bench some statement that in the next Budget a further Grant will be made in relief of the local ratepayers until this great question of local taxation is thoroughly dealt with.
§ Mr. HARRIS
Like the hon. Gentleman who has just sat down, I object to the Amendment which has just been moved by the hon. Member for Newcastle-under-Lyme, who has really drawn a red herring across the path. The object of this Debate, if it is to be a useful object, must be not to designate the precise means by which relief is to be afforded to the ratepayers, but to urge the Government to grant that relief. It is for the Government to make up their mind as to what measures ought to be taken to grant this relief, and it is only evading the real point by endeavouring to indicate what the means should be. The hon. Member for Newcastle-under-Lyme pointed out that there had been issued a Majority and a Minority Report, but both of them agreed that the ratepayers were entitled to look for relief from the Imperial Exchequer. They differ as to the means. The Majority report recommends that it should be done by assigned revenues, and the Minority Report suggests that it should be done by 228 contributions from the Consolidated Fund. We do not want to-day to go into those matters; we want to come to what is the real point. What is the Government going to do? The great difficulty we have in this matter is that the Government always admit in a most handsome manner the claim of the ratepayers for relief, but they always evade it in an equally persistent manner. The Government when dislodged from one position invariably take up another. The Chancellor of the Exchequer has declared in the very frankest manner the claim of the ratepayers to relief. He said, in 1909:—It has become almost a social question, for the municipalities are at the end of their resources, and their work is almost at a standstill in many of these areas. … The local ratepayer has been promised consideration by successive Governments, and he is surely entitled to it. I think I can safely say that the financial proposals which I shall lay before the House will enable me to make good that promise.When the right hon. Gentleman placed his proposals before the House they contained nothing for the relief of the ratepayers, in spite of the fact that they contained a proposal to tap the very source of revenue which had always been designated, especially by Progressives and the Radical party, as the most important means of giving relief to the ratepayers, namely, the taxation of site values. The right hon. Gentleman who has lately become the Secretary for Scotland (Mr. McKinnon Wood) laid that down most clearly in one of his election addresses for the London County Council. He said:—I regard the taxation of ground values as the most important source of relief to the occupying ratepayer. In face of the strenuous opposition of the Moderate party, the Local Government and Taxation Committee have elaborated a practical scheme which has been laid before His Majesty's Government.When the Government presented that scheme it contained no proposals for the relief of the ratepayers. We all know why. That came, I am bound to say, as a considerable shook to the ratepayers. I think it was a considerable shock to many hon. Members on the other side of the House. Undoubtedly great pressure was brought to bear upon the Government, and it had a certain amount of effect, because the Government took up a new position. The Chancellor of the Exchequer said he realised it was not merely a question of so many pounds, it was a question of recognising the special interests of the municipalities in these Land Taxes. He, said:—Their special interest ought to be indicated by some words in the Finance Bill. I am prepared to recognise 229 that view, and I stated yesterday that in my judgment the half of these taxes should be allocated for local purposes.A Clause, as we know, was inserted in the Bill which appeared in a sense to allocate hall of these taxes to local purposes, and we know upon the very highest authority that was a very wise decision, because the Prime Minister, speaking on the Budget, said:—When you adjust the strictly local portion on any basis you like to choose, you will be more and more disposed to agree that the Government has come to a wise decision in dividing the fund between the local and the central authorities.The effect of what the Government did then was very valuable to them from an electioneering point of view, because they were able to say at the Election in January, 1910, and at the county council elections, that they were relieving the ratepayers to the extent of one-half of the Land Taxes, and that that had a very important bearing. I think I may venture to quote an hon. Member who used to sit in this House, Sir John Benn. He expressly stated that that had a most important effect upon the election:—The Land Clause of the Budget helped us not a little in our fight. The desire to assist the Chancellor of the Exchequer in his effort to get something for us" (that is, the ratepayers) "out of the ground values of London meant many votes.It meant many votes, and they got many votes; but after the Election the Government took up a new position. They abandoned what the Prime Minister said was the wise decision of dividing these taxes between the Government and the local authorities, and they ceased to recognise, as the Chancellor of the Exchequer said he was going to do, the special interests of the localities in the Land Taxes. They took up a perfectly new position. The new position was that they must deal with the whole problem. The Chancellor of the Exchequer said there was a general sense of dissatisfaction with the position, and he proceeded:—What is the good of £1,500,000 to settle this problem? That is perfectly right. We have got to settle the problem.And he went on to say the best plan was not to appoint a Commission or a Committee.We have had Committees and Commissions galore all taking evidence, all reporting, all making suggestions, and nothing is ever done. I therefore thought it was no good going through the farce of appointing more Commissions to take evidence and get conclusions which are not acted upon, but I thought the time had come for the Government to act upon its own responsibility. I then decided to summon together quite informally a number of experts rather to advise the Government, or to give their opinion to the Government, as to the best way of dealing with the problem.230 That seemed a very reasonable suggestion, but we now know this Committee is going through the farce and is taking evidence. It is taking a long time about it, tout I suppose some day it will report and some day some action may be taken. That is going to mean a very great delay, and this Commission seems to me to have all the disadvantages of a Royal Commission in the matter of delay and none of the advantages, because the evidence is being taken in secret. It may be perfectly one-sided evidence, and it is therefore not likely to lead to thoroughly good results. I think the time has come for the Government to really act upon their responsibility, as the Chancellor of the Exchequer himself said. What is the reason for the delay? The Government and their supporters have surely made enough promises to the ratepayers. They have recognised the grievance of the ratepayers in the clearest possible manner, and I think the time has really come when the Government should make up their minds that the words they used to the ratepayers butter no parsnips and relieve no rates.
§ The SECRETARY of STATE for the HOME DEPARTMENT (Mr. McKenna)
I intervene only for one moment in order to answer partly the challenge and partly the appeal made by the right hon. Gentleman the Member for Fulham (Mr. Hayes Fisher) with regard to the London police rate. I say at once that the Bill which was introduced and carried through the House last year and rejected in another place will be introduced again immediately. The right hon. Gentleman asked whether the proposal under that Bill to increase the limit of the rate on London by 2d. was necessary. The answer to that point is shortly this. Of that 2d. one penny will probably have to be raised immediately in order to meet the current expenses of the police. If we are to go on recruiting to enable the men to enjoy one day's rest in seven, it will be absolutely necessary to increase the cost of the police by such an amount as would entail an addition of 1d. to the rates. All recruiting has now been stopped. Even after stopping, as I have been obliged to, all recruiting, not only to meet the deficiency on account of the one day's rest in seven, but the recruiting for any ordinary addition to the force, our revenue is not sufficient to enable us to meet our ordinary expenditure. It would not have required an additional penny to enable us to make both 231 ends meet if we discontinued recruiting. If I am to reopen recruiting in order to enable the police to get the boon which Parliament has promised them I shall have to ask London to pay an additional rate of a penny. It is necessary in prudence to take power to raise the second penny for two very simple reasons. In the first place, if we have industrial troubles in London, there will be an additional cost for the police, and, secondly, we cannot be sure whether there may not be a further falling off in the Exchequer contribution accounts. For these two reasons it would not be safe to limit the power of rating to the penny which is absolutely necessary. The appeal which the right hon. Gentleman made touched the question as to whether the expenditure on the London police is used for the benefit of any other part of the country. I can assure him and the House that whenever any of the Metropolitan Police are lent outside the London district the expense is not borne by the London ratepayers. The contribution of the full expense is made, or should be made, by the local authority which borrows the police. In any case in which the local authority borrowing the police fails to pay the bill that bill will be paid by the Exchequer, and in no case would the cost fall upon London. It is obvious we should never be justified in lending the police at the expense of London.
§ Mr. HAYES FISHER
May I ask the right hon. Gentleman whether, if the police are used as they have been used recently, it would not be necessary for him to keep up a much larger number of police, and whether any portion of that extra cost will not fall on the London ratepayers?
§ Mr. McKENNA
The point is a very good one for the right hon. Gentleman to take, and I can assure him it has not escaped the authorities at the Home Office. The numbers of the London force are now determined by the actual necessities of London, but if there is no special demand for the police in London it is obvious that with a force of close upon 20,000 in London there are often periods of the year when you have a margin of a few hundred men you can lend, provided you do not have to bear the cost of them. I can assure the right hon. Gentleman there is no case where the Metropolitan Police Force is lent outside London in which any of the cost will be borne by the London ratepayers. I hope I have been 232 able to satisfy him. The right hon. Gentleman was not in the House when I began, so that I may be allowed to state again that the Bill which was introduced last year, and which failed to meet with approval in another place, will be reintroduced by me again immediately, and I trust we shall be able to get it through the House without delay, in order that I may re-open recruiting for the London police for the purpose of giving the force the one day's rest in seven.
§ Mr. WALTER LONG
I wish to say, in the first place, that we are indebted to the Home Secretary for the statement he has just made. It is obvious, in the face of what he has said, as the Minister responsible for the peace of London and for safeguarding all the vast interests in London, that it would be impossible to object to the course which he has taken. But looked at from the point of view of the Debate in which we are engaged, it does strengthen and emphasise the Amendment moved by my right hon. Friend, because it makes it even clearer than it possibly could have appeared before that the present relations between Imperial and local expenditure are so unsatisfactory, and so much behind the necessities of the times that in a moment of difficulty, when the Minister responsible for the safety and the interests of London considers it necessary to increase its police force, he is compelled, whether he wishes it or not, not only to re-introduce a measure which imposes an immediate rate of one penny on London, but he has also to provide against such an alteration in the existing state of affairs as would mean that the State would pay less, and therefore London would have to pay more. That being so, while the right hon. Gentleman was fully justified in making the statement, and while, speaking with the high responsibility attaching to his office, he tells us he is bound to do this in the face of certain eventualities, it is obvious that we cannot criticise or oppose the action he is called upon to take. But it makes our demand even more emphatic than it was before.
The Chancellor of the Exchequer is to be much sympathised with. As the result of the Debate to-day he has had a variety of counsels given to him from both sides of the House. Taking those of his own side first, the hon. Member for Newcastle-under-Lyme (Mr. Wedgwood), with splendid disregard for the history of the rating question, told him and the House that as the land had always borne the rates, they 233 were an hereditary burden no one had any right to complain of, and that they should at least be continued, if not increased. I understand that the hon. Member for Bow and Bromley (Mr. Lansbury) took exactly the reverse view. He said that the rates are paid by the unfortunate occupiers and not by the landlords, and that therefore they ought to be put on the landlords. These are decidedly conflicting views, and I sympathise with the Chancellor of the Exchequer in the difficulty with which he is confronted by the common ground of action between the different proposals made to him by his supporters. On this side of the House the same difficulty is to be found, because my Noble Friend (Viscount Helmsley) advocated a local income tax, while other friends of mine criticised that proposal and pointed out, what I believe to be the true View of the case, that that proposal is not one that could be entertained by any responsible Government. I believe it is not practicable and that it will not have the effect which they and others desire. But while the Chancellor of the Exchequer deserves our sympathy, he himself has created some of the difficulties with which he is confronted. Hon. Members opposite made merry over a statement made by my right hon. Friend and Leader in this House the other day in his speech on the Address, but my right hon. Friend and Leader is not the only one who has made statements that they have not been able to fulfil. The language of the Chancellor of the Exchequer has been quoted, the language of Ministers in the House of Lords has been quoted, and never in this House or the other place have more emphatic and outspoken statements been made, and never has there been a more complete failure to fulfil the promises made.
It is not only that in this respect a distinct promise was made and not carried out. The Chancellor of the Exchequer has created difficulties for himself. Those who have followed the Local Taxation Debates for more than a quarter of a century find that the situation has altered for the worst to-day by changes which the Chancellor of the Exchequer has himself made in regard to the question of Imperial taxation. When we started the consideration of this difficult question it was held that there were two different ways by which the burden of local taxation might be relieved—one by continuing and improving the system of subventions, and the other by allowing local authorities to 234 find some fresh sources of revenue for themselves. That second proposal, for which many of us on this side of the House had considerable favour, has been practically destroyed by the action of the present Government, who have drawn into the Imperial net new sources of taxation while they have by their legislation constantly cast upon local authorities the burden of fresh expenditure. They have failed to keep up the contributions out of the Exchequer, and, in addition to that, they have deprived local authorities of any chance of securing new sources of contributions for their own expenditure. By their own action, consequently, the situation has been worsened. I am not going to quote any figures. They were given in the admirable speech in which my hon. Friend moved this Amendment, but I think everybody will agree that the burden of the rates is now not only excessive, but that it is intolerable. We live in an age when social reform is on every man's lips. Everybody is an advocate of social reform at one time or another, and anybody who has studied in the most cursory manner the social position of our people in town and country cannot be blind to the fact that there is an urgent need for reform.
What stops that reform? It is the fact you cannot carry out the work you want to do because it can only be done at the expense of the rates, and those rates cannot bear any additional burden being thrown upon them. I venture to say that no Poor Law Reformer"—and this is conspicuously the case in our country districts—will deny that there is an urgent demand for a thorough overhauling of our Poor Law system. We have too many workhouses for the population in rural districts, and in many cases those institutions are thoroughly unsuitable for the reception of the people who have to live in them. I will undertake to say that the Local Government Board now, as in my time, is in receipt of reports as to the condition of workhouses which ought to be replaced by new buildings and amalgamated with other institutions. But what is the obstacle to doing that? It is stopped by the fact that in many cases the unions are absolutely unable to bear the burden of the expense. The guardians dare not throw on the local rates the heavy expenditure. It means that the burden of your rates has become so heavy that it is a check on those social reforms which we are ever ready to advocate, but which while advocating them 235 we do not fully realise we are advocating reforms that are to be carried out at the expense of others. It is not only that in social reform that the present burden of rates is a check on progress and improvement. When we come to those sources of expenditure to which reference has been made by the hon. Member for the Buckrose Division of Yorkshire (Sir Luke White), it is not only in respect of expenditure which may be regarded as necessary for social reform, but in regard to expenditure on the police, the maintenance of roads, and education. In all these questions we find that the local authorities are called upon to bear an altogether undue proportion of the charge. What the hon. Member for Buckrose said is absolutely true; the time has come when you cannot delay differentiating between the different burdens which fall upon local authorities. The maintenance of the poor is quite a different affair to what it was when the Poor Law was first created, or when it was reformed in 1834. Education has changed in an infinitely greater degree, and when we come to the roads of the country there is a still greater change. Modern forms of locomotion and traction have made the roads practically the common property of the country. The hon. Member for the Buckrose Division referred to the main roads, but there are many roads now throughout the country which have not been made main roads, but which are used for traffic of a public and national character, and which have to be locally maintained and the burden of the maintenance of which is an intolerable one for the locality.
Then in regard to the methods of local expenditure on education and the maintenance of roads. I say that the time has come when this House must realise that the limit has been reached in regard to local burden. It is useless for hon. Gentlemen to deliver speeches in which they advocate social reform or the provision of good roads to enable modern traffic to be carried on unless they are prepared to face the fact that they must support a scheme for the division of these various burdens between those which really belong to the locality and those which belong to the nation and should be treated as national expenditure. I know the Chancellor of the Exchequer will tell us he has made, in some of the changes he has effected, alterations which are of great value to localities. There is the 236 Development Grant for instance. But this, unfortunately, does not mean relief for the rates. On the contrary it actually means—it is not the fault of the Chancellor of the Exchequer, and I am not blaming him for it—I am dealing with this matter in a non-controversial spirit—but the establishment of a great central commission endowed with funds to enable it to carry out a certain class of work, does not mean a reduction in the rates. On the contrary, it actually means a new expenditure which, if carried out, will add to and not diminish the rates.
Take the latest example, a wholly excellent one, of which I read in the papers the other day. The Road Board propose to allocate a sum of over three-quarters of a million with a view to making a new approach to London on its western side. But the estimated cost of this new approach is said to be something about two millions sterling, and I would ask where is the rest of the money to come from? How is this great national improvement, because it is a national improvement, as anybody who knows anything about the western approaches to London, will admit, to be provided for. Undoubtedly in view of the present congested state of our traffic, a great central roadway would be of enormous assistance in aiding the circulation of trade. My question is, how is the difference between the Grant from the Road Board and the ultimate expenditure to be met? Of course it can only be met by an increase of the rate.
§ Mr. LONG
I know that if the hon. Member had his way, he would like to play the part of Cromwell; he would like to clear out of the House of Commons all these baubles and remain here by himself. By a wave of his wand he would bring about the millenium, and we should have all these roads and everything else that was necessary by the simple form of a tax on land. He told us just now that he meant no harm to the owners and occupiers of land. On the contrary, he is a real beneficent fairy who desires not merely to provide for all this expenditure, which puzzles Chancellor of Exchequer after Chancellor of Exchequer, but to do it in such a way as would really add to the peace and comfort and prosperity of the land-owning classes. All I can say is that the hon. Gentleman has been preaching this doctrine for a good many years, in and out of the House, and I do not think he 237 has yet found any unfortunate flies amongst the land-occupying classes who have been in the least inclined to walk into his parlour. I think they know very well that if he did become possessed of the powers to which I have referred, and were to bring his own special reforms into existence, he might make new roads and confer many benefits upon the country, but he would absolutely destroy those classes who are dependent upon the land for their living at present. Therefore I do not think his remedy is likely to attract large attention.
What I was pointing out was that even where, as in the present case, the Chancellor of the Exchequer has made Grants which are to be used for local purposes, the difficulty of the rates comes in, and if these Grants are to be made full use of it can only be by an addition to the rates to make up the difference between the Grants and the total expenditure. Therefore this rating question is one which cannot be put off. The Chancellor of the Exchequer held these views himself a few years ago, and stated them in the most emphatic way. All that has happened since of importance, with the exception of one or two minor Grants, is the setting tip of this Committee. When the Committee was accepted by the then Financial Secretary to the Treasury last year, it was suggested, first of all, I think, by the hon. Member for St. Pancras, and finally adopted, it was urged on the Government by Members on this side of the House that if they were going to fall back on this Committee, which had been rather dismissed from the list of suggestions by the Chancellor of the Exchequer on a previous occasion, we hoped it would be with the deliberate intention of making the inquiry a short one and having the Report before us in order that action might be taken in this House. May I press on the Chancellor of the Exchequer that if this Committee is to prolong its investigations we ought at all events to have published the evidence on which they are going to found their Report. We ought to know, if they are to have so great an effect on the ultimate settlement of this question, what is the evidence they are taking in order that we may ascertain how far the conclusions at which they arrive are based upon the opinions which they may previously have held; and I hope that, as the Committee has been really put rather in the position of a Royal Commission now in regard to the importance of its Report and recommendations, 238 we shall at all events be in a position to judge what it is doing and have the evidence placed at our disposal.
May I suggest something else to the Chancellor of the Exchequer? I hope it will not be impossible to bring before the Committee the desirability, if their investigations are to be prolonged much further, of issuing an interim Report. It would be quite possible for the Government to act upon such interim Report and to take some steps which would show the country that they are determined at the first possible moment to do something definite in respect of this question of local taxation. It is, I think, eleven years since the Royal Commission reported and nothing has been done. I am not referring to this as a controversial question, and I am not throwing the blame for doing nothing on this Government any more than on its predecessor. This is a question which is above party politics. Every day in our country districts complaint is made of the need for some great reform, such as water supply or a drainage system, and every day the discovery is being made that something of that kind is necessary in the interests of the health of the district. What happens? You have country villages day by day faced with an expenditure which, I say deliberately, the ratepayers in that district cannot possibly bear, and therefore this work will not be done. No attempt has been made by Parliament to define the difference between the immediate and the remote benefits. You are actually calling upon people under your existing law to pay for such reforms, out of which they get no benefit at all. There are plenty of cases in the country where a farmer occupying a farm outside the area is called upon to pay rates on his holding for water supply or drainage or something of that kind in respect of which he cannot derive any possible benefit. It is not fair, and you cannot expect men to go on carrying out work of this kind so long as this injustice remains. I believe the two most urgent problems are, first, the division of the benefit. A national benefit which the whole country enjoys—that is to say, a main road, or a road which is used as a main road, has ceased to be a local affair altogether. I believe education has ceased, owing to modern methods of locomotion, to be a local affair. I believe the incidence of the cost of the relief of the poor ought to be radically altered. These are matters which call for immediate decision by Parliament, and having done that you must 239 find some means of making your Imperial contributions so that the greater part of the charge shall not fall on the local authorities. I know what this means. It means obviously some increase in taxation. Everyone dislikes that. The difficulty is undoubtedly a very great one, and I do not wonder at any Chancellor of the Exchequer hesitating before undertaking the burden. But succeeding Chancellors of the Exchequer and succeeding Governments have committed themselves to the statement that there is now injustice and that this injustice must be removed, and I say you have got beyond the stage at which you can take refuge in the fact that it is very difficult or cannot be done without serious addition to your Imperial taxation.
The hon. Member (Mr. Wedgwood) and I had a brief controversy during his speech over the old question of the incidence of the Poor Rate. I altogether deny the accuracy of his description of the present state of things. The burden was originally one, undoubtedly, intended to fall upon all classes of property according to the ability of the taxpayer, and it was only because the hon. Gentleman knows very well you could not find the personalty, and it was only to relieve those who had to levy the charge from a task they could not perform, that this House passed the Bill, which is annually passed, which relieves personalty. If it was an injustice two or three years ago that the person should escape it is infinitely a greater injustice to-day. The hon. Gentleman talks of the origin of these taxes. He knows very well, as a careful student of the question of local taxation, that when these local taxes were originally proposed land occupied a totally different position from that which it occupies to-day. In the first place it was almost the only class of property. And what came out in the Report of the Royal Agricultural Commission a few years ago? Everyone remembers the feeling of amazement in the country when the figures of the present Lord Milner, who was then at the Board of Inland Revenue, were produced. So startling were they that some of our leading newspapers and men whom were thoroughly conversant with the subject threw doubt upon their authenticity. They showed that in a comparatively short space of time there had been a complete revolution in regard to the value of land and the value of other classes of property, and that personalty and realty had changed places, and yet at the present 240 moment you are virtually in the same position that you were in then in regard to the contribution which personalty makes to the relief of this burden. My hon. Friend said, with a force which cannot be gainsaid, that the owner of personalty gets as much enjoyment out of local expenditure as the owner of realty. But I did not follow the answer which the hon. Member for Newcastle-under-Lyme (Mr. Wedgwood) endeavoured to make to my hon. Friend. My hon. Friend dealt with the common case of the owner of personalty who is rated only upon the house he occupies, although he may in a dozen different ways, directly or indirectly, get enormous benefit out of the local expenditure, it may be in half-a-dozen parts of the country, or it may be in the part where he has his own house. But he makes no contribution in aid of that local expenditure.
§ Mr. WEDGWOOD
If the right hon. Gentleman will read the evidence given before the Commission he will find that point dealt with.
§ Mr. LONG
It cannot, alter this great fact that whilst these taxes have been steadily increasing, while Parliament has been laying fresh burdens on the taxpayers, compelling them to spend money an certain directions, and urging a certain standard, personalty has been increasing enormously and realty has been decreasing. The Noble Marquis at the head of the Board of Agriculture was never tired of talking about the great boom in land. I know something about the boom in land. I have just sold some land. Among the farms I sold were two which I bought in 1880 and 1881. I got very little more than half of what I gave for these farms, although they would have answered the description given by the hon. Member for Newcastle-under-Lyme as regards the state of the buildings. Well, in these circumstances, where is the boom in land? I, as a land investor or speculator, or whatever you care to call me, do not find any boom, having paid £10,000 for land in 1880 and 1881 for which I only got back £5,000 in 1912, having spent at least £1,000 241 on the land in the meantime. I do not know whether the Chancellor of the Exchequer's experience has been similar to mine, or by what process of calculation he will arrive at what the Increment Tax on that land ought to be.
This is the same all over the country. [An HON. MEMBER: "What about the cities?"] The hon. Member may know more than I do about the cities. I have not so much experience in the cities as in the country, but I am told that even in this Metropolis of London land has shown a remarkable fall in the course of the last few years. If you take the country as a whole, and if you take the figures produced by Lord Milner, you will find that while taxation has been growing every day, and while fresh burdens have been put upon the ratepayers, the difference between realty and personalty has been going on in favour of personalty, and yet no attempt is made to bring personalty in except by certain Grants-in-Aid. Various suggestions have been made to-day as to the remedy. I wish to say, in conclusion, that we have had enough promises—we now want something in the shape of performance. We want to know what evidence this Committee are taking. We hope that every effort will be made to get an early Report from the Committee. The Chancellor of the Exchequer will say it is impossible for him or any Minister to press the Committee to come to a conclusion. At all events, the effect of this Debate will show, I hope, that the Committee should present their Report with as little delay as possible. Therefore I ask the Government not merely to tell us that they sympathise and realise that the difficulties are genuine, but that they will, as soon as they can get the Report—and may it be very soon—deal with this question in a large manner, realising that the grievance of the ratepayers is very large. This question until it is dealt with will be an obstacle to social reform which we all desire, and which this House is constantly expressing a desire for. Unless you deal with this question, you will hamper everything else, and it is therefore in the general interest of the community that I support the Amendment and call upon the Government to give their hearty support to the question.
§ Mr. LLOYD GEORGE
No one in this House speaks with greater authority upon this question than the right hon. Gentleman who has just addressed the House, and in the well-informed speech to which 242 we have listened I feel that he has made a real contribution to the solution of the problem. I must say that I was rather disappointed at the speech made by the Mover of the Amendment, who has first-hand knowledge of this subject. I was disappointed that he did not rather give the House the results of his experience and the real history of the subject rather than devote his time to a mere party attack, which is futile and barren when discussing this exceedingly difficult problem. It is not quite as simple as some may imagine. One hears the suggestion made that the whole problem would be solved by contributions given out from the Imperial Exchequer. We have heard a great deal about the demands made on local authorities to carry out reforms and improvements in one direction and another. But the demands are not confined to municipalities. Anyone who has been at the Treasury knows perfectly well that there is not a day when there are not demands coming from all quarters of the country for Grants for one purpose or another from the Imperial Exchequer. These demands, if granted, involve expenditure. However strong may be a Chancellor of the Exchequer's views with regard to these demands—I do not care who he is—ho cannot resist the whole of them.
I remember that Lord St. Aldwyn when Chancellor of the Exchequer had the reputation of being a strong resistor of the demands made upon the Treasury from any quarter, and no doubt he made a very excellent fight against most of the demands. But the expenditure went up from year to year, and that is the history of the Department under every Chancellor of the Exchequer. The right hon. Gentleman the Member for East Worcestershire (Mr. Austen Chamberlain) knows from experience of the office which I now hold how demands come pouring in, and how when you come to consider each, taken on its own merits, it is generally for some good purpose. I think very few demands come which could be said to be perfectly preposterous. We always feel in regard to each of these demands that if it was the only one coming before the Exchequer we would accede to it. But the Chancellor of the Exchequer is not quite free to consider on its merits each particular demand that comes before him. He has to consider what he can do and what is the particular concession which for the time being cries most for aid, and he has to do his best within the limit of his resources.
243 The tale we have heard about pressure upon local authorities is the tale which every Treasury can tell, whether it is an Imperial or local one. It is not a question between the Imperial Treasury and the local one. The grievance is as between one ratepayer and another. I have heard a great many suggestions with regard to the increase in expenditure. The right hon. Gentleman the other day attacked the Government for the increase in expenditure during the time we have been in office. I am not making this as a party point, but I am mentioning it with a view to examining this problem. If anyone looks at the increase in expenditure he will see that in regard to the vast majority of cases it is in reference to things which the House as a whole is pressing for; and, so far from the Exchequer having acceded to the demands made by the House as a whole, it has always been found that the Exchequer is a restraining influence whatever party is in power and whatever Minister is in charge. It is simply a process of cutting down, and not a process of going in advance of public opinion. That is the problem we are face to face with. Taking the question of subsidies for Grants-in-Aid, if at the time the subsidy is made you had in the same Bill a proposal for raising the money, if the tax and the Grant were contained in the same Bill, I do not think there would be found the same keenness for Grants-in-Aid. That is really what the difficulty is. You have always got the pressure of the expenditure of the money in one measure, and then comes the proposal for raising the money, and those who are perfectly unanimous in their pressure for spending the money are equally unanimous in resisting any measure for raising it. That is why we object to anything in the nature of an interim report which will simply suggest an additional Grant of one or two or three millions to the local exchequer. When the question comes to be considered, it has got to be considered all round. It has to be considered with a view to the best method of raising the money as well as with a view to the merits of the position between the local and the Imperial Exchequers.
The suggestion has been made that we should take over as national Services such matters as education. That, on the face of it, is a very popular proposal, but just reflect upon what the effect would be. When a Service is a national Service there is competition between the localities for expenditure. Suppose you made the whole of 244 the education Service of this country a national Service, you would have competition between localities for schools and representations from local authorities as to the desirability of extending schools, enlarging them, and increasing the cost of the staff, and in a very short time expenditure would be double what it is at the present moment in this country. Now you have a check when part of the expenditure is borne by the persons who control the expenditure. Take the point raised by the right hon. Gentleman in the course of his speech. He complained of Article 14. That, as I understand it, is a Minute by the Board of Education to reduce the size of the classes in London. They used to be fifty, and the proposal is to reduce them to forty. The right hon. Gentleman said he approved of that, and thought it was a very useful Minute, in itself, and taken on its merits. But what he objected to was the burden upon the ratepayers. Supposing, instead of the burden falling upon the London County Council it fell upon the Imperial taxpayers, upon the Exchequer. The right hon. Gentleman would come here and press for Article 14. Certainly he would not have been here to criticise it. On the contrary, he would have said, "To reduce from fifty to forty is not enough; the classes are still too large. As a matter of fact you cannot teach a class of forty. You ought not to have a class of more than thirty." I think he rather indicated that that was his personal view, but, being a member of the London County Council, and the burden falling upon the London ratepayer, he has got to balance in some way, he says, on the one hand the interests of the child, and on the other hand what the ratepayer is capable of bearing, and he considers both, and it is right that he should consider both. Therefore I think when—
§ Mr. LLOYD GEORGE
On the contrary, they have got a great deal to say in the matter. They have been fighting the thing very hard for some time—that is my information—and this is really, as far as I can understand, the result of a compromise between the county council and the Board of Education, after a considerable struggle going on for some time. The resisting power of the county council, I can assure the right hon. Gentleman, is very considerable. I am only pointing that out in 245 order to show that there is a real danger in present circumstances in throwing the whole burden of exclusively national Service upon the Imperial taxpayer. Everybody knows what happens in the case of the Post Office—that the effort is, in any given district, to have as much money spent as possible in that district, out of postal revenue, on the post offices—[An HON. MEMBER: "Out of profits."] Not always, because in the agricultural districts there is a great loss, though in some districts there is a profit made, but that is the real danger of anything in the nature of putting the expense of roads or education or anything of that kind on the Treasury, because there would not be the same check as there is at the present moment. I have indicated that in the judgment of the Government it is not so much a question between the Treasury and the municipalities as a question between one individual ratepayer and another; and when pressure is going to be put upon the Treasury to make such Grants, it is only an indirect method of squaring the account between one ratepayer and another. By coming to the Imperial Exchequer for a contribution you are able to get something out of personalty, you are getting something out of the Income Tax, you are getting something out of the working man: it is not therefore a question between the two Treasuries; it is rather a question between two classes of the community, and if you are able so to reform your rating system as to make it possible for municipalities within their own area to equalise the burden, there will not be the same case, and there will not be the same demand upon the Imperial Exchequer, and I am not sure that that is not the method by which we ought to seek to remedy the present situation. The present method, I think, is perfectly extravagant and a very haphazard one. You have the municipalities complaining. They come to the Treasury, the Treasury just ladles out a million or two, leaving the localities to spend it. It does not equalise matters; it does not give them any substantial relief, and it is very rarely used for the purpose of reducing the tax.
It is often used for the purpose of increasing expenditure, because one Treasury has got the responsibility of raising the money and the other treasury has got purely the responsibility of spending it. It is a thoroughly bad principle. On no conceivable business principle is it warranted, and I feel that what is wanted, if we could possibly have it, is an impartial, 246 full, and non-partisan consideration of the problem of the best possible method of getting people to pay according to their means for the rates as well as the taxes. I would not like to prejudge the consideration of the subject. The Noble Lord said something about the local income tax. That is a very much more difficult subject than it appears at first sight. There are two objections to it. One is that you destroy a very important weapon which the Treasury have got now for the purpose of raising funds for the Exchequer. The moment you hand it over to the locality it ceases to be a great Imperial source. That is the experience of Germany. In the localities, and even in Berlin, the taxes are very high, and the Imperial Reichstag is practically excluded from the field of localities like Berlin, because the localities are so jealous when they put 2d. or 3d. on income tax for imperial purposes. They say, "You are depriving us of a source of revenue which ought to belong to ourselves." Therefore you have got a very great conflict between the localities and the Imperial Exchequer. The second objection is that it is almost impossible to raise a local income tax. Supposing you have got a local income tax in London you will find that the taxes are pretty high in London, as they are in the large cities of Germany.
All a man has to do is to live outside the area to escape. While the income tax burden falls upon the people who live in the area the man outside it escapes. No doubt they resort to that method very greatly in Germany, and it does not equalise the burdens, not between the rich and the poor, but between the very rich and the merely fairly well-off people—fairly well-to-do people, tradesmen and professional men who cannot go far outside and who have got to bear the burden that the very rich people, by going twenty or thirty miles outside the area, escape altogether. I was very much attracted by the local income tax at first, but when I looked into it I must say that the difficulties which suggested themselves seemed almost insuperable. Then there has been the proposal of a local death duty. I think there are difficulties even with the local death duty of a very serious character. It seems to me, as far as I have been able to examine the problem, that the real trouble is that the municipality has only one method of raising money. If a municipality wants more money for any purpose it has got to put it upon the basis 247 of a local assessment. It has no fair means of taxing men according to their resources. Take a tradesman. It is not merely a question of farmers, for whom a great deal is to be said, but the objection in the case of the farmer is equally sound in the case of the tradesman. You tax the farmer upon something which is his means of livelihood—that is an objection—but you are doing exactly the same with the tradesman. Take a man who has got a shop, assessed, say, at £200 a year, in a town of fairly large size. Let us say that 7s. in the £ on the rateable value of £200 is paid by that tradesman. You get the professional man, or a man with private means. One of them rents an office which is assessed at £40 or £50, and he is making an income far higher than that of the tradesman, while not paying one-fifth of the rates which the trader does towards the health and upkeep of the town, which is of just as much importance to the professional man as it is to the tradesman. Not only that, the professional man can go and live outside the area altogether. He can go and live in a rural district where the rates are only 2s. or 3s. in the £, and he thus avoids contributing towards the town where the most of his interests exist. That is obviously unfair—unfair to the trader and unfair to the farmer, and you have a feeling that the man is not paying his fair contribution towards the upkeep of the municipality.
What is wanted, to use a phrase which has been made popular in some quarters, is the broadening of the area of taxation in a municipal sense. I am not suggesting an octroi duty, for that would be a very unfair method of levying taxes and a very unpleasant one, but there ought to be a means of broadening the area of taxation so that the responsibility for the expenditure will fall upon the people who have eventually to levy the new rate. That is what you want. If the Chancellor of the Exchequer spends more money than the revenue he has got he knows he has to face Parliament and impose additional taxes. That is a very obnoxious duty to cast upon anyone. But that is exactly what you ought to do with the municipality. You make them feel that they are spending too much money, and that they themselves have got to levy the rate and not come to the Exchequer for a subsidy or Grant. These are things which I hope the Committee will examine, and examine thoroughly. I was asked that the Report should be made expeditiously. I hope the 248 Report will be made soon, but what I am much more concerned about is that it should be the result of mature reflection, that they should consider it thoroughly, that the work should be very well done, and that we should not have a patched-up Report which we cannot depend upon. The right hon. Gentleman complained of the composition of the Committee, and remarked that it was very largely official. I am quite prepared to admit that. It was not intended to be in the nature of a Royal Commission. That was not the idea. If it had been a Royal Commission the composition, of course, would have been of a different character. But this was purely a Departmental Committee to advise as to the best method of legislating on the subject, and we appointed those whom we thought best capable of dealing with the matter, and the appointments included town clerks and clerks of county councils, some of them being the very best men that could be found. The hon. Gentleman opposite is very anxious that the evidence should be published. I have not had time to consult the Committee upon it, but I believe they have examined a considerable number of witnesses. I believe an official of the county council is going to give evidence before the Committee. I do not see any objection at all to the evidence being published, none as far as I am concerned. I think I have dealt with most of the points raised. I am not going to enter into the argument between the Noble Lord and the Member for Newcastle-under-Lyme on a question which is of very considerable moment but which on the whole I think is irrelevant to this subject unless the hon. Members imagine that the Government are going to propose a single tax upon the land and upon the sites of this country. There is an Amendment down in the name of my hon. Friend which urges the case for the valuation of sites. My hon. Friend is very anxious that the valuation should be expedited. I think that is in the interest of everybody. It is in the interests of the revenue, because naturally you cannot collect the whole of the revenue until the valuation is completed, and I think it is in the interests of the landlord as well to have an end put to his anxiety and to get a period put to his suspense and to know exactly where he is. Steps are being taken to expedite the valuation and to complete it as early as we possibly can.
My hon. Friend will not expect me to express any opinion upon the latter part of his Amendment as to the question of 249 local taxation. I am anxious not to express any definite opinion until the Committee reports. It would not be fair because that would be expressing an opinion on the whole case before we have got the report of the Committee that has been appointed expressly to advise the Government on that particular subject. As my hon. Friend knows, facilities have been given to put their side of the case before the Committee, and all due weight will be given in the report of the Committee to his evidence as well as to the evidence of others who made suggestions for the consideration of that body. I should like just to add one word in conclusion upon this subject. The right hon. Gentleman who moved this Amendment and the right hon. Gentleman who spoke last, spoke about certain burdens which have been cast on the ratepayers during the last few years by legislation. I think the right hon. Gentleman who spoke last quite fairly admitted that that legislation proceeded from both sides of the House, but he rather suggested that that legislation had been accompanied in the case of the late Government by subventions from the Imperial Treasury, whereas in our case it has not. That is not quite accurate. Take the Education Act of 1902. That cast a very heavy burden upon the town councils of the kingdom and it cast a burden upon London alone, over and above any subvention of £350,000. Then there was the Relief Act. That cast another burden upon the county councils, and between the two there is an addition of £400,000 put upon the London ratepayer without any relief from the Exchequer. Take the burdens that have been cast upon the London ratepayers by our legislation. The feeding of children and medical inspection between them do not come to more than £100,000. I am not making this as a party point and I would not make it at all, unless the suggestion had been put forward. Whether it comes from our side or from the other side, those suggestions do undoubtedly cast a burden on the ratepayers, and the question to be determined I think by this House is—
§ Mr. HAYES FISHER
Will the right hon. Gentleman deal with a much larger item of medical treatment under Article 14, infinitely larger?
§ Mr. LLOYD GEORGE
That is not a burden, that is purely voluntary if they like to undertake the responsibility, and personally I should like them to do so. Let me remind the right hon. Gentleman 250 on this matter that I promised two or three months ago that there should be a subvention to those councils in respect of medical treatment. The right hon. Gentleman has overlooked that fact, but in the forthcoming Estimates he will probably find a sum of money.
§ Mr. LLOYD GEORGE
I think on the whole I had better pass that by. Let me just tell this to those in the House who judge me fairly to wait until they see the Education Estimates, and then I hope the right hon. Gentleman will apologise.
§ Mr. LLOYD GEORGE
It will be the first time the right hon. Gentleman has ever done it, but I should be very glad at any rate to have elicited some expression from him which will reflect credit on him. So that as far as medical treatment is concerned we have not merely promised definitely to make a subvention, but it is in the Estimates, and will be published as soon as they are out. So much for that point. I am only pointing it out, not by way of making a party point, but by way of answering a point which was a party point against us, and to show that the balance of the burden placed upon those councils is rather against the party who are making the criticism than against us. That is not an answer, I admit, to the problem with which we have got to deal. The answer to the problem with which we have got to deal is, first of all, that you have got to devise some method by which you will equalise the burden and by which yon will impose the burden of local taxation upon those who are best able to bear it. Personally I am against the method of Imperial subvention for that purpose. I think it is an extravagant method. I think it is an ineffective method; it is a method that simply increases the general charges on the Exchequer without leading to economy as far as the district is concerned.
I am strongly in favour of some method which would broaden the basis of taxation 251 so as to give to the municipalities the power to equalise the burden themselves, while at the same time casting upon them the responsibility as far as economical expenditure is concerned. Thus far can I go now. The House of Commons will realise we could not deal with it during the course of the present Session. We could not deal with it even if the present Session had been free from any complication until we received the Report of this Committee. It was my hope that we should have been able to deal with it last year. When I gave that pledge it was under conditions when I thought it was possible it could be dealt with. Events happened, over which we had no control at all, which raised issues of a much larger character, and, therefore, if it was not dealt with in that particular year, we are not entirely responsible. When I came to consider it I found there were too many questions to consider which had not been considered in all respects by the Royal Commission. There is the question which the Noble Lord has suggested about the local Income Tax and there are questions about the method of raising local taxation in other countries, and about the best methods of equalising the burdens of this country. Therefore I think it is to the advantage of the ratepayers, and of those who have the highest interests of this question at heart, that you should not hurry the House of Commons or the Government. We shall consider the matter as soon as possible, because it is a pressing problem, but we shall consider it on the Report of the very able Committee which is now sitting and taking evidence on the question.
§ Mr. BONAR LAW
I have certainly not risen—I hope I shall not disappoint my hon. Friends—with any idea of raising the temperature of the Debate. There has been nothing in the speech of the Chancellor of the Exchequer with which I do not in the main agree. We all recognise that this is one of the most important problems that could be dealt with by any Government. I at least quite recognise all the difficulties which have been pointed out by the Chancellor of the Exchequer. My sole reason for rising is that I disagree with the right hon. Gentleman on one point which he made several times. He spoke as if this were a question between the ratepayers solely, and it is to express my disagreement with that view that I have risen. It is really not solely a 252 question between ratepayers. It is quite true that where a municipality is wealthy enough by itself to cover all the expenditure, it is a question of the ratepayers; but everybody knows that the tendency has been for areas to exist where the population all round is so poor that, how ever the burden is divided between the ratepayers, it is not possible—
§ Mr. BONAR LAW
That is the only point I wish to put. That is one of the main difficulties. When we remember that these charges, which have been described as national charges, and which we all recognise to be such, are imposed by the House of Commons, then however much truth there may be, and there is a great deal, in the contention that you must have some local control in order to keep down expenditure—if I am not mistaken that has been dwelt on constantly by Lord St. Aldwyn—it is equally true that there are many districts which cannot bear these burdens on their own ratepayers alone. It is therefore an urgent problem that in some way or other this House, which imposes the burden, should find some method of alleviating the burden which it imposes.
§ 4.0 P.M.
§ Mr. CASSEL
The right hon. Gentleman said that there was constant pressure on the Chancellor of the Exchequer to make Grants for various purposes. No doubt that is true. But this particular demand stands on a special footing, because the Chancellor of the Exchequer has given pledges in respect to it. Two years ago the right hon. Gentleman said that it was an urgent problem, and promised that whoever stood at that box would deal with it in the following year. Lord Crewe in another place gave precisely the same pledge. Hence in regard to this particular demand the right hon. Gentleman has given specific pledges which have naturally raised the hopes of local authorities, and if pledges are to have any weight at all in this House this demand must be treated on a different footing and receive special consideration. The right hon. Gentleman did not attempt to explain away his pledges. Surely he is not going to run away from them. He says that the Committee which is now sitting must report. I accept that. But surely he can do something in the meantime to remedy the injustice which he admits exists, and not leave the ratepayers in 253 the position of having to pay more for national Services than they ought to pay. In 1901 the Royal Commission reported that the local authorities were paying £2,500,000 more for national Services than they ought to pay. If this Committee is to take years to report, something ought to be done in the meantime. At any rate, if we are not to have piecemeal legislation to relieve the ratepayers, we ought not to have piecemeal legislation to burden them. While the right hon. Gentleman refuses to give the ratepayers piecemeal relief he has no hesitation whatever in imposing liabilities by passing piecemeal legislation, injuring the only source of revenue which they have available.
The Chancellor of the Exchequer spoke as if my right hon. Friend had suggested that the whole of the expenditure in connection with education, the Poor Law, and main roads should be taken off the local authorities. My right hon. Friend made no such suggestion. It is a suggestion which would certainly not meet with approval from any quarter of the House. The proposition of my right hon. Friend was that the Treasury ought to bear its fair share of these national charges. The Royal Commission declared that the Treasury did not bear its fair share, and since then matters have got worse. In regard to education alone, in 1901 the Treasury bore 59.1 per cent. of the expenditure, whereas in 1908—the last year available—it bore only 49.4 per cent. The case we make is that in the meantime the balance against the local authorities is growing bigger and bigger. The right hon. Gentleman said that this question had to be dealt with from a large point of view, and to be looked at from every side. I entirely agree. The question of local income tax has to be considered. But among all the proposals and suggestions that have been put forward there was none that would impose a fair share of local taxation upon the man whose money is in foreign investments. I do not wish to raise this as a Tariff Reform point. It has nothing to do with Tariff Reform. It is a question whether it is a right or proper system of taxation to put too large a share of the local burden on the man who carries on his business in this country, quite independent of whether you have Tariff Reform or Free Trade. I should like the Chancellor of the Exchequer to bear that point in mind. In regard to any of the proposed schemes, apart from the suggestion of a local income tax, the difficulties of which 254 I fully admit, how does the right hon. Gentleman propose to make the man who derives his income from foreign investments pay his fair share?
It is not, as has been pointed out, a question as between ratepayer and ratepayer, but it is a question as between ratepayer and taxpayer. And why should the man who invests his money in land or railways in the Argentine not make the same contribution to education, the main roads, and the police of this country as the man who invests his money in English railways, or Consols, or other English securities? This point has nothing to do with Free Trade or Tariff Reform, and I think it is one that the right hon. Gentleman ought to keep before him when he is considering this aspect of the question. Any attempt to rate site value or anything of that kind would not in the least tend to bring in as to his fair share the man who invests his money abroad. With regard to local income tax, the right hon. Gentleman was, I think, in error when he said that the Royal Commission did not deal with it. I have the report here, and I have looked into it, and the Commissioners particularly considered it very completely, and reported against it as an impracticable proposal.
§ Mr. CASSEL
I do not know as to that, but I do know that they considered it wholly impracticable. The right hon. Gentleman then proceeded into what is controversial grounds. He rather put it that my right hon. Friend had made a party attack. I think it hardly did my right hon. Friend justice to suggest that, for I really think that he put the matter very temperately and from a non-party point of view what is a non-party question. When the right hon. Gentleman put it that education burdens were put on the ratepayer by the late Government he admitted that there a subvention was given. The point here was that this Government had put burdens on the ratepayer without any subvention at all. It is true that the subvention given left a margin of £350,000 for the ratepayer. The point we make is that this Government did not give any subvention. Not only had they not given a subvention, but the right hon. Gentleman overlooked what for London is a most important item—that is, that not only are burdens put upon the ratepayers of London, but the only source of revenue which they have has been damaged by the 255 Licence Duties. The rateable value has been diminished to the extent of £359,000 by the Licence Duties alone—of which, as my right hon. Friend beside me reminds me the Government have had the benefit.
It is all very well for the right hon. Gentleman suddenly to say: "I cannot deal with this question until the Committee has reported." The Committee may sit for five years. The Royal Commission sat for five years. If all the questions are to be considered by the Committee that were mentioned by the right hon. Gentleman the Member for Newcastle-under-Lyme and the questions which were raised by the Noble Lord who sits below the Gangway, there is very little hope of our being able to get a Report from that Committee for a very long time indeed, or being able to deal with the question. What we want the right hon. Gentleman to address his mind to is the interim period. The right hon. Gentleman tells us that he cannot deal with the whole of this question. I agree with him. I agree he cannot deal with it this Session, or probably next Session, or probably the Session after. But what we want him to consider is whether he will in the meantime allow this state of things to continue? No one has described this state of things more eloquently than the right hon. Gentleman himself. He described them to us when a deputation, of which I was a Member, went to him from the London County Council in 1909. He said:—Suddenly to put burdens upon the local authorities, to arrest their growth and local development, and to prevent them from really being able to carry out those things for which they exist to carry out—Is he going to allow that state of things to continue? We have had definite pledges before, and now the right hon. Gentleman tells us—and I accept it—that it is for reasons over which he has had no control that he has been unable to carry out those pledges, but cannot he do something for us in the meantime? Is local development to be arrested in the meantime? Are we in the meantime not to have these reforms carried out in connection with sanitation and housing upon which he dwelt so much when we were considering the Insurance Bill? When we were considering that measure the right hon. Gentleman said that it was for prevention more than for cure, and prevention depended on the immediate carrying out by the local authorities of their duties in connection with sanitation and housing. All that local development 256 of sanitation and housing is being arrested until the period when it can be dealt with on a wide footing and national basis after we have got the Report. Will the right hon. Gentleman do something in the meantime? Will he not do something to lighten the burden and to see that some adequate Grant should be made. Take the case of the Metropolitan Police. There London was treated in a way that no great local authority has a right to expect. The Home Secretary told us he intends to reintroduce the Metropolitan Police Rest Bill, but I hope he will not reintroduce it on the 6th of December, and that he will not introduce it without communication with the local authorities responsible for the area. He introduced it on the 6th December last year; he took the Second Reading at 3 o'clock in the morning on the 11th December, and he passed it through its remaining stages after one o'clock on the 12th December without one word of communication with the local authorities who were responsible for the money. That was treating them in a way that makes local government a farce. And if there has been any delay, for which there was no necessity in regard to the Bill to enable the police to get a rest day, the responsibility lies upon the Secretary of State for the Home Department, because if he had chosen to introduce that Bill in proper time he would have got the penny which he says is sufficient, and probably twopence if he asked for it. In any case he could have got the penny, so there is no reason why he should have delayed it. He can have that money if he gives the opportunity for proper discussion. Here another burden, amounting to £400,000 a year, was put upon the rates. There is plenty of time to do that, but in order to give a subvention the right hon. Gentleman says we must wait until the Committee reports. We were pleased to hear that the right hon. Gentleman is going to publish the evidence. I take it that evidence will be published at once.
§ Mr. LLOYD GEORGE
I understood the right hon. Gentleman the Member for the Strand (Mr. Long) asked that the evidence should be published when the Committee had finished its sittings. I did not understand him to ask that the evidence taken up to date should be published.
§ Mr. LLOYD GEORGE
Then I must consider the matter. I do not want to have any misunderstanding about it. I understood the right hon. Gentleman to ask that the evidence should be published when completed, but now I understand from the right hon. and learned Gentleman opposite that he asked to have it published up to date.
§ Mr. CASSEL
I hope the right hon. Gentleman's consideration of that question will be favourable, because this Committee is sitting secretly, and those who desire to express their views upon the matters with which the Committee are dealing are naturally in a difficulty unless they know what is going on. I appeal to the right hon. Gentleman if there are circumstances over which he has no control which disables him from fulfilling the pledge he gave, then, at all events until he is able to fulfil his pledge, let him see that no further burdens are put upon the local authorities unless some adequate Grant is made to enable them to bear them.
§ Mr. HICKS BEACH
The reply we have received from the Chancellor of the Exchequer was really as much as we could hope for under the circumstances. Having set up this Departmental Committee, naturally the right hon. Gentleman could not undertake to legislate now in the direction requested by us before receiving the Report of the Committee. Two years ago the right hon. Gentleman gave us a definite pledge that this subject would be taken up and dealt with by the Government.
§ Mr. HICKS BEACH
Two years ago the Chancellor of the Exchequer said:—Whoever stands at this box next year will have to deal with that problem and deal with it thoroughly.Having said that two years ago the least the right hon. Gentleman could have done was to take steps to carry out that distinct pledge. Seeing that he will get the Report of this Committee before the end of the year, I wish to ask if he will now give us an undertaking to introduce the necessary legislation in the year after this. The least the Chancellor of the Exchequer can do 258 now is to assure us that he will deal with this matter in a definite manner next year. I should also like an assurance that between now and the date when this problem is to be dealt with by legislation the right hon. Gentleman will see that neither his Department, nor any other Department of the public service, take any steps by issuing articles or regulations which will have the effect of increasing the charges upon the local rate. Though the Chancellor of the Exchequer may not actually impose a burden under the Department over which he has control, the other public Departments have a very quick and effective method of compelling local authorities to spend large sums of money simply by the issue of an edict from their Department. Take, for example, the Board of Education. No matter whether the demands made by the Education Department are of an unnecessary character or not, the Board insists upon local education authorities spending large sums either upon repairs to buildings, or some other absolutely unnecessary amount upon stationery or books, which the school managers do not want to spend, but which they are forced to spend on account of the demand made upon them by the Board of Education in London.
I am glad to realise, from what the Chancellor of the Exchequer has said to-day, that he fully appreciates our grievance. The right hon. Gentleman told us that the object of any reform of local taxation ought to be to get at personalty as well as realty, and he mentioned something about a local income tax. I do not think that is quite so simple as it appears on the surface. How are you going to deal with a man who has a business in the city and pays his rates in another area outside? What is going to happen then? Is he going to pay the local income tax twice over, or is the city to demand the whole amount and the county get nothing? Take the case of a man who happens to have a house in London and one in the country as well. Who is going to get his local income tax? Is St. George's, Hanover Square, or the county in which he happens to reside? Simply because a man happens to reside, either for business purposes or for the purposes of his duties here, in two parts of the country at the same time, is he to be taxed twice over. I think the Chancellor of the Exchequer will agree that the question of a local income tax is not so simple as some people try to make out. The Chancellor of the Exchequer also 259 rather led the House to believe that the people who were asking for the relief of local taxation and for national Services to be really national Services were asking for the whole of the cost of education to be paid for out of the National Exchequer. I do not think that demand has ever been put forward by anybody who has taken any interest in the subject. As long as any Service is administered locally, and there is local control, you must have some contribution from local sources towards it. Everyone will admit that.
There is a demand put forward that the Government should take over entirely the control of some other Services that are now administered locally. I would only refer to two, namely, the police and pauper lunatics. I do not think the local authorities would mind very much if the whole of the control of the police were taken from them. After all, as we have heard this afternoon, the London police is not entirely devoted to the service of London. They are transported from London to Wales and other parts of the country. I do not think the local authorities would mind very much if the whole cost and management of the police were taken from them and put into the hands of a central authority. Then take the cost of the lunatics. It is anything but a pleasant job to have to go round and inspect the asylums or to have to enter into the details of their administration; and, after all, I do not think lunatics ought to be a charge upon certain parts of the country any more than anything else. After all, they are a national misfortune, and it is everybody's business to see these unfortunate people should be properly looked after and cared for. I really think the local authorities would not raise the least objection if some Government Department were to take over the care and control of the lunatics. That would no doubt relieve the local authorities of a considerable sum raised locally, and I do not believe it would tend to the extravagant administration of that particular Service. The hon. Member for Newcastle-under-Lyme (Mr. Wedgwood) has, of course, advanced a panacea for all these troubles. His one simple remedy is to have a tax on land. I should very much like the hon. Gentleman to tell us what would be the actual effect on the rural districts, or urban districts with a rural fringe, of these alterations in the system of local taxation. As far as I have been able to understand it, 260 the effect will be practically to take away the burden from the factories, workshops, and houses in a particular area and put the whole burden on agricultural land. That is by no means a pleasant prospect for those who happen to own agricultural land. Those who own and cultivate it know perfectly well that if they have to bear this burden it will cripple their power of developing the land, and that if the landlord has to bear the burden his capital will be seriously reduced, and he will not be able to put up the buildings which the tenants are anxious to have, and which in fact, must be provided if agriculture is to be carried on in accordance with modern application of science and new methods. I should like to see this subject threshed out on some future occasion, and if the hon. Member can convince me that his system will promote the prosperity of any district I should desire to support him, but I think that would not be the case, and therefore I shall cast my vote against him.
This is a subject which it is somewhat difficult to deal with briefly. I do not think the speech of the Chancellor of the Exchequer will be received with gratitude by the ratepayers of the country. I admit that it is impossible for him to carry out his scheme while the Departmental Committee is considering what is to be done. But as the Mover of the original Amendment pointed out, it is more than time that this question should be dealt with. It is, I fear, becoming a hardy annual: it is one on which I had the honour to make my maiden speech here. The suggestion of the Chancellor of the Exchequer is that his plan will broaden the basis of taxation. But we need not wait for this report for some scheme to do that. I am convinced that the Royal Commmission was right when it suggested that some of these national charges should be borne more particularly by the State. The right hon. Gentleman several times in the course of his speech made the statement that the rates were going to be relieved of all burdens. That is not the contention of hon. Members at all. Their contention is that the local authorities would still have a considerable burden to bear, and that therefore the power should be in their hands. I would call attention to some correspondence which has taken place with the Devon County Council, which claims that it is losing considerably on the carriage and motor-car licences. The loss amounts 261 to £4,000 or thereabouts, and I submit that that is an amount which should not, and even now need not, be lost by them. It is only a matter of rectifying the mistake made by altering the Finance Act, 1909–10, or the Revenue Act, 1911. I am not very conversant with the methods by which this could be done, but I suggest that it could be done in the forthcoming Finance Bill. That would create great satisfaction, at any rate as regards the county of Devon, and would do away with the bitterness which must be felt when county councils find that they are losing a certain amount of money they are justified in getting. The hon. Member for Newcastle-under-Lyme (Mr. Wedgwood) seemed surprised at the stress laid on the question of agricultural rates. I have had a resolution sent to me by the Newton Abbot Union, which says:—That this council begs to call the attention of the Local Government Board and the local Member of Parliament to the unfair manner in which the annual Grant under the Agricultural Rates Act is distributed, and that, in the opinion of this council, steps should be taken to have the Grant readjusted, as at the present time this council is not receiving anything like the amount which it ought to receive if the Grant were calculated upon the present rateable value and rates.I looked up the question of the Agricultural Rates Act, and I found that the estimated deficit which has had to be raised by rates during the last fifteen years amounts to over £2,000,000. The money which is taken from the Exchequer is taken from the Estate Duties. Since the Agricultural Rates Act was passed the amount received from those duties has doubled. It was £10,000,000 in 1896, and it is £20,000,000 now. I suggest that as the Estate Duties provide that sum there is no reason why they should not provide a certain amount more, considering they have increased so largely. There is one other point. The Government have taken over the telephones, and I should like to have an assurance from them that there will be no extra burden placed on the rates in that connection. Last year I put a question to the Postmaster-General on that point, and the answer was that the exact basis was under consideration as to how they would apportion the sums for local rates. There is considerable feeling amongst the unions in the different districts in regard to this particular question. I have had a resolution forwarded to me expressing the hope that something will be done to ensure that the unions shall not lose anything by it. That is a legitimate wish and I feel certain that it will be meet with the sympathy it deserves from the Government. I should like to know whether any particular result 262 has been arrived at as to the exact basis on which this charge will rest. I am sure the country and the ratepayers will not be satisfied with the situation as it has been left by the Chancellor of the Exchequer. I know there are great difficulties connected with it, but there is a very strong grievance in the country on the matter, and the ratepayers of the country districts feel that the rates are being increased in a manner over which they have not sufficient control, and that is one of the greatest grievances. We are told that we in the country districts do not provide sufficient cottage accommodation far those who have to work on the land. That, again, is a very difficult point. If you provide a couple of cottages at a cost of £400 you are immediately rated on them. A man who invests £400 in South African mines is not touched in the same way as a man who is doing something for the benefit of the community in his own particular district. All that makes it very much harder for a man to build cottages. In my part of the world forty-eight cottages have recently been built by a company, of which I am a director, and practically a new village has been made. Naturally the district council has taken over the drainage system and also widened the road which passes between the cottages. The first result of that is that the rateable value has to be raised, and I get complaints from two or three people in the district that it is raised, and they have to pay more rates, and I cannot blame them for it. At the same time, it is a great asset to the community having these good cottages to live in, and I feel quite sure they would not complain if they had not too heavy a burden to bear already. I only ask that something should be done as quickly as possible. It is quite hopeless to expect anything to be done during this Session, so that this grievance shall be done away with, although hardly a month passes that we in the country districts do not get some resolution from some body pointing out the unfairness of the heavy burden which is laid upon the ratepayers.
§ Mr. HARMOOD-BANNER
As chairman of one of the largest finance committees in the country, I can absolutely confirm the fact of the increased charge which is falling on the community, the reasons for it, and the fact that to a great extent it arises from the action of the Government. I wish to know whether the Chancellor of the Exchequer will give an 263 assurance that in case there is a substantial surplus in the Budget this year he will make it part of the plan of the Government, in dealing with that surplus, to devote a portion of it to relieve the burden upon local authorities. I ask for that pledge for no insufficient reason, because I am quite certain the Chancellor of the Exchequer desires to live up to his pledges. In July, 1909, he said to a deputation at which I was present:—In the next year, I shall have a substantial surplus in my Budget. It is part of the plan of the Government to devote a portion, and a substantial portion, of that surplus to relieve the burden on the local authorities.Well, 1909, 1910 and 1911 are gone. We are now in 1912. From expressions of opinion I gather that the Chancellor of the Exchequer expects a surplus this year. He could not for various reasons carry out his pledge in 1910. I ask now that he will do it at the present time. On the occasion to which I have referred he used these words:—It is not as if we were merely expressing a pious opinion as to the desirability of it.If that was the Chancellor of the Exchequer's opinion then, I hope he will carry out the pledge. He also said:—It is part of our definite plan that we should take into account in the expenditure of that money those burdens which have already been referred to, and that something should be done in the course of next year to make some progress with the readjustment of local finance.Unless the pledge is carried out this year, it will be a distinct breach of the pledge given to the municipalities and the other local authorities of the kingdom. There was apparently an intention to carry out the pledge, for the Government said, "We will give you half of the Land Taxes." But, subsequently, that half was taken away, or it is held over until 1914. At any rate, until 1914 local authorities are to have no benefit out of the Land Taxes, so that unless something is done at once all we can say is that the Chancellor of the Exchequer has no intention of carrying out the pledge he made in 1909. I should be sorry to think that that was the case. The rates are going up every day. They bear upon the wrong shoulders. There has been an increase in the rates since 1892 to the present time. The local rates have gone up 122 per cent. by the burdens put upon the ratepayers by the Government. Allowing for the increased contributions from the Government, there is over 100 per cent. borne in relation to police, lunatics, and other 264 matters, which the local authorities contend is no part of the burden they ought to bear. I ask the Financial Secretary to the Treasury to renew the pledge that was given in 1909, or, at any rate, to remind the Chancellor of the Exchequer of the speech he made in that year.
§ Sir JOHN SPEAR
I very heartily support the appeal of the Mover and Seconder of the Amendment to the Chancellor of the Exchequer to deal immediately with this question. I may say that my Constituents feel very strongly on the matter. No one has denied in the course of this Debate that the increase in rates consequent upon the increased cost of education, roads, and police, is becoming an extremely heavy burden on the ratepayers. I had hoped something would have been done before now to meet the difficulty. The Chancellor of the Exchequer has admitted the existence of an injustice. His speech was very sympathetic, but unfortunately it gave no substantial indication of dealing immediately with the difficulty. We were led to hope that one-half of the taxes on land would have been handed over to the local authorities, and that the operations of the Road Board would lead to a reduction in the cost of maintaining main roads. The reverse is the case. I grant that the improvements carried out by the Road Board are very desirable, but as part of the cost of those improvements must come from local rates the work of the Board has not reduced the burden on the ratepayers for the maintenance of the roads. It is a question of great importance not merely between ratepayer and ratepayer, but also because the ever-increasing burden is becoming intolerable to the trader and the producer. It is extremely difficult for small tradesmen to carry on in a country village or a provincial town with any degree of success. The difficulty is aggravated by the ever-increasing burden of contributions to Services largely national in their character to which the Imperial Exchequer should contribute more.
The Chancellor of the Exchequer considers Grants-in-Aid wasteful. I have been a member of various public bodies, and my experience is that, provided there is a margin of expenditure falling on the local rates the administrators, who are ratepayers, are careful to avoid extravagance, knowing that the margin at least will have to come from local rates. I support heartily the appeal of the hon. and gallant Member for Mid-Devon on the 265 question of the commuted licences given to the county council in lieu of the actual receipts for motor licences. The result of the change which took place eighteen months ago is that the county of Devon last year received £4,000 less from that source of income than would have been the case if it had received the actual payments for these licences. That grievance is all the more acute because the growth of motor traffic has caused an enormous increase in the cost of main roads, while the increase from the licences goes to the Imperial Exchequer. That is most unfair, and the Chancellor of the Exchequer should at least meet us to the extent of giving to the county councils the amount actually received for these licences rather than an amount based on the lower receipts of two years ago, before the great increase in these motor licences took place. I think that that is a way in which the Chancellor of the Exchequer, acknowledging as he does the existence of a grievance, could give substantial evidence of his desire to do what he could, as far as present circumstances admit, to deal with it at once. We all feel that the real remedy is a redistribution of the burden of local taxation, and that the present system is a handicap on industry. Take
§ the shopkeeper, for instance, who spends £500 in enlarging his premises, and who is immediately rated heavily for the public Services. By his expenditure he is developing his trade and affording employment, but if instead of developing his trade he had put his £500 in foreign securities he could have enjoyed the benefit of those Services without contributing one farthing for their upkeep. That is handicapping industry and affording a temptation to withdraw money from the development of industry in our own country and to invest it abroad in order to avoid the present unequal and unfair system of taxation. I heartily support the agruments in favour of drastic changes in our system, so that there may be fair play between man and man, and that men should not be compelled to invest abroad to avoid unjust taxation at home.
§ Question put, "That the words proposed be there added."
§ The House divided: Ayes, 106; Noes, 184.267
|Division No. 3.]||AYES.||[4.55 p.m.|
|Agg-Gardner, James Tynte||Goldman, Charles Sydney||Newman, John R. P.|
|Amery, L. C. M. S.||Gordon, Hon. John Edward (Brighton)||Newton, Harry Kottingham|
|Ashley, Wilfrid W.||Goulding, Edward Alfred||Pease, Herbert Pike (Darlington)|
|Baker, Sir Randolf L. (Dorset, N.)||Grant, J. A.||Peel, Captain R. F. (Woodbridge)|
|Baldwin, Stanley||Greene, W. R.||Peel, Hon. W. R. W. (Taunton)|
|Banner, John S. Harmood-||Guinness, Hon. Walter Edward||Peto, Basil Edward|
|Baring, Maj. Hon. Guy V. (Winchester)||Gwynne, R. S. (Sussex, Eastbourne)||Pole-Carew, Sir R.|
|Barnston, Harry||Hall, Fred (Dulwich)||Pollock, Ernest Murray|
|Bathurst, Hon. A. B. (Glouc., E.)||Hanibro, Angus Valdemar||Pretyman, Ernest George|
|Beach, Hon. Michael Hugh Hicks||Hardy, Rt. Hon. Laurence||Quilter, Sir William Eley C.|
|Benn, Arthur Shirley (Plymouth)||Harris, Henry Percy||Rawson, Coloner Richard H.|
|Bennett-Goldney, Francis||Harrison-Broadley, H. B.||Samuel, Sir Harry (Norwood)|
|Boyton, James||Henderson, Major H. (Berkshire)||Spear, Sir John Ward|
|Bridgeman, W. Clive||Hill, Sir Clement L. (Shrewsbury)||Stanier, Beville|
|Burn, Colonel C. R.||Hoare, Samuel John Gurney||Stanley, Hon. G. F. (Preston)|
|Carlile, Sir Edward Hildred||Hope, James Fitzalan (Sheffield)||Steel-Maitland, A. D.|
|Carson, Rt. Hon. Sir Edward H.||Houston, Robert Paterson||Talbot, Lord Edmund|
|Cator, John||Jardine, Ernest (Somerset, E)||Thomson, W. Mitchell- (Down, North)|
|Cecil, Lord Hugh (Oxford University)||Kerr-Smiley, Peter Kerr||Thynne, Lord Alexander|
|Chaloner, Colonel R. G. W.||Kinloch-Cooke, Sir Clement||Touche, George Alexander|
|Chamberlain, Rt. Hon. J. A. (Worc'r)||Kirkwood, John H. M.||Tryon, Captain George Clement|
|Cooper, Richard Ashmole||Law, Rt. Hon. A. Bonar (Bootle)||Tullibardine, Marquess of|
|Courthope, George Loyd||Lawson, Hon. H. (T. H'mts., Mile End)||Warde, Col. C. E. (Kent, Mid.)|
|Craig, Charles Curtis (Antrim, S.)||Lewisham, Viscount||Wheler, Granville C. H.|
|Craig, Captain James (Down, E.)||Lockwood, Rt. Hon. Lt.-Col. A. R.||White, Major G. D. (Lancs., Southport)|
|Craig, Norman (Kent, Thanet)||Lonsdale, Sir John Brownlee||White, Sir Luke (Yorks, E. R.)|
|Craik, Sir Henry||Lyttelton, Rt. Hon. A. (S. Geo, Han. S.)||Willoughby, Major Hon. Claud|
|Croft, Henry Page||MacCaw, Wm. J. MacGeagh||Wilson, A. Stanley (York, E. R.)|
|Dalrymple, Viscount||Mackinder, Halford J.||Worthington-Evans, L.|
|Denniss, E. R. B.||M'Kean, John||Wortley, Rt. Hon. C. B. Stuart-|
|Dickson, Rt. Hon. C. Scott||WcNeill, Ronald (Kent, St. Augustine)||Yate, Col. C. E.|
|Faber, George D. (Clapham)||Magnus, Sir Philip||Younger, Sir George|
|Fetherstonhaugh, Godfrey||Malcolm, Ian|
|Fletcher, John Samuel (Hampstead)||Mallaby-Deeley, Harry|
|Forster, Henry William||Mildmay, Francis Bingham||TELLERS FOR THE AYES.—Mr. Hayes Fisher and Viscount Helmsley.|
|Foster, Philip Staveley||Moore, William|
|Gardner, Ernest||Morrison-Bell, Capt. E. F. (Ashburton)|
|Abraham, William (Dublin Harbour)||Gladstone, W. G. C.||O'Kelly, Edward P. (Wicklow, W.)|
|Acland, Francis Dyke||Glanville, Harold James||O'Malley, William|
|Addison, Dr. C.||Goddard, Sir Daniel Ford||O'Shaughnessy, P. J.|
|Ainsworth, John Stirling||Griffith, Ellis Jones||O'Sullivan, Timothy|
|Alden, Percy||Hancock, J. G.||Palmer, Godfrey Mark|
|Allen, Rt. Hon. Charles P. (Stroud)||Harcourt, Rt. Hon. L. (Rossendale)||Parker, James (Halifax)|
|Asquith, Rt. Hon. Herbert Henry||Harcourt, Robert V. (Montrose)||Pearce, Robert (Staffs, Leek)|
|Baker, H. T. (Accrington)||Hardie, J. Keir||Pearce, William (Limehouse)|
|Baker, Joseph Allen (Finsbury, E.)||Harmsworth, Cecil (Luton, Beds)||Pease, Rt. Hon. Joseph A. (Rotherham)|
|Baring, Sir Godfrey (Barnstaple)||Harmsworth, R. L. (Caithness-shire)||Phillips, John (Longford, S.)|
|Barnes, G. N.||Harvey, T. E. (Leeds, West)||Pollard, Sir George H.|
|Barran, Sir J. N. (Hawick)||Haslam, Lewis (Monmouth)||Power, Patrick Joseph|
|Beale, W. P.||Hayward, Evan||Price, Sir Robert J. (Norfolk, E.)|
|Benn, W. W. (Tower Hamlets, St. Geo.)||Helme, Norval Watson||Primrose, Hon. Neil James|
|Bentham, G. J.||Herbert, Col. Sir Ivor (Mon., S.)||Pringle, William M. R.|
|Birrell, Rt. Hon. Augustine||Higham, John Sharp||Radford, George Heynes|
|Booth, Frederick Handel||Hodge, John||Raphael, Sir Herbert H.|
|Bowerman, C. W.||Holmes, Daniel Thomas||Rea, Walter Russell (Scarborough)|
|Brady, Patrick Joseph||Holt, Richard Durning||Reddy, Michael|
|Brunner, John F. L.||Home, C. Silvester (Ipswich)||Richardson, Thomas (Whitehaven)|
|Bryce, J. Annan||Howard, Hon. Geoffrey||Roberts, Charles H. (Lincoln)|
|Burke, E. Haviland-||Isaacs, Rt. Hon. Sir Rufus||Roberts, George H. (Norwich)|
|Burns, Rt. Hon. John||Jardine, Sir John (Roxburgh)||Roberts, Sir J. H. (Denbighs.)|
|Buxton, Rt. Hon. S. C. (Poplar)||Jones, Leif Stratten (Notts, Rushcliffe)||Robertson, Sir G. Scott (Bradford)|
|Byles, Sir William Pollard||Jones, William (Carnarvonshire)||Robertson, John M. (Tyneside)|
|Cameron, Robert||Jones, W. S. Glyn- (T. H'mts, Stepney)||Robinson, Sidney|
|Carr-Gomm, H. W.||Joyce, Michael||Rowlands, James|
|Chancellor, Henry George||Kelly, Edward||Runciman, Rt. Hon. Walter|
|Chapple, Dr. William Allen||King, Joseph||Samuel Rt. Hon. H. L. (Cleveland)|
|Clancy, John Joseph||Lambert, Rt. Hon. G. (Devon, S. Molton)||Scanian, Thomas|
|Clough, William||Lambert, Richard (Wilts, Cricklade)||Schwann, Rt. Hon. Sir Charles E.|
|Clynes, John R.||Leach, Charles||Simon, Sir John Allsebrook|
|Collins, Stephen (Lambeth)||Levy, Sir Maurice||Smith, Albert (Lancs., Clitheroe)|
|Cornwall, Sir Edwin A.||Lough, Rt. Hon. Thomas||Smith, H. B. Lees (Northampton)|
|Cotton, William Francis||Lyell, C. H.||Smyth, Thomas F. (Leitrim, S.)|
|Crawshay-Williams, Eliot||Lynch, Arthur Alfred||Soames, Arthur Wellesley|
|Crooks, William||Macdonald, J. Ramsay (Leicester)||Spicer, Sir Albert|
|Crumley, Patrick||Macdonald, J. M. (Falkirk Burghs)||Strauss, Edward A. (Southwark, West)|
|Davies, Timothy (Lincs., Louth)||Macnamara, Rt. Hon. Dr. T. J.||Tennant, Harold John|
|Davies, Sir W. Howell (Bristol, S.)||M'Callum, John M.||Thomas, Abel (Carmarthen, E.)|
|Dawes, James Arthur||M'Curdy, Charles Albert||Thomas, James Henry (Derby)|
|De Forest, Baron||McKenna, Rt. Hon. Reginald||Trevelyan, Charles Philips|
|Denman, Hon. R. D.||M'Laren, Hon. F. W. S. (Lincs., Spalding)||Ure, Rt. Hon. Alexander|
|Dewar, Sir J. A.||M'Laren, Walter S. B. (Ches., Crewe)||Verney, Sir Harry|
|Dickinson, W. H.||M'Micking, Major Gilbert||Wadsworth, J.|
|Dillon, John||Marks, Sir George Croydon||Ward, John (Stoke-upon-Trent)|
|Donelan, Captain A.||Marshall, Arthur Harold||Ward, W. Dudley (Southampton)|
|Doris, William||Martin, Joseph||Wardle, George J.|
|Edwards, Clement (Glamorgan, E.)||Masterman, C. F. G.||Warner, Sir Thomas Courtenay|
|Edwards, Sir Francis (Radnor)||Menzies, Sir Walter||Wason, Rt. Hon. E. (Clackmannan)|
|Edwards, John Hugh (Glamorgan, Mid)||Millar, James Duncan||Webb, H.|
|Elibank, Rt. Hon. Master of||Morgan, George Hay||White, J. Dundas (Glasgow, Tradeston)|
|Esmonde, Dr. John (Tipperary)||Muldoon, John||Whitehouse, John Howard|
|Esmonde, Sir Thomas (Wexford, N.)||Murray, Captain Hon. Arthur C.||Whittaker, Rt. Hon. Sir Thomas P.|
|Essex, Richard Walter||Neilson, Francis||Whyte, A. F. (Perth)|
|Esslemont, George Birnie||Nicholson, Sir Charles N. (Doncaster)||Wiles, Thomas|
|Farrell, James Patrick||Nolan, Joseph||Williams, Llewelyn (Carmarthen)|
|Ferens, Rt. Hon. Thomas Robinson||Nugent, Sir Walter Richard||Williams, Penry (Middlesbrough)|
|Field, William||O'Brien, Patrick (Kilkenny)||Williamson, Sir Archibald|
|Fitzgibbon, John||O'Connor, John (Kildare, N.)|
|Flavin, Michael Joseph||O'Doherty, Philip||TELLERS FOR THE NOES.—Mr. Illingworth and Mr. Gulland.|
|George, Rt. Hon. David Lloyd||O'Grady, James|
|Gill, Alfred Henry|
Question, "That the words proposed to be left out stand part of the proposed Amendment," put, and agreed to.
§ Main Question again proposed. Debate arising,
§ And, it being after Five of the clock, and objection being taken to further Proceeding, the Debate stood adjourned.
§ Debate to be resumed upon Monday next.
§ Whereupon Mr. SPEAKER adjourned the House without Question put, pursuant to Standing Order No. 3.
§ Adjourned at two minutes after Five o'clock, till Monday next, 19th February.