§ Postponed proceeding resumed on Question proposed on consideration of Question, "That a sum, not exceeding £1,045,830, be granted to His Majesty, to complete the sum necessary to defray the Charge which will come in course of payment during the year ending on the 31st day of March, 1913, for the Salaries and Expenses of the Inland Revenue Department." [NOTE.—£850,000 has been voted on account.]
§ Which Question was, "That Item AA (Salaries, Wages and Allowances in addition to Salaries) be reduced by £100."—[Mr. Royds.]
§ Mr. MASTERMANMy remarks will be brief, and I would not trouble the Committee further but for the fact that at the moment when we passed out of this Debate the hon. Member opposite (Mr. Pretyman) attacked what I said was the interpretation put upon the law by the valuers of the Inland Revenue. I want it to be quite clear what it was exactly I was trying to demonstrate. We were not on the question of policy at all; we were on the question of deduction proper to the assessment of the Increment Tax as paid from time to time. This particular point is especially 1950 interesting, and it is not ascertained on a point of fact, but on a point of law, a point of law which, I agree with him in the circumstances, must go again to the High. Courts for decision. I want him to be quite clear what the policy was that our valuers were pursuing in their interpretation of their duty under Clause 25. It is not the case, as he seemed to think, that, the policy of the valuer has been to deduct from money received on the occasion the mere cost of the building, or even the mere value of the building, as set down in the original valuation. What the valuers deduct is from the consideration of the money received for the composite subject as a whole, the amount of money that can be attributed to the building at the time or the occasion. [An HON. MEMBER: "Apart from the site."] Attributable to the building. That answers the question which the hon. Baronet the Member for Mansfield put when he said, supposing your building increases in value apart from the site since the original valuation, supposing there was a house or a particular type of building more sought after, despite the fact that no more bricks or mortar were put into it, would the full value attributable to the building, apart from the site, be deducted? I say without hesitation, yes.
§ Mr. PRETYMANThe market value.
§ Mr. MASTERMANThe full value of the building as sold.
§ Mr. PRETYMANTake the concrete case we have here, the Richmond case. It is admitted the land has not increased in. value between the time of the original valuation and the occasion. It is admitted definitely by the Department that there is no increase in the value of the land. It now follows from the statement made by the right hon. Gentleman that there was also no increase in the value of the building, because he stated if there was an increase in the value of the building that would be allowed. What is really done is what has been done in every case that has come to my knowledge. If the right hon. Gentleman will state a case where there has been a difference I should be glad. In every case all that is taken is the difference between the value of the land on the occasion which is arrived at by a process under Clause 25, and the actual selling price on the occasion, and the whole of that difference has been attributed to the site value in every case without exception. In the Richmond case the original total value assessed was 1951 £380. The sale price was £500, and the entire difference between £380 and £500 was debited or credited whichever it is to site value and treated as increment and taxed. Exactly the same process happened in the Newcastle case. The original site value was £625, the property was sold for £750, and the entire difference was treated as increment and taxed. In the Plymouth case £750 was the original value, the, property was sold for £1,000, and the whole £250 was deducted. In the Palmer's Green case the same thing happened. The whole £25 was debited to land value, and it now follows from the statement the right hon. Gentleman has made in these cases the deduction made was identical. In all these four cases I have quoted the deduction was made for building on the original valuation and on the occasion. They were absolutely identical, because not a penny of allowance was made, and the policy now is that had there been an increase in the value of the building it would not have been credited. Therefore we have now established these two facts that there was no increase in the value of the land, and we have it also established that in neither case was there any increase in the value of the building. Therefore what you have is pure occasional profit. It is neither increase in the actual value of the land nor an increase in the actual value attributable to the building. It is a pure and simple occasional profit in the market which the owner has obtained by selling a composite site. It is not obtained by profit on the land or the building, and therefore it is obtained by an occasional profit in the market by selling a composite subject. What we now establish is that by these four definite claims that are being carried to the High Court the valuers are claiming occasional profit in the ordinary market from the composite subject is to be treated as site value in regard to house property, and taxation.
§ Mr. MASTERMANI do not want to deal with all the cases which the hon, and gallant Member has raised, but I will take the Richmond case. The composite subject was sold for £500, and it was claimed that that must be taken as the market value of the composite subject. We stated that that was not so, and an impartial Referee said the market value of the composite subject was £456. Our people instead of appealing decided 1952 to take the Referee's decision. As the Referee says the market price is £456 we will reduce our statement that it is any other amount, and we will assess duty on that basis. Take another case where the facts are really accepted by everyone, and therefore a very suitable case to take. In this other case it is perfectly true that the land was sold for £750, but the market value of that land has been settled by the Referee not at the same value we put upon it, but as £625. I hope that point is clear. The Referee distinguishes between the particular consideration paid for that house and land and the market value of the house, and he makes that distinction by saying the market value is £625. We agree on the matter of price. There is only remaining the decision on the point of law, and the case has been stated.
Our valuers claim that under the Act the Commissioners, in order to arrive at the assessable site value as defined by the Act on an occasion, must deduct from the consideration the full market value attributable to the house at the time of sale. That means any profit the builder can get by making a better house or a more desirable house sold by a willing seller in the open market, and none of that profit is being subject to a claim for Increment Duty. You contend that we must deduct from the price paid the difference between that price and the value of the site. That is the case stated by the Referee and that is the case that will go to the High Court. We cannot see any other interpretation in the Act than that which we have put upon it. We will accept that as a test case, and future claims for Increment Duty will be made on that decision. It is not fair for the hon. and gallant Gentleman to say that the costs have been given against the Government in this case. The Referee has decided that the costs shall be paid by whichever party is unsuccessful in the appeal.
§ Mr. PRETYMANThe Referee definitely decided that the value is as we claim, that there is no Increment Value Duty in that case, and he gave costs against the Government. But, he says, if the Court reverses his decision the costs are to go to the other side. He gives the costs against the Government, but he says that if the Court decides against him on that point of law then the costs are to follow the judgment.
§ Mr. MASTERMANThat is not the statement given to me.
§ Mr. PRETYMANBut I have got the actual words here.
§ Mr. MASTERMANI am willing to withdraw my statement if the hon. and gallant Member says I am wrong, but I do not regard the point as important. The important point is the question of fact, and in this the Referee agrees with the Government valuer's statement. It is purely a question of law, and it is a suitable case to make a test of upon that point of law. I think it is unfair for any hon. Gentlemen to go about the country saying that we are taxing builders' profits, or that we are not deducting the whole value attributable to the buildings before we begin to tax anything at all. My hon. Friend can make that point perfectly clear, and by that we are prepared to stand.
§ Mr. MASTERMANIn every case the whole value attributable to the building has been deducted from the consideration. If the hon. Member will read Clause 25 he will see that that is the only possible interpretation to put on the law as it stands.
§ Captain WEIGALLHow do you arrive at the original valuation unless the property is placed in the market? Otherwise you get a purely hypothetical valuation, and to say that your original valuation is the market price is absurd unless the property comes into the market.
§ Mr. MASTERMANSurely the hon. and gallant Member realises what valuation means. Does he mean that under the circumstances which obtain in the British Isles, in which thousands of valuers make valuation, that none of them can estimate any value unless the property is actually sold in the market?
§ Captain WEIGALLFor twelve years the whole of my bread and butter depended upon my acting as a valuer, and I feel that unless you take the land and the buildings on it there is no value to offer to any willing buyer. You cannot divorce the two, and to say that you can do it is, to my mind as a valuer, absolutely non-sensical.
§ Mr. PRETYMANI should like to make the point I alluded to just now perfectly clear. The Referee, in his decision, said:—
I am of opinion, and I decide, that contention (a) of the appellant is correct, and I accordingly award and decide that the appellant is not liable to pay any Increment Value Duty on the occasion in question, 1954 and that the expenses of the appellant of and incidental to his appeal be borne and paid by the Commissioners of Inland Revenue.If the Court should be of opinion that the contention of the Commissioners of Inland Revenue is correct, then I award and decide that contention (b) of the appellant was not made good, and that the appellant is liable to pay the Increment Value Duty claimed by the Commissioners of Inland Revenue, and that the expenses of the Commissioners of Inland Revenue of and incidental to the appeal of the appellant be borne and paid by the appellant.Therefore the Referee says that if the Court reverses the decisions the costs are to follow the judgment.
§ Mr. MASTERMANI merely wish to bring home the point that that there was by mutual consent to be a test case on a point of law, and the Referee decided that whichever won the case the other side should not pay the costs. On the point of market value, let me give the hon. Gentleman just one example of the kind of way in which the State, as I think quite rightly, receives Increment Value Duty from a windfall which may not be the market value. I will lake the case of a piece of land. Take the case which recently came before us. Nine and a-half acres of land valued a few years ago for Estate Duty purposes at £254 was also valued in the Provisional Valuation, 1909, at £254. In November, 1910, one acre was sold for £605. I need hardly say it was sold to a public authority. The owner accepted, the apportionment of that acre as the apportionment applicable to the whole nine and a-half acres, and asked for no special apportionment, and that acre was therefore valued at £26 10s. The Increment was therefore £578, and the Increment Value Duty was £115, and all the parties agreed that was fair. Nobody imagines the actual value of that acre when it was sold was £605. It was money extorted out of the local authority, and money therefore which quite properly ought to pay substantial Increment Duty. I am glad to say the Committee upstairs over which we have no control, and which is largely represented by bon. Gentlemen opposite, have decided that land being sold under that condition would henceforth be obtainable by the local authority for something approximating to the actual value.
§ Mr. PRETYMANI have not, nor has the Land League, attempted to contest any case where it is simply land. The Act says you have to tax the difference between the value as fixed originally and the price fetched. The right hon. Gentleman seems to have missed the whole 1955 contention. Where the price of land alone has to be contrasted with the originally agreed value, the duty is payable, and we have never contested it. The right hon. Gentleman brings that case forward as if it was an answer to my contention. I have never contended that the duty would not be payable under such conditions, and we have never attempted to fight such a case. Where there is an occasional profit on house and land, it is the small owner who is being hit. Where he has made a profit on the composite subject, the actual practice which never varies is to attach the entire profit to the land alone and charge that as Increment Value Duty on the land alone.
§ Mr. MASTERMANI do not accept the last statement of the hon. and gallant Gentleman, because it is not so. The value attributable to the buildings is deducted, but not the profit. In this case the value was £26 and the consideration claimed from the local authority was £605. As the hon. and gallant Gentleman knows the consideration is now largely taken out of our hands. We have found a case in which we agree as to the figures, and the only question is as to the intrepretation of the law. That will go to the Courts, and either of us will abide by the decision. Some strong criticism was made as to the money spent on the valuation and as to the inadequate results being obtained, and, even after my right hon. Friend had stated that of the number of valuations which were given by him 90 per cent. were final valuations, there seemed to be some criticism of the amount of work which was being done. There have, as he has already said, been 2,338,000 provisional valuations made in this country and 249,000 in Scotland, and 90 per cent. have been accepted as final valuations without any dispute at all.
§ Mr. POLLOCKAre those figures owing to the lapse of time, or do they represent cases of actual assent?
§ Mr. MASTERMANThey are final valuations.
§ Mr. POLLOCKFinal, by the lapse of the sixty days?
§ 10.0 P.M.
§ Mr. MASTERMANWell, no protest has been made against them. Is it not idle to imagine, if there was a general system of unfair valuations going on in this country, stirred up as it has been now for 1956 three years by all the eloquence of the hon. and gallant Gentleman, with a great and wealthy corporation behind him, that more than one-quarter of the valuations of the country would be accepted without any protest at all? The hon. Member for Gloucestershire in a very fair speech stated that he thought the valuers under the Act were not fully competent for their duties. I am perfectly sure I can establish an exactly opposite conclusion, and I am glad to see that is endorsed by an hon. Gentleman opposite who has had great experience in this matter. The majority of them have been valuing land all their lives, and the sole object of the Inland Revenue Department was to obtain the very best valuers that could be had. From all I hear, owners who were formerly hostile are now willing to work in conjunction with the valuers and they are quite free from any charge of incompetency. The original valuations already completed involve a total sum of well over £700,000,000. The promise made by the Chancellor of the Exchequer was that the valuation should be completed by the early months of 1915. The Valuation Department accept that promise still. They are willing to provide this valuation complete by that time. There have been allusions to possible uses of the valuation after that time, and the hon. and gallant Gentleman stated that by that time the valuation would be useless and would all have to be done over again. The authorities at the Inland Revenue say that is an entire misapprehension, and that this first valuation will make the work of keeping the valuation up to date comparatively easy. They say, if this valuation is finished by 1915, they will have no difficulty in providing by the beginning of the following year a full site value of the land of England if Parliament in its wisdom then desires to use that site value for any legislative purpose.
Mr. EDGAR HORNEI think some of the difficulties which surround the valuation of the property may be explained when we consider what it is which has to be valued. Land or building may form nothing but a basis on which to construct the valuation of the whole. But what is bought by the investor or by the purchaser is, generally speaking, the income which is to be derived from the land or the building. For instance, if you take three plots of land all exactly similar and ripe for building, not let to anybody, and estimated by those best qualified to judge to 1957 be worth, any one of them, for ground rental £1,000 a year. One of those lots is sold on the 5 per cent. basis, at twenty years' purchase, for £20,000 the speculator is fortunate enough within a week to find someone willing to build on that plot at £1,000 a year. The building agreement is signed. The £1,000 becomes worth £22,000. Six months later the building is put up and completed, and the £1,000 a year is worth £25,000. But you cannot say that the value of that piece of land has varied from £20,000 to £25,000. There are the two other plots still in the market at £20,000. What has been bought in that case is the security of the income, and I think if we looked on property not so much as land and building, but as what is to be drawn from it, we shall be able to understand the prices that are obtained. Generally speaking, what is looked for from land is income in money. But that is not always what is bought by people. A piece of land may be bought for the purpose of providing a view or of keeping a private house from annoyance by undesirable neighbours. That piece of land commands for a short time a high price for that purpose, though it brings nothing in beyond securing privacy and quiet. Possibly the house is, later on, converted into workshops and the value of that piece of land is gone. Therefore I wish to point out it is not the land or the buildings together which represents the value, but it is that which is to be derived from it.
In the old days large estates commanded high prices. What was bought, in a small degree, was a limited income. What also was bought was perhaps the satisfaction of the position which attached in those days to the ownership of large estates. What also was purchased was the satisfaction which, thank goodness, a great many men still have of being able to try and improve and look after a large property in the country. These two intangible forms for which men gave money are now being taken away from them. They are breaking up their estates and, instead of the limited income which they were content to obtain, the latent value is being expressed on the rentals by purchasers by interests and mortgages, and money spent on land bought represents a great deal more than the income which the landlord in the first case obtained. Another reason which affects the value of property in land is that it is not now so easy to dispose of as it was some years ago. I believe that 1958 the interest which is to be obtained from property is as high now or even higher than then. But if any man buys property in this country now, though I think he can be assured of a very fair rate of interest upon it, he must not expect to be able to put it on the market and find a purchaser for it without much trouble. And it is the want of that ability to turn it into money when he wishes that makes for a lowering of prices. I believe that is one reason among others why Consols at the present time are at a low figure. In the old days, ten or twenty years ago, you could go into the Consol market and sell a quarter of million Consols without hardly moving the price. But if anyone did that now and the Treasury broker was not present to buy them up, I fancy there would be a very heavy slump in prices before the whole amount was got rid of. This question of the alteration in prices on occasion seems to me may act unfairly between one set of people and another. For instance, if a row of cottages is situated in a country district and waterworks are going to be constructed in that neighbourhood, there arises a large demand for cottages, and the land goes up in price. If the owner of one of these cottages dies, or if he wants to sell it, there will be an increase in the value which will be estimated, and probably he will have to pay a large sum to the State. But if he does not want to sell, or if he is fortunate enough not to die, as soon as the waterworks are completed the high rents will fall, and that fortunate man will have obtained during those years high rents for his cottage and will have paid nothing to the State. I think nearly the whole of the difficulties which have come from this land valuation are entirely due to leaving the good principle of taxing income and trying to tax imaginary values. We all recognise that whatever is wanted for carrying on the business of the State it is the duty of everyone to pay. But I think it should be paid from the actual income which is coming in.
The DEPUTY-CHAIRMANI think the remarks of the hon. Member are well outside the limits of the Amendment. We are discussing the administration of the Act in its relation to land valuation.
Mr. EDGAR HORNEI was trying to point out the difficulties of making a valuation on a basis which, I imagine, must be illusive. I am prepared, as I believe a 1959 great many of my professional brethren are, to tell, with a certain degree of accuracy, what the value is at a particular moment, but I absolutely refuse to say what the value is going to be in a year or six months' time, because it is impossible to know what the conditions will be at that time. I think it would have been very much better if the valuations which have to be made under the Act had more regard to the income that is derived from the properties than the imaginary valuations which have so often been put upon them.
§ Sir A. MARKHAMI should like to refer to the statement made by the Secretary to the Treasury with reference to the valuation of cottage property. I am sure his statement will be received with great satisfaction in my own constituency, where a large number of workmen have their own houses. I am not quite clear about one word he used, namely, "windfall." I will put a case to him. Assuming that the value of the composite subject is represented by £250, £50 of which is due to the value of the land, and £200 to the house. What I want to know is this: if that property rises in value and is sold for £300, and if there has been no increase due to the land, but all of it is due to the buildings, would Increment Value Duty be payable on the increased value of £50. According to what was said during the Debates on the Budget, there was to be a taxation of land values only. The case put to me by a number of my constituents is this—I have not got the particulars with me, because I forwarded them to my right hon. Friend, but I have most of the cases in my mind. A man buys a piece of land in my constituency from the local authority. Two years afterwards the Government valuers come along and value this same land, although no other land in the district has been sold at 30 per cent. lower than the price he gave for it. It is a very extraordinary thing that all urban land seems to be undervalued, while all rural land seems to have been overvalued. In the case of the workman who buys a piece of land and builds a house upon it, the cost to him was, say, £250. The value put on that by the Government valuer, on a new house and new land, is £200, or £50 less than the man actually paid for it. What my Constituents say is this, "It is all very well for you to say this is a tax on land values. We are working men, who by self-sacrifice have scraped a little 1960 money together to buy land and build a house upon it, and here we see a difference between the valuation of the Government valuers and the actual cost we have paid out of our own pockets. If we leave the district and sell the property, will any of that difference between the cost to us and the valuation of the Government be charged with Increment Duty?" My right hon. Friend just before the adjournment stated that if the value of the buildings rose from £1,000 to £5,000 no Increment Duty would be payable. I have given the case of a property of £250 which has risen to £300, where there cannot be said to be an increase in the value of the land. Will Increment Duty be payable on the £50?
§ Mr. MASTERMANThe hon. Baronet has given me rather a complicated case, in which a double question is involved. One is that the site value of the land as valued on 30th April, 1909, is less than the man paid for it. In that case, as I expect the hon. Baronet knows, by Section 2, Subsection (3), the substitution value, what he actually paid for it, can be put upon it, and until the site value has risen above that no increment attaches to the site value. The other point is this: If the man sells the composite subject in the open market, if it is sold by a willing seller, there is deducted from it the full value attributable to the building, and if it is a willing seller that value will be the full amount less the site value, and in that case he will not pay any Increment Duty at all.
§ Mr. PRETYMANYou have not answered the question.
§ Sir A. MARKHAMVery nearly, I think, though I should like to see it in writing before I express an opinion. May I refer to another subject? In the valuation of minerals I should like to ask whether the Government carry out a verbal promise given in answer to a question, that the Inland Revenue Commissioners shall in future separate in these valuations the amount paid to the landlord and the amount actually received as royalties which are the property of colliery companies. A certain amount of minerals are owned by colliery companies, and they make returns to the Inland Revenue of the total royalties that they have paid, but they do not state whether those royalties are derived from their property, of which they are owners, or whether they are derived by them from working their seams. It would be very desirable that the House should know in these valuations the total 1961 amount of royalty paid to the landlords in respect of minerals that are worked. We have no information whatever. The total amount was separated by the Chancellor of the Exchequer, in reply to a question I asked, in which he showed that the total royalties received amounted to something like £6,000,000, but he gave no information whatever as to where this sum goes, how much is paid away to the landlord, and how much is vested in the companies themselves. If that could be done at a very small cost by the Inland Revenue Commissioners, the information would be very valuable.
I wish to ask another question as to the Increment Value Duty on minerals. A great many valuations are being made at the present time, and I state unhesitatingly that a large amount of minerals which have been leased are evading duty. I known it is done, but I am not going to tell my right hon. Friend how it is done. It is only my duty to point out to him that Increment Duty is being evaded. If I were to explain how it is done, it would take a long time, because it is a very complicated question. I think the Inland Revenue Commissioners should have their eyes opened in regard to this matter.
§ Mr. AUSTEN CHAMBERLAINDoes the hon. Gentleman mean Increment Duty?
§ Sir A. MARKHAMI refer to Increment Duty on minerals. It is a very complicated question to deal with. The next question I wish to ask is whether the right hon. Gentleman will ask the Inland Revenue Commissioners to give us information in next year's Accounts as to who are the real owners of mineral royalties in this country?
§ Mr. AUSTEN CHAMBERLAINMay I ask one question about procedure? The Chancellor of the Exchequer announced to-night that he was going to appoint a Committee to inquire into the working of this system of valuation. He read out the terms of reference, but, of course, we have had no real opportunity of considering them, and I could not pretend to offer an opinion upon them. He did not give the names of the Committee, and I think he said he was not yet prepared to do so. We did not press him on that point, but we are anxious on this side of the House to reserve to ourselves an opportunity, if we should think it necessary, to discuss either the composition of this Committee or 1962 the reference to it when we know what the composition and the reference are. What I want to ask the right hon. Gentleman (Mr. Masterman) is that he should agree not to attempt to take the Vote to-night. Let the Committee settle this Amendment by all means, but not attempt to take the Vote, so that if we require an opportunity to discuss the composition of the Committee or the reference to it, we may get it by asking that the Vote should be put down again.
§ Mr. MASTERMANI know no reason why we should want to take the Vote tonight. I am exceedingly anxious that we should take the Opposition with us in this matter. I am willing to consult them as to the terms of the reference, and to ask them to help us as to the names of the Committee. We want an impartial Committee of experts, not politicians, who have knowledge of surveying. As to what fell from my hon. Friend the Member for Mansfield (Sir A. Markham), I will certainly consider the way in which the Mineral Tax is stated at present, and if I can give separate figures they will be given. As to the hon. Member's other point with respect to which he says he cannot communicate the information to the House, I would say that if he will communicate it to me, and tell me how we can get in taxation which is now being evaded, we shall regard him as a benefactor of the Revenue.
§ Captain WEIGALLAlthough no charge whatever can be made against the valuers who are now acting under the Valuation Department, it is perfectly apparent that the duty imposed on them by the Statute is a superhuman duty. The whole of the chaos in which the Valuation Department now is arises from the fact that these men are asked to value something which does not exist. Although the Financial Secretary to the Treasury says that it is done every day, I maintain that you cannot divorce the value of a house from the land on which it happens to stand.
The DEPUTY-CHAIRMANThe question of the merits of the Act is not one with which we can deal on the Amendment.
§ Mr. POLLOCKIs not my hon. Friend perfectly in order, when dealing with this question as a question of administration, in saying that the way in which the Valuation Department is carrying out its duties is hot in consonance with a true system 1963 of valuation, and that that valuation could be applied with greater skill and accuracy if certain principles were adhered to?
§ Captain WEIGALLI am not a legal luminary, as is my hon. Friend, but that is exactly what I intended to say. My whole point is that in asking these men to carry out the system imposed by the Finance Bill you are asking them to perform a superhuman task. Up to this afternoon as an agriculturist I have always looked with a great deal of apprehension on the effect of the Finance Act. Since hearing the Chancellor of the Exchequer and the Financial Secretary that apprehension has been increased. I understand now that we as agriculturists are in this position, that under Section 25 of the Finance Act, all valuations of agricultural land are now being made, and, in future, will be made without any deduction for improvements. I remember the eloquence of the Chancellor of the Exchequer in the speech in which he said that the work of man's hands will always go free. Now, so far as agriculture is concerned we are in future not to be allowed to deduct the work of men's hands. I also remember that that adept at accuracy, the Lord Advocate, when he came into my Division told all the agriculturists, "You need not be in the least afraid of the administration of the Finance Act. All your improvements, your drainage, your fences, your farmhouses, your buildings, will be allowed you. Nothing but the prairie value will be used for taxation." From this afternoon, we understand, Section 25 does not allow us to deduct those improvements. My hon. Friend made the point perfectly clear in regard to a farm which I happen to know very well, because it is situate on a property which I have had to look after for a great number of years. He showed clearly that so far as agricultural land is concerned that improvements under the administration of this Finance Act, are not allowed to be deducted, and were not in fact deducted. If under Section 25 we are not in future to be allowed, in the words of the Chancellor of the Exchequer, to "deduct the work of men's hands," how can you possibly avoid having to face the agricultural community in regard to their fear of the effect of future legislation. For nine months last year I was the only Member on this side 1964 of the House, who sat on a Departmantal Committee to inquire into the breaking up of large agricultural estates, and the only point I wish to make is this, that the mere fact of the administration of this Finance Act was the primary and fundamental reason why those estates were broken up. Directly those forms were thrown broadcast among owners and agents, then, and then only, were they brought face to face with the Act. Not one single witness of any sort, whether he represented the landlords, the tenants, the farmers, or agricultural labourers, was shaken in cross-examination in the statement that had it not been for the passing of this Finance Act and its administration we should not have been sitting on the Committee to which I have referred, to inquire into the grievance which was placed before us. I have no doubt the Chancellor of the Exchequer and others will say, "Oh, no; the administration of the Finance Bill has nothing to do with the question; it is a mere matter of sordid finance. The landlords saw that there was a demand, and they naturally sold." I will only quote part of the evidence of one witness, Mr. C. P. Hall, a witness representative of the Land Agents' Society, who control 10,000,000 acres of land in this country. I will only give one question and answer:—
Do you consider, had we had improved agricultural land prices, and had we not had the action of the Government, that there would have been this enormous acreage in the market?—Most certainly not.Surely that shows that the administration of this Finance Act was the main and the primary reason for all the insecurity that has been created throughout the whole of the agricultural community. The Chancellor of the Exchequer this afternoon made a tremendous parade of the improvement which has taken place under the administration of the Finance Act. He neglected to inform the House that on 13th June, 16,800 of those Death Duty cases were held up owing to the confusion caused by those valuations. We had this afternoon from the hon. Member for Sleaford (Mr. Royds) a very clear, very concise, and very detailed statement of how the ordinary agricultural valuation is made. He clearly showed the House in that case that the valuation was very far above the market value. When I say market value I mean the value that has always been understood by the country that would be put on when the ordinary deductions of the work of a man's hands has been allowed. I desire now to give the opposite case. I know 1965 that the Chancellor of the Exchequer said, "Oh, I am delighted to hear that we are accused of placing the values too high, because I have always been accused of placing values too low." In rural properties the valuation has been placed too high and in urban properties the valuation has been placed too low. In the one case the Government are out for Undeveloped Land Duty, and in the other case they are out for Increment Value Duty. The hon. Member for Sleaford has given a valuation that is placed far too high, and I propose to give an instance where the valuation is far too low. Eight months ago I happened to desire to own a certain acreage of land. The land had been in the market for eighteen years. Everybody had been offered it at six thousand sovereigns. Everybody in the country knew that they had only got to pat six thousand sovereigns into the hands of the owner and the land was theirs. On the passage of the Finance Act the owner altered his terms. Urban land, agricultural land, and the whole of the speculative building industry had come to a stand still. This case is still sub judice, and I am not going into it beyond stating the facts which are absolutely patent to everybody. This land had been in the market for six thousand sovereigns for eighteen years, and the owner had given six thousand sovereigns for it eighteen years ago, and out of it he received an income of £17 per year for those eighteen years. He sold it to me for five thousand sovereigns, and the Chancellor of the Exchequer and his Department come down on him and say, "You have found a mug. The land is worth only £4,000, but because you happen to have found a simple bucolic to give you £5,000, you have to hand over to us £200 for Increment Duty." There is a clear instance of property being undervalued. There have been heard before official referees nine test cases as to the administration of the land clauses of the Finance Act. I know that those referees are not appointed by the Treasury, but they are official referees. Every one of those cases has been decided against the Valuation Department.
§ Mr. MASTERMANNo.
§ Captain WEIGALLWhether that is so or not, I ask that, as these test cases come before the Official Referees, information concerning them should be given to all interested. Three weeks ago I asked the Chancellor of the Exchequer whether a short record of these test cases, in which 1966 every owner in the country is concerned, could be sent to the Surveyors' Institute and the Land Agents Society, all the members of which are keenly interested. The answer of the right hon. Gentleman was that if those who were immediately concerned in the cases had no objection he felt sure that the members of those two societies, if they applied, would be allowed to attend and listen to the cases. That is no possible use to anybody really interested. With the chaotic confusion in which the Valuation Department necessarily finds itself, there must be an endless vista of litigation to come before the Courts. For the convenience of persons interested, the least the Valuation Department can do is, as these test cases come before the Referees, to see that information concerning them is placed at the disposal of everybody concerned.
§ Mr. PERKINSThere are three practical points on which I want an expression of opinion from the Treasury. The first is as to the attitude of the Department and of the Valuers as regards the treatment of ground rents. Whether the Department be right or wrong remains to be proved, but, as a matter of practice, at present the Department is valuing ground rents—of which there are an enormous number to be valued—on a system which does not commend itself to the surveyors of the country. In fact, the Department's Surveyors are valuing ground rents at between one and two years' purchase less than the market value of ground rents. Are the Treasury prepared to endorse that action?
The next point is a sin—if sin it be—of omission, not of commission; the only sin of omission charged against the Department to-night. I have reason to know that, at any rate, one property of considerable value and area, has not even yet received the attention of Form IV. The owner is well-known; he is registered as a ratepayer. If this is an instance within the knowledge of a Member of this House, how many other instances may there be within the knowledge of other Members, and the outside public of Form IV. not having yet been served, and as a result the properties concerned not having been valued? I ask the Treasury to consider this point also: If the surveyor who has to value that property approaches it now for the first time after the Act has been in operation, and after some years have gone by, how is he going to arrive at the site value of that property as it stood at the 1967 date of the passing of the Act? It is almost impossible for the surveyor to tell unless he has a personal knowledge of the property. The third point arises out of my own practical experience; it refers to a single case, uncomplicated by any question of minus site value, the case of a man buying in the open market a composite property, land and house, and selling it at an enhanced price half an hour, or even a few days afterwards. He is asked—in some cases I know it is insisted upon that the whole of the increment between the purchase and selling price should be regarded as increment for the purposes of the Act. He is asked to pay his share of the Increment Duty. Does the Treasury think their surveyor right or wrong in asking for a share of increment, when, as a matter of fact, there can be no possibility of increment in the value of the land arising from the efforts of the surrounding population. There are three plain, practical questions, to which I want three plain, practical answers.
§ Mr. HEMMERDEThe hon. Member who spoke last but one has certainly removed many reasons for anyone on this side intervening in the Debate, but I wondered whilst he was speaking for how long the gentleman from whom he bought the land for £5,000 would have held it had it not been for the Budget? One thing that strikes me as curious about this Debate is we are still, whether in order or not, hearing exactly the same stories we heard at the time of the Budget, when the real reason why valuation is not altogether satisfactory is that the valuers were set to do a perfectly impossible task. It is a little difficult to imagine why a task done with the greatest possible success in New York for many years, and done in Australia and New Zealand also, should not be done here—
The DEPUTY-CHAIRMANI called an hon. Member to order a little while ago on this point. I hope the hon. Member therefore will not pursue it.
§ Mr. HEMMERDEI bow at once to your ruling, Sir, and shall not pursue that particular point further. On the question of valuation I think I shall not be straying beyond the limits of order when I say that the real difficulty of the Valuation Department in not completing this valuation arises almost entirely from two reasons. The greatest of all the difficulty we have in this valuation scheme has arisen from the great concessions made by the Chancellor of the Exchequer largely prompted by the desire to conciliate Members upon the other side. Another reason why we have had great difficulty in completing the valuation is that the particular valuation proposed in the Act was accepted at the wish of the Front Bench opposite, and that the very much more convenient form of private valuation, as it was called, was abandoned. It is entirely because the Government gave way on this matter to hon. Gentlemen opposite that we are now having very considerable difficulty in completing the valuations. As a matter of fact, the difficulty seems to be gradually and to a very considerable extent diminishing. There are also other reasons why this difficulty has been great. Take the case of mineral rights. A great deal has been made in the Debate to-day about the difficulty of aqueous and igneous rocks. As a matter of fact, no question would ever have arisen upon the question of aqueous and igneous rocks if the Government had not been persuaded to vary their original scheme of taxing mining values instead of taxing mining royalties.
§ Question put accordingly, "That a sum, not exceeding £1,045,730, be granted for the said Service."
§ The Committee divided: Ayes, 115; Noes, 194.
1971| Division No. 104.] | AYES. | [10.53 p.m. |
| Agg-Gardner, James Tynte | Beach, Hon. Michael Hugh Hicks | Campion, W. R. |
| Amery, L. C. M. S. | Benn, Arthur Shirley (Plymouth) | Carlile, Sir Edward Hildred |
| Ashley, W. W. | Benn, Ion H. (Greenwich) | Cassel, Felix |
| Bagot, Lieut.-Colonel J. | Bennett-Goldney, Francis | Cautley, Henry Strother |
| Baird, J. L. | Bird, A. | Cave, George |
| Banbury, Sir Frederick George | Boyton, J. | Chamberlain, Rt. Hon J. A. (Worc'r.) |
| Banner, John S. Harmood- | Bridgeman, W. Clive | Clay, Captain H. H. Spender |
| Barlow, Montague (Salford, South) | Burn, Colonel C. R. | Clive, Captain Percy Archer |
| Barnston, H. | Butcher, J. G. | Clyde, J. Avon |
| Bathurst, Hon. Allen B. (Glouc., E.) | Campbell, Captain Duncan F. (Ayr, N.) | Coates, Major Sir Edward Feetham |
| Bathurst, C. (Wilts, Wilton) | Campbell, Rt. Hon. J. (Dublin, Univ.) | Craig, Norman (Kent, Thanet) |
| Eyres-Monsell, Bolton M. | Lewisham, Viscount | Sanderson, Lancelot |
| Falle, B. G. | Lloyd, G. A. | Scott, Sir S. (Marylebone, W.) |
| Fetherstonhaugh, Godfrey | Locker-Lampson, G. (Salisbury) | Smith, Harold (Warrington) |
| Flannery, Sir J. Fortescue | Locker-Lampson, O. (Ramsey) | Spear, Sir John Ward |
| Fletcher, John Samuel (Hampstead) | Lowe, Sir F. W. (Birm., Edgbaston) | Stanier, Beville, |
| Gibbs, G. A. | Lyttelton, Rt. Hon. A. (S. Geo. Han. S.) | Stanley, Hon. G. F. (Preston) |
| Goldman, C. S. | Lyttelton, Hon. J. C. (Droitwich) | Starkey, John R. |
| Goldsmith, Frank | Mackinder, H. J. | Staveley-Hill, Henry |
| Gordon, Hon. John Edward (Brighton) | McNeill, Ronald (Kent, St. Augustine's) | Strauss, Arthur (Paddington, North) |
| Goulding, Edward Alfred | Magnus, Sir Philip | Talbot, Lord E. |
| Grant, J. A. | Malcolm, Ian | Tobin, Alfred Aspinall |
| Guinness, Hon. Rupert (Essex, S.E.) | Mason, James F. (Windsor) | Touche, George Alexander |
| Guinness, Hon. W. E. (Bury S. Edmunds) | Morrison-Bell, Major A. C. (Honiton) | Tryon, Captain George Clement |
| Gwynne, R. S. (Sussex, Eastbourne) | Mount, William Arthur | Valentia, Viscount |
| Hall, D. B. (Isle of Wight) | Newdegate, F. A. | Warde, Col. C. E. (Kent, Mid) |
| Hall, Marshall (L'pool, E. Toxteth) | Newman, John R. P. | Weigall, Captain A. G. |
| Hamilton, Lord C. J. (Kensington, S.) | Newton, Harry Kottingham | Williams, Col. R. (Dorset, W.) |
| Harrison-Broadley, H. B. | Pease, Herbert Pike (Darlington) | Willoughby, Major Hon. Claud |
| Henderson, Major H. (Berks, Abingdon) | Peel, Hon. W. R. W. (Taunton) | Wolmer, Viscount |
| Hewins, William Albert Samuel | Pollock, Ernest Murray | Wood, John (Stalybridge) |
| Hill-Wood, Samuel | Pretyman, E. G. | Worthington-Evans, L. |
| Hohler, G. F. | Pryce-Jones, Colonel E. | Wortley, Rt. Hon. C. B. Stuart- |
| Hope, James Fitzalan (Sheffield) | Rawlinson, John Frederick Peel | Wright, Henry Fitzherbert |
| Home, W. E. (Surrey, Guildford) | Rawson, Col. R. H. | Yate, Colonel C. E. |
| Ingleby, Holcombe | Rolleston, Sir John | |
| Joynson-Hicks, William | Rothschild, Lionel de | TELLERS FOR THE AYES.—Mr. |
| Kerry, Earl of | Salter, Arthur Clavell | Royds and Mr. Perkins. |
| Lane-Fox, G. R. | Sanders, Robert A. | |
| NOES. | ||
| Acland, Francis Dyke | Flavin, Michael Joseph | M'Laren, Hon. H. D. (Leics.) |
| Adamson, William | Gill, A. H. | M'Laren, Hon. F.W.S. (Lines., Spalding) |
| Addison, Dr. C. | Gladstone, W. G. C. | M'Micking, Major Gilbert |
| Ainsworth, John Stirling | Goddard, Sir Daniel Ford | Manfield, Harry |
| Alden, Percy | Goldstone, Frank | Markham, Sir Arthur Basil |
| Allen, Arthur Acland (Dumbartonshire) | Greenwood, Granville G. (Peterborough) | Marks, Sir George Croydon |
| Allen, Rt. Hon. Charles P. (Strand) | Griffith, Ellis J. | Marshall, Arthur Harold |
| Armitage, Robert | Guest, Hon. Major C. H. C. (Pembroke) | Martin, J. |
| Atherley-Jones, Llewellyn A. | Guest, Hon Frederick E. (Dorset, E.) | Mason, David M. (Coventry) |
| Baker, H. T. (Accrington) | Hackett, J. | Masterman, C. F. G. |
| Baker, Joseph Allen (Finsbury, E.) | Harcourt, Robert V. (Montrose) | Meagher, Michael |
| Balfour, Sir Robert (Lanark) | Hardie, J. Keir (Merthyr Tydvil) | Menzies, Sir Walter |
| Baring, Sir Godfrey (Barnstaple) | Harvey, A. G. C. (Rochdale) | Middlebrook, William |
| Beale, Sir William Phipson | Harvey, T. E. (Leeds, W.) | Molteno, Percy Alport |
| Benn, W. W. (T. Hamlets, St. George) | Harvey, W. E. (Derbyshire, N. E.) | Mond, Sir Alfred Moritz |
| Bentham, G. J. | Haslam, James (Derbyshire) | Morgan, George Hay |
| Birrell, Rt. Hon. Augustine | Haslam, Lewis (Monmouth) | Morrell, Philip |
| Boland, John Pius | Hayward, Evan | Muldoon, John |
| Booth, Frederick Handel | Hemmerde, Edward George | Munro, R. |
| Bowerman, C. W. | Henderson, Arthur (Durham) | Munro-Ferguson, Rt. Hon. R. C. |
| Brady, P. J. | Henry, Sir Charles | Nannetti, Joseph P. |
| Brocklehurst, W. B. | Herbert, Col. Sir Ivor (Men., S.) | Needham, Christopher T. |
| Burke, E. Haviland- | Higham, John Sharp | Neilson, Francis |
| Burt, Rt. Hon. Thomas | Hodge, John | Nicholson, Sir Charles N. (Doncaster) |
| Buxton, Noel (Norfolk) | Holmes, Daniel Turner | Nolan, Joseph |
| Cawley, Sir Frederick (Prestwich) | Howard, Hon. Geoffrey | Nuttall, Harry |
| Cawley, Harold T. (Heywood) | Hughes, Spencer Leigh | O'Brien, Patrick (Kilkenny) |
| Chancellor, H. G. | Isaacs, Rt. Hon. Sir Rufus | O'Connor, T. P. (Liverpool) |
| Chapple, Dr. W. A. | Jones, Edgar (Merthyr Tydvil) | O'Grady, James |
| Clough, William | Jones, H. Haydn (Merioneth) | O'Malley, William |
| Clynes, J. R. | Jones, Leif Stratten (Notes, Rushcliffe) | O'Neill, Dr. Charles (Armagh, S.) |
| Collins, Godfrey P. (Greenock) | Jones, William (Carnarvonshire) | Parker, James (Halifax) |
| Collins, Stephen (Lambeth) | Jones, W. S. Glyn- (Stepney) | Pearce, Robert (Staffs, Leek) |
| Cornwall, Sir Edwin A. | Jowett, Frederick William | Pease, Rt. Hon. Joseph A. (Rotherham) |
| Cory, Sir Clifford John | Keating, M. | Philipps, Col. Ivor (Southampton) |
| Crooks, William | Kellaway, Frederick George | Pointer, Joseph |
| Crumley, Patrick | Kelly, Edward | Ponsonby, Arthur A. W. H. |
| Cullinan, John | King J. (Somerset, N.) | Power, Patrick Joseph |
| Davies, Timothy (Lines., Louth) | Lambert, Rt. Hon. G. (Devon, S. Molton) | Price, C. E. (Edinburgh, Central) |
| Davies, Sir W. Howell (Bristol, S.) | Lambert, Richard (Wilts, Cricklade) | Priestley, Sir W. E. B. (Bradford) |
| Dawes, J. A. | Lansbury, George | Pringle, William M. R. |
| De Forest, Baron | Lawson, Sir W. (Cumb'rld, Cockerm'th) | Radford, G. H |
| Delany, William | Levy, Sir Maurice | Raffan, Peter Wilson |
| Denman, Hon. R. D. | Lewis, John Herbert | Raphael, Sir Herbert H. |
| Devlin, Joseph | Lundon, Thomas | Rea, Rt. Hon. Russell (South Shields)' |
| Doris, W. | Lyell, Charles Henry | Rendall, Athelstan |
| Duffy, William J. | Lynch, A. A. | Richardson, Albion (Peckham). |
| Duncan, C. (Barrow-in-Furness) | Macdonald, J. R. (Leicester) | Richardson, Thomas (Whitehaven) |
| Duncan, J. Hastings (York, Otley) | Macdonald, J. M. (Falkirk Burghs) | Roberts, Charles H. (Lincoln) |
| Edwards, John Hugh (Glamorgan, Mid) | McGhee, Richard | Roberts, G. H. (Norwich) |
| Elverston, Sir Harold | Macpherson, James Ian | Roberts, Sir J. H. (Denbighs) |
| Falconer, J. | McCallum, Sir John M. | Robertson, Sir G. Scott (Bradford) |
| Ffrench, Peter | McKenna, Rt. Hon. Reginald | Robertson, J. M. (Tyneside) |
| Roch, Walter F. (Pembroke) | Toulmin, Sir George | Wedgwood, Josiah C. |
| Roe, Sir Thomas | Trevelyan, Charles Philips | White, J. Dundas (Glas., Tradeston) |
| Rowlands, James | Ure, Rt. Hon. Alexander | Whitehouse, John Howard |
| Samuel, Rt. Hon. H. L. (Cleveland) | Verney, Sir Harry | Whyte, A. F. (Perth) |
| Shorn, E. | Wadsworth, J. | Williams, Penry (Middlesbrough) |
| Simon, Sir John Allsebrook | Walsh, Stephen (Lanes., Ince) | Williamson, Sir A. |
| Smith, Albert (Lanes., Clitheroe) | Ward, John (Stoke-upon-Trent) | Wilson, W. T. (Westhoughton) |
| Soames, Arthur Wellesley | Wardle, George J. | Young. Samuel (Cavan, E.) |
| Sutton, John E. | Warner, Sir Thomas Courtenay | Young, W. (Perthshire, E.) |
| Taylor, John W. (Durham) | Wason, Rt. Hon. E. (Clackmannan) | |
| Taylor, Theodore C. (Radcliffe) | Wason, John Cathcart (Orkney) | TELLERS FOR THE NOES.—Mr. |
| Tennant, Harold John | Watt, Henry A. | Illingworth and Mr. Gulland. |
| Thomas, J. H. (Derby) | Webb, H. |
Question, "That the Question be now put," put, and agreed to.
§ Committee report Progress; to sit again upon Monday next, 24th June.