REVENUE DEPARTMENTS.—INLAND REVENUE. [LAND VALUATION OFFICE.] (Hansard, 20 June 1912)

§ Mr. ROYDS
I beg to move to reduce the Vote by £100, in respect of Sub-head AA (Salaries, Wages, and Allowances in addition to Salaries).
The public cost of the Land Valuation Department for the current year is estimated at £530,000. In addition to the public cost, we have to take into consideration the cost to owners of land and house property, the subject of valuation. I do not think I shall be accused 1861 of exaggeration when I put that cost to owners at double the public cost, namely, £1,000,000 per annum—a recurring cost. Some months ago the Chancellor of the Exchequer said that 10,000,000 of Forms IV. had been sent in. If we put the cost of filling in each of these forms at 2s. that alone amounts to £1,000,000, and that is in the first year of this land valuation. We are now asked to make provision for the third year of the scheme. I make this Motion with very great satisfaction, because I hold that this valuation scheme, as administered by the Department, is not only a waste of public money but that the Department's method of administration is inflicting a burden on the owners of land and house property in the country, and is at the same time striking a blow at the credit of our greatest national asset—land and house property. The Attorney-General some weeks ago hazarded the opinion in this House that one-fifth of the task of valuation had already been completed. A few days afterwards I put a question in the House to the Chancellor of the Exchequer and asked how many final valuations of land had been completed. The answer was that it was impossible to state. I then put a supplementary question asking on what authority the Attorney-General had based his statement that one-fifth of the valuations had been completed. That supplementary question received no answer. We may take it that there is no justification or authority whatever for that statement as to the one-fifth. One-fifth of the number of the provisional valuations of land and small house property may have been issued; but that one-fifth part of the land valuations of this country have been accepted as final I doubt. My humble opinion is that the task undertaken by the Valuation Department, under the so-called People's Budget, will never be completed; I hope it never will.
We are now entering upon the third year of this valuation, and if the public cost and the estimated cost to owners of land and house property are added together, I believe the total must be at least £1,500,000 per annum, and in a very short space of time we shall find we have had £10,000,000—money spent on a perfectly unjustifiable, unnecessary, and fruitless valuation. I say "fruitless" because the last official information we had as to the money derived from these taxes was, I believe, that in. all it was the sum of £37,000. Whether that is correct or not, it is not of much consequence, because the 1862 total is only about one-fortieth part of the annual cost of the valuation. The immence cost of this valuation very largely arises from the endeavour to ascertain the site value of land in this country. Every surveyor and valuer in the country is perfectly accustomed to value all forms of property and all interests in property at its market value; but no surveyor or valuer has ever before been called upon to make a valuation of the site value of property, as he has to do under the provisions of this Act. Therefore I say it is in consequence of the site value of land having to be ascertained that this immense cost is occasioned. I propose to deal with two points only: firstly, in regard to the methods and operations of the Land Valuation Department, and to show the House what ridiculous results are arrived at, and how grossly unjust to owners of laud, great and small. I happen to represent a purely agricultural constituency in the great agricultural county of Lincoln, one of the foremost agricultural counties in the United Kingdom. Therefore, I think, I cannot do better than to place before the Committee the position of the owners of agricultural land in Lincolnshire in regard to the site value of their land as ascertained under the provisions of the so-called People's Budget. Of course, these conditions, if they apply to Lincolnshire, which does not differ much from other parts of the country, apply also to the rest of the United Kingdom.
Broadly speaking, site value is the value of land divested of buildings,—in fact in its unimproved state apart from any value added by the community. I think, broadly speaking, that is a correct definition of site value, and the term "land value," which we so frequently hear in this House and outside of it, means practically the same thing as site value. At any rate, I know no distinction; the two terms are synonymous. The county of Lincoln embraces 1,850,000 acres of agricultural land, of which about 775,000 acres are fenland or lowland, 250,000 acres are woldland, and about 120,000 formed the tableland called Lincoln Heath, and the residue consists of miscellaneous lands. The whole of this land has been drained, reclaimed, enclosed, and fenced, and farmhouses and buildings have been erected at the cost of the owners of the land. Two-thirds of the whole area of Lincolnshire consists of heath, wold or fen-land, and the bulk of that land has been drained, enclosed, and fenced within the last 150 years, a very considerable portion 1863 of it within the last 100 or 120 years. I take a valuation, which I have here,—it is typical of a very large number of farms in the Lincoln fens which contain some of the finest agricultural land in the country. The farm of which this is the provisional valuation, is in Martin Fen, Lincolnshire. It is part of that fen bounded on the east side by the River Withman and on the west side by the Lincoln Heath. It is a farm of 179 acres, of which I have a provisional valuation; gross rent £263, net rent £178. It is valued at £4,700 for gross value, and with that valuation I have no particular cause of complaint. The site value, however, after allowance for all improvements, is put at only £744 less, namely, £3,956, and of that £744, the sporting value is £200, so that £544 is the only sum allowed by this Valuation Department to represent improvements and expenditure in the past by the owners of that farm in Martin Fen.
What is the nature of those improvements, and why do I complain that the allowance is inadequate and insufficient? In the first place, on that farm there is a farmhouse and buildings at least of the value of £2,000. Besides that, this farm, along with the rest of that part of the fen, was about ten years previous to the year 1800, drained at a cost which I shall be able to show to the Committee amounted to £10 per acre. Therefore, the cost of improving that farm alone was £10 per acre for drainage in or about the year 1790, which added to £2,000 the cost of buildings makes £3,970. In addition there would be the cost of making dykes, drains, gates, fences, and so forth, and also the cost of paring and burning and bringing the land into cultivation. I put that at the very moderate sum of £3 per acre, which would make £537. That brings the total cost of improvement up to £4,327, and if I deduct that from £4,700, which is the total value of the farm as now valued by this Department, the site value would be brought out at £373, and of that site value £200 represents sporting. The site value of that farm ought to be brought out at £173, whereas it is actually brought out at £3,956. In fact, the site value of that farm is fifteen times as much as it ought to be—that is what it comes to. I should like to give the Committee the authority I have for saying that the drainage of these fens originally cost £10 per acre, and when I say they cost £10 per acre I am only referring to the scheme which was successful, the scheme of Sir John 1864 Rennie. It is a matter of history that as regards all these fens previous attempts had been made to drain them, and that many of the owners were ruined by these attempts. There never was any complete and comprehensive scheme for the drainage of these fens until the scheme of Sir John Rennie of 120 years ago. I have here my authority in a book by Smiles, "Lives of the Engineers," and at page 153 the writer says:— The wretched state of these lands may be inferred from the fact that, about seventy years since, a thousand acres in Blankney Fen, constituting part of the 'Dales'—now one of the most fertile parts of the district between Lincoln and Tattershall—were let annually by public auction at Horncastle, and the reserved bid was only £10 for the entire area! and I should especially like to have the Chancellor of the Exchequer's attention to that. The reserved bid for the letting of these lands of 1,000 acres one year before they were drained, and now one of the most fertile parts of the Kingdom, was £10 for the entire area. So much for these lands before they were drained. On page 164 of the same book we have an estimate of the cost of the drainage of 60,000 acres of land by Sir John Rennie; the estimate is by Mr. Brown, and it shows that 60,000 acres of land were improved and drained at the cost of £580,705. That is the evidence which I submit in support of my statement that at least £10 an acre was spent upon the drainage of this particular farm of 179 acres, and therefore I claim from the site value a deduction of £1,790 on the ground of that improvement. I am quite prepared to sink the whole of the capital previous to that drainage scheme spent by the owners of this farm or the adjoining farms. Another gentleman at about that time, Secretary to the Board of Agriculture, Arthur Young, also referred to this matter, and he said:— The quantity of land thus added to the Kingdom has been great; fens of water, mud, wild fowl, frogs, and agues, have been converted to rich pasture and arable, worth from 20s. to 40s. an acre. Health improved, morals corrected, and the community enriched. These, when carried to such an extent, are great works, and reflect the highest credit on the good sense and energy of the proprietors. These are the results of that government, which so many living and fattening under its protection wish to exchange or hazard for speculative legislation of a more popular cast. These undertakings prove the reliance of a people on the secure possession of what their industry creates. A farming traveller must examine this country with a cold heart who does not pray for the continuance of a system of legislation which has tended so powerfully to adorn, improve, and cultivate the country, and to diffuse prosperity and happiness through the whole society. I think I have satisfied the Committee as to the value of the improvement carried 1865 out on this particular farm, and I think I have also satisfied them as to what the opinion was before and after, these improvements had been carried out, as to the state of the land in the estimation of the best experts of the country at that time. It is now sought, in this valuation scheme, practically to ignore the whole of those improvements, not to allow the owners of property to be credited with these improvements on this particular farm, which, as I said before, amount at least to the sum of £4,324. The Government, through its Valuation Department, proposed to credit us with £544. I now leave that particular farm, and I am perfectly ready to show the Committee thousands of valuations upon the same line. This form of valuation, and this method on which the site value of agricultural land is treated, applies to every single farm in the United Kingdom. I am not sure that the owners of agricultural land are all alive to the fact, but I propose, in my humble way, to try and enlighten them, and to warn them not to agree, and, in no circumstances whatever in regard to agricultural land, to submit to such valuation and to insist upon their improvements which they effected in the past being recognised and the site value of their farms and land brought out at their proper, fair, and true value, so far as it can be ascertained. I think the Committee might very well ask how comes it about that the Valuation Department can write off these improvements in such a way. What claim do they make? On what do they rely to write off these improvements? I will tell the House exactly how they make this claim and how it is that owners are to be tricked of their improvements.
There are two reasons. The first is that the valuers allege that the unit of valuation being occupation the owner of the farm cannot be given credit for the value of the buildings, because that farm might be linked on to or thrown into another farm, and then they might not want my buildings. The valuer does not regard the value of my house or buildings or how necessary they have been to my farm. After surveying my farm he values it with the buildings and fences. He then estimates what will be the value of this farm without those buildings and fences. He sees an adjoining farmhouse and buildings which may belong to someone else, but that does not matter. The adjoining farm might belong to the county council. Then he says, "Look here, there is an adjoining farm, I can put fifty acres without 1866 inconvenience to this tenant, fifty acres to another, and then throw the seventy acres into a third farm and so do without those buildings." Consequently, he writes down the whole of my improvements and drainage to £500, while the buildings alone have cost £2,000. Then he comes the next day and values the adjoining farm and the same process is gone through. He values that farm as if all those buildings were gone, and as if all mine were there. In fact, he asks the owners of these two properties to exchange their buildings for those few days for the purposes of this fictitious valuation. That is the position, and neither the Chancellor of the Exchequer nor any hon. Gentleman sitting on the Government Bench can deny it, because that is the course being followed by every valuer at the present time, and if he is not following it, at any rate he says he is, and judging from the actual results of this valuation, they must be following it. The next reason why I got such a very small sum allowed for my improvements with regard to this farm, is because no deduction can be made in respect of dykes and stone walls; so that all drainage is disallowed. As there may be some doubt on this point, I will read in support of my statement a question which I put in the House on the 20th of March this year. I asked:— Whether the valuation of land is still proceeding on the basis that, for the purpose of arriving at site value, no deduction is made in respect of stone walls and dykes, but is made in respect of live fences? The Financial Secretary to the Treasury (Mr. Masterman): Subject to possible exceptions in cases where the stone walls or dykes are appurtenant to or used in connection with a building the answer to the hon. Member's question is in the affirmative."—[OFFICIAL REPORT, 20th March, 1912, cols. 1858–9.] In the construction of the Act in that connection placed on it by the Valuation Department, none of these stone walls, drainage, or dykes are used in connection with the house; they allow a paltry drain to the house, but not the great cost of drainage and bringing all this land into cultivation. On the same date I put a supplementary question, and I asked— Would the hon. Gentleman say why properties of precisely the same value are for the purposes of the Finance Act valued upon entirely different basis? Mr. Masterman: We are only carrying out the law under Section 25, Sub-section (2), of the Budget, 1910."—[OFFICIAL REPORT, 20th March, 1912, col. 1859.] I further asked, "Is not the assessable site value the value of the land?" And the Financial Secretary to the Treasury replied, "Assessable site value is the value of the site." All I ask is that the site should be properly valued. I ask that the site of this particular farm and every other 1867 farm in the country should be properly valued. If the site is to be valued,—I think it is ridiculous to have it valued at all, because it must be a hypothetical value,—but, assuming that it is necessary to have the site valued, then do let that be properly arrived at. The same conditions I have described apply to every farm in the United Kingdom. And I assert that the site value of agricultural land is being valued at anything from five to fifteen times above its actual value. Take the Heath of Lincoln. There were formerly no buildings on it, and the owner has no allowance for them or for his stone walls or live fences, or other things necessary to bring the land into cultivation. The site value of every farm on the Lincoln Heath and Wolds is being valued at least five times its proper site value. I may be asked why is it so vitally important that as correct a site value as possible should be ascertained, seeing that under the People's Budget no tax is placed on the site value of purely agricultural land? My answer to that question is that I think that arrangement was made to gull the landowners of England in order that they might think this valuation was set up simply and solely for the purpose of that Act. We know it was set up for no such purpose. We know that no money is coming in from the People's Budget. [An HON. MEMBER: "Not under the Land Tax?"] I do not think it was called the People's Budget in any connection except the Land Taxes. We have heard a good deal about the Land Taxes, and the land for the people, and the tax on the dukes. It was called the People's Budget because it placed a burden on the so-called rich owners of land.

§ The DEPUTY-CHAIRMAN (Mr. Maclean)
The hon. Member is not in order in discussing that subject.

§ Mr. ROYDS
I was trying to impress upon the Committee the danger of the methods now being adopted by the Valuation Department.

§ The CHANCELLOR of the EXCHEQUER (Mr. Lloyd George)
Whatever your ruling is, Mr. Maclean, I want to know what is debatable in Committee of Supply? I do not understand whether the hon. Member opposite is complaining of the Act or the administration of it. Does the hon. Member's charge mean that the valuers are not faithfully administering the Act, or is he criticising the Act itself? 1868 If he is doing the latter, it is not the place to criticise Acts of Parliament in Committee of Supply; but if his charge is that the valuers are not carrying out the Act, then it is quite another matter.

§ Mr. PRETYMAN
I think it will be within the recollection of the House that when the very same question was being discussed on the Committee stage of the Budget Resolution I was called to order by the Chairman for discussing this matter, because it was a matter of administration and not a matter of altering the law. Now I understand an attempt is to be made by the right hon. Gentleman to show that it is a matter of law and not a matter of administration. I submit with all respect, Mr. Maclean, that this matter is so complicated that it is absolutely impossible to differentiate and say where administration ends and the law begins. What we desire to do is to discuss the administration of the law as it is being interpreted by the Valuation Department. Whether that interpretation is right or wrong or involves a criticism of the law is a matter for the Chair to decide.

§ The DEPUTY-CHAIRMAN
I interrupted the hon. Member because he had transgressed the Rules of Order on that point. This is purely a question of the administration of the Act, and he must keep clearly off discussing any alteration of the law or legislation.

§ Mr. ROYDS
I am confining myself to the administration of the Act, because I know I should not be in order if I did not do so. Every point I have made in the interests of the landowners and against the administration of the Act will be contested and fought inch by inch in the Law Courts. I was proceeding with the point of the necessity of getting the correct site value of agricultural land. I have not got before me the report of a gentleman who, when this Act was under discussion in this House, was very closely associated with the Chancellor of the Exchequer as his adviser—I refer to Mr. Lumley,—but I remember this gentleman saying:— We shall see when we get the valuation of the agricultural land of England how closely the total value of the agricultural land approaches or approximates to the site value. If the site value and the agricultural value approximate to one another, it will be quite clear that all this talk by the owners of land about improvements they have made in the past is mere moonshine. If, on the other hand, the site value is brought down to a very low sum, then their contention will be borne out as to the improvements which they, or their predecessors, have effected. I recall that statement because it shows what has been in the minds of valuers 1869 and the framers of this Act during the whole of that time, and they are now endeavouring by trickery to make the site value of agricultural land approximate to the total value, when they ought to be as far apart as the figures I have mentioned, namely, £4,700 and £179. The hon. Member for North-West Norfolk (Mr. Hemmerde), of course, launched a brand new scheme of land reform during that by-election.

§ Mr. HEMMERDE
I fought North-West Norfolk on exactly the same policy as I fought East Denbighshire.

§ The DEPUTY-CHAIRMAN
I think we must keep clear of that.

§ Mr. ROYDS
I should like, on a point of Order, to put it this way. In order to show the absolute necessity of getting a correct site value of agricultural land I must show this valuation is going to be used, not only for the purposes of the Finance Act, but also for other purposes. I am not going into the scheme of the hon. Member for North-West Norfolk, because I do not believe for one moment he understands it himself, and I am perfectly certain the electors of North-West Norfolk do not.

§ The DEPUTY-CHAIRMAN
That clearly is a step outside the limits of this discussion.

§ Mr. ROYDS
Perhaps I have said enough to draw the attention of the House to the fact that this valuation is not going to be used only for the purposes of these Land Taxes of the People's Budget, which I consider has proved itself a failure, but is also going to be used for all these other purposes.

§ Sir F. BANBURY
On a point of Order, may I ask whether it would not be out of order for my hon. Friend to ask the Chancellor of the Exchequer to do something which would entail fresh legislation, but whether it would not be in order for my hon. Friend to ask the Chancellor of the Exchequer not to do something which would entail fresh legislation, and whether that is not what my hon. Friend is doing?

§ The DEPUTY-CHAIRMAN
I appreciate the point, but that is not the interpretation of the hon. Member's remarks which occurs to me.

§ Mr. AUSTEN CHAMBERLAIN
May I submit to you, as a point of Order, that the argument of the hon. Member is that this valuation, being wrongly made, is an 1870 untrustworthy basis for any future legislation. The fact that such future legislation is contemplated is in itself a special reason for making this valuation accurate and in accordance with the provisions of the law.

§ Mr. LLOYD GEORGE
There is nothing I would like better than a Debate on land values and the use which can be made of the valuation for the purposes of future legislation, but I would like to know whether I would be in order, if the question is raised, in discussing the fitness of this valuation for the purposes of future legislation, because there we are entering upon a very large question indeed.

§ The DEPUTY-CHAIRMAN
Certainly I must clearly rule that the discussion of that question is entirely out of order.

§ Mr. ROYDS
That being the position of affairs, I, of course, cannot pursue that topic any further. I hope, however, I have made it clear that this valuation is not going to be used only for the purposes of these Land Taxes in the Budget, but that it is being pressed forward for other purposes. I think I am in order in arguing that there is no occasion for it to be proceeded with for the purposes of the Budget, and, if there is no occasion for it being proceeded with for that purpose, then I am entitled to ask for what purpose it is being pressed forward, and why 170 of his followers are memorialising the Chancellor of the Exchequer to do so. I think I can supply the answer myself. They are pressing it forward lest the landowners of the country should find out before it is completed what the Valuation Department are about. I have dealt with agricultural land, and I propose to make one point in connection with urban land and house property. The Increment Value Duty on the statement of the Chancellor of the Exchequer, oft repeated, and within the recollection of this House, was only to be levied on the difference between the site value as ascertained under the Act and the site value on an occasion of a sale or transfer. That was perfectly clearly established, and it was understood by every Member of the House and by the country. It was clearly understood that the site value of the land was only to be charged with Increment Value Duty when that site itself increased in value. It was further understood that under no circumstances whatever was Increment Value Duty to be charged on 1871 house property; it was only to be charged on the increase in the value of the site.
The valuers throughout the length and breadth of the land are claiming Increment Value Duty, not only when there has been no increase in the value of the site, but when there has been a drop in the value of the site, and they are also claiming it on house property, or, as the Chancellor of the Exchequer would call it, the composite value, without regard to the fact whether the land has gone up or down, or whether there has been an actual profit or loss on the house. They are not only claiming Increment Value Duty when there has been no profit on the land, which is irregular, illegal, and against the understanding of this House; and they are not only charging it on house property, which is also irregular, illegal, and against the understanding of this House, but they are also charging it on house property when the wretched owner of it has made a loss. I will explain the matter by giving a very simple illustration. A man buys a plot of land for £200, and builds a house costing £1,200. The total cost is £1,400. The valuers come round and value the composite property at £1,000; that would be a perfectly natural and ordinary thing to do. The man subsequently sells the house for £1,200, and the valuers say there is an increment of £200 because he has made a profit. The man says, "No, the property cost me £1,400, and I only sold it for £1,200." The valuers say, "No; it cost you too much". We have nothing to do with that. It does not matter to us what you gave for it, or what you have spent in building. We were able, in our wisdom some years later to place a value on that property as in April, 1909, and, regardless of what it cost you or what you gave for it, we claim Increment Value Duty on £200, although you have actually made a loss of £200." There is no way of getting out of it, except, of course, by appealing and contesting the matter in the Law Courts, and I need hardly say it will be contested.

§ Sir A. MARKHAM
I can confirm what the hon. Member says, that this is a general complaint. It is general in all the county of Nottinghamshire. Does the hon. Member, however, know a case where the Treasury has claimed and obtained the money?

§ Mr. ROYDS
I only know of cases in which it has been claimed, because wherever a case has come before me I have always insisted on it being fought. Still 1872 the point is that every man who owns a house or a bit of land in the country is faced with this unless he is prepared to go to the expense of fighting it. The further point is that a claim is being made which this House repudiated from the first. Now it is brought to the knowledge of the House, I think in common honesty hon. Members, not only on this side of the House, but also on the other side of the House, should insist on the matter being adjusted. I am sure on both the points I have put I must receive the general support of the House, because I am quite sure it is the intention and desire of the House that this Act so long as it is on the Statute Book should be administered fairly. If this system is continued, whether with regard to agricultural land or to Increment Value Duty claimed on houses and land, a practice, of course, is being followed to which this House has never consented, and which this House should never approve or allow to go on. I ask the House, therefore, to support me in the Motion I have made.

§ Mr. LLOYD GEORGE
The hon. Gentleman who has just sat down has attacked the Act of 1910. I was not very clear during the first part of his speech whether he directed his criticism against the Act itself or against its administration, and I am not even now sure whether he maintained that in the action they have taken the valuers have departed from the principles laid down in the Finance Act of 1910. That is the contention of the hon. Gentleman?

§ Mr. ROYDS
indicated assent.

§ Mr. LLOYD GEORGE
I think if the hon. Member will only look at Section 25, which is the Section he is criticising, he will find there is no ground at all for his complaint. I would make this preliminary observation. He says they have departed, and departed very materially, from the principles of that Act in a case which I should have thought was very typical of land in the eastern counties of England. He very properly said that a matter of that kind ought to be brought before the Courts and that steps were being taken to bring it before the Courts. In that case it is in the position of being sub judice, and I should have thought it was rather a departure from precedent, even if it was not strictly improper, when the matter is sub judice.

§ Mr. ROYDS
There is no case, so far as I know, at present before the Courts.

§ Mr. LLOYD GEORGE
I see. The action has not been brought. The hon. Gentleman at any rate stated it was his intention to see the matter fought out in the Courts, and I should not have thought it was a very fair beginning for an impartial adjudication of a case of that kind to charge the opposite party with trickery, because, if I were to defend the matter in the same way—

§ Mr. ROYDS
I did not charge the opposite party. I charged the Valuation Department.

§ Mr. LLOYD GEORGE
This is a challenge, in the Law Courts, of the action of the valuers of the Department. [HON. MEMBERS: "NO, no."] The hon. Gentleman said the case was to come before the Law Courts. He prefaces the proceedings by accusing the Department of trickery in the administration of the Act. If I were to defend the valuers of the Department by the same method it would be a very improper thing to do. I am not sure whether, as a Minister of the Crown, it is not improper for me to enter into the matter at all, but the hon. Member having raised the point I am bound to deal with it. If he will only look at Clause 25, I think he will find that the valuers have acted strictly within the four corners of the Act. Sub-section (1) says:—
"For the purposes of this part of the Act the gross value of land means the amount which the fee simple of the land, if sold at the time in the open market by a willing seller in its then condition free from encumbrances and from any burden, charge, or restriction (other than rates or taxes) might be expected to realise."
Again, if he will look at Sub-section (4) (b) he will find it provided:—
"(b) Any part of the total value which is proved to the Commissioners to be directly attributable to works executed or expenditure of a capital nature (including any expenses of advertisement) incurred bonâ fide by or on behalf of or solely in the interests of any person interested in the land for the purpose of improving the value of the land as building land or for the purpose of any business, trade, or industry other than agriculture."
Other than agriculture! The hon. Gentleman cheers that, but it shows that his point is a point directed against the Act and not merely against the administration 1874 of it. The Act may be right or it may be wrong; at any rate it was debated at great length, and I think these words were introduced in the interests of the agricultural-community. At the time the only complaint was that they did not go far enough, in the interests of agriculture.

§ Sir A. CRIPPS
But the Section to which the right hon. Gentleman is referring does not deal with these valuations.

§ Mr. LLOYD GEORGE
I think the hon. and learned Gentleman is wrong. I have not finished reading the Clause. I find it is further provided:—
"Where any works executed or expenditure incurred for the purpose of improving the value of the land for agriculture have actually improved the value of the land as building land, or for the purpose of any business trade, or industry other than agriculture, the works or expenditure shall, for the purposes of this provision, be treated as having been executed or incurred also for the latter purposes."
The hon. Gentleman said we deducted the drains near a house, but not the drains which improved the value of land for agricultural purposes. That, again, may be a criticism against this Act; it is not a criticism against the administration of the Act.

§ Mr. ROYDS
On this land no houses could have been built until it was drained, under any scheme.

§ Mr. LLOYD GEORGE
If the hon. Gentleman can maintain that proposition it is one which should be argued in the Courts. It is a question of fact, a question which this House is quite incompetent to decide. It is a fact which cam easily be decided by the Court of Appeal and, as I understand the case is to come before that Court, I repeat it should be tried outside this House and not within its four walls.

§ Mr. AUSTEN CHAMBERLAIN
May I ask one question, which, I think, the right hon. Gentleman will recognise to be a fair one? Will he, on his side, facilitate the taking of a test case, and will he agree that the action of the Valuation Department shall follow the decision arrived at in that test case?

§ Mr. LLOYD GEORGE
I cannot say without having time to think it over. On the face of it it seems very fair, but I 1875 will let the right hon. Gentleman know later on in the Debate, which, I understand, is going on until eleven o'clock.

§ Mr. CASSEL
Will the right hon. Gentleman go a step further? Will he allow an extension of time in those cases where the valuation has already been finally settled before knowing the result of the test case; otherwise people may have their cases adversely decided with no opportunity of remedy.

§ Mr. LLOYD GEORGE
I am not quite sure as to that. It strikes me that this is a rather typical case which would cover practically the whole of the Fen district, and the decision in it would be of great moment. I was surprised the matter had not been challenged in the Courts. I recognise there is a good deal to be said for the poor owner of a small hereditament, and I think it is quite open to the right hon. Gentleman to say we cannot expect him to go to the Court of Appeal and fight a case of this nature. But that is not the case here. This is a case which affects practically scores and even hundreds of thousands of acres in the Eastern counties. I am very surprised, seeing that the owners have been advised that they should take the case to the Courts, that no action has yet been commenced. I am surprised it was not taken long ago and a decision obtained on the point. It is also clear that this is a typical case, and the decision in it will cover the rest of the cases of the same nature. Seeing that it is a matter which is going to be brought before the Courts—I am very glad it is, and I hope it will be without any delay—then it will not be wise or fair for me to enter into any further discussion in the nature of argument on one side or the other. I have given generally my answers. I was bound to do that, because the hon. and learned Gentleman had challenged the action of the valuers. I was rather surprised to hear his statement that agricultural land throughout the United Kingdom had been valued at five times its actual value.

§ Mr. ROYDS
Its site value.

§ Mr. LLOYD GEORGE
I thought the general charge was that the land was undervalued, and if I were in order in glancing even remotely at the possibilities mentioned by the hon. Gentleman, I should say, on the whole, that his remarks show how fair the valuation is. To value at five times the actual site value is to give facilities to get hold of land at something less 1876 than its real value. Overvaluation rather than undervaluation surely should not give rise to much complaint.

§ Mr. ROYDS
You have overvalued the site value of the land, and it is on the site value that you are claiming the new taxation. The owner of the land wants the true value of the site, and not the value of the site, which includes all his improvements.

§ Mr. LLOYD GEORGE
The hon. Gentleman is begging the question. I was referring to another part altogether. He seems to think we have overvalued agricultural land instead of undervaluing it. The general charge brought against us was of undervaluation and not of overvaluation.

§ Mr. PRETYMAN
May I point out—

§ Mr. LLOYD GEORGE
Really, I have been subjected to a good many interruptions.

§ Mr. PRETYMAN
This is a Committee Debate and we might clear up these points as we go along. There is no charge as regards the total value of agricultural land which is the value at which it will be compulsorily taken that it has been either undervalued or overvalued. The charge is that the site value of agricultural land, which is to be the basis of future taxation, has been overvalued by making no allowance for improvements. The charge of undervaluation is perfectly definite and applies to urban land where there is again a special object for undervaluation, i.e., to obtain the Increment Value Duty when the land is sold at its proper price.

§ Mr. LLOYD GEORGE
I am glad there is no charge that agricultural land has been either overvalued or undervalued.

§ Mr. PRETYMAN
As regards the total valuation.

§ Mr. LLOYD GEORGE
I regard that as a very valuable admission. The hon. Gentleman quoted Mr. Arthur Young in reference to all these great drainage works in the Fen district. I believe Mr. Arthur Young said that we wanted more legislation of this kind—legislation enabling improvements in the land to be made and the whole charge of those improvements placed on the land improved. There, again, we have a very important admission on the part of the hon. Gentleman. He seems to think it is a precedent that might very well be followed. I agree with him, 1877 and he must not be surprised if that precedent is followed in the future. When it is I shall claim his support on the strength of the speech he made a few minutes ago. The second point he brought forward was with regard to the valuations. He complained that they were both irregular and illegal, and he told us that he meant to fight them. He is perfectly right in so doing, and, if they are irregular or illegal, I hope he will fight them. I will just call his attention to what is happening. We have heard a good deal from him—indeed, he worked himself into a state of great excitement with regard to the valuations, and one might have imagined that they were vitiated from top to bottom. I would like to inform him that up to the 31st May last we had 2,588,000 valuations, which represent 26 per cent. The hon. Gentleman mentioned 20 per cent., he was only 6 per cent. wrong—a very small percentage of inaccuracy in that quarter.

§ Mr. PRETYMAN
That is a monstrous statement.

§ Mr. LLOYD GEORGE
I have received from the hon. Gentleman about a dozen interruptions. May I remind him he has a perfect right to get up and reply to me after I have finished?

§ Mr. PRETYMAN
I am making a definite charge of misrepresentation against the Chancellor of the Exchequer.

§ Mr. LLOYD GEORGE
I have not referred to the hon. Gentleman at all. If I misrepresented anybody I misrepresented the hon. Member for the Sleaford Division of Lincolnshire (Mr. Royds), and I think his recent speech proved him quite as competent, and more competent, than the hon. Gentleman to conduct his defence.

§ Mr. ROYDS
The Chancellor of the Exchequer stated that my statement was about as correct a statement as usually came from this quarter. This is the first time I have ever addressed the House on this subject, and he, therefore, can have no evidence by which he can judge either the accuracy or the inaccuracy of my statement.

§ The DEPUTY-CHAIRMAN (Mr. Lyell)
The only charge I heard the Chancellor of the Exchequer make against the hon. Member was that he was fully able to defend his own case.

§ Lord ROBERT CECIL
On a point of Order, Sir, in the interests of the proper conduct of the. Debate, may I call your attention to the fact that the charge that the Chancellor of the Exchequer made was a charge of misrepresentation by my hon. Friend the Member for Sleaford—[HON. MEMBERS: "Inaccuracy."] Yes, it was a charge of inaccuracy.

§ Mr. LLOYD GEORGE
What is there disorderly about that?

§ Lord ROBERT CECIL
I was merely pointing out to the Deputy-Chairman that he had not correctly heard.

§ The DEPUTY-CHAIRMAN
There is nothing unparliamentary about a charge of inaccuracy. It is a statement made every day by Hon. Members on both sides of the House.

§ Mr. LLOYD GEORGE
Really, what is all this excitement about? I am very sorry to have caused it. Let us get to the facts. The hon. and learned Gentleman said that we had only valued one-fifth. I did not say one-fifth; I said 20 per cent. Is that inaccurate? As a matter of fact, we have valued 26 per cent., and I said you were inaccurate to the extent of 6 per cent. Is that wrong?

§ Mr. PRETYMAN
Quite wrong.

§ Mr. ROYDS
I only quoted the words of the Attorney-General.

§ Mr. LLOYD GEORGE
He quoted the words used by the Attorney-General a long time ago, when it was one-fifth.

§ Mr. PRETYMAN
Then he was not inaccurate.

§ Mr. LLOYD GEORGE
Perhaps the hon. Gentleman will restrain himself. His excitement must be very painful to himself. The mistake the hon. Member has made is a mistake of more than 6 per cent., because the difference between 20 per cent. and 26 per cent. is a difference of nearly one-third per cent. That is a very considerable percentage. These are the facts. I am giving the valuations up to 31st May last. The total is 2,588,000.

§ Mr. ROYDS
Out of a total of what?

§ Mr. LLOYD GEORGE
Out of the total number of hereditaments in this country.

§ Mr. ROYDS
How many hereditaments are there?

§ Mr. LLOYD GEORGE
If the hon. Gentleman will only take a pencil, if 2,588,000 is 26 per cent., he can easily work the answer from that. If I had got the figures I would give them to him, but those figures are all I have got at the present moment. Let the Committee get these figures into their minds—2,588,000 hereditaments. How many appeals are there? Two hundred and sixty-one. I beg pardon—we must be strictly accurate—there are 263. [An HON. MEMBERS: "How many of them test cases?"] How many hereditaments do these appeals cover? Two thousand three hundred and ninety-one, that is all. That is one in every thousand hereditaments. It shows they only relate to small cases, and it means that so far as the great estates that have been valued are concerned, it has been very largely a matter of agreement. It is suggested that the small people cannot contest our valuations, but this means that the big people have not thought it worth their while to contest our valuations. It is not that they could not afford it; it is that the valuations have been, on the whole, perfectly fair. The hon. and learned Member for South Bucks (Sir A. Cripps) has had great experience of rating, and probably the hon. and learned Gentleman who initiated the Debate has had the same experience. I have asked the question, and I ask it again, whether any Member of this Committee, with experience of rating, and who has seen a revaluation of any union, has ever seen a case where there were fewer appeals, one out of a thousand hereditaments, that is all? I have had some experience of revaluation in unions, and some experience of appeals, but I have never seen a case where there was such a small percentage of appeals in a case of a revaluation. I think it is due to those gentlemen, who have undertaken a very difficult task, that they should be treated fairly. They are members of the Civil Service. I have repeatedly challenged the hon. Gentleman the Member for Chelmsford (Mr. Pretyman), who certainly has not been remiss in finding fault with everything, to say that these men, on the whole, are not a very able and competent body of men. Let us be fair to them. It is not like a revaluation of a union proceeding upon the same old principles established for a good many years. It is a valuation upon new principles in this country. They are undertaking it, and are carrying it out, and they are doing it so well that there are only appeals in one case in a thousand in respect of 2,600,000 valuations. Is not that 1880 creditable to the work they have done? That is purely a general observation I make in reply to the hon. Gentleman. He seems to think that there is no demand ever put forward by a Revenue officer which is subject to contention and criticism. Take the Income Tax, which has. been in operation for over sixty years in this country. In connection with that the Revenue officers are constantly putting forward claims that have to be decided. There are reviews, examinations, and reductions; there are appeals even now, after sixty years of working at it. Is it to be said that every time a valuer puts forward a claim that cannot be supported that that means he has been guilty of trickery, that he is incompetent,. and that the whole thing is simply a dodge and a trick to oppress landlords and owners of hereditaments? It is unfair; it is grossly unfair to a very admirable body of men, and I am surprised at the hon. Gentleman for suggesting it.

§ Mr. ROYDS
I made no personal charge against any individual valuer whatever. I made a charge of trickery against the Department which is under orders from I do not know whom. I certainly did not make it against individual valuers.

§ Mr. LLOYD GEORGE
If the hon. Member's speech meant anything, it meant a charge against the valuers in the Eastern counties. He actually used the word "trickery"; I am glad he is ashamed of it.

§ Mr. ROYDS
Trickery of their employers.

§ Mr. LLOYD GEORGE
I think, at any rate, he might have formally withdrawn it as a charge against them.

§ Mr. ROYDS
I never made it. The Chancellor of the Exchequer has set it up in order to knock it down.

§ Mr. LLOYD GEORGE
I am quoting the very word used by the hon. Gentleman himself. The word "trickery" is not a word I used. It is a word I took down the moment the hon. Gentleman used it. It was a word he used in connection with the valuations in the Eastern counties. I say that a grossly unfair charge has been made against men who have, as the results I pointed out show, on the whole discharged their duties with exceptional fairness.

§ Mr. ROYDS
Hear, hear.

§ Mr. LLOYD GEORGE
I am glad to hear that cheer.

§ Mr. ROYDS
It is agreed.

§ Mr. LLOYD GEORGE
With regard to the general question, I have already said that 26 per cent. of the hereditaments of this country have been valued.

§ Mr. CASSEL
Provisionally?

§ Mr. LLOYD GEORGE
Yes, provisionally valued. There are 261 appeals, covering about 2,600 hereditaments.

§ Mr. PRETYMAN
How many objections are there?

§ Mr. LLOYD GEORGE
What does the hon. Gentleman mean by objections?

§ Mr. PRETYMAN
There are four processes. The first process is to serve a pro-visional valuation. I understand that two and a-half millions of them have been served. The next process is the objection. You cannot lodge an appeal until the objection has been considered by the Valuation Department and a further valuation served, and that further valuation revised. I ask again how many objections have been received?

§ Mr. LLOYD GEORGE
I think I can reassure the hon. Gentleman on that point, in spite of the triumphant way in which he interrupted me. I have no doubt he will be delighted to know that the great bulk of these provisional valuations have been finally settled. My right hon. Friend (Mr. Masterman) tells me that about 85 per cent. have been finally settled. Let the Committee realise what that means. Here is an association working night and day, in every part of the country, whose main business it is to find faults in this valuation, working up cases, stirring up suspicion, and if there is any complaint anywhere, not merely investigating it, but working it up and picking holes, and all it can manage is 260 appeals.

§ Mr. CROOKS
Not so bad as a parish union.

§ Mr. LLOYD GEORGE
I agree with my hon. Friend. There is not a new assessment in a parish union where the hon. Gentleman's Land Union could not find more to do than it has found here in a great valuation covering nearly 3,000,000. That is all they have succeeded in doing after working hard during the last two years. I can say that it is in the interests of the Exchequer, and certainly in the 1882 interests of the framers of this Act, that the valuation should be a fair one. My right hon. Friend tells me after making further inquiries, that it is not 85 per cent., but well over 90 per cent. of these valuations that have been finally settled. It was an under-statement on my part.

§ Mr. AUSTEN CHAMBERLAIN
That is very unusual.

§ Mr. LLOYD GEORGE
My inaccuracies are usually on the side of under-statement. That is where they are different from those of hon. and right hon. Gentlemen opposite. It is our interest that there should be a fair valuation. The hon. Gentleman said this was not a fruitful valuation. He had better wait a little, and he will find how fruitful it is. But even from the point of view of taxation it is much more fruitful than he is prepared to admit. I gave figures in the last Debate on these valuations showing that we have added very nearly £500,000 to the Death Duties. I gave some glaring cases—the right hon. Gentleman (Mr. Austen Chamberlain) admitted that they were glaring cases—where we had more than doubled the valuation upon which Death Duties were paid in consequence of this valuation. There is no doubt that the saving in respect of Death Duties alone will more than justify it. I cannot, within the ruling of your predecessor in the Chair, defend the valuation in all its aspects, because it involves glancing at future possibilities as well. All I say is that, having regard to all the difficulties of the case, the valuation has been a very considerable success. If there are any cases of real grievance we are always prepared to examine them.

§ Mr. AUSTEN CHAMBERLAIN
Would the right hon. Gentleman deal with the case of the farm buildings, the first instance which was cited from my hon. Friend, and the method of eliminating buildings and refusing any credit to the owners in respect of buildings?

§ Mr. LLOYD GEORGE
I did not quite grasp that when listening to the hon. Member, but it is difficult to deal with a case of that kind unless I have some sort of notice.

§ Mr. AUSTEN CHAMBERLAIN
Can the right hon. Gentleman say whether he defends, as in accordance with the Act, the general principle of valuation which was explained by my hon. Friend as practised in the county of Cambridgeshire, namely, that you divest a particular farm of its 1883 buildings on the assumption that the buildings on the neighbouring farms remained, you then go to the neighbouring farms, restore the buildings on the original farm which was first divested and assume that the others are renewed?

§ Mr. LLOYD GEORGE
I will see exactly what the position is. I would rather give an informed answer. I have another statement to make in respect to something which the right hon. Gentleman said on the last occasion. He suggested that we might have some kind of inquiry into the valuation, and I think I recognised that it might be very desirable. Charges were made of undervaluation, and that the valuation has not been carried out properly. I think it important that there should be absolute confidence in the method of the valuers. I should like this to be a valuation that hon. Gentlemen themselves are prepared to operate with whenever it is necessary to get a valuation for local purposes. Valuation is by no means a matter which concerns one side of the House alone. I recollect well that the right hon. Gentleman (Mr. Long) at one time introduced a Valuation Bill I am quite willing that there should be an inquiry into the administration of the Act by experts. The House of Commons or the Royal Commission is the only Committee which could inquire into a question of policy, but a Committee of experts, while not being the best Committee for the purpose of examining a question of policy, would undoubtedly be the best Committee for the purpose of examining the actual administration of the Valuation Department. I suggest as terms of reference, "To inquire into the working of the valuation prescribed by Section 26, Sub-section (1) of Part I. of the Finance Act, 1910, and report whether any modifications of machinery for carrying out the valuation are necessary, and, if so, what modifications." I think the right hon. Gentleman will find that that covers pretty well all the points he raised. I framed the reference with a view to meeting his demands, and I think he will find it will do it. I have not quite settled the names of the Commission, but I am proceeding on the principle of securing real experts in valuation. They can consider all cases, such as those mentioned by the hon. Member (Mr. Royds) and other cases which have been mentioned from time to time by the hon. Member (Mr. Pretyman) and others. I propose that the Committee 1884 should be appointed at once in order to get its Report upon these very important matters. It is really almost impossible for the Government to answer specific cases of this kind without at any rate twenty-four hours' notice to look into them.

§ Mr. AUSTEN CHAMBERLAIN
I do not want to prejudge a particular case, but can the right hon. Gentleman not say whether it would or would not be in accordance, in their opinion, with the law that such a thing as was alleged by my hon. Friend should be done? Is that their practice?

§ Mr. LLOYD GEORGE
That is a very fair question; but the right hon. Gentleman will understand that I would really rather not answer the question on a point of law which is constantly being brought before the Courts. The Attorney-General will take part in the Debate later on, and if the question is put to him he will answer it. I simply have to say now that I propose that the inquiry shall be set up at once.

§ Mr. CLYDE
Will the right hon. Gentleman say that the Commission or inquiry will include some gentlemen who are familiar with Scotch procedure?

§ Mr. LLOYD GEORGE
I think that is important. Perhaps the hon. and learned Gentleman will submit some names.

§ Mr. CLYDE
I should be very willing to give any assistance in that way.

§ Mr. PRETYMAN
We have had a very characteristic speech from the Chancellor of the Exchequer, and, as usual, he has avoided the real points at issue, and has started one or two rather personal hares to draw off the attention of the Committee from the real point of my hon. Friend's speech. I wish to deal with an interruption which occurred just now. My hon. Friend (Mr. Royds) merely quoted the statement of the Attorney-General that one-fifth of the valuations had been completed. That quotation was accurate. The Attorney-General had said so.

§ Mr. LLOYD GEORGE
When?

§ Mr. PRETYMAN
In answer to a question.

§ Mr. LLOYD GEORGE
When?

§ Mr. PRETYMAN
In answer to a question in this House.

§ Mr. LLOYD GEORGE
But when?

§ Mr. PRETYMAN
My hon. Friend did not state that the amount of the valuation was now one-fifth. He stated, what was the fact, that the Attorney-General, in answer to a question some little time ago, had stated that it was one-fifth. That is all. The Chancellor of the Exchequer gets up and says it is not one-fifth, but 26 per cent.—not much of an inaccuracy—only 6 per cent., and coming from that quarter! I interrupted to point out that that was just one of the Chancellor's usual tricks in Debate, if I may use the expression without offence. It is nothing less than a trick in Debate, and I am not afraid to say so. The Chancellor accuses my hon. Friend of an inaccuracy when there was no inaccuracy whatever. It was a perfectly correct quotation. Perhaps, if he had listened to what was said, he would not have taken a course which I do not think is quite in consonance with his position in the House of Commons or what it ought to be. Another point is that we are accused of making a personal attack on the valuers. No one, as far as I am aware, on this side of the House has any desire to make a personal attack on the valuers at all, and I propose particularly to guard myself against any such misunderstanding. I believe the valuers have done their best, according to their ability and with perfect single-mindedness, to carry out the instructions which they have received from the Valuation Department, and if there has been any trickery the person responsible for the trickery is not the valuer, who is carrying out his instructions, but the Chancellor, who is responsible for the Valuation Department and the policy to which it gives effect. He may take any accusations of that kind which are made as made against him and his Department, and not as made personally against the valuers.

§ Mr. LLOYD GEORGE
What does that mean?

§ Mr. PRETYMAN
What?

§ Mr. LLOYD GEORGE
The charge that you are making now against the Chancellor of the Exchequer.

§ Mr. PRETYMAN
The charge that we are making against the Chancellor of the Exchequer was very plainly put by my hon. Friend, who gave chapter and verse, and it has not been answered.

§ Mr. LLOYD GEORGE
This is rather an important matter. Does the hon. Gentleman really mean to suggest either that 1886 these valuers are interpreting the law according to their own judgment and are guilty of trickery, or does he accuse me of deliberately trying to trick these people out of the value of their property by some instruction? If he does, would he mind telling me when I gave those instructions?

§ Mr. PRETYMAN
In the actual instructions to the valuers which were issued. That has been already brought forward, and we have never had an answer to it. The right hon. Gentleman tells us these matters are brought forward at short notice. One of the principal charges on which this question of trickery was based has been the subject of Debate again and again, and the trickery comes in here, that the right hon. Gentleman tells the House of Commons and the country that all he proposes to tax is the actual increase in value of the actual land upon which the building stands. That is the interpretation which the House of Commons and the country has placed upon it. The right hon. Gentleman himself told the builders, in a conference to which he invited them, that no man, particularly no builder, was to be taxed upon his profits. The trickery comes in under the administration of the Act, and by the instructions issued to the valuers by the Department for which the right hon. Gentleman is responsible. That practice is not being followed, and taxes are being demanded from builders upon their profits. The actual words of counsel for the Commissioners; speaking before a Referee, were:— What I do say is that the Government under the scheme of the Act is entitled to a share of the profit—this being builder's profit—as increment, and I hope the owner will not in future object to share a little of his most well-deserved and ingeniously won profit with the Government. I call it trickery to tell the House of Commons that you are only taxing land and not profits, while you are taxing builders' profits, taking builders into Court, and, under the shelter of the most vague language which the Act contains, claiming to distinguish between the value of the land and the value of the land with the building.

§ Mr. LEIF JONES
That is not the charge which was made against my right hon. Friend.

§ Mr. PRETYMAN
It was the second charge. There are so many offences of which the right hon. Gentleman can be convicted in that line that it does not very much matter which we choose. We have had one charge already denied in Debate, 1887 and there is the one referred to just now. You are going away from the subject and accusing my hon. Friend of inaccuracy. It is a petty matter if trickery is petty. This matter was raised in this House only about a fortnight ago. The words of the Commissioners' counsel, which I quoted, have been quoted before. The right hon. Gentleman has had ample time to inform himself as to what the policy of the Department is; but he has sheltered himself at every other sentence of his speech with the statement that he did not like to deal with this aspect of the question, because the case was, or might become, sub judice. We have asked what is the policy of the Department? The right hon. Gentleman spoke for a considerable time, but we do not know now what the policy is. I may say that for over a year we have been asking the same question, and we have never had an answer. I ask a straight answer to this question: Does he claim to tax builders' profits—does he claim to tax the increased value of the land alone, or to tack on to the value of the land the value of the house, and to charge Increment Value Duty on the land with the house? The right hon. Gentleman has in so many words admitted that the value of the land in the case referred to has not altered or increased. That claim has been made before a Referee, and I think we have a right to ask the right hon. Gentleman to state whether he makes that claim in this House.
The other point to which my hon. Friend referred was the question of buildings. The right hon. Gentleman avoided the point which was raised clearly, distinctly, and fully by my hon. Friend. The first point with which my hon. Friend dealt in detail was that no allowance, or no proper allowance, was made for buildings. Further questions were asked in relation to drains and fences. The right hon. Gentleman saw his way to deal with drains and fences, but he sought to deal with them by riding off on a question of law. He absolutely ignored with great skill the question of buildings, and when my hon. Friend drew his attention to the fact, one would have thought from his tone and manner that he had never heard of the question before. He dealt with the old statement about the number of valuations made, and contrasted them with the number of appeals. We welcome these figures. The right hon. Gentleman stated that the appeals against the valuations were not 1888 greater than might be generally expected against ordinary valuations for rates. The right hon. Gentleman knows perfectly well that the comparisons are absolutely fallacious for this reason. Here is a totally new proceeding which nobody understands, and which in its first stage involves no demand for payment by the taxpayer. The taxpayer does not understand that it will involve any charge upon him. He has been accustomed to believe that a low valuation means low taxes. These valuations are fixed—this is one of the most wicked injustices in these valuations—by the lapse of sixty days. The valuation becomes fixed, not by the assent of the owner on whom the notice has been served, but by the mere lapse of time. My view of the matter is this: Here are 2,500,000 valuation notices served mainly on the owners of small properties in towns, not 1 per cent. of whom have the slightest comprehension of the meaning of the valuation paper. They cannot afford to take professional advice, and by the mere lapse of sixty days over 2,000,000 of valuations are made. The right hon. Gentleman used the expression" Ninety per cent. of these are final." I contradicted him, and said that not one was final. I said so for this reason: Every one of these valuations is subject, or ought to be subject, to amendment.
There is another question I wish to ask the right hon. Gentleman with respect to these valuations, which are fixed by the mere lapse of time, and not by the assent of the owner. If any of these valuations are not in accordance with decisions of the Court with respect to parallel valuations, would the right hon. Gentleman assent to their being reopened, as I think they ought to be? Is the right hon. Gentleman going to tell the House that he is going to allow the valuations to stand? Let us take the case of a street where the houses are of a similar character. Let us take the actual case of Plymouth. You have a row of houses valued by the valuer at £750 each. One of these was sold for £1,000, and Increment Value Duty was claimed for the difference. But as sixty days had not elapsed an appeal was lodged, and the matter came before the Referee, who decided that the value was not £750, but £1,000. Here you have a row of ten houses, let us say. I do not know how many there are, but it does not matter for the purpose of my argument. When the owners of these houses received the 1889 valuation paper they did nothing, just as ninety-nine out of a hundred do. The valuation of £750 became statutorily fixed by the mere lapse of sixty days. The tenth house is sold, and therefore "the occasion" arises within the sixty days. The matter is brought before the Referee, with the result which I have stated. Does the right hon. Gentleman regard the valuations in the case of the nine houses as completed? Does he say that the valuation is to remain at £750, although one of the ten in the street when sold was valued at £1,000, and is he going to make the owners pay on the fictitious increment of £250 through the valuations which were forced upon them? That is the policy indicated by the action of the Department, and that is why we call it trickery. I say that not one of the valuations is completed. We have by the Chancellor of the Exchequer's own admission 263 appeals coming before the Court. That does not sound much in proportion to the number of valuations, but the value of that comparison disappears in view of the consideration I have brought before the Committee. The fact remains, and I think the Committee should take it into consideration that there are no less than 263 appeals to be heard in the Court.

§ The FINANCIAL SECRETARY to the TREASURY (Mr. Masterman)
Some have been withdrawn or disposed of, and the number now is 170.

§ Mr. PRETYMAN
Well, there are 170 left. Let us see what is the action of the Department in regard to these appeals. I venture to say that one of the most serious aspects of this matter is the enormous vista of costly litigation which is opened up. I say that on two grounds. I will take first of all my two objections to the administrative action of the Department in that respect. First of all, they are carrying cases which involve purely questions of value up to the High Court. Take the Plymouth case, where you have a property which was sold for £1,000. The Valuation Department claimed through their valuer that the amount ought to be £750. Is he a better judge of the real value than the mortgagee? The matter is taken before the Referee appointed by the Government. That Referee is a gentleman of the highest experience, and of great local knowledge, and he decides that the value of the house is £1,000, and yet the Government on that pure question of value are taking the poor owner up to the High Court, and appealing against the 1890 decision of their own valuer on the question whether the value is £750 or £1,000.

§ Mr. LLOYD GEORGE
The Referee is not appointed by the Government.

§ Mr. PRETYMAN
I withdraw that. The Referees are appointed by the Referees' Committee; but, after all, the Referees are appointed under the Act, and they are appointed with special regard to their knowledge of values, and their local knowledge too. To take an appeal to the High Court on a pure question of value does seem to me to be nothing short of bullying by a great Department, which has the whole revenue of the country behind it. The Referee, in this case, has special knowledge of valuation, and he has local knowledge as well, and if he decided in favour of the owner that the value is £1,000, it seems to me that to take the case up to the High Court can only be done to force owners to agree to any valuations however unjust they may think them, because it will be cheaper in the end to accept the valuations made by the Government valuers than to be taken up to the Court. The other point is even more serious. We have had now five or six of what I call test cases, and in every one of these the practical point has arisen as to whether the Government have or have not the right to charge as Increment Value Duty an increasing price, which is purely profit, when they admit that the value of the land has not altered. There are four or five test cases which have been brought on this point. There is the Richmond case, where the chief valuer, Mr. Thomas, and counsel for the Commissioners admitted that the value remained the same and had not altered between the occasion and the original valuation when there was a value of £380. The property was sold for £500, and the whole of the difference was charged with increment, although it was admitted that the value had not altered. In the Newcastle case the difference between £625 and £750 was claimed as increment, although there again the definite admission was made in the Referee's Court that the value of the site had not altered between the two occasions. In the Palmer's Green case the property was bought for £400 and resold, I think in three days, for £425, and increment is claimed on the £25, although it is perfectly obvious that the value of the site cannot have altered in the three days. The most astounding claim of all is in what is known as the Fitz William 1891 case, where small licensed premises changed hands, and where there has been a valuation, and the Government claimed three values on which Increment Value Duty was to be charged.
Here we have the Richmond case, the Newcastle case, the Plymouth case, the Palmer's Green case, and the Fitz William case, all decided against the Valuation Department. And though we have the decision that they have no right to make this claim, yet we have this claim persisted in every other case, so far as I know, and not only persisted in, but the sixty days are being allowed to elapse. Here we have a Valuation Department, and the request is made, and we have the right to make it, in this House, in the most earnest manner, that no valuation shall be allowed to become statutory by lapse of sixty days, and no duty shall be claimed against an owner of property based upon such valuation until these cases, or some of them, have been finally decided. Apparently the claim of the Department is that every case differs from every other case. That is what was pointed out when the Act was under discussion as a Bill, that you have an infinite variety of units of occupation and infinite variety in the circumstances which have attended the growth of the value of those units, and all the infinite details upon which this intricate valuation depends, and therefore it does not matter how many so-called test cases occur, the Valuation Department say that in some particular or other in its situation or previous history, that particular unit varies in some manner from the other unit on which the test case was decided, and thereupon they claim the valuation. I comes to this, that everyone with property in this country has got to fight the Valuation Department in the Law Courts on his own case if this process is to continue, and the vista of expense and litigation is absolutely boundless. I have a list of points here covering nearly two sheets of paper, which have been already brought forward, and which have got to be decided in the Courts before any valuations can be settled. What it is all going to cost is appalling to contemplate. I would like to go now to another point, which is of considerable importance to the country, that is the interpretation by this Department of the Minerals Clause. Here we have a very indeterminate definition of minerals.
The Committee will agree that one of the most important things for the country 1892 at large is that road metal should be cheap. At any rate this House has laid enormous burdens on local rates for roads. I do not know whether the House understood when imposing this duty that they were putting a charge on road stone. The present position in Scotland is that there is a particular kind of igneous rock which is called felsine, which is a sort of granite of the character of felspar, and there is a quarry at which this material is being raised for the roads by, I think, a county council in Scotland. The claim has been made by the Valuation Department that this is a mineral. There has been a judgment before a Referee, and there is an appeal. This is the interesting part of it to which the country attaches importance. What is going to be charged as a mineral and what is not? We have a pronouncement in writing from the Valuation Department. The Surveyor of Taxes writes that earthstone, and firestones derived from the old green sands, flint, Pentland stone, Portland stone, sandstone, firestone, and lowerstone, derived from the lower green sands, are treated as not liable, but all igneous rocks are to be treated as liable, so aqueous rocks are to be treated as not liable for duty and igneous rocks are always to be treated as minerals which are liable. It is rather peculiar that any stone other than coal, which comes out of the carboniferous strata, is to be treated as non-dutiable. I suppose coal is treated as dutiable because it is of vegetable origin. I cannot imagine any other reason. I do not know whether it is the fashion for the Department in their leisure moments to amuse themselves by playing the old nursery game of guessing animals, minerals, or vegetables. It appears to me that that is the only system upon which the decision has been arrived at. But this is the important point in reference to that statement that these particular forms of stone are not liable. Counsel for the Commissioners has explained that the above list was not to be held as extending the list of exempted minerals, but was to be taken simply as a concession made by the. Commissioners in an individual case. That seems to me to be rather a remarkable statement to come from counsel for the Commissioners. It amounts to this, that in one county you mend the roads with igneous rock and in one county you mend the roads with aqueous rock. In one county the county council is to escape payment of duty on minerals, and in the other county it is not, but if it desires it can bring each particular case before the 1893 Valuation Department, who are, as a matter of concession and not as a matter of law, to decide the issue. Surely we ought to have a clear statement from the Government of what they claim ought to be regarded as minerals and what they do not claim. It is a very important matter. I happen to come from the Eastern counties where there is no road stone, and where the road stone which is used, amounting to millions of tons, has to be brought by water, and it is nearly all igneous rock—granite.

§ Mr. W. M'LAREN
It comes from quarries in Jersey.

§ Mr. PRETYMAN
The hon. Gentleman has made a point of importance. A good deal of it comes from Jersey, where there is no Mineral Eights Duty, and a portion of it comes from Belgium, where there is no Mineral Rights Duly. Another part comes from another sensible country, Norway, where there is no Mineral Rights Duty. But a large part used to come, and is still trying to come from Scotland, where there is a Mineral Rights Duty. Does the hon. Gentleman know that?

§ Mr. W. M'LAREN
Yes.

§ Mr. PRETYMAN
The hon. Gentleman will see that the Government by this are penalising the supply of millions of tons of road stone brought from within the United Kingdom, which is subject to this duty, and putting a direct premium on the importation of road stone from, and the employment of labour in, other countries where there is no Mineral Rights Duty.

§ Mr. W. M'LAREN
Does the hon. Gentleman complain of the amount of the duty, which is only about one-third of a penny per ton, while the value of the stone is about £1 a ton?

§ Mr. PRETYMAN
The stone costs about 9s. 6d. a ton in the dock. It costs perhaps 12s. 6d. when carted on the road. Perhaps the hon. Gentleman would be surprised to learn that even one-third of a penny is an important matter in this trade, these rates are cut so fine and competition is so close for the supply of these enormous quantities. The hon. Gentleman does not understand that millions of tons are concerned in this matter. You have all counties making up their roads and using enormous quantities of metal, and if you take one-third of a penny per ton on all the metal which is being imported into the Eastern counties it comes to a very considerable burden on the ratepayers. And to what 1894 purpose is this burden imposed? We have a right to ask that the Valuation Department, along with the Government, shall make a clear and definite statement as to what they claim to be liable to Mineral Duties. I suppose we will get the usual answer—that you must test it in the Law Courts. You have an infinite variety of strata in the country, one grading into another. By the time you have fought out every detail of every stone in the Law Courts the Mineral Rights Duty will be nearly as popular as the rest of the Land Tax.
One more point and I have done, and it is in reference to the way in which this Act is administered. The Chancellor of the Exchequer tells us in his book that this Increment Land Tax is new; that it is the first time it has been imposed in this or any other country, and that he has great hopes of it in promoting trade and encouraging building. Here is a statement from a newspaper called the "Star," which I think is not unduly unfavourable to the right hon. Gentleman's policy. In this an account is given of the heavy failure of Mr. John Hill, a builder and brick manufacturer. The Official Receiver stated that Mr. Hill began business as a speculative builder in 1881, and in 1887 he began business as a brick manufacturer also. Both businesses had been successful, and still would have been so had it not been for the great depreciation of various properties and the practical stoppage of the building trade and the great depression in brick-making. These circumstances had arisen in consequence of the present legislation in regard to the Land Clauses of the Finance Act. Mr. Hill got into difficulties with the mortgagees of various properties, and, in the building trade depression, was unable to remortgage. That is how the building trade has been advantaged by this tax. If the Chancellor of the Exchequer had been content with taking the Increment Value Duty on the land alone it might not have been so bad, but when you come to the builder's trade and profits you increase the alarm. The effect of the administration of this Act is now going on, and furthermore it is driving up the rents of small house properties all over the country. Everybody knows—I have given a definite instance—that this Act has practically stopped the speculative building trade. What is the effect of the administration of this Act? It stops speculative building, and until the demand for houses overtakes the supply there will be no resumption of the trade of the speculative 1895 builder until rents have risen to a point when they will pay the old profit, together with the taxes and all the consequences which arise from an interference with that trade, due to the administration of the Act.
Workmen are now having to pay, and will in future have to pay, a great deal more in rent owing to the worst form of indirect taxation which can possibly be levied upon them. Hon. Members opposite are never tired of objecting to indirect taxation on the necessaries of life, but I say the most important necessary of life to the workman is the house in which he lives. Of the rent which he has to pay for his house, at least half, through this kind of administration and legislation, goes in rates and taxes. That is no overstatement; it has been carefully thought out. At least half of the rents paid by working men of this country are in the form of rates and taxes, and if the whole of the rent is not paid the family lose the roof over their head. This administration is placing on the working men of this country an indirect burden, absolutely inelastic, and in the very worst form in which it can be put upon them. The fact is the increased cost of living and the trouble we are suffering owing to strikes and labour unrest, are mainly due to this kind of administration, and I do appeal to the House to treat this matter as urgent and serious, especially when we produce evidence showing that the Department is costing something like twenty times what it produces in revenue. The right hon. Gentleman shakes his head. I would point out that £38,000 is the amount of the revenue from this taxation, and the Valuation Department has cost £686,000. The right hon. Gentleman will repeat the oft-refuted statement that the Death Duties repay it.

§ Mr. MASTERMAN
I have the figures, and I will give them afterwards.

§ Mr. PRETYMAN
It is perfectly plain that the Chancellor of the Exchequer, before his Budget was introduced, or at the very time it was being introduced, and before his Valuation Department had been created, stated in this House that the valuation of realty for Death Duties had not been accurately made, and there had been a great deal of undervaluation. I have already pointed out that there was not a single word in the Act of 1894 in regard to this, but there was the fullest power to obtain the utmost value of any 1896 realty. Before this Valuation Department was created for the purpose of this Act the Chancellor of the Exchequer stated in the House that he had already appointed valuers, and they were doing their work so successfully that a very large increment had accrued from the Death Duties.

§ Mr. MASTERMAN
I wish to point out that the hon. Gentleman is charging the whole of the expenses of the Department against the land valuers, but the expenses of part of the Land Valuation Department are due to Estate Duty work, and should not be charged against the Land Valuation Department.

§ Mr. PRETYMAN
What I would point out is that the Valuation Department are engaged mainly upon obtaining full site values, gross values, assessable site values, and all the other intricate valuations which have nothing to do with the Death Duties. The full site value, the gross value, the assessable site value, and other values could not affect the Death Duties, and all that is required for the purpose of the Death Duties is a small staff of valuers which would cost very little money, and who simply, when the Treasury receive what was supposed to be an undervaluation in the accounts furnished by the executors, send one of their number to furnish an independent valuation. That is a simple matter, and would probably cost at the most £20,000 a year. I suppose the right hon. Gentleman knows that since this Increment Value Duty came on the tapis an entirely new practice of this Department—which has done so much to increase the value of the Death Duties—is to return the accounts of executors, because the figures were too high, with a request to reduce them. Is that the way to increase the Death Duties? Has the Chancellor of the Exchequer or the right hon. Gentleman ever heard of a case, previous to this Valuation Department coming into existence, in which the accounts were returned to the executors, who were told that the amount they returned was too high?

§ Mr. MASTERMAN
Do you object to it?

§ Mr. PRETYMAN
Not at all. But I do object to the statement of the right hon. Gentleman that his Valuation Department is to be credited with the whole of the increase in the value of the Death Duties. I say they have diminished the Death Duties, and there is clear evidence of it. I quite understand the right hon. Gentleman's interruption, and I concede that some small part of the cost of £686,000 1897 may be fairly attributed to the small additional staff which could be used by the Treasury for the purpose of the valuation of the Death Duties. That is purely a minor matter, and it does not affect the general statement that the Valuation Department costs £686,000. But knock off the odd £86,000 in respect of the Death Duties—and that is far more than ample—you have still left £600,000 as the cost of the Valuation Department, while, so far, the revenue from the taxation is only £38,000.

§ Sir A. MARKHAM
The hon. Gentleman stated last year that half the rent paid by workmen was due to rates, and he quoted the hon. Member for Blackburn in the same discussion last year as we are having now. May I ask him whether in the whole of the United Kingdom the rates represent one-half or even one-third of the total rent paid by the workman? Assume that the rateable value of a workman's dwelling is £10, and the rates are 8s., how does the hon. Gentleman arrive at the result that the rates represent half the rent paid by the workman?

§ Mr. PRETYMAN
I said rates and taxes, and if you take all the rates and taxes which are now imposed, it will be found that there is a considerable list. The main taxes are the Income Tax and the Death Duties, and there are all the new burdens imposed by this taxation. If you add these taxes to the rates which are 8s. and 10s. in the pound—I am willing to accept 8s. as the average—that brings the total burden on the average house of a workman roughly at about 50 per cent. of the rent. I do not think there can be any doubt about that.

§ Mr. JAMES MASON
The Chancellor of the Exchequer told us that it was not fair to attack a very considerable body of Civil servants who have a very difficult task to perform. I entirely agree with what he said. It appears to me that these valuers have to fulfil an almost impossible task, that is to say, they have to set to work a machine which is so complex that I am not at all surprised the results are what they are. I regard with the utmost satisfaction the statement of the Tight hon. Gentleman that he intends shortly to appoint a Commission of experts to examine into this machinery. It seems to me that it is quite time something was done in that direction. The question of machinery is one which I think this House cannot afford to neglect, because it must be remembered that after all that in so far as the machine leads to difficulties in 1898 administration and leads to injustice in many of the valuations—I do not mean intentional injustice—this House is undoubtedly responsible for having set it up, and until they remedy this state of things. Of course, the difficulty really is that for the first time, I believe, these taxes are based not on actual facts, but entirely on pure guesses. It is very much as if you were to attempt to impose Income Tax not upon what a man had, but upon what you thought he ought to have, which I venture to say would very soon land you in considerable difficulties. You might as well say that a man should be taxed not on the tobacco he actually consumed but upon what you thought he should consume. The basis, of course, of the taxes is the assessable site value. You arrive at that assessable site value through a whole labyrinth of guesses in which practically no fact, that is no valuation which serves as an actual business transaction, at any time under any circumstances comes into the calculation.
The way that you arrive at this assessable site value is by taking first of all two valuations which are more or less of a business character, that is to say, the gross and the total which are more or less actual valuations. When once you have got that, you will then proceed through a whole labyrinth of deductions and additions to arrive at the assessable site value, and that has led you into such absurd results that you frequently arrive at that most absurd of all valuations the minus valuation for the actual piece of land. The difficulties are of course very great, and these people have to use ordinary human intelligence, and they are told to wade through difficulties which are of an insuperable character. To begin with, all or almost all sale of land includes something more than site value, and therefore the site value is not an actual thing in itself, but only exists in the imagination of those who are called on to work it out. Secondly, you compare sites which are the subjects of transactions which are necessarily affected by the value of neighbouring sites or neighbouring conditions. Thirdly, the expenditure on sites, which is one of the things which are to enter into the calculation to arrive at the assessable site value, is frequently unknown, and even when it is known, it is not as a matter of fact brought into use for the purpose of this calculation. The instance I have in mind is a question of redemption of the tax on land. In one of the cases of redemption of 1899 Land Tax which has actually come to my notice there was a difference between the valuation put on as redemption value and the actual amount which was paid of just 100 per cent. The case in question was on a cottage property, and the redemption amounted to £4 per cottage. The redemption had been paid after the cottages were built. The probability is if the redemption had been effected before the cottages were built, it would not have cost more than £1 per cottage. I think, as a matter of fact, it was settled on at £2 per cottage.
The point is that even in this case, where you had an actual fact to build upon, rightly or wrongly, and I am not disputing whether it was right or wrong, that fact could not, or was not allowed to be, brought into the calculation, nor did you deduct what you believed would have been the amount if the cottages had not been built, but you had a compromise of a pure guess between the two. As a matter of fact, I am not quite sure whether the Land Tax is easily leviable on anything but the land, but that is a point which would take me rather wide of the issue. I am not sure if the tax could be attributed to the cottages at all. In that case the amount to be paid would be the amount deducted from the greater valuation, in order to arrive at the assessable site value. You have another series of difficulties which arise when you come to estimate the assessable site value on an occasion. The difficulties which arise here are of course somewhat different from those which arise on the original estimating of that value. First of all, you have the difficulty which comes from the parts or sub-division of certain areas of land which have been divided since the original valuation took place; and, secondly, the estimates of similar deductions from those which were made in the original valuation. Each of those estimates is always a weak link, and as a chain is no stronger than its weakest link you are relying on the relation of one estimate to another, or otherwise you are placing taxation on the relation of one weak link to another weak link. First of all, there is the question of sub-division into parts of land or of the sites.
You have the case, and I do not know how you are going to deal with it, of a plot of land which is valued at, say, originally £1,000—that is, building ground. One-tenth of it, probably the most desirable part, is sold for £150, and so on it is 1900 sold in tenths. As you get to the least desirable parts of the original site of course the price declines, but in each case with each sale there is to be a sub-division and re-estimation of the original value. There is duty chargeable in the case of the part which has been sold. The point is this, that when you come to the sale of the last tenth of the whole site the amount that the whole site has realised may be only £1,000, or exactly the amount of the original valuation, but, nevertheless, the sites which were sold in the first instance—the most desirable sites—showing as they did an increased value in proportion to their area, will probably have paid years before the Increment Value Duty. Yet when the whole transaction is finished there would be no duty payable at all if the duty had been deferred until the end of the transaction. I do not know how you are to overcome such a difficulty as that. I am not blaming the valuers in that respect. When you come to the question of estimates of similar deduction how are the valuers to be expected to deal with cases of that kind? You have the case of a genuine increase in the value of the site accompanied by a genuine loss in the value of the buildings. Take as an illustration the case of cottage property which originally is valued at £1,000, the site having an original valuation of £100. Mineral is discovered, or a railway comes near, or some manufacture becomes desirable, and that particular piece of ground with the advent of that manufacture or mineral or railway enormously increases in the value of the site, while at the same time the very cause which has brought about the increase in the value of the site renders the cottages not wanted and valueless. We will say, then, that the factory or the railway or whatever it may be buys that site for £1,000, which it has become worth.
There is thus a genuine increase in the site value from £100 to £1,000, or an increase of £900, from which you deduct 10 per cent. on the original site value of £100, which means £890 of increase, which is subject to Increment Value Duty of £178. That is perfectly chargeable, though the whole sale has only fetched £1,000, because the buildings on the land have become valueless. The point is, what do you mean by the words, "Subject to like deduction"? If you mean by those words, which, I think, are in Section 2, that on each of those occasions, that is to say, the original valuation and the valuation on 1901 the occasion, the same amount shall be deducted, then, of course, the answer to that is that all the increase in value is in the site. Obviously the cost of material and labour as to the dwellings would increase or decrease in value, and therefore the question of what the like deduction is that you are to make in that case seems to me to be one of very considerable difficulty. There is another difficulty which seems to me to face those gentlemen who have to make these valuations. If the fixed charges which are contemplated in Section 25, Sub-section (3) and in Section 41 are leviable on the total value, and not on the site value, then those charges are entirely deducible to arrive at the site value, because they come off the gross to equal the total. That is one of those difficulties which arise, and I think an honest attempt at valuation may sometimes lead those gentlemen into an absurd position. Take a case, say, in which the gross value of a factory standing on, say, five acres of land in an out-of-the-way part of the country is £50,000, and the site value of those five acres is £500. The total value equals the gross value less the burden, not of rates and taxes, but any burden imposed by Act of Parliament, such as tithes, I would take it, or certainly anything like the Thames Valley drainage. Suppose that charge amounts to £37 10s. per year on the site, and that payment at twenty years' purchase is capitalised at £750, this is what will occur. The total value in that case would be £49,250, and the assessable site value, which is the total value less the difference between the gross and the full site value, would be £49,250, less £49,500, or a minus assessable site value of £250, which, of course, is absurd.
This result may be perfectly honestly arrived at by the valuers. I do not see how they could possibly get any other result, given the machinery they have to work. It seems to be due to defects which have crept into the machinery through certain omissions, so that the way of arriving at the value has not been what was intended by the House. Not only are these taxes in many cases necessarily based on guesses, but the guesses themselves are based on information derived in a rather imperfect manner. The way in which information was expected in the original Form IV. may have led to extraordinary results. I know a large block of buildings in London in which the ground floor is divided vertically into shops and the floors above are divided horizontally into flats. A separate Form 1902 IV. was required to be filled in to arrive at the site value of one of the shops without taking into consideration the flats which stood above it. Obviously you could not arrive at the site value of the shop without considering the building which stood over it. With that sort of basis it is not surprising that considerable difficulties have arisen. I think that in many cases the faults of administration and, I will not say the irregularities, but the injustices of the valuations which have been referred to this afternoon, are due to the extraordinary difficulty to which these gentlemen are put in endeavouring to administer machinery which, so far as I can see, is incapable of comprehension by the ordinary man, and must necessarily be capable of different interpretations by different valuers. In many cases two gentlemen of equal capacity and experience, if put down to make a valuation of a property, with the machinery here provided and on the data at their command, would perfectly honestly come to absolutely different conclusions, and each would be able to show that his conclusion was equally well founded.

§ Mr. H. D. M'LAREN
I agree with the hon. Member opposite (Mr. J. Mason) in his reference to the extreme difficulty of some of the provisions of this Act; but I would point out how some of the complications arose. When the Bill was passing through this House a great many hard cases were brought forward by hon. Members opposite against the system of taxation proposed by the Chancellor of the Exchequer, who, as a rule, went out of his way to insert provisions to meet those cases. A great many of the deductions from the total value were inserted with that particular view. Take the striking case in regard to minerals. When the Bill was introduced there were no exceptions in the mineral Clause. The Mineral Duty applied to all minerals equally. A deputation came and urged the claim of the users of brick-earth or brick-clay for an exemption from the Mineral Tax, and the exemption was put into the Bill. Then came a deputation from the builders, who use sand and gravel, and those minerals were exempted. Then came the makers of Portland cement, who complained of chalk being included, and that also was exempted from the Clause. Therefore, it is through the concessions made to hon. Members opposite that the somewhat anomalous position to which reference has been made arose, and calciferous 1903 minerals are exempt while igneous minerals are subject to the tax. But that cannot be charged against those who administer the Act at the present time. The hon. Member for Chelmsford (Mr. Pretyman) said that the tax on granite was a hindrance to industries in this country, and put them on a bad footing as compared with Belgian and Norwegian granite. It has already been shown that the amount of the duty per ton of minerals is a very small proportion of the actual cost to the consumer. I may further point out that in the great majority of cases the one-third of a penny or a halfpenny which this particular tax may work out at per ton of granite does not add to the cost of the stone at all. Nor is it a deduction from the quarry-master's profit, because, as a matter of fact, the Royalty Tax is deducted from the royalties paid. Unless the worker of the quarry is also the owner, the cost of producing the granite is not affected in any way by the Mineral Rights Duty. Like the hon. Member for Chelmsford, I have been to some extent a victim of the Act, the passage of which I desired, but when in my capacity of victim—

§ Mr. PRETYMAN
I have not been a victim.

§ Mr. M'LAREN
I meant liable to the incidence of the tax. When I have come in contact with the officials of the Land Valuation Department I have always found them most ready to meet fair and reasonable claims in connection with the valuation of any land. I have found them most conciliatory even towards unreasonable claims. But I would urge upon the Government one risk in connection with the working of the Act. The valuers, however able, however much they desire to carry out the valuations on perfectly fair principles, are always liable to err. When a man has access to those who understand the Act, and is in a position to fight any valuation which he thinks is not fair, there is no harm in such errors; they are easily corrected. But I rather agree with some hon. Members opposite, that in the case of small men who do not understand the provisions of the Act, or who think their property is not of sufficient value to justify their going to a solicitor, or surveyor, or some one who understands the Act, there is in certain cases a risk that the provisional valuations may be allowed to become definite valuations by the lapse of time, and these persons may, 1904 in some cases where an accidental error is made by the valuation staff—I do not put it higher than that—pay duty to which, if they were in a position to give closer attention to their property, they would not be fairly liable. I would therefore urge the Government that, not only now, but at any time, when a claim for Increment Duty arises, if it is proved that the provisional valuation was allowed to go through by default on the part of the small owner, who thought it would not be reasonable to go to the expense of legal assistance, the Valuation Department should be instructed to remedy the error and not claim the full amount of Increment Duty. I should be glad if the Government would consider that suggestion, because I think it would remove the only possible source of hardship under the Act.

§ Mr. HICKS BEACH
I did not quite follow the first part of the speech of the hon. Member (Mr. M'Laren). As far as I could make out, he argued that all the blame for any hardships arising under the Act were entirely due to Members on this side, because when the Bill was passing through the House we brought forward cases of obvious hardship, and the Chancellor of the Exchequer did his beet to remedy the grievances complained of. The obvious conclusion is that the hon. Member would have preferred that none of those hard cases should have been brought forward, but that the Act should have been allowed to proceed full of the gross anomalies which we felt it our duty to point out. I can hardly follow that course of argument. I was glad to hear the hon. Member appeal to the Government to instruct the valuation authorities to have some sympathy with the small people who allow valuations to pass through without really knowing what those valuations mean. That is a very reasonable appeal, and I hope the Government will pay some attention to it, seeing that it comes from one of their ardent supporters. That grievance, however, is not confined merely to the small owner. Many of the valuations which the Chancellor of the Exchequer says have been accepted are valuations of property belonging to gentlemen who own a considerable, area of land, but who have allowed the valuations to pass through for exactly the same reason as that urged in the case of the small owner, namely, that they did not in the least understand what the valuations were or what was the obvious course for them to take to get the errors remedied. If you are going to remedy the grievance of the 1905 small owner, which both sides agree exist, I submit that you must also revise all those other valuations which have been made without accurate knowledge on the part of those who have allowed them to go through.
7.0 P.M.
I cannot say that I was much impressed with the conciliatory tone of the speech of the Chancellor of the Exchequer. I think he meant to be conciliatory, but I cannot say that to accuse hon. Members on this side of the House of being in the habit of making gross misrepresentations is the right way to answer, or the right way to conciliate, hon. Members on this side. I was rather glad to hear one or two things he said. In the first place, I was glad to hear that an inquiry is to be held into the general administration of this valuation. I should like to know a little more about that inquiry. Who are the people that are going to make it? Will they have real expert knowledge of this kind of valuation; because it is rather difficult to find real experts in valuation who can honestly say that they think that any valuation of this kind is at all practicable or feasible. I remember when the Act was first passed that practically every surveyor of importance, or who had a recognised position in country or town, said that this kind of valuation was absolutely impracticable. What will be the result of this inquiry? If these experts do, as a result of their inquiry, come to the conclusion that great hardships have been inflicted, and gross injustices have taken place, and that thousands of these valuations have been made upon a basis which is quite unfair to the people concerned, who in a great many cases let the thing go because they did not in the least understand the subject, will the Government, if their experts so recommend, say that a revaluation shall be made?
I entirely agree with the Chancellor of the Exchequer when he says that this valuation ought to command confidence. It is most important, if this is going to be a second Domesday Book of the site value of all the lands of the country, that the valuation ought to command the confidence of everybody who has to do with the land. It is because the manner in which valuations are now being made does not command confidence that I think there is so very large a demand for a further and complete inquiry to take place. It has always appeared to me to be absolutely impossible to get a valuation of the whole of the land that will command confidence, for the very simple 1906 reason that you have not got one man, or one set of men, trained in the same school to value the whole of the land of the country under the same conditions. You have got a lot of gentlemen of whom it is nothing derogatory to say that they had not had a very large experience of land valuation before they undertook their duties under this Act. I do not say that this is so in all cases, but I think the right hon. Gentleman admits that a good many of these gentlemen have not had a very large expert experience in the valuation of land. Everyone also agrees that there are very few persons with whose ideas and estimates as to valuation other men will agree. We all know that a purchaser employs one valuer and the seller employs another, and I do not suppose that in one case out of a hundred these two valuers, without consulting each other's figures, come to the same opinion as to the value of the particular site in question. Therefore I am still of the opinion that the valuation of the land of this country will not be satisfactory, because you have so very many gentlemen, whose opinion of value is so different, valuing the same kind of thing in different parts of the country. I hope that as a result of this inquiry which the right hon. Gentleman has promised means will be found to make the valuation as uniform as possible and so ensure the real confidence of everybody associated with the land.
I would like some information, too, as to the methods by which the site value of agricultural land is now to be taken. I did not quite grasp what the Chancellor of the Exchequer said about deducting the value of buildings on agricultural land. If I understood him correctly, he said that under Clause 25 of the original Act in Subsection (4), paragraph (b), there is a sentence as to the deduction of the value of the buildings connected with any other industry than agriculture—that therefore implying that the value of agricultural buildings ought not to be deducted from the gross value of the land for the purpose of obtaining the site value of agricultural land. I do not know whether I followed the right hon. Gentleman correctly, but I must point out to him that if that is so it does not at all carry out the intention of the House during the time the Bill was going through. So far as I remember, the whole intention of inserting the words "other than agricultural" in this particular Clause was to save agricultural land from having anything to do with valuation for Increment Duty.

§ Mr. LLOYD GEORGE
Sub-section (2) deals with that point.

§ Mr. HICKS BEACH
May I say what I want to? It is very difficult to understand Sub-section (4), and indeed a good many other Clauses of this Act. But surely if you are going to have site value of the whole of the agricultural land of the country it must be done in a uniform manner. I am glad to see the hon. Gentleman the Member for North-West Norfolk back again. I believe he has been very active in his campaign in urging the imposition of a single tax on the site value of all lands.

§ Mr. HEMMERDE
No.

§ Mr. HICKS BEACH
Well, that is the opinion of a great many people inside this House that a site value tax should be imposed for all purposes of rating upon the site value of land, including agricultural land. If that is so it is very important that this site value on agricultural land should be actually and uniformly got at. I am given to understand that the Valuation Department has carried out the site valuation in different ways in different parts of the country. I hope I am inaccurately informed.

§ Mr. LLOYD GEORGE
There will be no difficulty in the matter.

§ Mr. HICKS BEACH
In some cases they are deducting the value of agricultural buildings, the cost of putting up fences, the value of trees, etc., while in other cases there is no deduction allowed for agricultural buildings, nor for the improvement of the agricultural value of the soil as opposed to the original site value of the land. I think the Chancellor understands what I mean. The original prairie value of this country was very different from the agricultural prairie value of the same land which has been vastly improved by many means, including that of scientific cultivation. There is another point which affects that part of the country that I know. No deduction is allowed for the cost of erecting dry stone walls. In parts of the country where the land is much stronger and capable of growing strong thorn fences they are grown, but in other parts where the land is very poor it is necessary to put up these dry stone walls. I do urge very strongly that if you are going to allow for the erection of a thorn fence you should also allow deduction for the cost of erecting these dry stone walls, 1908 because they exactly correspond to the thorn fence in another part of the country. I hope that point will also be inquired into.
I also wish to draw the attention of the House to the question of minerals. Owners of land have been asked to answer the question as to whether there were valuable minerals in the soil. I do not suppose many owners have been able to answer that question as to what is the value of the minerals, which, indeed, they possibly did not know existed. They had not the slightest idea on the point, or as to whether a strata might not be a false-strata or whether there was really a large amount of minerals of any kind in the soil Again, they had not the least idea, if minerals did exist, as to whether they existed in sufficient quantities and of such a character as to be worth the working. I suppose a great many people responded to Form IV., and said that though there might be minerals they did not know the value. Form IV. has been held to be illegal.

§ Mr. LLOYD GEORGE
No.

§ Mr. HICKS BEACH
Is there an appeal?

§ Mr. LLOYD GEORGE
A certain number of these Forms had been served outside the proper time, but that is a very small thing. There was no decision that the Form was illegal.

§ Mr. CASSEL
I was in the case, and my recollection is that the Form was declared' to be illegal in all cases where the person: was also the occupier.

§ Mr. LLOYD GEORGE
That is exactly what I said.

§ Mr. HICKS BEACH
The point, then, is the illegality of a certain number of these Forms IV. I do not think anybody ought to be made to suffer in the least if he fails to make any return upon a form which the Court has held to be illegal. Now as to the practice of the Department. A man, in his reply, may have said "I have no minerals," and thereby have no value in that respect upon the land. Afterwards it may occur to somebody that there are minerals beneath the surface, and that they are capable of being worked. Inquiry is made. The thing has actually occurred in at least one case, and the minerals are now being worked. What I believe the practice of the Department has been is not only to charge the owner on the mineral rights, 1909 but also to charge him Increment Duty upon the increase of value of his property after the discovery of these minerals. If that is so, it is going greatly beyond the intention of the House of Commons when this Act was passed. The Mineral Rights Duty suffered a great deal of transformation from the time of its introduction. It was first put upon undeveloped minerals. Then is was transformed into Mineral Duty, but that duty had only to be exacted when the minerals had been extracted from the soil, and then upon the tonnage. It was not the intention of the House to impose Increment Duty as well upon this kind of land in relation to its increased value brought about by subsequent discovery. That is, at least, my recollection of what took place in the various discussions. I hope that whoever replies upon this general discussion will give us some assurance that that is not the intention of the Valuation Department. I hope they will also give us some definition of what is a "mineral," and what is not a "mineral." That point has already been raised by the hon. Gentleman the Member for Chelmsford, and therefore I will not pursue it further; but it is of great importance to people to know what is a mineral and what kind of mineral is charged Mineral Rights Duty. I hope that the Government in relation to this inquiry will be able to give us some assurance upon some of these points.

§ Mr. J. M. HENDERSON
I do not desire to go into the policy of valuation. I approve of valuation and I have all along, but there are valuations and valuations, and this is not the valuation that I ever intended. We have often been told that there are only two or three thousand people in the country holding land; that they are a small number anyhow. Then how comes it that 9,000,000 forms have been sent out? Of course, they have been sent to everybody who has any interest direct or indirect, present or future, in any land. Every one of these people has received a form of value and a great deal of time has been wasted and a great deal of money has been spent upon land valuations. I have got one of the forms here. It was sent to me by one of my clients, but it is not of the slightest interest to me or my client. I would ask my right hon. Friend the Chancellor of the Exchequer to tell me, how is it possible that there can be any increment value on an improved ground rent? My clients have plots of land worth £20 or £30 a year. 1910 They built houses and sold them with an improvement of another £20 or £30 a year. They got papers to fill in for the site value of the land. The land will never increase and cannot possibly increase in value so far as they are concerned, yet they are served with notices and there are thousands of people in the country who have got similar notices. I wonder if the Committee has ever seen one of the forms which the assessors are asked to fill up. When the Scottish Valuation Bill was introduced into this House the then Lord-Advocate said, "all we want is another column; one column is enough; from that we can deduce all the values we want from the rolls." It is quite true now we have got some sort of scientific value which requires the addition of about twenty columns. I am anxious that these valuations should be completed, and I go so far as to say that with a little additional information to what you have already in the valuation rolls this valuation could have been in the hands of the country to-day. Yet here we are spending enormous sums of money to find out valuations, which, when we get them, are not of the slightest use to us or to anyone else. My right hon. Friend has said there were only 260 appeals; he has forgotten one class of appeal, those of the minus quantities, I understand there are 36,000 of these.

§ Mr. CASSEL
Sixty-four thousand!

§ Mr. J. M. HENDERSON
At all events there are over 30,000 in Scotland. The judges have decided in the Court of Appeal there that there is no such thing as a minus value. I quite agree with them. There are many concessions which make it easy to say there are no appeals. This is what they do. I do not know who advised or directed it, but there is no doubt whatever that they are knocking the values, down as low as they can. I have a case here of a man who wrote to me. He bought twelve cottages a few years ago; he paid for each £225; he bought them subject to a mortgage of £150 each; he sold one for £235. A little while after he was sent a valuation of £170. He went to the assessor and remonstrated and the assessor said, "Well, I will put it at £190." What sort of valuation is that, when a man will value at £170 one day and the next morning put the figure at £190? It really cannot be relied upon as a valuation. My point is this and I wish my right hon. Friend will take notice of it. There is an enormous quantity of information being obtained 1911 which neither now nor at any future time can ever be of the slightest value to the Exchequer or to the country at large. People are being put to enormous expense, hide it how you may, to get these values which they have got though they are not of any use. In this particular case I do not believe the site valuation which is put down at £3,000 to be correct. I have not the slightest doubt I could get it raised 40 per cent. or 50 per cent., but it is no use to me. A person says, "Why send me this? Can you suggest any increase that can come to me on my improved ground rent."
I do not see how there can possibly be increment upon improved ground rent. There may be a decrement because the property here afterwards might not be of sufficient value to meet it, but in no circumstances can the improved ground rent be increased. The only man interested is the landlord and the present tenant. You get what you want from the landlord and you get what you want from the tenant, and why are all these notices sent to thousands of intermediaries who cannot possibly have to pay Increment Duty. I suppose it is this: The Chancellor of the Exchequer has got into the hands of the surveyors and the lawyers, and if you get into the hands of the surveyors and the lawyers it takes a long time before you can get out of them. Here is an enormous expense gone through while two or three business men would have got all the information you want with comparatively little cost. If the right hon. Gentleman speaks of the advance of Estate Duty I would point out that to lower valuation would only tend to decrease Estate Duty. Take the 36,000 cases of minus quantities. All these are manifestly driven down. It was said just now that 25 per cent. of the valuations had taken place. All I know is I sent in about twenty, and I have only received three, and I am quite sure that from what I have seen of the Scottish valuations most of them will be minus quantities. I feel quite sure that all this money spent is very much in excess of what would have been required for decent valuation that would serve all purpose, both for the present and for the future. You have gone far too elaborately into the matter, and made it an algebraic proposition instead of a simple question of valuation. I hope the Committee which the Chancellor of the Exchequer is appointing will persuade him to adopt the simpler 1912 plan, and will not require valuers and assessors to give such an enormous quantity of valuation.

§ Mr. LLOYD GEORGE
All the elaboration of which my hon. Friend speaks are entirely due to deductions made and concessions made in the Committee Stage of the Budget. Does he suggest that all these should be swept away? If he does, it would simplify valuation enormously, and I will consider it.

§ Mr. J. M. HENDERSON
The concessions made cannot affect the valuations!

§ Mr. LLOYD GEORGE
Oh, yes.

§ Mr. J. M. HENDERSON
My simple plan is this. Take all the house property. You have the rack rent and the ground rent. Ask the landlord what his rack rent is and what his ground rent is, and what are his repairs, and you have the whole thing. There may be other questions in individual cases. Lord Shaw, when he was Lord Advocate, said all we want is one more column.

§ Mr. LLOYD GEORGE
That is all right, and I am in accord with the then Lord Advocate that it is very much better to have a simple valuation without any of those deductions. But I want to know if my hon. Friend objects to these deductions being made in consequence of concessions made in Committee. Does he suggest that all this should be swept away? If he does we have a simple valuation, and the suggestion he has made is very well worthy of consideration.

§ The DEPUTY-CHAIRMAN (Mr. Maclean)
That suggestion would involve legislation.

§ Mr. LLOYD GEORGE
Yes.

§ Mr. J. M. HENDERSON
At all events, I feel quite sure that the Committee sees that there is a simpler way of getting at all the facts which the Chancellor of the Exchequer wants, even making provision for all these allowances, and I am quite sure that if he had given me £1,000,000 I would have done this valuation before now.

§ Mr. AUSTEN CHAMBERLAIN
We always listen to the hon. Member who has just sat down with instruction. I do not profess always to agree entirely with his views, but I think, in the few observations he has made this afternoon, he has shown how wise is the resolution of the Chancellor of the Exchequer, which I am glad to see is now to be translated into action 1913 at an early date, to have an inquiry into the valuation carried out, and into the methods and results of that valuation. I merely rise to ask a few questions, and to place a few suggestions before the Chancellor of the Exchequer in regard to that matter, but before I do so I would like, in a few words, to bring to his notice two other matters, both of them of immediate administrative importance. One is quite general. It is the announcement already alluded to by my hon. Friend the Member for Chelmsford in a case which came before the Referee when counsel gave a list of exempted minimum, not by way or in course of an ordered list, but simply as a concession made by the Commissioners in this individual case. I think this was actually taken from the judgment of the Referee.

§ Mr. PRETYMAN
From the reference by the Referee.

§ Mr. AUSTEN CHAMBERLAIN
From the reference by the Referee on an appeal in Lanarkshire. The name of the case would be supplied to the right hon. Gentleman privately, as for obvious reasons I do not wish to mention the name. I do not want in the least to prejudge the case; I only want to ask the Chancellor of the Exchequer by what legal authority the Commissioners make a concession in an individual case which they withhold from the generality of the public. That seems to me to be a new view, and a very dangerous one, which places the property of the subject, not at the mercy of the law, but at the mercy of the discretion of the Commissioners. I am not suggesting that the Commissioners were actuated by any improper motives in this case, or would be actuated by any improper motive, but clearly taxation ought to be governed by law and not by whim, and this seems to me to be an assertion of the right of the Commissioners to act upon their own judgment and not upon the law. The second point I want to bring forward is another case, most of the details of which my hon. Friend will also supply. Here in a provincial town is the case of one agent acting for certain properties. In the month of January he receives 288 valuations, in February 251, March 218, April 203, and in May 342, making in all 1,302 provisional valuations in six months. It is impossible to deal with all these within the limited time allowed, and this man has twice appealed for an extension of time. Such an extension is provided for in the Act, but it is left to the discretion of the Com- 1914 missioners to grant it or not. It does seem to me that it cannot be the desire of the Chancellor of the Exchequer, and it can hardly be the desire of the Commissioners, themselves, that in a case which prima facie is one of hardship on account of the accumulation of work the necessary time should not be given to the agent in the case. That is a specific case, but I beg the Chancellor of the Exchequer to lay down for the guidance of the Commissioners that where great numbers of nominations are in the hands of one agent, and there is no evidence of dilatory conduct, he should be allowed a generous measure of time to deal with them. There will be no escape from taxation in those circumstances, and it is in the interests of everybody that he should deal with those cases as rapidly as possible.
I now come to the question of the Committee which has been suggested, because it is by far the most important matter which has arisen in the course of our discussions. The announcement that such a Committee is to be appointed really does mark an advance. I frankly admit that our discussions on this subject have been very unsatisfactory. We have brought up case after case, and it is not easy for any one on this side of the House or on the other, to deal with such cases by way of debate, even when introduced to illustrate a principle, and it is very much more complicated when the cases themselves are under appeal. The Chancellor of the Exchequer escapes at one time by a plea that he does not know the individual case. At another time he escapes by a plea that the case is sub judice, or that it ought to be sub judice, and ought to be taken into Court. We are more concerned, not so much with the statement of a case upon its merits as with the policy of the Government in respect of certain general principles, and this is what I hope we shall have given in evidence before this Committee. Of course, much depends upon the names of the gentlemen chosen. I do not ask for those names now, because I know that the Chancellor of the Exchequer has to consider the matter very carefully, and the responsibility must be his. The right hon. Gentleman is interested in securing a tribunal which will command the confidence and respect of the country, and unless he gets such a tribunal it is not worth having.

§ Mr. LLOYD GEORGE
As to the nature of this inquiry, I hope the right hon. Gentleman does not use the word policy in 1915 respect to the Act, because the experts will not consider that point. What they will consider will be the general policy of administration under the Act.

§ Mr. AUSTEN CHAMBERLAIN
I want to make my meaning quite clear. A mere examination of whether a particular valuation was too high or too low, multiplied over a series of instances, would teach us something, but I do not think it would give us all the information we really want. There is a general charge against the valuation that where the land is urban it is undervalued, and where it is agricultural land it is overvalued. That is the general charge, and I understand that that would come within the terms of the reference to this Committee. But we want a little more. As the Chancellor of the Exchequer has himself said, it is very important in the public interest that this valuation, if it is to be made at all, should be one which commands confidence, and the right hon. Gentleman himself said, in the course of this Debate, that he hoped it would so secure the confidence of the country that a Government drawn from either side of the House would be prepared to use it and base legislation upon it. We need not go into what the legislation is to be on one side or the other, but clearly it is of great importance when we are spending so much money, and nominally getting a valuation which is serviceable for the purpose of taxation or rating, because it represents the real facts of a real situation that the valuation should be a true and a real one corresponding with facts. Of course, I cannot criticise the words of the Chancellor of the Exchequer's reference, because I only heard them as he read them across the Table, and I am not sure how far they carry us. I want them to be wide, and I want him to make sure that the valuation he is getting corresponds with the criterion which he himself has laid down. They should see whether it represents real facts, and whether it is a valuation on which you can confidently build for all the purposes which it is expected to serve.
One thing, for instance, which is of enormous value is that the valuation should be uniform throughout the country. Let me take one or two illustrations. You deduct the value of the improvements in the case of urban land, but you do not deduct them in the case of agricultural land. Under those circumstances, what common basis is there in your valuation 1916 of urban and agricultural land, and how are you going to base any system on that? You may have deliberately chosen it for the purpose of the particular Act now on the Statute Book, but when you claim that your valuation is going to be serviceable for other purposes as well, then I say that such a disparity strikes at the root of any valuation and tends to destroy its value. Take the case which was alluded to by my hon. Friend who moved the Amendment, and my hon. Friend from Gloucestershire. He pointed out that you are allowed to deduct for one thing and not for another, although they are of the same nature. It has been shown that this deduction depends to a large extent upon the part of the country you are in. Now any common valuation, to serve a common purpose, ought to treat things which are like in character, and material which serves the same end, in the same way. But you are treating them differently. In this way you destroy the homogeneity of your valuation if you make it mean two different things in two different parts of the country, not on account of any difference in the facts, but merely a difference of climate or soil.
There is one other point which I wish to raise in regard to this matter. There is a considerable number of very material questions under appeal. There will be other questions brought before the Committee of Inquiry, however narrow its scope may be, which affects a great number of cases. They will be brought on one case, which will be a test case, but that case will affect a great number of others. As the Chancellor of the Exchequer has said, this is experimental legislation. It is quite possible, and if I were willing to take up the time I could prove, that the Commissioners are claiming in the Courts that the law says that which the Chancellor of the Exchequer when discussing the Bill in the House said the Bill does not mean, and they are claiming that it does that which the right hon. Gentleman disclaimed all intention of doing. That involves legislation, but those are matters which must be brought out before this Committee. I hope the Chancellor of the Exchequer, recognising the experimental character of this legislation, and recognising that every individual cannot take his case into Court, and that certain test cases must be tried to settle what the law is, will instruct the Commissioners, in the first place, to facilitate the bringing of test cases as soon as possible; and, in the second place, I hope 1917 he will instruct the Commissioners, if a test case is decided against them, that it is to govern all similar cases, and that they ought not to renew the same claim in similar cases which are waiting to be decided and not enforce a valuation which has been proved to be illegal and unjust. Those are only claims of equity. If those taxes are lucrative, as the Chancellor of the Exchequer hopes some time they will be, he can afford to lose any revenue at stake, and in any case revenue ought not to be got by injustice to individuals. I hope I have made clear to the Chancellor of the Exchequer the various points I wish to bring to his notice. The most important of them is that the test cases should be made available as soon as possible, or, rather, the results of them, and the decisions should be made retrospective. The Committee of Inquiry should not be too narrow in its terms of reference, and they should be able really to test the question whether the valuation you are getting is one which corresponds with any real facts in our present state of civilisation.

§ Mr. MASTERMAN
The right hon. Gentleman need not apologise for giving us an opportunity of answering such relevant points as he has put before the Committee, and I am very glad to have the opportunity of answering them. Firstly, I will deal with the point raised in connection with minerals, which has been made one of the subjects of the speech delivered earlier in the afternoon by the hon. and gallant Member for Chelmsford (Mr. Pretyman). I cannot trace the case to which he alludes at the moment, but I quite agree that it is unsatisfactory in a Debate of this nature, to discuss cases which are brought forward without notice, and in regard to which we cannot trace the facts. On the main principle I agree with the hon. Gentleman that there should be no discretion on the part of the Commissioners to allow one subject to escape taxation and another subject not to escape taxation on the same kind of property. As the right hon. Gentleman knows, we had a very long discussion in 1909 about minerals, and there was a great difficulty in regard to the definition. We tried to make out lists on both sides, but we found them very unsatisfactory, and we could not find a legal definition under which we could classify what were minerals as distinct from what were not minerals. I understand that the Commissioners have proceeded on the analogy of the list made out 1918 by this House, or rather by the list which this House decided to exempt from duty. There may be cases before the Referee and the High Court, and if there is any uncertainty as to what particular stuff is a mineral it must be made the subject of a legal decision, and immediately that is done it will be widely circulated to all those affected by it. The second was about the appeal for extensions of time, and there I entirely agree with the appeal which was made by the right hon. Gentleman. If at any time he or his Friends can give us any case either by way of question and answer or privately which they think is hardly dealt with, we will have it investigated.
The general policy of the Valuation Department has been to give an extension of time in any case where any genuine reason is given, such as a number of valuations having to be made or checked by one person, or the owner being abroad, or the necessity of dealing with trustee property on a large scale, or any other reason. Of 131 applications for an extension of time, received in April and May, 100 were allowed, and five partially allowed. They only refuse an extension of time when they think they have reason to believe the excuse is not a genuine one and that the applicant is endeavouring to break through the exception as laid down in the Act. I can freely offer to investigate any case of hardship if that case is brought before me. With regard to the Committee and the reference to it, I am glad the right hon. Gentleman in his speech agreed with the kind of reference suggested and that the Committee was the kind he wished. I think he will agree with us that it will be impossible to allow a Committee of that kind to criticise the provisions of this Act of Parliament. That would have to be done by a Committee of quite a different nature altogether. We require a Committee to take this Act as it stands and find out whether the valuation is being carried on as it should be under the Act. I do not see how we can refer to such a Committee the question whether deductions in agricultural land laid down under Clause 25 should continue to be different from the deductions in the case of urban land. That is a question of policy, and it is a question of policy which has been decided by this Act. It is a question of policy which would require legislation in order to alter it. I entirely agree it would certainly be one of the functions of the Committee to see Lincoln is valued, say, under the same system as Worcester is valued, and if 1919 possible to take test cases, not of a single valuation, but of valuations on comparatively a large scale, to see whether there is any justification in the belief of the hon. and gallant Gentleman, which I agree is sincere, that there has been a systematic undervaluation of urban property and a systematic overvaluation of rural property. All those questions and any questions as to the machinery that has been set up under the Act for dealing with valuations are proper questions for the Committee to deal with.

§ Mr. AUSTEN CHAMBERLAIN
We want to know what is the value of the valuation. Could they not report whether the valuation is uniform throughout the country and produces comparable results in different cases? Could they report whether, when you get the site value of one property or one kind of property, it is comparable with what is called the site value of another kind of property? That is very important as affecting the usefulness or otherwise of the valuation as a whole.

§ Mr. MASTERMAN
I agree that may be an important point when you are dealing with any subsequent legislation in connection with valuation, but it is not the particular point for which the Committee was pressed, and I think it is far more a point to be dealt with in connection with any legislation which may be proposed in the House of Commons than by a technical committee of surveyors. My right hon. Friend says, if you once allow this Committee to go behind the Act as it stands, then you will also require it to report on these questions of deductions from site value, and there you are referring to a technical committee the whole of the site value controversy, which I do not think is the object of the right hon. Gentleman. We fully agree the Committee may perform very valuable work—as valuable to us if it endorses the general system of valuation as to the hon. and gallant Gentleman opposite if it endorses his criticism—in ascertaining whether the valuations as laid down have been made accurately, and whether they have been on a uniform system. That we will gladly promise.

§ Mr. AUSTEN CHAMBERLAIN
The right hon. Gentleman has just said the Committee might do very valuable work by saying whether it endorsed the system of valuation. I shall be satisfied if that question is referred to them. Do the 1920 Government terms of reference cover that question? And would they permit the Committee to give the answer to which the right hon. Gentleman has just referred?

§ Mr. MASTERMAN
"The system of valuation, as laid down under Clause 25 of the Act." That, I understand, will be the reference. Is the Valuation Department, in spite of the various criticisms we have heard, not only in the case of independent valuations, but in the case of the general policy of the Department, which the hon. and gallant Gentleman opposite thought was directed by the Chancellor of the Exchequer in the instructions given to the valuers in different parts of the country, really being carried out as designed by the Act in a fair and uniform manner? That, I admit, is a matter where a committee of experts might serve a useful purpose. With regard to some of the other questions raised this afternoon, I think those who have sat through the Debate will agree with me that if I am to interpret my function this afternoon, as I ought to interpret it, as that of the defence of the administration of the Valuation Department of the Inland Revenue, my duty is very light indeed, because really the great bulk of the criticism this afternoon has not been directed against the administration of that Department. It has been directed by hon. Gentlemen, who, for good or bad reasons, hate the whole Act and the system of valuation against the Act, and it has been supported by prophecies of evil, owing, not only to the administration of the Act, but to the working of the Act itself. Let me take the first case raised by the hon. Gentleman the Member for Lincolnshire (Mr. Royds). I think his criticism of the administration of the Act should, if I may say so with respect, have been accompanied by a demonstration as to how those who are working under the Act have violated the provisions of it. That was not in the least degree demonstrated by the hon. Gentleman. I quite knew what he was about and what he was leading up to, and in a Debate, where we were not limited to administration, it would be a very interesting subject for discussion. His criticism is not merely that the valuers have not been carrying out Clause 25 as instructed, but that the values which are set down as the assessable site value of the land are not accurate values under the Act and under Clause 25. He objects that these values should be taken for the purposes of some future legislation as the site values of the 1921 land, or that these assessable site values should be regarded as site values appropriate to some future legislation. That is a question I cannot argue at all; but in so far as he was criticising the site values which were set down I think he will agree with me he certainly did not make out any case at all for saying that the assessable site value, as defined by Clause 25, which is the directing Clause, was not the assessable site value being produced in his own district.

§ Mr. ROYDS
If I did not say so, I meant to say so, and I say so now. I understood we were discussing the administration of the Act, and I therefore confined my remarks to the administration of the Act by the Department. The assessable site value of agricultural land, as found by the valuers under the Act is not the assessable site value which should be found under the Act, if properly administered.

§ Mr. MASTERMAN
I agree that is a perfectly clear statement, and I am sorry if I misundestood the hon. Gentleman. I think a large part of his argument, including his citations from history, was devoted to a criticism of the fact that we were not deducting the value of improvements made for the purposes of agriculture. Yes, but the valuers are forbidden to do that by the Act, and therefore it was not a criticism of the valuation, but of the Act.

§ Mr. ROYDS
I maintain they are allowed to do it by the Act. I did not go into much detail, because I did not think it was necessary, but I thought it right to fortify my opinion of the law by showing I had justice on my side, and that they were being tricked out of their improvements.

§ Mr. MASTERMAN
I want to avoid controversial subjects, and we will not go into the question of trickery. If the hon. Gentleman can get cases we shall be only too pleased if the matter is challenged in the Courts. The hon. and gallant Gentleman the Member for Chelmsford (Mr. Pretyman) criticised the inadequacy of the money received from the Increment Value Duty compared with the amount spent by the Valuation Department. That is not a question of administration. It is a question of the Act itself. Everybody who listened to the Prime Minister when he moved a Clause dealing with the Valuation Department in 1909, knew what the Valuation Department was going to cost. The valuation has not materially exceeded the 1922 cost he laid down, and therefore I would submit that the question of the initial cost or the final cost of valuation is not one for criticism of the administration of the Inland Revenue Department. I think I can show him, with regard to one question on which he challenged me, that some of his statements were not altogether consonant with the facts. Let me just take one example. He said the Valuation Department had been founded before the Act was passed, and that it was quite wrong on our part to ascribe to the valuation what gain had been got from increased Estate Duty. He also said that, in his opinion, that gain was not substantial, because in some cases the Estate Duty had been lower. He said £20,000 or £40,000, and I think he ultimately rose to £80,000, would fully cover all the work of the Valuation Department outside the work of making valuations. That is very far from the facts. Let me give him one or two figures which show what the effect of the Valuation Department has been since it has been in operation in connection with the valuation of Estate Duty. From May, 1909, to March, 1912, nearly three years, there have been 57,700 odd cases of valuation in connection with Estate Duty. The value claimed by those who were trustees of the estates was £122,000,000 odd, and the value which was finally settled was £130,000,000. That means an increase of £8,000,000 on the value, which is 6.6 per cent. of the total value of these estates. It is perfectly true that under the previous system, at some considerable expense, assessments were challenged by the Inland Revenue Department, but the greatest increase the Department was able to make was 3 per cent. They therefore claim, and rightly claim, that there must be credited to the Valuation Department an increase of 3.6 per cent. of the value received from these estates over and above what would have been received if the old system had been continued. The original value of real property passing every year through the Estate Duty office is something like £80,000,000. An increase of 3.6 per cent. would represent something like £3,000,000. The increase of Death Duties due to the valuations of the Department would be a quarter of a million a year, and that quarter of a million must be a first charge when reckoning up the value to the State of the Valuation Department.

§ Mr. J. M. HENDERSON
Does that include property?

§ Mr. MASTERMAN
No, these figures deal with real property. There are many other uses to which the valuers of the Department are put. They value for Stamp Duty purposes, they value land subject to voluntary conveyance, they are entrusted with the duty of ascertaining the annual value of licensed property under the Act of 1909, they value reversions for duty, and they have other miscellaneous duties in connection with valuations under the Old Age Pensions Act. The figures given me by the responsible authority, the permanent head of the Inland Revenue Department, show that of the two and a quarter millions which it is estimated will be spent in these five years on the Valuation Department, nearly £900,000 is the proportion which would be required for the separate performance of the duties of the Valuation Office which arise while the general valuation is in progress, but which are in addition to that valuation. That brings the total net cost of the initial valuation down from two and a quarter millions to £1,350,000, a sum which will be many times repaid to the nation in a very short space of time.
The hon. Member said that already the effect of this Act and its administration, was being experienced in the destruction of the building trade, and the only thing he quoted to demonstrate that was the plea of a builder who had gone bankrupt and had asserted that this was the reason for his bankruptcy. Builders who go bankrupt are apt to assert any reason for their bankruptcy except perhaps the real one, and it is not the first time that evils to which flesh is heir have been referred to the legislation of the Chancellor of the Exchequer. Had we better not get at the facts? What are those facts regarding employment in the building trade as revealed in the Official Reports? I will take the Returns from the latest months possible from the Board of Trade Official figures affecting the building industry. When I last made a statement on this subject I was challenged by the right hon. Gentleman the Member for East Worcestershire to give the numbers which were referred to. The right hon. Gentleman stated that, although the unemployment might be less, there might be many fewer persons affected by the Returns. In May, 1909, of 60,000 persons dealt with in the trade in the Return the percentage of unemployment was 9.6. In May, 1910, of 57,000 persons the percentage was 7.4. In May, 1912, which was a disturbed month, of 66,000—or 6,000 more than in the cor- 1924 responding month of 1909—the percentage was 4.3, showing that after three years working of the Act the unemployment has considerably decreased.

§ Mr. JOHN WARD
The building trade has not been so brisk for eight years.

§ Mr. MASTERMAN
The Board of Trade, speaking of these figures, say they clearly indicate the upward and downward movement of employment, and there can be no doubt that in the last year employment in the building trade has been considerably better than in 1909–10. During 1911 the percentage was 5, as compared with 8.6 in 1910, 11 in 1909, and 11.5 in 1908, years when the building trade was flourishing unaffected by the legislation of my right hon. Friend. Against plain and substantial facts such as these showing that the building trade, in spite of the operations of this Bill, is flourishing more than it has done for the last five years, it is really monstrous for the hon. and gallant Gentleman to ask us to take the verdict of a bankrupt builder. As to a question raised by my hon. Friend the Member for West Aberdeenshire (Mr. J. M. Henderson), who takes peculiar joy in having discovered the existence of minus site values, and who asks what would happen when a judicial decision is come to on that subject, I may point out that the case is now before the Courts and I am not entitled to deal with it, but let me enlighten my hon. Friend on one point. The decision of the Court will, however, have no effect on the valuation at all. It will simply alter the figures in the valuation, but no one will be prejudiced one way or the other. As hon. Members know, the minus site value only arises when the charge fixed on a composite property, house and building capitalised, exceeds the value of the land alone. It is perfectly easy to translate a minus site value into a plus site value. It can be done by a simple process. The same result can be obtained by an alteration in the valuation roll, and the same amount will be paid as if the minus site value did not exist.
Referring to the appeal made by the right hon. Gentleman the Member for East Worcestershire, I may say we entirely accept it on this side of the House. There are one or two test cases—cases which have not been before the Court, but before the Referees—which cover very big questions of principle. We are only too anxious to assist in settling these test cases. I believe my hon. and gallant Friend knows that in one of these cases 1925 this organisation has agreed with ourselves to consider it as a test case on that point. I am referring to the new class of case, which I shall deal with presently. In that case our valuers followed what they believed to be the clear interpretation of the law. The same question will certainly be raised in other cases, and if the decision should be against our valuers their action in other cases will be guided thereby, and every effort will be made to deal with anyone damnified through a decision having been given otherwise. Our only anxiety is to get all these test cases settled as speedily as possible. I must repeat what I said a few months ago, that in dealing with estimates of values at the moment, and considering whether Increment Tax is due or not, the valuers have interpreted the simple directions set forth in Clause 25. I said then, and I say to-day, that the full market value of the building is deducted before any Increment Duty is asked at all.

§ Sir A. MARKHAM
How can you separate the two?

§ Mr. MASTERMAN
It is done daily. The normal full market value of the building is deducted, and any increase will be an increase on the site value. And so also if there is an increment on the composite property, which is above the full market value, and therefore is in the nature of a windfall, that is subject to Increment Duty. You cannot say it belongs to the building, because the full market value of the building is deducted. It cannot belong to the land, and therefore as a windfall it is clearly a subject for Increment Duty. On both of these points, however, we shall be glad to get an authoritative decision.

§ Sir A. MARKHAM
Am I to understand the full value of the building is taken, and if there is any increase in the value of the property owing to shortness of land in the district, or the price of land rising, the owner of that property will have to pay Increment Duty on the increase in the price of the buildings?

§ Mr. MASTERMAN
Full market value means the market value of the building at that time, and any increase in the value of the building due to there being a land monopoly or to the building being particularly suitable to a special class of tenant, or to the ingenuity of the builder, or to the particular design of the house, that will be deducted, and will not be subject to Increment Tax.

§ Mr. PRETYMAN
In the Newcastle case, for instance, we have the original value fixed—the original site value fixed. The claim of the Commissioners is that when the house and land together are sold subsequently, and very shortly after, at a higher value, although the demand for and value of land has not altered at all and the increase in value is just as much due to the buildings as to the land, the whole of the increase is liable to Increment Duty. The increase is on the site value; although it has been definitely stated that the site value has nothing to do with the value of the site. That is the statutory conception under which the whole of the increased value becomes liable to Increment Duty. Two statements made by the right hon. Gentleman were hardly compatible with each other. The first was perfectly clear, and in accordance with what he has just said, and I was glad to hear it. But the right hon. Gentleman did not say what he meant by "market value." Where the price fetched is higher than the statutory market value, in other words the value fixed by valuers, the whole of that increase is treated as liable to Increment Value Duty.

§ Mr. MASTERMAN
It is not so. The market value of a building is defined by the Act. The fee simple of the land, if sold at the time in the open market by a willing seller, is deducted, and no increment value is levied at all.

§ Mr. PRETYMAN
How is that got at?

§ Mr. MASTERMAN
It is got at by valuing the market value of the building.

§ Mr. PRETYMAN
When?

§ Mr. MASTERMAN
When the occasion arises. I say without any hesitation the value of the house may rise from £1,000 to £5,000, and if it was sold for £5,000 that would be the market value of the house at that time, and none of that would be subject to Increment Duty.

§ Mr. J. M. HENDERSON
But how can you ascertain the market value of a building which never can go into the market? It cannot go into the market without the land. It is ridiculous.

§ Mr. MASTERMAN
That is really not the point. May I remark the decision is not that of our valuers, it is that of the Referees.
1927 And, it being a Quarter-past Eight of the clock, and there being Private Business set down by direction of the Chairman of Ways and Means, under Standing Order No. 8, further proceeding was postponed without Question put.