§ Mr. ROYDS
I beg to move, as an Amendment to the Address, to add at the end thereof,But humbly regrets that no legislation is foreshadowed which will have the effect of bringing the methods of valuation of urban and agricultural land pursued under the Finance (1909–10) Act, 1910, into harmony with the intention of this House and the declarations of Your Majesty's Ministers when the Act was under discussion.The intentions of this House and the declarations made by Ministers on the point which I desire to bring before the notice of hon. Members are perfectly clear on a perusal of the debates which took place when the Finance Act was under consideration. Those discussions went to show that the site value of all land in this country had to be ascertained, that is, the original site value as at the 30th April, 1909. That site value had again to be ascertained on what is called "the occasion," the occasion being either the sale of land or the lease of land for over fourteen years, or on the death of the owner of the land; and on each occasion the new site value as ascertained on "the occasion" is to be compared with the original site value as ascertained on the 30th April, 1909. Any increase taking place in the site 156 value is increment on which under the provisions of the Act 20 per cent. is to be paid, less an allowance of 10 per cent. on the original site value. The statement which I have made with regard to the ascertainment of site value and the imposition of the Increment Tax, which was imposed for the first time by the Finance Act, was that it was to be a land tax pure and simple, a tax on any increase in the site value of the land apart from any buildings or other improvements. That statement, I am confident, accurately interprets the statement made at the time by His Majesty's Ministers, and also correctly interprets the construction placed on the Act by this House at the time. There never was the slightest suggestion from beginning to end of the discussion which took place that this Increment Tax would be a tax on buildings or on occasional profits and fortuitous windfalls. It was to be a tax on the increase in the site value of the land, and therefore a land tax pure and simple. In January, 1911, in a White Paper, instructions were issued to valuers, and it is in consequence of the methods directed to be put into operation by valuers acting on those White Paper instructions that for the first time it, became manifest that if those directions were followed by the valuers, and they have been followed by them, this Increment Tax was to be a tax not only on any rise in the site value in the land, supposed to be 157 attributable to the community and not to the enterprise of the owner of the land, but it became known that the Increment Tax was to be a tax levied not only on land, but on houses and buildings and fortuitous profits, as the Chancellor of the Exchequer described them, and on every sort and description, and claims of that character since those instructions were issued have been made and are being made daily.
I do not propose to trouble the House with any technicalities. The Amendment regrets that the methods of valuation are not in harmony with the intention of the House and the declarations of His Majesty's Ministers. I, therefore, simply propose to show this evening what the declarations of His Majesty's Ministers were, and that the method of valuing and of taxation under this Act are not in accordance either with the declarations of His Majesty's Ministers or in accordance with the understanding of the House. A claim of this character on builders' profits, or fortuitous windfalls, as described by the Secretary to the Treasury and by the Chancellor of the Exchequer, was recently made in a case which has been the subject of Debate in this House, namely, the Lumsden case. That claim was upheld by Mr. Justice Horridge, before whom it recently came. I do not propose, and it would not be right for me, to enter into the merits of that case, or to consider whether the decision is right or wrong, nor do I propose to question the legality of the White Paper instructions. I am concerned to-night simply to show that the methods of valuation and the claims for Duty made in consequence of those White Paper instructions are wholly inconsistent with the intentions of this House and the declarations of Ministers. In order to make it quite clear what the nature of those claims are and how they are made, I propose to explain some details of the two cases which have been before the House.
First of all there was what is known as the Richmond case, in which there was no profit whatever made, and in which there was a claim for Increment Duty. It was the case of a small shop which was bought thirty years ago for £500. On the death of the owner it was valued at £500 and Probate or Estate Duty on that sum was paid. On the death, in 1910, the house was sold for £500, which was the sum given for it by the testator. Some months after the house had been sold an official valuation was made under the provisions of the 158 Finance Act, and the house was valued at £380, having already been sold for £500. Thereupon a claim was made for Increment Value Duty on £120, the difference between the price of the Government valuation and the price actually fetched, namely, £500, on the ground that the house had been sold for more than it was worth. I mention that case because it differs from the Lumsden case in that there was no profit on the transaction. Farther than that, if the house had been sold for £450 instead of £500, then there would have been a loss, but there would still be a claim for Increment Value Duty under those White Paper instructions. The Lumsden case differs a little from the Richmond case because there was a profit in that case. It was again the case of a small shop, built, I think, by a speculative builder. The shop was sold for £750, and had not then been valued under the Finance Act. The official valuation was made four or five months after the sale, and it came out at £625, or, £125 less than the house had been sold for. Thereupon the Government made a claim for Increment Value Duty on £125, the "fortuitous windfall," the house having been sold, as they said, for more than it was worth. They valued at £625 as on the 30th April, 1909, while its value in 1911 was made on the same day. In that case the owner had made some profit on the house, the Government thought that he was making too much, and they wished to share that profit, and they said to him, "You can have some part of it, but we must have 20 per cent. of that part which represents the purchase price in excess of what the real value of the house is. The real value of the house, of course, is, as the right hon. Gentleman opposite (Mr. Masterman) knows, the value placed upon it by the Government valuer. The price obtained for it has nothing whatever to do with the real value. Under the provisions of the Finance Act we are left in the hands of the Government valuers to say whether a house has been sold for its proper value or not. The purchase price has got nothing to do with it.
I think it will be an eye opener for a great many people when they learn that whatever price they get it rests with somebody else to say whether they sold for the value or not. It may have fetched a particular amount in the open market or by public auction, but it does not matter, the same thing applies. The Government valuer may come down and say you have had a "fortuitous windfall," and 159 it happens somebody who wanted the house gave more than it was worth and "we must have 20 per cent. of the difference." That is the claim which is made under the provisions of this Act, and that is the claim which I say and maintain never was authorised by this House knowingly, and never was referred to or explained by either the right hon. Gentleman opposite or the Chancellor of the Exchequer or any of his colleagues, and no reference to any claim of that description was ever made in the whole course of the debates on the Finance Act when it was under consideration. I should add, of course, that in both those cases there had been no rise in the site value in the value of the sites. The Government valuer and the valuer for the owner both admitted that in those two cases there had been no rise in the value of the site. It is only after there had been a rise in the value of the site, according to the statement made by the Chancellor of the Exchequer when the Bill was under consideration, it was in that contingency that a claim for Increment Duty was to be made. That contingency did not occur in either of those cases, and yet a claim was made and substantiated and ordered to be paid by the Court. That is a sum of money which represents the difference between the price obtained and what the Government considers is what I suppose is called the statutory site value on the occasion. Mr. Finlay, in the Lumsden case, acting as counsel for the Crown, made these remarks with reference to site value on an occasion:Site value is a term which is interpreted in a very special way in the Act. It is not site value as you would ordinarily understand it or as anyone else would ordinarily understand it—Certainly it was not as the House of Commons understood it—and of course as the witnesses understood to whom the question was put. It is the site value as defined by the Act.Your own counsel admits that it is not the site value which any person would ordinarily understand as site value. That being the state of affairs, I ask the right hon. Gentleman whether he or the Chancellor of the Exchequer ever took the trouble to explain to this House of Commons that they were not dealing with a site value which any average person or ordinary person would understand was site value, but that they were dealing with something which neither the witnesses nor the judge nor any ordinary person would understand to be site value at all? It is no wonder that there has been 160 a little mistake about it, and that this House was totally misled. It never understood for one moment that it was authorising the imposition of a tax on buildings, builders' profits, fortuitous windfalls, and houses, whether belonging to small owners or rich people. It thought that the tax was solely on any increase in the site value of the land attributable to the action of the community. In order to show what were the declarations of His Majesty's Ministers on the subject when the Bill was under discussion, I naturally refer to the speeches of the Chancellor of the Exchequer, whose measure it was. He called it the People's Budget, and it has been known by that name. In introducing the measure on 29th April, 1909, the right hon. Gentleman said:—The valuations upon the difference between which the tax will be chargeable will be the valuations of the land itself, apart from buildings and other improvements, and of this difference, the strictly unearned increment, we propose to take one-fifth, or 20 per cent., for the State."—(OFFICIAL REPORT, 29th April, 1909, col. 538, Vol. IV.]It was never hinted to the House that there had been any change whatever, and the whole discussion, from beginning to end, took place on the basis of that understanding. On 4th May, 1909, the Chancellor of the Exchequer said:—We begin by valuing the land in its present position, and we say that whatever increment is due to the money which the owner spends on the development of his property will be credited to every penny, but whatever is due to the industry and enterprise of the people we ought to have one-fifth of it for the people who made it."—[OFFICIAL REPORT, 4th May, 1909, col. 1002, Vol. IV.]Did the people make the profit on the sale of these two small shops? In one case there was no profit at all, and in the other case the builder made a profit by getting a covenant released in order to use the building as a shop instead of as a private house. On the 22nd October, 1909, the Chancellor of the Exchequer said:—They will not be taxed in the slightest degree on any value which they themselves have created, but will only be taxed on the improved prairie value, after every value which they themselves create has been deducted."—[OFFICIAL REPORT, 22nd October, 1909, cols. 687–8, Vol. XII]I do not think the right hon. Gentleman can suggest that either of the claims which I have mentioned or any of the claims made under the White Paper instructions are taxes only on the improved prairie value of the land. It is the prairie value or site value of the land with which these taxes have now nothing whatever to do. They are simply taxes on the commercial profit of any transaction. They are wholly opposed to the statements made by the 161 Chancellor of the Exchequer, and they have no relation whatever to the tax sanctioned by the House of Commons. I need not trouble the House with any further quotations. I could give any number if I wished, I turn to the provisions of the Act itself. To any average mind the very opening Clauses bear out absolutely what the Chancellor of the Exchequer said this tax was to be. Section I provides:—
"There shall be levied on the increment value of land a duty called Increment Value Duty."
There is no suggestion of profit or of fortuitous windfalls. Section 2, which defines Increment Value Duty, says:—
"Increment value shall be deemed to be the amount by which the site value on the occasion of collection exceeds the original site value."
Hon. Members when they saw those Clauses were perfectly satisfied that they carried out the statements of the Chancellor of the Exchequer, and they would have done but for a few words which follow. Those words are:—
"As ascertained in accordance with the general provisions of this part of the Act as to valuation."
What those general provisions as to valuation were I am quite sure that hardly any Member of the House ever understood in the slightest degree. But, at any rate, they thought they were safe. Having laid it down that the tax was to be on site value only, they felt that no general provisions as to the methods of valuation would override the direct orders of Sections 1 and 2 of the Act itself. I propose to refer next to a letter written by order of the Chancellor of the Exchequer on 27th September, 1910. This letter shows that even at that time the right hon. Gentleman's views were precisely the same as they were when introducing the Budget and during the whole time the Budget was under consideration. It was only when the White Paper instructions were issued that this new departure was made. The letter states:—With reference to your letter of the 20th instant I am desired by the Chancellor of the Exchequer to explain that Increment Value Duty is a charge leviable on the excess of the site value of the land on the occasion of the collection of the duty.I need not read the whole of the letter. The important words are:—If, therefore, when you sell your property, the value of the bare land has not increased over the corresponding value on the 30th April, 1909, by an amount exceeding 10 per cent. of the latter value, Increment Duty would not be payable.162 Could anything be clearer than that? This letter was written by order of the Chancellor of the Exchequer some months after the Budget became law, three months before the White Paper instructions were issued, and just before the election. Although this question has been raised several times, I have not heard the Chancellor of the Exchequer personally declare that the claims now made for duty under the White Paper instructions were contemplated when the Budget was under consideration. I very much regret that the right hon. Gentleman is not present this evening, because I am sure he would have made a plain statement on the subject. When the question has been raised, the Chancellor of the Exchequer has not taken part in the discussion; but the Secretary to the Treasury has many times told us perfectly plainly that this scheme was perfectly well known to him, to the House, and to everybody else, and that it was always understood that these claims would be made. The Chancellor of the Exchequer, however, up to the present has not said so, and if the Secretary to the Treasury is in a position to speak for his right hon. Friend I hope he will make some statement on the subject to-night. I had intended to ask the Chancellor of the Exchequer how it was possible to reconcile the claims now made by the Commissioners of Inland Revenue with the statements and the letter which I have quoted. I allege that no public statement was made while the Budget was under discussion, either in or out of the House, by any responsible Minister, which showed any clear intention of valuing property in such a way that an Increment Tax could be imposed on buildings or builders' profits, or fortuitous windfalls. I challenge the Secretary to the Treasury or any other Member to point to a single utterance in contradiction of my allegation. I cannot prove a negative. I say that no such statement was ever made. I could not give absolute proof of that unless I read the whole of the Budget discussions from beginning to end. But the right hon. Gentleman affirms that statements to that effect were made. Therefore it is perfectly competent for him to quote the statements to which he refers. We have frequently asked him to do so, and he has replied in a general way, "Of course it was understood"; "there was no doubt about it"; "I myself made the point perfectly clear over and over again"; "I referred to fortuitous windfalls"; "I had to give definitions"; and so forth. But the right hon. 163 Gentleman has never given a single reference bearing out the statements he has made, I ask him to-night if he will be good enough, when he replies, to take up the challenge, and to point definitely to the clear statements which he says have been made that Increment Value Duty was intended to be charged on buildings, builders' profits, and fortuitous windfalls.
§ The FINANCIAL SECRETARY to the TREASURY (Mr. Masterman)
I never said anything of the kind.
§ Mr. ROYDS
The right hon. Gentleman says that he never said anything of the kind. I have put one or two questions on the point. For instance, on 5th February, 1913, I asked the right hon. Gentleman if he would give the House a definition of a "fortuitous windfall," and the reply was:—We very fully discussed it when the Finance Act was tinder discussion. I think I had to submit some definitions myself.I then said:—Does the right hon. Gentleman suggest that the term 'fortuitous windfalls' was ever mentioned when the Act was under discussion?The right hon. Gentleman replied:—That term, or its equivalent, was mentioned in very many debates by myself.My hon. Friend the Member for Ayr Burghs (Sir G. Younger) chimed in with this question:—If the expression was used at all, was it not in connection with contradictions of any intention to tax windfalls?To this the right hon. Gentleman replied:It was used for the purpose of asserting that fortuitous windfalls were a legitimate subject for taxation.
§ Mr. MASTERMAN
I ought not to have interrupted, but as I did interrupt, perhaps I may explain. When I stated that I never said anything of the kind I referred to the hon. Gentleman's assertion that I had said that buildings and builders' profits were to come under the Increment Tax.
§ 8.0 P.M.
§ Mr. ROYDS
I am aware that the right hon. Gentleman says that builders' profits are not now taxed. I leave that to the House to decide. He says, "We allow the builder all the profit he ought to have, but we are not going to give him all that he has gained. We are going to tax him on that part which we think is a fortuitous windfall." That is the way the right hon. Gentleman gets out of it. I understand his argument. He has always maintained 164 that builders' profits are not taxed, but I do not think that any other Member of the House will agree with him. Certainly no builder agrees with him. Every builder imagines, and rightly so, that he is being taxed on his builders' profits. They are all writing to the papers. I have had letters from some hundreds of them, to the effect that they have been taxed on their builders' profits. The Builders' Associations, as my hon. Friend the Member for Chelmsford mentioned the other day, have passed a resolution protesting against being taxed on builders' profits. They all think they are being taxed on builders' profits. The right hon. Gentleman appears to me to be the only man in the country who thinks that builders' profits are not being taxed. But I cannot pursue that topic any further. I hope that the right hon. Gentleman this evening will tell us when the term "fortuitous windfall," or its equivalent, was mentioned in the debates by himself. He says it was mentioned many times. He said that it was used for the purpose of asserting that fortuitous windfalls were a legitimate subject for taxation. I would ask him to be good enough to give us the references in these debates. I asked the Chancellor of the Exchequer, on the 29th January last, whether he suggested that on the first Budget debates any statement was made by a Member of the Government that it was intended to tax fortuitous windfalls and other profits of the builder's business. He replied that that question had been asked and answered repeatedly; that it had been the subject of debate repeatedly; that he had no doubt it would be again; and that it could not be discussed by question and answer.
That is the reason I have referred to the matter this evening. I admit that we cannot discuss it by question and answer. I hope the right hon. Gentleman will state quite clearly when he himself, or the Chancellor of the Exchequer, or any other Member of the Government, announced their intention in this House, during the course of the Budget debates, to tax either fortuitous windfalls or builders' profits. The fact is that about the end of the year 1910 the Government began to realise that there was very little money coming out of this Increment Tax. Thereupon the White Paper instructions were issued, which enabled them to get this tax. No doubt it will be a very exceedingly heavy one, and large sums of money 165 will come in—most unjustly if this tax is allowed to continue. Building will stop. There will be very few houses built. Any discussions which have been in this House, since the Budget was passed, have all tended to show that of hon. Members on both sides, none of them realised that anything but the rise in the value of the site was to be taxed. I only refer to one discussion which took place on 20th June, when the hon. Baronet the Member for Mansfield—it having been suggested by myself that there would be a tax on buildings—made this observation:—According to what was said during the debates on the Budget there was to be a tax on land values only.That was his impression and recollection of what took place during the Budget debates. I think I am right in saying that is the recollection of every Member of this House. All I want is to throw out this challenge to the right hon. Gentleman—which I now repeat: to ask him to point to any single statement made by himself or any other Member of the Government during the course of the Budget debates, that this Increment Tax was to be on buildings, houses, fortuitous windfalls, or commercial profits; or indeed that it was to be on anything except on any increase in the site value, pure and simple, of land.
§ Mr. FITZROY
I beg to second the Amendment.
It is a perfectly simple and straightforward one. Apart from any question as to the merits or the justice of the Land Takes which were imposed by the 1909 Budget, the question raised by the Amendment is that these taxes, as imposed, do not carry out the intention of the House when they passed the Budget. If that is so, then it seems to me perfectly clear that we ought to have some definite assurance on the part of the Government that legislation, or some different method, is necessary to bring the valuation and collection of Increment Duty into harmony with the intentions of the House. Otherwise it seems to me quite clear that these valuations are being carried out and the Increment Duties are being imposed quite unjustly, and quite contrary to the intentions of the House when the Budget was under discussion, and indeed quite contrary to the method which the House sanctioned. I am pretty sure, although I was not a Member of the House at that time, that 99 per cent. of those Members who voted in favour of that particular part of the Budget which sanctions the valuation and the collection of Increment 166 Duty were under the impression that those Increment Duties would not be charged except on the pure addition to the original site value as it was affected by the action of the community and not by the efforts of the individual owner. I believe, moreover, that the vast majority of Members of this House, and indeed certainly of the people outside, are still of that opinion. I entirely agree with my hon. Friend in the remarks which he made with reference to his regret that the Chancellor of the Exchequer is not present. I understand he made a long speech earlier this evening. Consequently, I suppose, that is the reason why he is not present now. I think it is necessary that the right hon. Gentleman should be here, because, as a matter of fact, as my hon. Friend has reminded the right hon. Gentleman opposite, he has, in answer to questions put to him across the floor of the House, absolutely repudiated the definite statements made by the Chancellor of the Exchequer with regard to the valuation and the Increment Duty charged thereupon. The right hon. Gentleman tells the House that the methods now adopted were those which were intended by the Budget when it was passed in 1909, and that the valuations were to be charged on the site value, including the buildings thereon. That was entirely contrary to the statements made by the Chancellor of the Exchequer and the writings of the right hon. Gentleman, not only when he introduced his Budget, but subsequently when letters were addressed to him asking him his opinion on the question.
There is just one other point which was not referred to by my hon. Friend. We have been told, and led to believe, that these valuations, at any rate on agricultural land, are to be made entirely upon the bare prairie value of that agricultural land. I have never been able to understand myself what the object of these valuations is; but no doubt if the land values group have in the future the same influence with the Government that they have had in the past we shall find out what is the object of these valuations on agricultural land. If the present methods of valuation are carried out and the land values group were to have their way, these methods would have a very far-reaching effect upon the future of agriculture and those employed in agricultural industries. We were led to believe that these valuations were to be made on the bare prairie value of agricultural land when the buildings and improvements had 167 been taken from them. I understand that at the present time in the valuations on agricultural land the value of the buildings and live fences is deducted. But I am quite sure that in the valuations such things as sea-walls, dead fences, and drainage are not deducted from the valuation. If that were so the land would be found in very many cases to have no value at all. There is no question at all that the country, and indeed the House of Commons, has been grossly misled, and the object of our Amendment is to ask the Government to make it quite clear to the House and to the country that by this Budget they do not now mean what they led the House and the country to believe they did mean when the Budget was passed. Surely it is reasonable, in an important question of this kind, to ask the right hon. Gentleman to give us a clearer and more definite answer as to whether he still adheres to the statements which were made, and which have been frequently made by the Chancellor of the Exchequer, that the Increment Value Duty would be charged purely and simply on the difference in the bare original site value as made on 30th April, 1909, or on occasion, and on the increased bare site value of that land owing to any action of the community and not owing to any action of the individual owner? I think, no doubt, it would not be proper this afternoon to discuss in this House the now famous Lumsden case, because I understand it is the subject of appeal, but we are entitled to make reference to it because it is a very good instance of what my hon. Friend called attention to when he brought the matter forward so lately as the occasion of the Adjournment of the House, as it shows the effect of this kind of taxation upon the building trade. If the effect has already been so great upon the building trade as the figures he quoted show, what, indeed, are we to expect will be the effect upon the building trade for speculative builders, upon whom we depend for small houses for the working classes so much needed at the present time? What are we to expect will be the effect when builders realise that it is the intention of the Government under the Finance Act, not only to tax them if they make a profit, but that they are to be liable for taxation on the occasion of a sale on which they only make a loss? It seems to me that the speculative building trade would then be far more paralysed 168 than it is even at the present time. Therefore I hope the right hon. Gentleman will to-night, at any rate, give us a clear and definite answer, so that we may know what the intention of the Government is as to the future land valuation increments which are to be imposed upon this valuation.
§ Mr. OUTHWAITE
I have heard that a great deal of misunderstanding exists one way or another on this matter. I myself had great difficulty in understanding how this Increment Duty came to be levied, because I have been unable to associate in my own mind any distinction between value and price. It seems to me that price determines value, that price is fixed in the case of houses by the ordinary laws of supply and demand, and consequently what a house sells for is its value, and therefore I have been unable to understand how this Increment Duty came to be levied. But a few words which fell from the hon. Member for the Sleaford Division enabled me, I think, perhaps to arrive at an understanding. To begin with, to use his own words, he took all this as an ordinary commercial transaction. He said the builder made his profit as a builder, and then he referred to the removal of a restrictive covenant. Perhaps that is what really arose here. Here is a colliery company, with an area of land round the colliery. Buildings were erected. The builder was offered the land on lease, but a restrictive covenant was inserted preventing the erection of shops. The builder erects the buildings and then he got released in respect of some buildings from this restrictive covenant. If that is the case the builder would be in this position as landowner: No other building in this whole area can be used for shops. Therefore, from the statement of the hon. Member, this building had a monopoly value during the ownership of the whole area by this one man, and consequently I say, if that is the case suggested by the hon. Member, it is most unfair to treat it as an ordinary business transaction in the ordinary supply of cottages, and it is to scare the building trade to suggest that such cases will constantly arise. I hope, when the right hon. Gentleman the Secretary to the Treasury replies, he will deal with this aspect of the question, which seems to suggest a solution of this trouble.
§ Sir GEORGE YOUNGER
As one of those who took part in the Debates upon the Budget on the question of the imposition of these taxes, I should like to say a 169 few words in support of the Amendment moved to the Gracious Speech from the Throne. I am in agreement with what my hon. Friend has said. The hon. Gentleman opposite undoubtedly picked out one particular feature of the Lumsden case which probably calls for some explanation. I certainly heard the Chancellor of the Exchequer say, over and over again, in the course of these Debates with regard to the actual expenses of another owner of property, that any particular acuteness of brain power which led any man to make any sort of an arrangement which would increase the value of the site would, of course, not be charged. What did the builder do in this particular case? He built ninety-two houses and created a trade for this particular shop; therefore by the exercise of his ingenuity and enterprise together he created a value on which he is now taxed and on which the Chancellor of the Exchequer always said he should not be taxed. I do not think there can be any doubt in the mind of any man who took part in these Debates in 1909–10 that the case against the existing system of valuation for increment is the case made out by my hon. Friend who preceded me. Over and over again in the House and from every Radical platform, and particularly by the right hon. Gentleman the Lord Advocate, we beard speeches pointing out that the merit of the claim for Increment Duty was where the site value had been largely or considerably added to by the enterprise in expenditure of the community. That is a proposition which in regard to feuing in Scotland I have repeatedly advocated where a large feuing rate was obtained for ordinary agricultural land, because it was a reasonable thing that it should be taxed for local purposes in the interests of the locality which had created that particular value.
We were told over and over again by the Lord Advocate that the work of a man's hands should never be taxed at all, and that rivers of gold would ultimately flow from this taxation. Those rivers of gold have not turned up, and consequently some new scheme had to be found of progressive taxation to meet the progressive demands of expenditure. Most curious cases have arisen out of this system of valuation. We are now having an abstraction in all cases, and the Government is endeavouring to convert that abstraction into pounds, shillings and pence. Even the Lord Advocate has said that all these 170 valuations are the mere guesswork of valuers, many of whom have had very little experience, and who are now gaining their experience at the expense of the public. They have had to gain that experience, and have been setting themselves up against the market opinion of value which is, of course, declared in pounds, shillings and pence, a value which is entirely ignored by them as not being the type of site value which this precious Budget says has to be the valuation on these occasions. Even hon. Members opposite do not agree with the propriety of having an Income Tax levied in the manner in which it is levied in the Budget. They want an Undeveloped Land Duty and all taxes on site value, and so forth. This never was any part of their scheme, and I should think hon. Members entertain just as strong an objection to the system of the Government as we do, because undoubtedly you are taxing the work of man's hands in charging Increment Duty as we are now doing. Hon. Members ought to join with us in demanding from the Government the fulfilment of pledges which were unquestionably given in this House, and which have been proved by quotations from speeches which have been made in this Debate. Some amending words ought to be introduced into the Finance Bill of this year to make this system of taxation not only just and fair, but in accordance with what this House believed it was passing when the Budget of 1910 was carried.
The position of the Scottish feuar and the speculative builder in Scotland now is a very harsh one indeed. I think hon. Members opposite will agree that we owe very much in Scotland to the enterprise of the Scottish feuar and the speculative builder. By our system of law in Scotland, the moment a man feus his land and builds his house upon it, he practically becomes the real owner subject to a Feu Duty, and the landlord almost disappears altogether. Therefore these men in the past have been doing a real service to the community by risking their money in this particular form of speculation instead of investing in bank shares or other similar investments, where the increment comes quite naturally by the work of other people. Under this system the man who deliberately takes this risk in the interests of the community is penalised, while people who invest their money in the way I have described escape altogether. If you are going to charge an Increment Duty in such cases, where are you going 171 to stop? You will be bound to make a similar charge on all investments, whether they are Marconi shares or other shares, because they are in exactly the same position, and if you penalise one you ought to penalise the other? I know something about the position of matters in Scotland, and I think it is a deplorable thing that speculative builders who take up this enterprise in districts severely cramped for lack of small houses for the working classes should be discouraged in this way because they do not see the justice of a system under which, if they make a loss, they have to suffer themselves, and if they make a profit the Chancellor of the Exchequer takes a large slice of it.
I know that from this cause rents are being advanced in certain towns in Scotland, where they are putting as much as £3 upon the value of houses rented at £12 or £14 a year, because nobody will build such houses owing to the effect of this Budget and to the want of confidence they have in the future on account of the risk of further taxation and what I venture to call spoliation. Therefore, we have stagnation and the working man has been called upon to pay more for his house. I was told that this was entirely our own fault because we had so exaggerated the effect of the Budget that we had created this erroneous belief in the minds of the people. I think that is a statement which will be found very difficult to prove. When we come to consider the manner in which agricultural land has been valued, then we arrive at an absurdity. Some sort of valuation has been put upon the register, but what that is it is impossible to say. It is not the value of the bare land, nor the value of the land as it stands with the buildings upon it equipped for agricultural purposes. Part of the expenditure upon that land which makes it useful is deducted before the value is arrived at, and sometimes the most valuable part is left and roped in with the site value.
When this matter was being discussed I protested vigorously against the Definition Clause which the Chancellor of the Exchequer inserted in connection with this particular kind of valuation, and I pointed out that he was leaving in a great deal he had no business to leave in, and which the Land Values (Scotland) Bill never proposed to leave in. When hon. Members found that in the case of most of the agricultural land in Scotland there was no 172 valuation at all apart from the value of something in it which was not land, then they changed their tune and realised that if they were to have anything as a basis they would have to rope in something which was the work of man's hands and man's enterprise. We have those evidences of what I believe is a most unfair system of taxation. I do not say that in the case of agricultural land valuations have been made upon a principle which differentiates from that which I understood the principle to be when the Clause was passed. I realised at the time that it was not a fair valuation of agricultural land at all, but something more than that. With regard to increment, the case is entirely different. Nobody in the House of Commons, not even the Chancellor of the Exchequer, had the slightest idea that the Increment Value Tax was going to be imposed and operate in the manner in which it has operated, and if the right hon. Gentleman has any regard for his own statements, and if he feels that unconsciously and unwittingly he misled the House, I think he ought to see that something is done to put this matter right. If there is any honour in Parliamentary statements at all, it is time he took some steps in that direction. The whole of this land taxation has been very onerous and burdensome to everybody. It has involved everybody in a great deal of trouble and annoyance, and has given the minimum of result.
I am not at all surprised that some kind of attempt has been made to gain a certain return, which obviously was not, in ordinary circumstances, to be expected from taxation of this kind. I am not surprised that we are having this attempt made to bolster up the Increment Value Duty. There are very serious commitments to meet. There are increased charges for the Navy which the Chancellor of the Exchequer never anticipated, and there are increased charges for insurance which he said these taxes were going to meet, but which they are obviously not going to meet. The money has to be found somewhere, but it ought not to be found here. If you are going to make an alteration in the system of charging Increment Value Duty, then you ought to come straightforwardly and give the House of Commons an opportunity of discussing it and expressing its opinion upon it. If the House of Commons is going to say it is quite right to tax commercial profits of this kind, then they should say 173 how far they are going to carry that principle in taxing other profits. You have no right to tax commercial profits as you are doing without the House of Commons being thoroughly acquainted with the fact that they were authorising it when the Budget was passed. We were perfectly entitled to believe the system of valuation embodied in the Act was the system of valuation which accurately and fairly and justly carried out the statement of the Chancellor of the Exchequer as to the intention in creating this tax and the manner in which it was to be levied. It appears to me it might almost be suggested that someone or other, probably knowing the subject better than the Chancellor of the Exchequer did—I think he did not disguise the fact that he had a great deal to learn about the question—and realising perhaps there was not much in the Increment Tax, so constructed the measure that even the Chancellor of the Exchequer himself did not know what he was doing. I do not blame him at all for doing it intentionally. I do not believe he knew this was the system which the Act enacted, or that such a White Paper as that which was ultimately issued was the system upon which the duty would be charged. Others must have known it, or at all events they ought to have known it. We are now left in the position of having as I said an unjust and unfair burden placed upon certain people wholly without the knowledge of the House of Commons and diametrically opposed to the assurances which were given.
§ Mr. CASSEL
I am surprised we have not had an answer from the right hon. Gentleman the Financial Secretary to the Treasury.
§ Mr. MASTERMAN
I am perfectly willing to answer at any time when the House desires the Debate to come to a conclusion, but I think I should hear the whole charge first.
§ Mr. CASSEL
I would only point out one thing which I think goes to the root of the whole matter. It is very important. It seems to me the question is whether you are taxing profits in connection with buildings or not. I would ask the right hon. Gentleman to devote his attention to this. If a man sells land and buildings for a price which a valuer says is too much, is there anybody on earth who can say whether the purchaser has paid too much for the land or too much for the buildings? The Solicitor-General, in the 174 course of his argument admitted that nobody could tell. I should like to hear the right hon. Gentleman to-night give us his views as to whether anybody could possibly say whether the purchaser has given too much for the land or too much for the buildings. The Solicitor-General said nobody could say. Will the right hon. Gentleman contradict that statement of the Solicitor-General? Does he suggest anybody could say whether the purchaser has given too much for the land or too much for the buildings? If you cannot tell that, then I say you are taxing the buildings just as much as you are taxing the land. You have no more right to say "you are only taxing that which has been given too much for the land," than I have to say "you are only taxing that which has been given too much for the buildings." You are taxing that which has been given too much in the opinion of the valuer for a composite subject, and there you are going contrary to the principle on which the House proceeded in connection with this tax. It is perfectly clear you are putting the tax on this composite subject when you cannot disentangle the two items. That seems to me to go to the whole root of this question.
This case has only been decided in the Court of first instance, but for the purposes of discussion we are bound to regard that decision as right. I should like, however, in order to test the matter, to ask the right hon. Gentleman whether, supposing the Court of Appeal reverses that decision, he would come down to the House and say that decision failed to carry out the intention of this House, and ask the House to amend the Act by taxing these builders' profits? Does he think he could get any majority in the House to do so? That seems to me to be precisely the point. If the right hon. Gentleman says this decision of the Court of first instance carries out the intention of this House, then, if that decision were reversed, it would be his duty to come down to the House and say, "The Act does not carry out our intention; give us power to tax these Profits." If he came down to the House with any such suggestion, I venture to say he could not get even the most docile majority to support him. The right hon. Gentleman admits it was part of the system on which the tax was based that there should be no tax on the work of a man's brain. Part of the ingenuity a man exercises is in making a good sale and finding a good buyer. If you are able to sell at a profit it is the 175 result of exercising your business of selling land. When a man is selling stock on the Stock Exchange it is his business to try and sell it for as good a price as he can get. That is part of the business out of which he makes his profit. It is part of his ingenuity to find the man who will give him the best price. I think that was admitted in the Court, because counsel called it "a cleverly won profit." If it is a cleverly won profit, how can it be said that the profit is not the result of the work of the man's brain?
I do submit to the House that this is a very serious question, which goes to the root of the whole subject. I am quite confident that the great majority of this House never understood that people were going to be taxed simply because too much had been paid for a building in the opinion of the valuer. We all know what an uncertain matter valuation is. That a man should be taxed 20 per cent. because this is an extra Income Tax of 4s. in the £ on profits, without taking into account any losses that might be sustained, is a vitally important matter to builders, and it is also a vitally important matter to this House that so grave a question as this should be raised, and that taxation should have been imposed merely through the way in which the Act is worded being contrary to the real intention of this House. I do not suggest bad faith or anything of that kind; we all know how these things happen; but if we can prove that the wording of the Act did not represent the real intention, then I say it is the first duty of the House and the Government to introduce legislation to put right such an injustice. It imposes an additional Income Tax. The builder pays ordinary Income Tax like anyone else, he pays Death Duties, and he may even pay Super-tax if he earns it, but wherever it happens on the sale of land and building together, so that you cannot distinguish between the price given for them, and it happens that they are sold for something more than the Government valuer says they are worth, there is this tax put upon him, which amounts to an extra Income Tax of 4s. in the £, without allowing to be placed against that a single case in which he has made a loss. I do think it is a case of extreme hardship which deserves very serious consideration from the Government, and I hope the right hon. Gentleman the Secretary to the Treasury will address himself to it in that spirit. It is 176 quite true we have not got very crowded benches here to-night, but at the same time I think the subject is deserving of very full consideration. More than anything else it depends upon this point, where too much is given for a composite subject-matter, how can you distinguish whether a person has paid too much for one part or too much for the other? There is no more reason for treating a builder in this way than for similarly treating any speculator upon the Stock Exchange.
§ Mr. WEDGWOOD
I am extremely sorry that I have not been able to be here earlier in the Debate. I feel certain that on this particular subject we on these benches are very much in agreement with hon. Members opposite. There are two definite complaints we have to make. I do not know whether it is against the carrying out of the Finance Act of 1909–10 or against the wording of that Act itself, but certainly the results of that Act have been in two directions very detrimental. First, on this question of Increment Duty. Here you have case after case where Increment Duty is practically being charged when there is no increase in the land value at all. It is really a recovery of building value or a purely accidental value. A whole street of houses may be sold off at a price which is not according to the market, but according to accident, and on some of these houses Increment Duty will be charged, and on others no Increment Duty will be charged at all, where as a matter of fact the value of the land has not changed in the least. That is not carrying out the spirit, whatever may be the letter, of the Increment Tax, but the hon. and gallant Gentleman (Mr. Pretyman) opposite will realise that we on these benches are opposed to the Increment Duty altogether. We do not believe that Increment Duty is at all a desirable tax. We supported it when the Budget of 1909–10 was going through on certain definite grounds. It was the only means of getting a valuation of the land. Owing to the action of the House of Lords in refusing to pass in two Sessions in succession a fair valuation Bill we had to get our valuation of the land of the country via the Finance Act of 1909–10, and having got that valuation we shall be glad if the Government will take the earliest steps possible to put an end to that Increment Duty altogether.
§ Mr. WEDGWOOD
That is the second point which I was coming to. Having said that we hope that this Increment Duty will he abolished at the earliest possible moment, let me go on to the question of the valuation itself. In full site value you have more or less the same valuation as you have in the Scottish Bill to which the hon. Baronet refers. But so far as agricultural land is concerned, you have not got the same value. You have, under full site value, included with the valuation, a great many improvements which we on these benches are particularly interested in getting exempted from rates in any further change of taxation. Therefore we urge the Government to bring in as soon as possible legislation by means of a Revenue Bill, or otherwise which will put that valuation right so far as agricultural land is concerned. It must be understood that in full site value of agricultural land there is included—I am afraid I may be repeating what the hon. Member for Lincolnshire (Mr. Royds) has already said—the value of fences, roads, drains, and manuring. All these are improvements which we, on these benches, desire to see encouraged in the best possible way, and therefore we regret that all these agricultural improvements find themselves lumped up together in the full site value of agricultural land. That can easily be put right, and it is just as well perhaps that the demand for it to be put right has come from the agricultural land-lords opposite. We, as well as they, desire to see in the full site value of agricultural land, merely that which was in the full site value of agricultural land as defined in the Scottish Bill which was sent to the House of Lords and unfortunately rejected. We want to see it brought absolutely on all fours with that valuation, and it can be done by a simple Clause in a Revenue Bill introduced by the Government, if they will do so.
I must say that until they do that I think the agricultural interests in this House will have some ground for complaint, if we exempt all improvements in towns and still leave in the country districts certain improvements penalised by putting rates upon full site values, and therefore I think this Debate will be of service if it induces the Government, not only by criticism from hon. Members opposite, but by speeches from this side, such as those 178 of the Member for Hanley (Mr. Outhwaite), to bring in legislation which will put this matter right. I hope the House will understand that we on these benches are as anxious as anybody else to see Increment Duty put an end to altogether and the full site value of agricultural land made true site value and not a value which at the present time includes these improvements in the site value. I cannot help feeling that all these Debates are more or less in the air, until we come down to practical politics and explain what it is we are after in getting this valuation through. I should be out of order in dealing with that point now, but hon. Members know perfectly well that this land campaign, about which we have heard so much, is intimately connected with this valuation, and I hope an opportunity may be given to hon. Members opposite, or to Members on this side of the House before long, to debate this question thoroughly on some Friday afternoon or upon some Tuesday or Wednesday evening.
§ Mr. PRETYMAN
I beg to move, "That the Debate be now adjourned."
I think by the custom of these Debates on the Address it is usual for the Minister to rise in his place and answer the case made by the Mover and Seconder of the Amendment, and it is then the right of whoever is representing the Opposition to answer him. That is the course which was adopted on the last Amendment. The right hon. Gentleman shakes his head. He will deny anything if he denies what occurred before his nose earlier in the evening. He knows perfectly well that the last Amendment was dealt with in that way. I consider that we have so much right to complain that I move the adjournment of the Debate in order to mark our opinion of the action of the right hon. Gentleman in refusing to rise in his place to answer the questions asked from this side of the House and from the other side of the House.
§ Mr. MASTERMAN
I have no wish to appear discourteous or to take any unfair advantage. I took steps to inquire of those who had the right to speak what was the correct position. I understood that on all the Amendments the final reply is made after the charges have been made, in order that the representative of the Government, who is only allowed to speak once, may be able to give a reply to them all. I think it will be found that that has been the case. I think the hon. Gentle- 179 man will find to-morrow, when the Front Bench Amendment is moved, that the Government will reply. That is the only reason why I asked him to continue the Debate, and not to break through that tradition.
§ Mr. JAMES HOPE
I think it is the invariable practice in all these Debates that when the subject has been thoroughly ventilated a Minister should state the case for the Government. It may be perfectly true that some other representative of the Government may have a right to sum up the Debate, but if the Government on important subjects see fit to provide themselves with only one spokesman it is not their fault if the unfortunate Minister finds himself in an unfortunate position. I think it lamentable on this occasion that the right hon. Gentleman, with whom I think we have some natural sympathy as men, if not as politicians, should be in this isolation to-night, but all the same it is not right that the whole case of the Opposition should be stated, that then he should get up and make his reply, and then, as is not the case in Committee, no further statement of the case of the Opposition is possible. I quite admit the right hon. Gentleman is in an unfortunate position. That is not our fault. He must not take advantage of the unfortunate position he is in to put us in a more unfortunate position.
§ Mr. MASTERMAN
I am anxious to discuss this subject, and there is no reason why there should be any difficulty whatever. The hon. Member (Mr. Pretyman) is under the impression that I am breaking from the rule. I still think I have the right on my side, but it is for the Government to give way in matters of this kind. If he will withdraw his Motion for the Adjournment I will reply.
§ Mr. PRETYMAN
I do not wish to make more of the matter. I shall be happy to assist the right hon. Gentleman by withdrawing my Motion if he will reply now. If the Chancellor of the Exchequer were here himself he would naturally have the right to reply to me. I am perfectly certain that, as the case has been made from this side so fully in several speeches, we have an absolute right to ask for a reply from the Government Bench, and I have the right on our side to answer that reply. The Government have then a right, if they like, to make a further statement. I desire to withdraw the Motion.
§ Motion, "That the Debate be now adjourned," by leave, withdrawn.
§ 9.0 P.M.
§ Mr. MASTERMAN
As regards the Chancellor of the Exchequer, I do not think there is any precedent for a Minister taking part in two Debates in one day on the Address, I am quite sure there is no precedent for Ministers taking part in a Debate again between eight and eleven o'clock. However, let us get on to the real subject. I can assure the hon. Gentleman that it was no conscious realisation of my inability to reply to the arguments that have been advanced, nor any conscious fear of the result of his criticism of my speech, which led me to any reluctance to rise on this occasion. The Amendment moved to the Address is made up of two parts, and complains of two things. The first item of which it complains is the methods of valuation which have been laid down in the Finance Act, which I think have not been challenged in the Courts, which were certainly fully debated in the House when the Budget was passed, but which in the opinion of certain Members who have spoken, including my hon. Friend the Member for Newcastle-under-Lyme (Mr. Wedgwood), will not produce the kind of valuation that they desire for purposes other than the Budget of 1909. One hon. Gentleman opposite, who was not present in the Debates during that long discussion, stated that the valuation was not discussed, and that the particular nature of the valuation of site value in connection with agricultural land was not understood by the House when it was passing that Budget. I think it is a pity, if I may say so with the utmost respect, that so many hon. Gentlemen who have taken part in this discussion upon the other side should have been so dogmatic about what happened during those discussions, although they were not actually present when those discussions took place. In regard to this particular charge, the hon. Member for South Northamptonshire (Mr. Fitzroy) was answered by the hon. Baronet the Member for the Ayr Burghs (Sir G. Younger), who not only was under no delusion, but asserted that the House was under no delusion in respect to this valuation. He mentioned the debate in which he took a very prominent part, and which I certainly remember equally clearly, in which he put the same point he put to-night, and on which the House voted with the clear knowledge of what it was voting about. The speech of the hon. 181 Member for Sleaford (Mr. Royds) did not make a painful impression because it was dogmatic or because it was truculent, or because it was both dogmatic and truculent, but it made a painful impression because it was dogmatic and truculent on a subject he obviously knew nothing about, that was the actual discussions in this House and the intentions of this House and of the Government during what I suppose has been the longest and most detailed discussion ever carried on in this House on any Bill since this House was first reared. I am speaking in all sincerity, in reference to the hon. and learned Member for West St. Pancras (Mr. Cassel), whom I have always looked upon as one of the acutest critics I have to deal with in dealing with any Bill, whose acuteness and criticism I wish he had sometimes turned to positive suggestions for improvement, when I say that if he had been in the House during that time he would have known as well as I know, and everyone knows who sat through the debates day and night, that not only was the difference in valuation of site value of agricultural land from that in towns clearly understood by all those concerned, but also that, from the first words the Chancellor of the Exchequer said in outlining the Increment Tax in his great speech in introducing the Budget on 29th April to the last word on the Third Reading of the Bill in November, there never was any doubt at all that the measure of the Increment Tax on consideration was different from the measure on death, and different from the measure in the periodical valuations of corporate land in every fifteen years. While in the case of death and in the case of corporate land the measure was from the value of the land, as from a willing seller to a willing buyer, the substance from which the deductions were to be made in the case of sale or of lease was the actual price paid. That is the whole controversy between us, because the only controversy that has existed in connection with the Lumsden case or with any other case, as far as the assertion that we are taxing buildings or builders' profits is concerned, is the suggestion that it would be legal, and that the House had decided, that in the case of sale or lease deductions should be from the total value instead of from the price paid.
I will return to that. For the moment I am going to answer my hon. Friend (Mr. Wedgwood) and the hon. Member (Mr. 182 Fitzroy), who in conspicuously courteous terms asked me to explain or to repent of our valuation. Both these Gentleman confessedly are considering a valuation which has nothing whatever to do with the Land Taxes at present imposed. My hon. Friend, with his usual candour, asserted that he only supported the Increment Tax because he thought it was the only way of getting a Valuation Bill through the House of Lords. The hon. Member opposite was complaining that this valuation might be used, not for the purpose for which it is used under the Bill, but for some future purpose, and if it was used for this future purpose, it would not be fair to the owners of agricultural land. All I can say is that the valuation as it stands at present is a valuation for the purpose of levying taxes, and was passed by this House for the purpose of levying taxes—the Undeveloped Land Tax and the Increment Tax—in order primarily that a datum line should be drawn as from 30th April, 1909, from which increment in future should be calculated. If we had, as a matter of fact, for the levying of Increment Tax, done what the hon. Member desired and what the hon. Baronet (Sir G. Younger) desired—that is, place the conditions of the valuation for the assessable site value of agricultural land under the same conditions as the assessable site value for urban land—we should have done a very considerable injustice, as I think, to the present owners of agricultural land. We should have made deductions from the original site value of agricultural land. The original site value in April, 1909, would have been placed at a lower level than it has been placed at present to the extent of those deductions, and the result would have been that when the land was sold as building land, and you came to calculate the amount of increment, you would be calculating more increment than you will calculate from the datum line as it stands at present, by the amount of those deductions.
§ Mr. MASTERMAN
If this alteration had been made in the Act, you would not have made the same deductions, and so far from this being passed through without knowledge, I remember defending the lowering of the datum line for this very reason, that we gave an advantage which we might, on the strict principles of the 183 Act, not have given to the agricultural interest. Otherwise the alteration would not affect the tax. The Increment Tax does not tax agricultural land, and the Undeveloped Land Tax does not tax agricultural value. When my hon. Friend says we want the valuation for another purpose, there is no difficulty at all, so soon as the House has made up its mind what purpose it wants it for, in adjusting the valuation for that purpose. Nor is any of the work which is now being done redundant.
§ Mr. MASTERMAN
No, I do not think so. We are finding the real site value. We are not making deductions. In the case of land in the cities, the owners claim deduction. There would be no difficulty, if the House desires, in the future, deductions for agricultural improvements as well as urban improvements, in passing a Bill allowing the agricultural owners also to claim deductions for agricultural improvements so soon as the House has decided under what conditions those deductions would be desirable, and how far back they should go. The valuation is pressing on as fast as it can, and the values being obtained are real values, and it is quite unjust to say that it is a false valuation. It is a true valuation, but without a column containing deductions for agricultural improvement, and there is no difficulty at all. It is a true valuation both of the total value and the site value, and the only thing that is not given is not a valuation of site value at all, but a deduction of improvements which have been made in the past and which have helped to make that site value. I am informed by the Valuation Department that if such information is required very little extra work would be needed in order that it should be obtained.
Let me pass from the valuation to the question of the Increment Value Duty, and once more I find myself in the rather unpleasant position of discussing a case which is more or less sub judice. I appealed to the hon. Gentleman, when he first brought up this case and when he triumphantly announced that the case was going from the Referee to the High Court, not to discuss it until the High Court decision had been given. He refused to respond to that appeal, he discussed the case in full. He was so confident that his Land Union was going to win that he made statements 184 which look very foolish to-day. He wrote letters challenging me in the "Times," which I thought was a rather absurd method of carrying on a controversy which might be carried on between Members in the House, saying that my desire, as he put it sarcastically, for the case to go to the High Court would be fulfilled, and protesting against this waste of money in being compelled by the Inland Revenue to take cases to the Court, where obviously the Inland Revenue would be beaten. The Inland Revenue was not beaten. I have never seen a more flimsy case than that presented by the Land Union against the Lumsden decision. Once more the Land Union say they are going to take the case to a Higher Court. Once more they have insisted on discussing it to-night, therefore once more I shall claim the right to make a few remarks.
§ Mr. MASTERMAN
There is no legal point as far as I can see. We will discuss the subject and not the legal point. The legal point is as clearly laid down as anything could be in the Finance Act of 1909. Before I deal with that case, let me clear away the absurd contention which has been made over and over again, mostly by men who were not in the House when the discussion took place, as to the interpretation of the Government and of the House itself in connection with Increment Value Duty. There was never any doubt at all—and I cannot imagine how many times the case was stated—that on occasions the like deductions were to be made from price as had been made on the original valuation from values, and that the difference was the measurable increment. Not only so, but the Chancellor of the Exchequer took what pains he could to illustrate the method, not from land value taxation in other countries, though he said something about that, but from the Increment Tax abroad. I remember him discussing at, length, in a Debate in which I think the whole House was interested, the German system, especially manifest in Frankfort, where the increment is definitely measured as from price to price, and not from value to value, and where after certain deductions are made from the price, what remains is increment value. The hon. Gentleman opposite has quoted a portion of the Chancellor of the Exchequer's speech in introducing the Budget. What could be clearer than the 185 statement made by the Chancellor of the Exchequer at that time?You get increment on two bases. You get it when the land is sold. Then it will be discovered what the actual increment is. We propose to charge 20 per cent. on the increment which the landlord receives as ascertained by comparing what he receives with the valuation made immediately after the passing of the Finance Bill—the price he receives, small or great.When I consider what an acute and active part the hon. and gallant Gentleman took in those Debates, I am amazed that he should come down and back up what I can only call the ignorance of Gentlemen who were not here, and state that he was not clear in his own mind that the deduction had to be made from the consideration—that is, from the price received and not from the total value as measured in the case we are dealing with His words are—The light hon. Gentleman's basis is that if a piece of 1and is sold to-morrow, it is that price which has to be compared with the value of to-day.Here is another statement by the hon. Member for one of the Divisions of Liverpool:—The increment is what is going to he paid upon, and that is the difference between the low valuation now made and the price which is subsequently realised.There we have definitely laid down what is the nature of increment. The hon. and gallant Gentleman says that windfalls were never mentioned in the Act.
§ Mr. MASTERMAN
If the hon. Gentleman will be a little less excitable, I will endeavour to answer him. The Home Secretary, in summing up the Debate on the Third Reading of the Finance Bill, said that the Act levying on coalowners the Coal Duty had been defended by the Conservatives as being an Act levying a tax on windfalls. He said if that was a real defence, how much more was the tax now levied on windfalls justified than in the case of the tax on coal.
§ Mr. MASTERMAN
The Home Secretary was referring to the Increment Tax, and he stated that the great ground urged in support of the Coal Duty was that coal-owners had made exceptional profits, that they had a windfall, and that they might be justly called upon to contribute to the national revenue. The right hon. Gentleman defined the Increment Tax as one 186 easily ascertainable, and one which conformed to the Coal Tax, and every principle on which the Coal Tax had been based. If I have said enough on that point, let me pass on to the actual charge now made in regard to the levying of the Increment Tax. I find that the hon. Member for Lincolnshire takes up a remarkable line of argument. He referred to the White Paper, which states the conditions under which Increment Value Duty could be collected, and he seemed to think that the White Paper was issued because the Increment Duty could not be obtained in any other way. He seemed to think that it was issued in opposition to the law as laid down in the Act. As a matter of fact, the Law Courts declared that it was in accordance with the law as laid down in the Finance Act of 1909–10. The White Paper was issued after this particular Lumsden case had arisen.
The hon. Gentleman says that builders all over the country are being deprived of the money which they might justly have hoped to get, and that consequently they have stopped building. Would it interest him to know that so far as I have been able to trace not a farthing of tax has been asked from or paid by any builder in the country with the solitary exception of this case, although the number of cases settled with builders numbers tens of thousands. Would it interest him to know why this remarkable result took place in the Lumsden case? The Chancellor of the Exchequer was quite correct in saying that in general this did not take place in connection with increment value. The actual gross value of the property, as between a willing seller and a willing buyer, acknowledged by the seller himself as being the gross value of the property, was something like £125 less than the amount he obtained. A speculative builder sold a shop to a person who wished to develop his trade in the district. The facts as to the various values defined in the Finance Act were hardly disputed, and they were settled by the Referee. And here once more I must protest against the evil suggestion, if it goes outside this House, that the total values of these properties are simply made at the caprice, and tyrannically, by those who the hon. Baronet opposite (Sir G. Younger) suggested are very inadequate judges of values.
§ Mr. MASTERMAN
There is hardly a case in which the value is not settled under agreement with the parties concerned. If they are not settled in that way, this House has provided full apparatus for an impartial judgment by which these values can be settled. It is intolerable that persons should be led to believe, especially builders and others engaged in the work of building, that, whatever they do, a man will come down from Somerset House and lay any sum he likes on a building and take away a large portion of the builder's legitimate profit. There is not any resemblance in what is done to such procedure as that. The property in the Lumsden case fetched £750. In consultation with the land valuer of the Inland Revenue, Mr. Lumsden agreed that the value of the property, as by a willing seller to a willing buyer, was £625. A great amount of evidence was brought before the Referee's Court to show that, if anything, our valuers had put an outside value upon the value of the property. The sum of £625 far exceeded the price of the land, the price paid for the various deductions which had to be made, and the cost of building; and amounts to well over £100 were allowed as value, not of the price of the building, but in addition to the price of the building as builders' profits. That value was also allowed for what they call landlords' profits. That is the kind of profit which the hon. and learned Member for St. Pancras mentioned when he said the landlord expected to get a profit from the sale of the land over and above the value of the land, though very often he was unable to do so. He did so in this case and it was allowed.
§ Mr. CASSEL
What I said was that where a man got more for the property than the value which the valuer placed upon it, it was perfectly impossible to distinguish what was paid too much for the building and what was paid too much for the land.
§ Mr. MASTERMAN
Anyhow, it was an amount allowed for profit, legitimate profit on a speculative business in land, and all the profits in this case could be attributed not merely to the value of the building, but to the value of the building as it stood on this piece of land. Then 188 the question arose why, if the selling value in the open market was £625, was it sold actually for £750, and we have the point raised by the hon. Member for Hanley (Mr. Outhwaite). I cannot honestly say what the truth about the matter is, because there is a conflict of evidence, but the man who bought the property states that he bought it on the explanation that he would be given a monopoly value for the shop, and that the extra amount over and above the proper amount at which it would have sold only represented to him a guarantee of the monopoly value. If that guarantee had been carried out—I will not say whether it was given or not: it was on the property it was said to be given, and he was very furious about the whole transaction—and if the land had been valued by our valuers under the condition of the guarantee, then without a shadow of doubt the total value would have been the same as the selling value. You would have had £750 as the fair value, and there would not have been a farthing of Increment Duty. But as it was not so, and the man paid a consideration for monopoly value, as he says, in addition to the value of the shop and land, I think we are perfectly justified in interpreting that as the monopoly value of the land, because evidence was brought before the referee. One builder stated that on a similar piece of land he was prepared to build a similar building, including builders' profits, for £300. Under those circumstances it is evident that the fact that the man thought that there was a restrictive covenant for him was a reason for his giving the higher value. I submit it is perfectly legitimate that the builder himself in those conditions should contribute a fair proportion towards the increment value.
Not only so, but I would point out to the House that this man owning the shop has paid £750 for the land and house, and the land and house are franked to the extent of £220 as being an assessable site value, and on that the builder has also his profits. If the builder had paid nothing, and the man who had bought the land, finding the conditions were not what he thought they were, had sold the shop for £750, and the other conditions had remained the same, then that man would have had to pay the £22 Increment Value Duty for which now the land is franked, and the builder, besides obtaining this large amount of profit above builders' profits, owing to a misapprehension on the 189 part of the man, would also have transferred his Increment Value Duty from himself on to the man whom he has already treated in that manner. That seems to be a monstrous proposition for any hon. and gallant Gentleman opposite to get up and state. I know of no other case in which the price paid has been over the total value and in which our valuers challenged the price paid as not being the value under the Act and took this money except where there was some monopoly value of the land itself, and I submit that the statements made by the Chancellor of the Exchequer to the builders in giving the interview to them on this subject in October, 1909, have been carried out.This is one of the points on which I want to be quite clear to the builders, and which I do not think that they have quite apprehended up to the present moment. It is not the money they spend which they can deduct. It is the value which they create, which is a very different thing. You may spend £500 and create a value of £1,500 if you put brains and intelligence into it. Another man may spend the same money and not create a value of £300.In all these cases if the builder builds with ingenuity and skill every farthing of the value of the building must be in the definition of the Act attributable to the value of the building, and under those circumstances must be deducted before the increment value is paid. But there are cases where the definition of the total value of a willing seller to a willing buyer is broken through owing to the seller endeavouring, solely because of the location of a particular plot of land on which the building is, to hold up that building against that buyer who must have that building on that bit of land.
§ Mr. MASTERMAN
it has nothing to do with brains. It is only due to the fortuitous demand of people in that district for that piece of land. I gave a case the other day where a hospital home had to expand in a street where all the houses were of the same value, but the house next door was held up against the hospital because the hospital had to have the house next door, and could not do with a house down the street, and that is a legitimate subject for Increment Value Tax. It is a land value, and it is a monopoly value. You cannot do this with tea and sugar because you can carry them about from place to place. If you could carry houses about in a wheelbarrow it would not affect them either. If there was another shop next door or opposite to Mr. Landsmen's 190 shop there would have been no monopoly value. As he possessed the monopoly value that monopoly value is taxed, and this House always knew that that value would be taxed. The hon. Gentleman threw scorn on us because we had only drawn a small amount of Increment Tax during the years that have elapsed since the passing of the Budget. At one moment it was explained that we were drawing enormous sums on builders' profits, and afterwards it was made a matter of reproach to us that we were only drawing a small sum during all the years the tax has existed. Why has only a small sum been drawn, and why have the estimates made by my right hon. Friend and myself when this was passing through the House been up to now altogether out of proportion to the results obtained? It is due to one cause and one cause alone. It is not due to the fact that there is no increment or no unearned increment, or that in many cases all over this country land is not steadily going up in value, not through the exertions of the owner, but through the general development of the community. It is due to the concessions which we gave when the Bill was being passed; and, above all, to the concession which allowed a 10 per cent. reduction from the site value before any increment could be obtained. Hon. Gentlemen opposite always reproach us with not collecting enough money, and they seem to think that the Act has been a failure. There is an easy way in which we can collect money, entirely within the intention of Parliament in passing this Act, and by which the Act can be made quite simple, without any reference to the alternative and larger scheme which my hon. Friend for Newcastle-under-Lime (Mr. Wedgwood) outlined, and the way is to remove the 10 per cent. and to remove some other deductions which were made, not, I think, entirely in response to demands for justice but in response to appeals for mercy. Certainly, if we could obtain any general agreement as to the desirability of fully charging unearned increment upon owners, making all the allowance possible for deductions which could be made owing to their own foresight, their own skill, their own appreciation of what may be demanded in the future in connection with building, I think there would be no difficulty between the two parties in this House dealing with the matter. May I repeat a statement made by my right hon. Friend the Chancellor of the Exchequer and other Members of the 191 Government during the Debate on the Budget in 1909? The hon. Baronet the Member for Ayr Burghs (Sir G. Younger) asked, Why not tax other increments? I agree. Why not tax other increments? I believe it is far fairer, if you can define them, to tax increments which are not increments due to the foresight and skill of persons, but which are made by the community as a whole, than to levy taxes on the poorest of the poor. Just compare the condition of Increment Tax as it stands at present in the records of Parliament with the case of the Tea and Sugar Taxes. There is no definition made with them of a 10 per cent. reduction before you have done anything with a certain amount of tea or sugar—
§ Mr. DEPUTY-SPEAKER (Mr. Whitley)
I think the right hon. Gentleman is going rather wide of the Amendment before the House, which has reference to the methods of valuation under the Act passed in 1909.
§ Mr. MASTERMAN
I quite agree that I was going too far in answering the challenge made by the hon. Gentleman opposite.
§ Mr. MASTERMAN
If the hon. Baronet will single out other forms of unearned increment, I shall be pleased to give them most fair consideration. In conclusion, I submit that I have shown that the collection of the Increment Tax is, first, from the value of the site, from the initial valuation, but afterwards is from the price at the sale, and that was clearly before the House all through the Debates in 1909. I have shown that so far from taking the builder's profits, not a single builder has been asked to pay a farthing Increment Tax except in those special circumstances in connection with the Lumsden case. I have shown in connection with Lumsden's case we taxed what in the narrowest sense of the word we have a right to define as profits obtained from the monopoly value of the land, and I have shown, and I think the Court has shown, too, that so far from our doing that through the Inland Revenue against the law, as we were so fiercely charged with doing all through the summer, the Inland Revenue were merely carrying out both the plain statement of the case in the Budget Act, and also the intentions of Parliament when that Budget Act was passed.
§ Mr. PRETYMAN
I am not at all surprised that the right hon. Gentleman in his reply has shown a certain amount of heat. My hon. Friend who moved this Amendment, perhaps made with more force than in any other part of his speech, a direct challenge to the right hon. Gentleman opposite, to produce chapter and verse for the claim being made, or the suggestion being made, or the principle being put forward to this House, that at the time of the Budget Debate the duties were to be charged upon windfalls or upon profits from selling house property. My hon. Friend behind me asked for facts or quotations from statements made on that side of the House, especially by the Chancellor of the Exchequer, who is responsible for the Budget, which would prove the statement which had been made generally, and on several occasions, that that princple was laid before the House, and that that was the principle on which the Increment Tax was imposed. The hon. Gentleman opposite produced one statement in which the word "windfall" was mentioned, on the Third Reading of the Finance Act of 1909–10 by the Home Secretary, and the word "windfall" in that case was really mentioned as a comparison with the duties on the export of coal. That is the sole justification which the right hon. Gentleman has been able to advance. I think I may leave it to the judgment of the House whether he has made his case good when he says that this duty was to be levied upon fortuitous windfalls or builders' profits. That was the only point. The right hon. Gentleman used a good many adjectives which are not of much use in debate of this House, but we have the perfectly definite statement which was made by the Chancellor of the Exchequer, and which was referred to by my hon. Friend behind me. It is a perfectly plain letter from the Chancellor of the Exchequer, in which he states in so many words that where there have been no increase in the value of the bare land Increment Duty would not be charged. The right hon. Gentleman has wandered all round the hat. He has repeated ad nauseam general statements which were made in novel terms, and which were totally incomprehensible to the lay mind at the time of the general discussion.
But the real point which appeals to the country, which appeals to the builders, which appeals to the owners of house 193 property, and which I hope will appeal to this House now is, Are you or are you not charging Increment Value Duty nominally upon an increase in the value of the land when you admit, in so many words, that there has been no increase in the value of the land at all? As my hon. Friend the Member for Ayr Burghs reminded the House, it was just before we were going to a General Election. It is perhaps well to recall the circumstances that then existed. This Budget had been passed, and it was understood, I am quite sure, by every Member of this House who was present at those Debates, that the whole principle which the country was asked to approve was the simple principle that there was in many parts of the country a large increase in the value of land which was not due to any action of the owners of the land, and which had nothing to do whatever with house property as such, and had nothing whatever to do with the fortuitous profit which could be obtained in any commercial industry carried on in this country, whether the building trade or any other, but that if there was an increase in the value of the land due to the growth of the community as a whole that the object was to obtain one-fifth of that increment due to the growth of the community, in the form of Increment Value Duty. Am I not within the recollection of the House in saying that that was the definite claim and definite proposal on principle laid before this House and accepted by it? Not one word, direct or indirect, was ever said by the Chancellor of the Exchequer to lead us to suppose that he was going to tax fortuitous windfalls on the sale of house property. In the autumn of 1910 came the issue of Form IV., the next stage in this long controversy. It brought home to the people of this country what the nature of this tax was likely to be. The building trade were alarmed, and them were deputations to the Chancellor of the Exchequer, I think on his own invitation. It became clear to the Chancellor of the Exchequer that it was necessary to reassure the building trade and owners of house property throughout the country, if he was to obtain any support from those quarters for the General Election. He gave the necessary assurances in very explicit terms.
Amongst the people who interviewed the Chancellor was Mr. Smithers, a Liberal and the chairman of the National Builders' Federation. He received the 194 assurances from the Chancellor of the Exchequer which the right hon. Gentleman has just read to the House. Those assurances were so satisfactory to him that 6,000 circulars were issued by him officially to the building trade that they need not anticipate any injury to their trade from the Increment Value Duty or the taxes in the Budget. Now the Horridge judgment in the Lumsden case has shown what the claims of the Government really are, and it is only a very short time ago since I heard Mr. Smithers state that the assurances which the Chancellor of the Exchequer had made had not been fulfilled, and that the Lumsden case, and the claim which it revealed, was a very serious blow to the whole building industry, and he announced that he was strongly opposed now to the entire policy of the Increment Value Duty, as exemplified in that particular case. So that it was not our statements, our "alarmist statements," which turned Mr. Smithers' opinion contrary to the facts. On the contrary, it was the facts which convinced him. The right hon. Gentleman says that he has not levied this tax upon any other builder. Perhaps he will allow me to say that those very large and wide negative statements which he makes require a little proof before we can accept them without any challenge. May I remind the right hon. Gentleman that my hon. Friend referred not only to the Lumsden case, but also to the Richmond case? This Amendment does not refer only to the building trade; it refers to the whole method of levying taxes on the sale of house property generally. I do not know what may be the particular claim which may have been made against builders, but I do know that a very large number on this very ground have been made on the owners of small house property after they have sold that property in the market.
How does the explanation given on this Amendment fit in with the facts of the Richmond case? Hon. Gentlemen opposite cheered when the right hon. Gentleman said this claim was only made when there was a monopoly builder's profit owing to the particular situation of this land. How does that apply to the Richmond case? In the Richmond case you had a piece of land bought for £500, with Death Duties paid on £500, and sold for £500. The Valuation Department come down and put a value of £380 on that property. That becomes its statutory value. I was much interested to hear the hon. 195 Member for Hanley (Mr. Outhwaite) get up and say—and this is our whole contention—that he was of opinion that the price which the property fetched in the markets was a better test of its value than a figure put on it by a Government valuer. I think every common-sense man in the House will agree that there is no better test of the value of property than what it fetches in the open market when it it put up for auction. Remember the instructions that were issued. The right hon. Gentleman was particularly careful not to refer to the instructions or even to mention them. They say nothing about a monoply value of the land. They simply say that Increment Value Duty is collectable whenever the unit of valuation, that is the house as well as the land, is sold for more than it is worth at the time. What does that mean? It means that what the statutory worth of the property is at the moment is what the valuers have placed upon it. What the property is not worth, according to that, is what it fetches in the open market, and the wider the difference between the statutory value which is arbitrarily placed on the land by the Government valuer and the price which that property has fetched in the open market, the bigger the tax levied on the unfortunate owner. Surely it must be perfectly clear that those valuers are not infallible. The right hon. Gentleman attributed to the valuers very great sagacity and accuracy in the method of making the valuation. May I suggest to him that the ordinary practice of valuers in this country is to value for clients, and may I also suggest that every property in this country has a considerable margin? There is the highest value which it may fetch under ordinary market conditions if three or four people want it, and that which it may fetch when very few people happen to desire to possess it.
The margin is very considerable, and if you want proof let us take a concrete case as to how these valuers value when they are valuing for the Government on both occasions. The facts are known and have been the subject of question and answer and are admitted by the Chancellor of the Exchequer. There was a gentleman named Mr. Gough, who owned a ten-acre field just outside Chatham, at Chapeltown. The War Office desired to purchase, and had power to take the field compulsorily. They put on a valuer to value the land for compulsory purchase. It was agreed that it 196 was not necessary to hold an arbitration. The Government valuer valued the land at £450. They adhered to that, but sooner than go to arbitration they eventually agreed to give £500. The valuer valued according to the ordinary practice, and in valuing for his client, the Government, he put the value upon that land which he considered was the lowest value which that land would he likely to fetch under unfavourable conditions. That was in 1909, after the date at which this Act came into operation. In December last the time came for valuing the land under the provisions of the Finance Act. The valuers were unaware of the War Office having purchased the land. Another Government valuer, also valuing in the interests of his clients, which was to get as high a value as possible in order to obtain Undeveloped Land Duty, valued these same ten acres of land and served a valuation of £845. So that you have one Government valuer, when the Government want to buy a piece of land, valuing it at £450, and another Government valuer, when the Government want to obtain Increment Value Duty, valuing it at £845. It is upon a valuation carried on on that principle that the unfortunate owner is liable to be mulcted to the extent of 4s. in the £ on the difference between the two figures.
There are innumerable cases. There is the case of two acres of land near Wakefield. That land was put up for auction, with a reserve of £400 upon it. The reserve was not reached, and ultimately, with great difficulty, the land was sold in the open market for £350. This is bare land without any buildings. The Government served upon the owner a valuation, which became the statutory value by the lapse of sixty days. The right hon. Gentleman did not explain that these valuations are served upon people who do not understand them, and that by the mere effluxion of time, without the people having any say in the matter, those valuations become statutory and represent the value upon which the Increment Value Duty is chargeable. In this case a valuation was served for £975, and the market value which the land has actually fetched in the open market is £350. That is the method upon which these valuations are being conducted. We have it definitely in black and white from the Chancellor of the Exchequer that no duty will be chargeable unless there is an increase in the value of the bare land. What is happening? The question we are now discussing is part of 197 an even larger and more important question than that which has been brought before the House. It is a question of departmental law-making. Legislation in this House has been carried on under pressure, and it has become the habit of the Government, whenever they have met with a difficulty, not to submit that difficulty to the House, to allow the House to hear both sides, to adjudicate upon it, and to settle the difficulty in express terms available to the Courts of Law, but to pass the matter by and to leave it to a Government Department, not only to administer the law made by this House, but to make the law itself. That habit has so grown upon the Departments that they do not appear to be satisfied with making the laws really left to them, but they make laws of their own. I think we have some right to complain to-night of the absence of the Chancellor of the Exchequer, because, to some extent, his personal honour is at stake. He has made the definite statement that no duty is to be levied unless there has been an increase in the value of the bare land. Mr. Howell Thomas, Deputy Chief Valuer for England and Wales, stated in the Lumsden case that, in his opinion, there had been no rise in the value of the land, but that he thought the amount of Increment Value Duty had nevertheless been correctly ascertained. Mr. Howell Thomas is an officer of the Treasury.
There is no doubt the proceedings of this House are conducted under very curious conditions. Statements are neglected and matters which previous Houses of Commons would have considered it absolutely necessary to investigate very closely indeed are passed by as of no account. Taxation is, or ought to be, the principal care and responsibility of this House. We are bound to make our taxation, not only just and clear, but comprehensible to the people upon whom it is levied. We have the statement made by the Chancellor of the Exchequer that no tax is to be levied upon owners of house property unless there has been a rise in the value of the bare land. I have also read the definite statement by one of the officials of the Chancellor of the Exchequer that there has been no increase in the value of the bare land, and that yet the tax has been correctly levied. That is a serious matter, and yet the Government Bench is unoccupied, except for the Secretary to the Treasury, who has done his best, and who has our sympathy in 198 attempting to defend an indefensible case. It is for the Chancellor of the Exchequer himself to come here and reconcile the statements in his letter with the claims now made by the Valuation Department. It is a scandalous thing that when a statement is made by the Chancellor of the Exchequer himself on a matter of taxation it should not be his duty to come to this House and make good the pledges he has given, but the duty, and the very expensive duty, of a private organisation and of private individuals to test in the Courts of Law whether this procedure is legal. Because that is the position of the Chancellor of the Exchequer: "Can I legally break the pledges which I have given to the House and the country?" His pledges are being broken, and it is surely a point of honour of which he should take cognisance.
If the law is being rightly interpreted under the recent judgment, it is the bounden duty of the Chancellor of the Exchequer to make good his pledges, and to announce that he proposes to introduce a Clause altering the law. That would cost nothing. The present position is that he does not consider it necessary even to be here to answer the charges made against him, but he leaves the Law Courts, at the expense of private individuals, to find out whether this claim, which we have definitely proved to be contrary to the pledges he has given, is legal. Where shall we be, supposing this is legal? The Chancellor of the Exchequer will still be levying duties contrary to the pledges which he has given to the country and to this House. If they are legal they are none the less dishonourable. On the point of public policy, is it not perfectly clear that it is contrary to the feeling of the House? No House of Commons would ever sanction the placing of a duty upon fortuitous windfalls that come to one particular industry in the country when all the other industries are entirely free? In the matter of the actual increase of the value of the bare land, the claim was made, and was fought out over and over again in this House. It was decided by a majority, against the will of this side—and, of course, we have to accept the decision of the majority as law until it is reversed—that where there has been an increase in the value of the bare land due to the growth of the community a tax should be levied upon that particular subject. But it has never been passed by this House, and I do not think it ever would be, that fortuitous windfalls and chance profits in 199 any trade of the country should be taxed when the other trades escape altogether! Surely, if there is a trade or if there is a market in which there are less fortuitous windfalls than to any other trade or market in the country, it is in the ordinary market of house property and of the development of land by builders? In this particular Lumsden case it is worthy of note that no less than ninety-two houses had been constructed by this particular builder. It was no doubt the provision for a customer of a shop by Mr. Lumsden that was mainly responsible for the profit which he obtained upon that one single transaction. In the building of the ninety-two houses there was only one that was eligible for a shop. I think it is rather remarkable that the Government, in dealing with this matter, have two lines of defence—one for the House of Commons, and the other to take into the Court of Law. It is rather remarkable that the justification which the right hon. Gentleman has just given, and the facts upon which he based that justification in regard to the Lumsden case—the facts which he stated as to a monopoly value, the removal of restrictions, and so on—that not one of those points was brought before the Court of Law in any shape or form. It is good enough for this House, where it is not subject to cross-examination, where it is not evidence, and where ex-parti statements of a political character can be made to provoke cheers from the benches opposite. But we should think a great deal more of a defence of that kind if the right hon. Gentleman had dealt with the defence and justification which were made before the Court of Law. Not one word of it, so far as I read it—and I have been pretty carefully through the case—not one word of the justification was brought before the Courts. On the contrary, the justification that was given to the Court was simply that it is a fortuitous windfall.
Where do we stand? What is going to be the consequence of this? The claim is now made that that part of the profit which is a fortuitous windfall is liable to a tax of 4s. in the £. There has been another such decision in the Court of Session in Scotland a few days ago, where it was decided that part of the profit which was made by the sale of some real property was a sentimental profit, and that sentimental profits are not liable to duty. So now, whenever there is a sale of a piece 200 of house property, this investigation has to take place. A certain percentage of the profit of the sale is legitimate, a certain percentage is sentimental, and a certain percentage is a fortuitous windfall. That part which is sentimental and that part which is legitimate are not taxable. That part which is a gratuitous windfall is subject to a duty of 4s. in the £. It simply means this, that every poor man who has to oppose a claim of that kind has got to pay because he cannot fight the Government. The rich man who has capable legal and other advisers at his disposition will be able to fight the case and the probability is that the duty will rarely be levied upon him. The expense and trouble to the individual levied caused by this indeterminate form of claiming duty is endless. Surely we have the right to know when a man is buying a piece of house property the kind of burden he has got to bear in connection with that property? All he knows is this: if he makes a profit it will be the cause of litigation in some form or another as to whether he has got to pay Increment Value Duty or not.
Although I do not wish to transgress the rules of order, and I do not want to go into the question of the tea and the sugar tax referred to by the right hon. Gentleman, still I am entitled to point out what the consequences of levying taxes upon this basis are to the very poorest of the population. The indirect, effect of these taxes is to-day, and must be more so in the future, the raising of the rents which are charged for small house property. That is already happening. Hon. Gentlemen opposite are always telling us that the consumer pays. There is nothing truer than to say that this Increment Value Duty which we are now taxing is simply nothing less than a heavy tariff duty, an Excise Duty, placed upon every transaction in renting house property. In every transaction there is, at any rate, a guinea for getting the Increment Value Duty stamp affixed, even if there be not a farthing of duty charged. In an answer, we were told some six months ago that no less than 403,000 Increment Value stamps had been affixed costing 403,000 guineas, and that the total amount of the increment obtained had been £6,000. In face of that the right hon. Gentleman says how can we on this side of the House suggest at one and the same time that these heavy burdens are being placed upon owners of house property, and yet sneer at the 201 ridiculous yield of the tax? But the right hon. Gentleman and his Friends have accomplished the impossible! They have succeeded in inventing a tax which is really a heavy and onerous burden upon the owners of property, and yet which produces little or no revenue. Here you have the concrete instance that I have mentioned. It is perfectly clear that the burden upon property is not the £6,000, but the 403,000 guineas, with other burdens that are additional. There are two sets of people who pay this. First of all the working classes who are obliged to pay higher rents which this tariff adds to the burden upon the consumer in this country—[HON. MEMBERS: "Hear, hear"]—surely nobody has denied that if you put a heavy tariff upon articles produced in the country, if you put an Excise Duty on whisky, that you are going to raise the price. Here you are putting an Excise Duty on house property, and of course you are thereby raising the rent to the poor people who are to live in the houses. And there is another class of people who suffer, and these are the ratepayers, who will have to dip their hands into their pockets to build houses which the builders do not build on account of the taxes placed upon them. The economic action is perfectly plain and simple. You restrict building; it cannot be denied that building has been restricted; the speculative builder does not carry out his normal functions to cope with one-tenth of the demand for houses, and consequently there is not the proper proportion of empty houses there should be in a district to keep rents down to the proper level. The whole cost of this duty and this legislation is not measured even by the four hundred and three thousand guineas. Any speculative builder who desires to borrow money to-day has got to pay 1 per cent. more for it than before this legislation, and that 1 per cent. increases the cost of building the house and the rent to the man who is going to occupy it. I did not intend to go into this economic aspect of the question because this Amendment is confined to the pledges of the Government, and I must apologise to the House for being led away by the line taken by the right hon. Gentleman opposite in defending himself. But I did not wish the House to think that our case was less strong on the economic and general ground than on the speeches of the Chancellor of the Exchequer. On both these grounds, though I know it is difficult to ask hon. Members opposite to vote for an 202 Amendment to the Address, I hope there will be, as the result of this Debate, such an expression of opinion not only in the House, but in the Lobbies as well, as will force the Government to recognise their responsibility to carry out the pledges they have given, and which should be carried out, unless the building trade on the one side and the honour of the Government on the other are to be very seriously jeopardised.
§ Sir ARTHUR MARKHAM
The hon. Gentleman who has just sat down said it would be difficult for anyone on this side of the House to vote for this Amendment. I have no hesitation or doubt as to the way I shall cast my vote, and that way will be in favour of this Amendment, and I wish to give my reasons for taking that course. I have no investments in land. I think it is necessary for me to say so because these are times in which every vote seems to be measured by one's interest in particular investments. I will be acquitted of having any particular interest in the vote I am going to give this evening. I represent an industrial constituency which is composed practically of 95 per cent. of working men. A very large number of these men, by self-sacrifice and by thrift and industry, have bought small pieces of land and have become their own land lords. At the autumn meeting of the Liberal Association, at which I was not present—an association composed entirely of working men—men who had voted Liberal all their lives, there was expressed a feeling stronger than any feeling expressed during the whole time I have been connected with the constituency against the system of valuation the Government has adopted under the Finance Act. What the owners of small property say is, "Here we buy a piece of land, say, for £50. We build a house upon it costing £150, and the composite subject is £150. The Government valuer places the composite subject at £150." That has happened in several instances. My people say, "It is all very well to say to us, as you did at the last election, that there will be no Increment Duty paid except upon that which is due to a rise in the price of the land, but how can the Government valuer differentiate as to whether the land or the house has risen in value?" In point of fact is that possible? The hon. Gentleman opposite complained that the Chancellor of the Exchequer was not present, but I think the Financial Secretary to the Treasury is far more astute on this point. 203 I have had a long correspondence with him, which I have forwarded to the members of the Liberal Association in my Division, and they have all said that the letters of the right hon. Gentleman are very polite, but they do not deal with the problem which they are faced with. They say, "You made a definite statement during the passage of the Budget and at the General Election that Increment Duty would only be charged in the event of there being a rise in the price of the land." The right hon. Gentleman is not correct in saying that during the course of the passage of the Budget the word "windfall" was never used. I have not refreshed my memory by looking up the Debates, but I remember asking my right hon. Friend a question on this point, and I believe he did use the word "windfall" when I tried to extract from him whether any duty would be paid on the composite subject other than the occasion when there was a rise in the value of the land. I think my right hon. Friend then said that there would be a duty levied on this fortuitous windfall.
I do not think it can be said that the House was not aware that there would be some sort of Increment Duty, and I am still in the dark as to how this tax is levied. Let the House examine the position in which the working man finds himself. By self-sacrifice he puts all his savings into a house, and he buys the house he wishes to live in. He wishes to sell it or give it to his children. As a rule he sells it, or after he dies it is sold for the benefit of his children or dependants. See how this man is prejudiced when he wants to sell. He has paid, say, £200 for a house which stands in the Government valuation at £150. Suppose that man wishes to raise money. He cannot raise the amount it has cost because they are always valued below the actual cost of building. I have received a flood of letters on this subject. A man wrote to me from Mansfield saying, "I bought a piece of land in June, 1910, and I built a house upon it. I got into it by the 1st August, and I received a demand from the Treasury for 1s. 11d. for Undeveloped Land Duty." He had not then actually got into the house, although he was in it in August. When I wrote to the officials they said, "We will alter the date, and this man, instead of paying duty from 1st June, shall pay from 1st July." "But," they said, "we beg to point out this constituent of 204 yours has not paid what he ought to have paid. He has been wrongly assessed. He ought to have paid Undeveloped Land Duty for the year 1910, but by an oversight this has not been charged. Therefore, instead of the duty being is. 11d., it will be 3s. 6d." My Constituent, therefore, got out of the frying pan only to find himself in the fire. It is a very small sum of money, and may not be thought to be worth troubling about; but, after all, it represents a day's work of that man. He has, in the first place, a valuation put upon his property lower than he has actually paid for it. In view of the unsatisfactory position in which I find myself in connection with these Land Duties, seeing the Chancellor of the Exchequer putting his hand into the pockets of working men in my Constituency who have accumulated small savings out of their hard-earned wages and built their own houses, I intend to vote for the Amendment.
§ Mr. PETO
I happen to have spent fifteen years of my life in the building trade, and I have taken a great interest in it ever since. I am not competent to speak of what was the exact view held either on one side of the House or the other in 1906 for the simple reason that I was not here, but it was understood throughout the building trade, and I believe by the general public, that the intention was to tax the value given to the land solely by the growth of the community apart altogether from any value attributable either to the enterprise or to the brain or to the industry of the owner. That was what was generally understood throughout the country after all the exhaustive debates in this House on the subject, and I am, therefore, right in assuming that was the clear view put from this side of the House. That was not the gist of the right hon. Gentleman's argument in this matter of the Lumden case at all. He had to admit there was in this case a tax upon the profit that was derived by the builder from the transaction. His contention was that it was not a legitimate profit. If that is the line of argument he thinks good enough to put before the House of Commons, it is very curious that was not the line of argument adopted by the counsel who was briefed in order to put before the Court the case for the Government. They were successful in that case, and it is, therefore, somewhat curious to find the right hon. Gentleman putting before the House a wholly 205 different line of argument. I want to read just a line or two of the actual words of Mr. Finlay, in which he put forward the case as he understood it in this matter of profits. He said:—My friend put it to one of the witnesses that this was a legitimate profit. I perfectly agree. If Mr. Lumsden was so fortunate to find Mrs. Stobie who would give more than the place was worth, it is perfectly legitimate. I do not criticise it in the least. What I do say is that the Government under the scheme of the Act is entitled to a share of the profit as increment, and I say that in taxing that we are not putting a sixpence on the value of the property; we are putting it on the increment. I hope that Mr. Lumsden will find many other Mrs. Stobies, and when he does that he will not in future, after the explanation given in this case, object to share a little of his most well deserved and ingeniously won profit with the Government.I cannot conceive of anything clearer than that, and, considering that that is the case which was put forward by the counsel for the Government in this very case which has been discussed on the Amendment, I cannot understand how it is that the right hon. Gentleman the Secretary to the Treasury, who is the sole representative of the Government in the House, comes down to put an entirely different case before us. He says, in effect, "It is admitted that part of the profit of the builder was charged with Increment Duty," but he says it was an illegitimate, and not a legitimate, profit, and it was said to be due to a monopoly in one grocer's shop. That is perfectly common in the building trade. Mr. Lumsden erected ninety-two houses. He was doing something to solve the housing problem which the Budget is not doing. An incident of this large transaction was that he got this particular concession, this grocer's shop. The Government then stepped in and said in the words of the Secretary to the Treasury, "This is not a legitimate profit. It is a builders profit it is true; but it is a profit you ought not to have made; and therefore we are entitled to charge Increment Duty upon it." Now, I hold that if it is part of a legitimate profit it must be due to the brains and enterprise of the builder himself, and if so, it clearly comes within the definition which the Chancellor of the Exchequer gave. That was precisely what was to be entirely exempt from Increment Duty. There was a conference representing the whole building trade, with the National Federation of Building Trades Employers. It was held on 6th October, 1910, and I have here a verbatim report of the proceedings. At that conference Mr. Smethhurst, the president of the National Federation, Mr. White, the vice-president, and another 206 Mr. White, the secretary, were present. The Chancellor of the Exchequer said:—But if there is one thing more than another that they appreciate it is that it is not merely the money the builder has spent, it is the value he creates with the money, which means with the help of Ins brains.The vice-president then said:—Of course, he may not only be a builder but a developer of the land, would he be then in exactly the same position?The Chancellor of the Exchequer said:—Certainly, Anything which is due to the expenditure or the brains of the persons who are creating the value is not to be taxed at all.That, surely, is quite clear, and I think we are entitled to say that here is a case where it is undoubtedly a part of the builders' enterprise and brains which has created this value. I say from my experience in the building trade that the difference between failure and success in erecting any kind of house property consists in three or four things. The first three things which are essential to success are to know when to build, where to build, and what to build If a man succeeds in these three things he is using brains and enterprise, and making a legitimate profit and a legitimate success; but there is a fourth thing which is absolutely necessary in order to succeed in any building speculation, and that is to know who to put the property before when you have got it built—to know how to put it in front of the right buyer who is likely to pay a profitable sum for it. In this case it was simply knowing where to build, when to build, and what to build, and then having the ingenuity to find the right class of person to buy the property and to make a profit. In this particular case the builder was successful, and the Government step in and say, "You have made a profit; whether it is legitimate or not does not matter for the moment. You have made a profit through your enterprise. We will charge upon you what was supposed to be a tax purely upon an increment value, something over which the person had no control; which was not due to him in any way. Although that was the purpose and object of the Act, yet we will charge you an increased Income Tax of 4s. in the £ upon the top of the usual 1s. 2d. on profits, or 9d. if it is a smaller profit derived from trade." What is the justification the Government put forward for this? They say that this is a fortuitous windfall, or use some expression of that kind to try to disguise what they are really doing. They only apply that theory to the profits of one particular industry, and it is because they do that that they are 207 producing effects out of all proportion to the amount of the tax collected from that particular industry.
Where ought this legitimately to end? I see the Solicitor-General in his place. Everyone who pursues his profession must make a beginning, and the first fee any barrister receives, if there is anything in life which is a fortuitous windfall, it must he that. I wonder if he will agree that all the fees chargeable by learned counsel, particularly the earliest fees, for they are the most important because they are most fortuitous, should pay 4s. in the £ duty above the ordinary Income Tax. The greater the success, as in the case of the right hon. Gentleman, the larger is the windfall, but the less fortuitous. I suppose that on the same theory on the salary he at present enjoys, if the builder is to be taxed on these fortuitous windfalls, he ought to contribute the same proportion, and so on right through the profession. There is no logical end to this theory. If you appoint certain Government officials to say what a thing is worth, to go behind the haggling of the market, which settles the value of everything in this world, and to say that there is some other perfectly artificial measure of the true value of an article, whatever it may be, which is to be applied only in the case of the building trade, and that someone with superhuman knowledge beyond that possessed by the whole building trade and the public is to say that there is a certain hypothetical imaginary value, which corresponds to nothing in heaven or earth or anywhere else, and which everyone knows does not exist, and upon this you recover a special Income Tax, can the Government be surprised if it produces some effect upon the construction of house property in this country? I only want to draw the attention of the House to the fact. I say it is largely brought about by the uncertainty that is created both in respect of people who have money to lend upon mortgage, and of people engaged in the building trade, particularly small speculative builders. It does in large measure account for the fact that in 1911, the first year of the operation of this beneficent Budget, only 10 per cent. of the number of small houses of £20 annual value and below
§ that for the years 1904–06 were built. In those years 107,021 of such small houses were erected on the average. In 1910–11 the total number was 10,651. When the Chancellor of the Exchequer was cross-examined on this question on 29th January and 5th February we elicited from him the interesting fact that this was not the lowest record in small house building, and that there was a lower year, 1893–4, the year of the Liberator smash, when the whole of the building trade was paralysed through those unparalleled frauds. I think there is something more behind this, and that it is perfectly clear that you cannot have results of that kind due to causes which the Government give—the official sort of answer which is given across the floor of the House. It is something more than a coincidence that in the first year of the operation of this Budget we get only about a tenth of the number of small houses which were erected only three or four years before, and very little more than an eighth of the number erected in every year between 1905 and 1909. I believe it is because this portion of the Finance Bill has been carried out entirely in a contrary manner to the distinct understanding which I regard as a solemn engagement which was entered into between the Chancellor of the Exchequer and the building trade, entirely different from what they were given to understand, that they have created a sense of injustice, a sense of doubt, a sense of uncertainty in that trade that has largely contributed to the disastrous result in small-house building to which I have referred. Therefore I think this Amendment is more than justified. Not only is it an injustice to the trade, but it is one which is working in a disastrous manner to the poorer people in this country, not only the small-house property owners that the hon. Baronet the Member for Mansfield referred to, but every member of the working classes who requires to keep a roof over his head. Instead of finding that he is better off for the Budget, he is far worse off, because of the way this particular part of the Budget has been administered.
§ Question put, "That those words be there added."
§ The House divided: Ayes, 100; Noes, 191.211
|Division No. 2.]||AYES.||[10.44 p.m.|
|Baird, John Lawrence||Barlow, Montague (Salford, South)||Benn, Arthur Shirley (Plymouth)|
|Baker, Sir Randolf L. (Dorset, N.)||Barrie, H. T.||Benn, Ion Hamilton (Greenwich)|
|Banbury, Sir Frederick George||Bathurst, Charles (Wilts, Wilton)||Bennett-Goldney, Francis|
|Bird, Alfred||Gwynne, R. S. (Sussex, Eastbourne)||Perkins, Walter F.|
|Boyton, James||Haddock, George Bahr||Peto, Basil Edward|
|Bridgeman, W. Clive||Hall, D. B. (Isle of Wight)||Pretyman, Ernest George|
|Burn, Col. C. R.||Harris, Henry Percy||Rawson, Col. Richard H.|
|Butcher, John George||Helmsley, Viscount||Remnant, James Farquharson|
|Campbell, Captain Duncan F. (Ayr, N.)||Henderson, Major H. (Berkshire)||Roberts, S. (Sheffield, Ecclesall)|
|Campion, W. R.||Hewins, William Albert Samuel||Rutherford, Watson (L'pool, W. Derby)|
|Carlile, Sir Hildred||Hibbert, Sir Henry F.||Samuel, Sir Harry (Norwood)|
|Cassel, Felix||Hohler, Gerald Fitzroy||Sanders, Robert Arthur|
|Castlereagh, Viscount||Hope, James Fitzalan (Sheffield)||Sanderson, Lancelot|
|Cave, George||Hope, Major J. A. (Midlothian)||Sandys, G. J.|
|Cecil, Lord Hugh (Oxford University)||Horne, E. (Surrey, Guildford)||Smith, Harold (Warrington)|
|Cecil, Lord R. (Herts, Hitchin)||Houston, Robert Paterson||Stanier, Beville|
|Clay, Captain H. H. Spender||Hunt, Rowland||Steel-Maitland, A. D.|
|Clive, Captain Percy Archer||Hunter, Sir Charles Rodk. (Bath)||Stewart, Gershom|
|Craig, Charles Curtis (Antrim, S.)||Ingleby, Holcombe||Swift, Rigby|
|Craik, Sir Henry||Jardine, Ernest (Somerset, E.)||Talbot, Lord E.|
|Denniss, E. R. B.||Kerry, Earl of||Terrell, Henry (Gloucester)|
|Duke, Henry Edward||Knight, Captain Eric Ayshford||Touche, George Alexander|
|Eyres-Monsell, Bolton M.||Law, Rt. Hon. A. Bonar (Bootle)||Tryon, Captain George Clement|
|Falle, Bertram Godfray||Locker-Lampson, G. (Salisbury)||Willoughby, Major Hon. Claud|
|Fell, Arthur||Lockwood, Rt. Hon. Lt.-Col. A. R.||Wills, Sir Gilbert|
|Fletcher, John Samuel (Hampstead)||Lyttelton, Hon. J. C. (Droitwich)||Wilson, A. Stanley (Yorks, E. R.)|
|Forster, Henry William||Mackinder, Halford J.||Wilson, W. T. (Westhoughton)|
|Gardner, Ernest||M'Calmont, Major Robert C. A.||Winterton, Earl|
|Gibbs, George Abraham||Magnus, Sir Philip||Yate, Col. C. E.|
|Gilmour, Captain John||Markham, Sir Arthur Basil||Younger, Sir George|
|Glazebrook, Captain Philip K.||Mildmay, Francis Bingham|
|Goldsmith, Frank||Mills, Hon. Charles Thomas|
|Gordan, Hon. John Edward (Brighton)||Newton, Harry Kottingham||TELLERS FOR THE AYES.—Mr. Royds and Mr. Fitzroy.|
|Guinness, Hon. Rupert (Essex, S. E.)||O'Neill, Hon. A. E. B. (Antrim, Mid)|
|Guinness, Hon. W. E. (Bury S. Edmunds)||Pease, Herbert Pike (Darlington)|
|Abraham, William (Dublin, Harbour)||Farrell, James Patrick||Lynch, A. A.|
|Acland, Francis Dyke||Fenwick, Rt. Hon. Charles||MacNeill, J. G. Swift (Donegal, South)|
|Addison, Dr. C.||Ffrench, Peter||Macpherson, James Ian|
|Allen, Arthur A. (Dumbarton)||Flavin, Michael Joseph||MacVeagh, Jeremiah|
|Allen, Rt. Hon. Charles P. (Stroud)||Gelder, Sir W. A.||M'Callum, Sir John M.|
|Armitage, Robert||George, Rt. Hon. D. Lloyd||McKenna, Rt. Hon. Reginald|
|Arnold, Sydney||Gill, A. H.||M'Micking, Major Gilbert|
|Baker, H. T. (Accrington)||Gladstone, W. G. C.||Marshall, Arthur Harold|
|Balfour, Sir Robert (Lanark)||Goldstone, Frank||Masterman, Rt. Hon. C. F. G.|
|Beck, Arthur Cecil||Greig, Colonel J. W.||Meagher, Michael|
|Benn, W. W. (T. H'mts., St. George)||Griffith, Ellis J.||Meehan, Francis E. (Leitrim, N.)|
|Black, Arthur W.||Guest, Hon. Major C. H. C. (Pembroke)||Middlebrook, William|
|Boland, John Pius||Hackett, John||Millar, James Duncan|
|Booth, Frederick Handel||Hall, Frederick (Normanton)||Molloy, Michael|
|Bowerman, C. W.||Hancock, J. G.||Mooney, John J.|
|Brady, Patrick Joseph||Harcourt, Rt. Hon. L. (Rossendale)||Morgan, George Hay|
|Burke, E. Haviland-||Harcourt, Robert V. (Montrose)||Morrell, Philip|
|Burns, Rt. Hon. John||Harvey, T. E. (Leeds, West)||Morison, Hector|
|Burt, Rt. Hon. Thomas||Harvey, W. E. (Derbyshire, N. E.)||Muldoon, John|
|Byles, Sir William Pollard||Hayward, Evan||Munro, R.|
|Cawley, Harold T. (Lancs., Heywood)||Hazleton, Richard||Murphy, Martin J.|
|Chancellor, Henry George||Henry, Sir Charles||Murray, Captain Hon. Arthur C.|
|Chapple, Dr. William Allen||Higham, John Sharp||Needham, Christopher T.|
|Clancy, John Joseph||Hinds, John||Nolan, Joseph|
|Clough, William||Hobhouse, Rt. Hon. Charles E. H.||Norton, Captain Cecil W.|
|Collins, G. P. (Greenock)||Hodge, John||Nugent, Sir Walter Richard|
|Collins, Stephen (Lambeth)||Hogge, James Myles||Nuttall, Harry|
|Compton-Rickett, Rt. Hon. Sir J.||Holmes, Daniel Turner||O'Brien, Patrick (Kilkenny)|
|Condon, Thomas Joseph||Holt, Richard Durning||O'Connor, John (Kildare, N.)|
|Cornwall, Sir Edwin A.||Horne, Charles Silvester (Ipswich)||O'Doherty, Philip|
|Cotton, William Francis||Howard, Hon. Geoffrey||O'Dowd, John|
|Crumley, Patrick||Hudson, Walter||O'Grady, James|
|Davies, David (Montgomery Co.)||Hughes, S. L.||O'Kelly, Edward P. (Wicklow, W.)|
|Davies, Ellis William (Eifion)||John, Edward Thomas||O'Malley, William|
|Davies, Timothy (Lincs., Louth)||Jones, J. Towyn (Carmarthen, East)||O'Neill, Dr. Charles (Armagh, S.)|
|Davies, Sir W. Howell (Bristol, S.)||Jones, William (Carnarvonshire)||O'Shaughnessy, P. J.|
|Dawes, J. A.||Jones, W. S. Glyn- (Stepney)||O'Shee, James John|
|Delany, William||Jowett, Frederick William||O'Sullivan, Timothy|
|Dillon, John||Joyce, Michael||Outhwaite, R. L.|
|Donelan, Captain A.||Keating, Matthew||Parker, James (Halifax)|
|Doris, William||Kellaway, Frederick George||Parry, Thomas H.|
|Duffy, William J.||Kennedy, Vincent Paul||Pearce, Robert (Staffs, Leek)|
|Duncan, C. (Barrow-in-Furness)||King, J.||Pease, Rt. Hon. Joseph A. (Rotherham)|
|Duncan, J. Hastings (Yorks, Otley)||Lambert, Richard (Wilts, Cricklade)||Phillips, John (Longford, S.)|
|Edwards, Sir Francis (Radnor)||Law, Hugh A. (Donegal, W.)||Pirie, Duncan V.|
|Edwards, John Hugh (Glamorgan, Mid)||Levy, Sir Maurice||Pointer, Joseph|
|Esmonde, Dr. John (Tipperary, N.)||Lewis, John Herbert||Price C. E. (Edinburgh, Central)|
|Esmonde, Sir Thomas (Wexford, N.)||Low, Sir F. (Norwich)||Radford, G. H.|
|Esslemont, George Birnie||Lundon, Thomas||Rea, Rt. Hon. Russell (South Shields)|
|Reddy, M.||Samuel, Rt. Hon. H. L. (Cleveland)||Ward, W. Dudley (Southampton)|
|Redmond, John E. (Waterford)||Scanlan, Thomas||Wason, John Cathcart (Orkney)|
|Redmond, William (Clare, E.)||Seely, Col. Rt. Hon. J. E. B.||Webb, H.|
|Redmond, William Archer (Tyrone, E.)||Sheehy, David||White, J. Dundas (Glas., Tradeston)|
|Rendall, Athelstan||Simon, Rt. Hon. Sir John Allsebrook||White, Sir Luke (Yorks, E. R.)|
|Roberts, Charles H. (Lincoln)||Smith, Albert (Lancs., Clitheroe)||White, Patrick (Meath, North)|
|Roberts, G. H. (Norwich)||Smyth, Thomas F. (Leitrim)||Whitehouse, John Howard|
|Robertson, Sir G. Scott (Bradford)||Spicer, Rt. Hon. Sir Albert||Whyte, A. F. (Perth)|
|Robinson, Sidney||Stanley, Albert (Staffs, N. W.)||Wilkie, Alexander|
|Roch, Walter F. (Pembroke)||Taylor, Theodore C. (Radcliffe)||Williams, John (Glamorgan)|
|Roche, Augustine (Louth)||Taylor, Thomas (Bolton)||Williams, Penry (Middlesbrough)|
|Roe, Sir Thomas||Tennant, Harold John||Wood, Rt. Hon. T. McKinnon (Glas.)|
|Rose, Sir Charles Day||Thomas, James Henry|
|Rowlands, James||Toulmin, Sir George||TELLERS FOR THE NOES.—Mr.|
|Rowntree, Arnold||Trevelyan, Charles Philips||Illingworth and Mr. Gulland.|
|Russell, Rt. Hon. Thomas W.||Verney, Sir Harry|
Question put, and agreed to.
§ Debate accordingly adjourned till To-morrow (Wednesday).