Another Amendment proposed, at the end of the Question, to add the words,
But humbly regrets that no mention is made in Your Majesty's Gracious Speech of such a rearrangement of the basis for local taxation as would provide from Imperial funds larger sums towards the cost of education and the maintenance of main roads."—[Sir John Spear.]
§ Sir JOHN SPEAR
I beg to move the Amendment, standing in my name on the Paper, and in doing so I ask the indulgence of the House while I endeavour to 1158 give my reasons for it. The present Government and past Governments have placed upon local administrative bodies greatly increased work, involving increased expenditure. Many of those duties are national, or at least semi-national in their character, yet Parliament has failed to give to those administrative bodies reasonable and just contributions from the Imperial Exchequer, with the result that those bodies have had to greatly increase their demand upon the ratepayers for money, until to-day those demands have become intolerable, and not only so, but are placing an unjust and unreasonable handicap upon the development of our trade and agriculture. It is scarcely necessary for me to refer hon. Members to the Report of the Royal Commission on Local Taxation which reported in 1901, but I should like to refer for a moment to an expression of opinion they made in Chapter 4 of the Final Report, as to what in their opinion constituted national services. First I would say that although the Commissioners reported some twelve years ago, nothing practical has been done to carry out the recommendations they made. It is true that a small increased grant has been made to local bodies towards the cost of education, but the bulk of the increased expenditure has fallen on the ratepayers, although the Commissioners strongly emphasised the fact that a large number of those duties were national in their character. In proof of this will the House allow me to quote a few of their remarks emphasising this fact. First they say:—We consider poor relief a national service, and the maintenance of paupers and lunatics services administered by boards of guardians and overseers.Then the Commissioners say:—Police and criminal prosecutions are also predominantly national.Further they point out that—Education is also national in a high degree.They say also:—Main roads, on the whole, is a national service and likely to become more so.4.0 p.m.
If the Commissioners could view the user of the roads to-day and the development of motor traffic, I think they would see that their prophecy has come fully true. Instead of a larger proportion of the cost of these national services being defrayed from the Imperial Exchequer, which was clearly recommended by the Commissioners, the reverse is the case. To-day we find that these local administrative bodies are raising £65,000,000 per annum 1159 from the rates, while they are only receiving from the Imperial Exchequer £22,000,000. In other words, two-thirds of the cost of those services which are agreed to be largely national in their character comes from the local ratepayers, while only one-third comes from the Imperial Exchequer which is largely responsible for finding the funds wherewith to carry out national work. May I further point out, as showing the increase of the burden on the rates, that while in England and Wales in 1899–1900 the charge per pound on the assessable value was 4s. 8d. and a small fraction; in 1912–13 the amount of poundage on the assessable value was 6s. 6¼d., or an increase per pound of 1s. 10d. To go back further for a moment, I would point out that in 1884–5 the amount per pound on the rateable value collected in the administration of local works was 3s. 6d., so that during the last twenty-eight years the demand on the ratepayers has practically been doubled. In order to bring home that fact—I apologise for quoting so many figures—I should like to show in greater detail the increase in expenditure and the reduction in contributions as experienced in the county part of which I represent in this House. I do so because I feel that what has happened in Devonshire is just what is happening in every other county in England and Wales, and though many of us are members of local bodies and know, to our cost and experience, how greatly the burden has been increased, yet there are doubtless some Members of the House who are not members of local bodies whom I want to help, if I may, to realise the injustice that now rests upon local administrative bodies in having to raise so much money from the rates to carry on their work. I find that in the county of Devon the total county expenditure in 1891–2 was £115,364, while the expenditure in 1912–3 has risen to £574,000–an increase five times over in twenty-one years—while the estimated expenditure for 1913–14 will be £620,000. As to the cost of main roads, in 1891–2 the total cost of the maintenance of the main roads of Devon was £38,364, while in 1913–14 the estimate is £178,297, which is an enormous increase. It has more than quadrupled in that period of years. It is true that we have received a Grant from the Road Board—or, rather, a promise of a Grant towards the main roads—of £14,176, but a very small proportion only has yet 1160 been received, though, of course, the Board has been in existence for some years.
We suffer, too, from the fact that the Grant in lieu of half the rates under the Agricultural Eating Act is not at all equal to half the rates on agricultural land. The Grant was based on the amount which represents half the rates of agricultural land when the measure was passed. Since then county expenditure has increased to such a large extent that the Grant we receive under that Act is not half as much as it should be if based on the present value of one-half the rates on agricultural land, so there an injustice is, we think, done. Then we receive a reduced contribution under the Exchequer Act—that is to say, after the first charges are deducted that which remains, out of which a part of the expense of the main roads is to be paid, has fallen off by £10,000 a year. Further than that, by the Chancellor of the Exchequer some five years ago deciding to pay the county councils a commuted sum in lieu of the revenue from, the horse and motor car licences, instead of on the actual up-to-date receipts, the county of Devon loses £7,000 a year. Our feeling is that since the enormous increase in expenditure on the upkeep of the main roads has arisen to a large extent from the development of mechanical power, especially from the introduction of motor lorries, we think it only equitable that the public body that has to repair the damage done by those vehicles should receive all the revenue that comes from them. At present the county council has to pay an enormously increased amount of money to repair the damage done by the increased number of motor cars, while we are deprived of a very considerable portion of the increase of the revenue that comes from the increased number of motor cars. We appeal to the Chancellor of the Exchequer on this point especially. We feel that he is doing a great injustice to county councils, and I hope, at any rate, he will readily concede the point that the county council which has to repair the damage done by motor cars shall receive all the revenue arising from those licences. Of course I am aware, and the Chancellor of the Exchequer in reply to my questions once or twice has pointed to the help that we in the county are receiving from the Road Board; but instead of helping the ratepayer, the work of the Road Board has increased the burden resting on them. The work contributed to by the Road Board is a class of work that never hitherto devolved 1161 on county councils. It is a class of work which has involved practically the remaking of many of the roads. Roads which were quite equal to the ordinary traffic have become broken up through the advent of motor cars, and, therefore, it cannot be pointed out fairly as a ground of relief to county councils because the Road Board makes a contribution towards new works which never yet have devolved upon the county councils. The Chancellor of the Exchequer loses sight of the fact that even when the Road Board makes a Grant towards this class of work they require that a corresponding amount shall be contributed from the rates, so that instead of easing the ratepayer, it has increased the burden. I am quite well aware that it is of considerable value that this work, part of the expense of which is borne by the Road Board, should be done in the interests of the public. It is absolutely necessary. But surely in the case of extraordinary damage of this kind full responsibility for the repairs should fall on the Imperial Exchequer, which should bear the whole cost of the remaking of these roads.
In my Amendment I particularly point out the importance of increased assistance from the Imperial Exchequer towards the cost of the main roads and the expenses of education. But though I have not mentioned the question of Grants for Poor Law officers, I would point out that there, too, administrative bodies have a grievance, inasmuch as the Grants handed over from the Imperial Exchequer towards the salaries of the Poor Law officers are based on the amount of the salaries in 1888, whereas, to-day they are very much larger than they were, and consequently the Grant is altogether inadequate and unequal to the present expenditure in that branch of the public service. I am quite aware that some relief to the poor rate has come from the passing of old age pensions; but while that is so, there is abroad, and rightly so, in my opinion, a determination that the poor shall be better treated than used to be the case; that better sanitary arrangements should be made, and that workhouse children shall be cared for in scattered homes rather than in the workhouse. The increased expenditure from those desirable developments of more humane administration of the Poor Law has swallowed up practically the whole of the advantage received to the poor rate from the passage of old age pensions; but still I admit that we cannot make out as 1162 good a case for increased Imperial assistance towards the administration of the Poor Law as we can, in my opinion, make for increased assistance in the maintenance of the main roads and education. The same, too, applies to the police. We might naturally and properly bring forward a case in which increased assistance should be given to local bodies in the payment of the police. But I desire especially to emphasise the importance of at once making some alteration in the amount which is paid by the Imperial Exchequer towards the maintenance of the main roads and the cost of education.
I cannot help thinking that by the Imperial Exchequer bearing a larger portion of the cost of these local services we shall be doing something to make a more equal distribution of the burden upon those living in that particular locality. At present far too large a share of the burden rests on the owners and occupiers of real property. There are very many large taxpayers who are quite willing that a larger sum should be taken from the Imperial Exchequer for these local services, so that thereby they will bear a larger share of the cost of the service for which they are responsible, and which they alike enjoy with the owner and occupier of real property. Therefore, from that point of view I think we have a strong claim on the Chancellor of the Exchequer; but not only do I press this question on the House as a matter of justice between ratepayer and taxpayer, but I say that our present system is seriously handicapping the development of our trade and agriculture.
May I call attention to a very familiar illustration? I would point out that in the case of a shopkeeper who builds a shop to carry on trade which is convenient to those among whom he lives, and through which he will contribute to the common wealth, directly he has built his premises he has to pay heavily to the rates, whereas, if he took the money and invested it in foreign securities, though living in this country, he would not have to pay these rates. But because he invests his money in developing his own country, instead of sending it abroad, he is immediately penalised by heavy taxation. I would point out that this applies to the building of cottages. All sides of the House are anxious to see more cottages built and the working men better housed, but directly a man builds a cottage, upon which he is generally content with a return 1163 of 2 or 3 per cent, on his expenditure, he has to pay rates on the building. It is the law of the land. If, instead of building a cottage, the man invested his money in foreign securities, though he lives in this country and enjoys the fruit of the local services, yet he contributes nothing towards the services which he enjoys. Again, this reveals to us the necessity for a drastic alteration in the basis of local taxation, so that our system shall not penalise the man who spends his money in his own country, and almost drive him to make his investments abroad in order to avoid the incidence of unjust taxation. Then the same applies to the tenant farmer improving his farm. It is a very hard thing that a man who improves his farm, and thereby causes more employment and adds to the native food supply of the people, should have his rates raised on his own improvements.
§ The CHANCELLOR of the EXCHEQUER (Mr. Lloyd George)
§ Sir J. SPEAR
I am very glad to notice that the Chancellor of the Exchequer approves of the remark. By the way, some eighteen years ago, when agriculture was passing through the bitterest depression it has known, the Chancellor of the Exchequer's sympathy with the farmer was not so great as it is to-day, and just at the crisis in the history of our business the right hon. Gentleman felt it to be his duty to do what he could to prevent the passage of the Agricultural Rates Act. However, it is never too late to mend, and I hope the indication which the right hon. Gentleman gave by nodding just now is evidence of considerable improvement in his interest in the agricultural community of the country. I have shown, I think, that great injustice is being placed on the ratepayer by compelling him to contribute so much towards the upkeep of services which are largely national in their character. Though I have spent something like forty years in Local administration work, I do not feel competent to say anything very dogmatic as to what should be done. I would venture to point out that our system of Grants towards the cost of education, so far as we have gone, is spasmodic, and even irregular, in its action. I hold that the money from the Imperial Exchequer towards the cost of education should be a percentage of the whole expenditure of the local body in that branch of public work. I think we have reason to expect that the 1164 bodies which have carried on the great work of education shall feel that, in the future at least, when Parliament puts on those bodies increased expense in the development of education, Parliament itself and the Chancellor of the Exchequer shall arrange for the contribution being a percentage, so that the Exchequer shall bear in all cases its share of the cost of the improvement and development. I would ask the Chancellor of the Exchequer to consider whether the time has not come when 70 per cent, of the total cost of the administration of education should be paid from the Imperial Exchequer. I hold that the local ratepayers must find a margin of money, so as to avoid extravagance, but surely education is so largely national in its character that it is not unreasonable that those who administer that important branch of public expenditure should have 70 per cent, of the cost regularly from the Imperial Exchequer.
As to main roads, I think a case can be made out for the whole of their cost being paid from the Imperial Exchequer. Of course, if the Government are afraid that would lead to extravagance—[An HON. MEMBER: "Hear, hear."]—well, if that be so—I fancy there is not much ground for the fear—let the Government, through the Road Board, make themselves responsible for the maintenance of main roads, and let the total cost be defrayed from the Imperial Exchequer. There is no reason why, even if they adopt that system, they should not utilise the county councils as their agents in giving effect to the work. I would point out that even though the ratepayers would be relieved of the heavy expense which they have to bear at present with respect to main roads, they would still have to find money from local rates for the increased cost of maintenance of district roads, for, although the advent of motor traffic has told more on main roads than on local roads, the introduction of motor power has also added to the cost of the upkeep of local roads as well. There is just one suggestion I wish to make with reference to the cost of Poor Law officers. Instead of its being based on the expenditure of 1888, surely these Grants ought to be based on the average expenditure for three years prior to the date that the Grant was made. In conclusion, I wish to point out to the House that the time has come when a larger share of the expense of these local services shall be borne by the Imperial Exchequer. I would remind the House that during the 1165 last ten years the income from all kinds of property, except land, has increased £190,000,000 per annum, while that from land has only increased £45,000, and yet land and houses suffer more from the unfair incidence of taxation which makes the poorer people pay more largely than the wealthy towards the upkeep of those services. It is only fair that the contributions to the upkeep of those services which are valuable to all should be on the basis of ability to pay, and not on any crude idea of putting an unfair amount of burden upon any given class of property whatever.
Agriculturists and traders do not want favour, but justice, which they have not got at present under the existing basis of taxation. I hope the Chancellor of the Exchequer will promise to deal with the matter at once. We are tired of postponement. We may be told that the Government are waiting for the Report of the Departmental Committee. I can assure the right hon. Gentleman that the feeling in the country is intense. The country owes to those engaged in administrative work a deep debt of gratitude. The way men and women devote their time to carrying out the law throughout the country is the admiration of the world, but under present conditions either efficiency has to suffer, or an unfair and undue burden has to be placed on the ratepayers. It is extremely disagreeable for men who know that the ratepayers are heavily penalised and badly able to make their contribution to be placed in the position of either neglecting efficiency or imposing a burden on their neighbours which they know to be unjust and unequal. Therefore, from that point of view also, I hope the Chancellor of the Exchequer will do something at once to remedy this evil. I hope that the least he will agree to do to-day will be to hand over to county councils the whole of the revenue from the horse and motor car licences. I think that will be some little alleviation of the unjust burdens that rest upon ratepayers. I feel that this is an extremely important question, and I believe all sections of the House consider that it is time something was done. I venture to say that, if all voted as we think right on the question, it would turn out that a large majority in the House on both sides recognise the injustice that exists, and are anxious to see some remedy applied. Unless the right hon. Gentleman to-day is prepared to show that he will meet the 1166 difficulties I have described and do something to remedy the injustice which exists, I do hope that many will vote in favour of my Amendment. It was not brought forward with the purpose of injuring the Government, though if as a result, as a by-product, it were to put them in a minority, I am bound to say that I am not sure but that I would have rendered the country a greater service than I have hitherto done.
§ Mr. HICKS BEACH
I beg to second the Amendment. The hon. Member (Sir J. Spear) made an interesting speech on the question of local taxation—a topic which has been brought before the House on many occasions in former years. It is one which, I venture to say, will be brought forward on many occasions until the Government of the day do something to prevent the real grievance which is felt throughout the country. This is a subject which affects not only the country but also the towns. Every ratepayer has a real grievance, and it is one which, strange to say, the representatives both of town and country can unite in voicing. We who represent the country feel that the farmer has a very real grievance in the fact that he is rated, not upon the amount of his earnings, but upon the raw material of his industry, the house in which he lives, and the land which he tills, and he therefore pays a very much larger contribution towards the local exchequer than his far wealthier and far richer neighbour who happens to be a solicitor, or a banker, or a merchant, who is rated only upon the house which he occupies. In the same way the shopkeeper has a very real grievance. Very often he has to occupy premises in a commanding part of the town which are rated very high, and he has to pay, not at all on the proportion of the profits which he makes, but on a basis which is very unfair to him in comparison with far more wealthy people. My hon. Friend has enumerated various subjects, including education, the upkeep of main roads, and the maintenance of police and lunatics, the charges for which are continually increasing. It is admitted by everybody that these are far more national services than local services, and the ratepayer at the present moment in a country town does feel that he is being very harshly treated in respect of the payments towards these objects.
This grievance will exist as long as only one class of property is assessed for local rates, and one class of property which, 1167 according to the Income Tax Returns, has not increased at all in proportion to the other classes of property in the country. For instance, the Income Tax in the year 1902–3 under Schedule A, namely, land, houses, and buildings, was £152,000,000, and in the year 1911–12 it was £160,000,000. Whereas property assessed under Schedules C, D, and E, in the year 1902–3, amounted to £452,000,000, and in the year 1911–12 it was £556,000,000, being an increase in personal property, upon which no charge is made for rates, of 23 per cent., whereas real property has increased by only 3.2 per cent., and the whole burden of rates is being levied off that property. That we believe to be fundamently unfair, and it is a burden which nobody on either side of the House could possibly dream of imposing if the subject were being renewed at the present day. Our present system of rating does undoubtedly discourage people from improving their property or investing their money in building new houses and cottages, and erecting new buildings, whether for places of business or for assisting the farmer to carry on his business. Let me look at one or two particular charges. Take education. The cost of education ought to be met far more largely out of the National Exchequer than out of local rates. We are all agreed that it is a national service. In the country districts we feel this particularly—so many of our children are receiving a form of education which may be good in its way, but undoubtedly fits them far more for a career in the town than to become good, competent tillers of the soil. I am glad to admit that that is being remedied to a slight extent at the present time; but for years past it has been a real grievance for agriculturists that they have been paying these large sums to educate children in a manner which unfits them to remain in country districts.
Take now the cost of the police. They are a very efficient body of men. They are not maintained entirely for those who are merely occupiers of land and houses. They are also maintained for other classes of the community. Coming to the cost of lunatics, I find that in the year 1911–12, the Exchequer contributions towards the maintenance of lunatics was £176,000, while the amount contributed from local rates was £801,000. It is very unfair that such a large proportion of the cost of maintaining these unfortunate people should be levied upon one particu- 1168 lar class of the community. In reference to main, roads I admit, frankly, that the Road Board are doing very good work in collecting from the Exchequer a very considerable sum every year towards the improvement of the main roads of the country. But they are also by their action involving the local ratepayers in very heavy expenses. In my own county the Road Board recently told us that we ought to spend no less than £40,000 on practically remaking a great deal of the main roads of the county; and they have told us that, if we will spend this sum, they will contribute half the amount. The ratepayers, left to themselves, would never dream of spending £20,000 upon the improvement of the roads of the county. But we are in this position, that if we do not accept this offer, in years to come the roads will have to be done, and the ratepayers of the county will have to find the money. These roads have to be practically remade, and the charge ought to come much more out of the pockets of these people who use the vehicles which harm the roads.
I do not know the actual value of the motor cars, lorries, and cycles in the country at the present time, but I happened to see some estimates by writers in the "Times." One stated his belief that there are at present no fewer than 440,000 motor vehicles of all kinds in this country, including motor cycles and motor lorries and cars, and the total value of these vehicles must amount to no less than £755,000,000. I often go on a motor car myself, and I quite admit that it is a very useful form of conveyance; but I think the time has arrived when there ought to be a much more direct charge upon the actual users of the roads than there is at the present time; and I do think that all the proceeds of the Licence Duties on motor vehicles, the Petrol Tax, etc., should be used towards the upkeep and improvement of the main roads of this country. I will gladly support my hon. Friend in his proposal that the main trunk roads of the country should be taken over entirely by the Road Board. I believe that it will be a very good thing for the country, and we should then find that the cost of the upkeep of these roads would be borne far more equally between all classes of the people, and chiefly by those who use the roads than it is at the present time. Everyone admits that this grievance has been in existence for a good many years past, and we were full of hope, when the Chancellor of the Exchequer introduced his Budget in 1909, 1169 that the Government were really going to do something to remedy this grievance. We remember the eloquent passage in which he talked about the grievane of the local ratepayer, who he said was entitled to consideration in respect of the heavy expenditure imposed upon him, both by the late Government and the present Government, more especially in educational matters. He said:—He also has been very hard pressed owing to the increased cost of maintaining the roads, attributable to the development of mechanical traction. I am not sure that it is altogether a fiscal question. It has also become a great social question, for the municipalities are at the end of their resources, and work is almost at a standstill in many of these areas because they cannot afford to spend what is absolutely necessary on their development. The local ratepayer has been promised consideration by successive Governments, and he is surely entitled to get it. I think I can safely say that the financial proposals which I lay before the House will enable me to make good that promise.When is that promise going to be made good? It is quite true that the right hon. Gentleman promised half the proceeds of the Land Tax, but we have not yet had even half the proceeds of that very remunerative source of income, though I believe we are to have that money this year. I am not certain whether in the words "Land Taxes" the Chancellor of the Exchequer excludes for his purpose Mineral Rights Duty, because for other purposes the Mineral Rights Duty is included in the revenue produced by Land Taxes. I must admit that I have always contended that it was not a Land Tax, but I do hope that for this purpose it will be included in that category, because, if not, I am afraid that the net result to the local ratepayer will not be a very large one. I hope that the Chancellor of the Exchequer will give us some definite assurance on the point. What has happened since 1909? In 1910 he told us:—Whoever stands at this box next year will have to deal with the problem, and deal with it thoroughly.Several years have rolled by since then, and so far nothing has been done beyond the appointment of a Departmental Committee in April, 1911. That is a long time ago now, and we have not yet got the Report of the. Committee. We do not even know whether the Committee have finished taking evidence. I believe that they have, but we do not know. Surely it is about time that they issued a Report. Everybody admits that the problem of which they have had to deal is very intricate, but surely it is quite time to issue the Report after they have had three years in which to consider the subject. I do hope that the Chancellor of the Exchequer will 1170 use his influence in suggesting to this Committee that it is about time for them, to issue their Report. I know he is very active at certain times in administering ginger to the local authorities throughout the country. If he will administer a little ginger to this Departmental Committee, I venture to say that he will be doing a great service to the country. Of course, it would be impossible for the Government to act upon the recommendations of that Committee in the coming Session. [An HON. MEMBER: "Why not?"] They are pretty well committed by promises and pledges; but, if they cannot act upon the proposals recommended by that Committee, I devoutly hope that the Chancellor of the Exchequer will give us some definite assurance that he is going to do something to assist the local authorities on these two particular points, the cause of education and the cause of the main roads throughout the country. These are the two particular items which, I believe, are causing great anxiety to local authorities throughout the country, and it is because I believe that those questions excite great interest throughout both the country districts and the towns that I heartily support my hon. Friend to-night.
§ Mr. ROWLANDS
The hon. Member for Tavistock (Sir John Spear) has raised a question of exceeding great interest. He will, of course, forgive me if I think that the by-product to which he referred would be very detrimental to the well-being of the country; but so far as the issue he has raised in the Amendment is concerned, I believe he will have the sympathy of the majority of Members in this House. It is a very old question, that of the relation between the State and local charges. My memory goes back a great number of years to discussions in this House, and, if it serves me rightly, I took part in a Debate here in 1888, when the famous. Goschen Budget was discussed, and which was to settle once for all the whole question of the relation between the State and local charges. Like a good many things that are done with the best intentions, that particular object has not been attained, nor do I think that at the present moment we are in a position in which any Chancellor of the Exchequer could reach a conclusion that would for all time satisfy Members of this House. I take it, however, that what we are engaged upon to-day is to see if it is not possible to get some concession out of the Chancellor of 1171 the Exchequer which will meet the immediate requirements at the moment. Personally, I believe that anything which the Chancellor of the Exchequer may say to-day with regard to any concessions, if he kindly gives them to us, will not settle this question. We are face to face with a very broad, far-reaching question awaiting the Government that has the courage to come along and take it up and deal with from top to bottom. I know that it is a subject to which a Government does not particularly care to devote its time. I have said to my own Constituents that I believed that if we devoted a whole Session to this question—a thing no Government would do, because it is considered a dull subject—it would be productive of great benefit. It goes deeply to the well-being of the people, but it is one of those questions that does not strike the imagination, and therefore possibly the Government do not care to go right into it.
I hope, with previous speakers, that we are within measurable distance of getting the Report of the Departmental Committee, which we are all waiting for. I do not think we want to-night to go into the abstract question to any depth. What we have to do is to see what we can get for the present year out of the Chancellor of the Exchequer. The hon. Member for Tavistock in his Amendment mentions two specific subjects in which he asks us to support him in seeking relief from the Chancellor of the Exchequer. I know there are other questions which we all have in mind, but the hon. Gentleman has confined himself to these two for the immediate present. I quite agree with him in regard to main roads. Anybody who listened to the Debate on the Road Board, and knows what is the sentiment of the House, realises that while something might be done by the Chancellor of the Exchequer at present, there is only one solution for the question of the main roads, and it is that the Government should have the courage to take up the whole question of these great trunk roads with a view to their becoming a State charge and nothing else. We all know that there is much difference of opinion as to the way the Road Board applies the money under its control in different parts of the country, but the question of whether the money is given rightly in particular portions of England, Scotland, Ireland, and Wales bears relation to those portions of the country from which the critics come. 1172 The Board has done something, and I believe that, so far as it has done its work, the result has been to relieve local charges. But it is such a huge question that nothing that can come from the resources of the Road Board can possibly meet the difficulty, which, in the opinion of the majority of the House, will eventually have to be dealt with by the Government taking over the trunk roads. I pass away from that with the observation that I should be delighted if the Chancellor of the Exchequer can see his way to do something.
But there is another question, and it is that of education, which to my mind is paramount. I know of nothing on which one can spend money in this country with greater results, when the money is properly spent, than education. It is, above all other things, one upon which we cannot afford to be niggardly. I have had some little experience of this great subject. It was my great privilege during part of my life to sit on the largest school board the world has ever seen. I had been brought face to face with the education problem or I should never have gone on that board. We find ourselves in this position: There are certain reliefs given to local authorities in respect of education. We do not believe that they are sufficient, and I think that they should be much larger than they are at the present time. But the great problem for the moment is, as all who are conversant with the subject know, that we are face to face with one specific difficulty, and that is the question of necessitous areas. It is well known to the majority of this House—and here we can speak irrespective of party—that last Monday a deputation, representing I do not know how many portions of England and Wales—I do not care to say how many, because I have not the exact data, but I know that the deputation was of a far-reaching character—put before the Chancellor of the Exchequer an appeal in the strongest possible form they could, urging him to try and find the money in the present year to assist the local authorities in meeting the requirements of those necessitous areas. Some of those areas have developed rapidly, and their requirements have risen very greatly. We have from time to time put extra burdens upon the education authorities, but we have not met the responsibilities which we have put upon them by giving them the extra money 1173 necessary to enable them to discharge those responsibilities.
At present we find that the state of things is very serious in such places as West Ham, Erith, and other parts of the country which I need not name, because I know, in fact, that the Chancellor of the Exchequer has been supplied with all the data necessary in regard to the requirements of those localities. We have to ask the right hon. Gentleman, therefore, the simple question, Can he do something for us in the coming financial year to meet the requirements of the local authorities in those necessitous school areas where there is a rate of over 1s. 6d. in the £? We ask him sincerely whether he can meet us by giving us the three-fourths originally agreed upon, but which was afterwards reduced. We ask him to go back to that point and give us the three-fourths where the rate is over 1s. 6d. I can give him a concrete and simple example of what is a necessitous school area in the growing industrial Division which I represent, and what I am about to say applies to a large number of places, and that of which I am about to speak is not exceptional, for I believe many Members are in a position to give equally striking illustrations. Take Erith. That place has grown up rapidly, owing to the increase of the London area and its overflow. The Division has developed a number of large industries, with the result that a large population has been placed on a comparatively small area, and the education authority has had to meet the requirements with regard to school places. I am informed by the local authority that the expenditure on loans for buildings in itself amounts to a rate of 7d., and we have in Erith at the present time one in five of the entire population that is of school age.
It will be seen that a demand like that upon an assessment—apart from the assessment of the large business premises—which applies simply to small houses inhabited by industrial classes, means that the assessment is very small compared with the demand which is made upon it. I do not want to develop this subject at any length, but I do ask the Chancellor of the Exchequer whether he can meet us with some concession. I hope he will. I am afraid to mention the figure, because I do not know whether it is exact, but I am told that we require somewhere about half a million of money to meet the requirements of the necessitous areas. Though the demand is a very heavy one, I do 1174 believe that the money would be well spent. If the right hon. Gentleman can meet us in this particular case the education authorities will feel that the burden put upon them would be relieved. The burden is so great that they cannot increase the rate, and hence there is a likelihood of the work stopping. Nothing could be more unfortunate, in my opinion, than anything that would hinder the evolution of our educational policy in this country. To my mind it is the one thing above all others for which the nation gets something like a return on its expenditure. We spend our money under the Poor Law to help the aged poor, and, while they gather benefit and comfort from that expenditure, we do not expect any return from it. When we take the children of the country—and I hope we shall carry education to a higher stage than we do at the present time—we are investing money in cultivating their minds, and we believe it will return to the nation a larger percentage of interest than any other money that can be spent in any other way in this country of ours.
§ 5.0 P.M
§ Mr. BARNSTON
The hon. Gentleman who has just spoken made a very interesting statement, and gave whole-hearted support to the Amendment moved by my hon. Friend. Therefore, I sincerely trust that unless the hon. Gentleman has been promised the concessions which he asks, that we shall have the privilege of meeting him later in the Division Lobby. I believe that no reform is so pressing and important to agriculture as the reform, of local taxation. I am quite prepared to admit, and I think my hon. Friend, the Mover, admitted it, that there must be some margin which will fall on the local ratepayers so as to prevent extravagance, and to make the local ratepayer see that due economy is enforced. In the case of main roads and education, which are national services, or almost national, I think it is a pity and grossly unfair that so heavy a burden should fall on the local ratepayer as in this case at the present time. In this matter we are backed up by what I may call expert opinion. Some eleven or twelve years ago a Royal Commission reported, and admitted, what I may call the whole agricultural case. They held that education is national in a high degree, and they held main roads to some extent a National service, and likely to become more so owing to the increased mobility of population, and new means of 1175 locomotion. Certainly, nobody could have anticipated that their words as to new locomotion would have come so near the truth as they have to-day. We must admit that the Agricultural Rates Act has been of some assistance, but after all that came to us only as a piece of temporary relief, because, unfortunately at the time it was violently opposed by the right hon. Gentleman the Chancellor of the Exchequer.
Since the time of that Act Parliament, instead of relieving local taxation, has passed measures imposing an increasing burden on the rural districts, which amounts to even more than the relief given by the Agricultural Rating Act. We used to be told that that Act was a gift to the landlords, but I do not suppose that anybody says that to-day, and if hon. Gentlemen opposite do say it, they know perfectly well that they continued that present for a great number of years. It is difficult to know what the opinion of the Government is of agricultural landlords, because the right hon. Gentleman the Chancellor of the Exchequer has recently been declaring in the towns that they possessed two horns and a tail, but we have not been in this House a week before the Minister of Agriculture gets up and very fairly says that the agricultural landlords of England are doing their best in helping forward schemes of reform for the sake of agriculture throughout the country. I think most people must admit that education is really a national service. How many children, I wonder, who go to a country school remain in the village or in the county in which they are educated. Everybody knows that hundreds of children pass through our county schools, and directly they are educated they go on to the towns, or possibly to the Colonies, and the people who pay most for their education receive no benefit from them afterwards. While that is going on, one can hardly say that there is local government in education. What happens is that the Education Department swoops down and order this, that, or the other, and all that the local people have to do is to obey and to educate children whom they know perfectly well are going away from the country districts, and from who they are not going to get any benefit.
There is also the question of main roads. In days gone by, before motor cars came into use, and before mechanical traction became common, the use of the main roads 1176 was possibly, more or less, confined to the local people. We all know that those days are gone and will never return. If you talk to any cottager who lives on a main road, perhaps fifty miles from some great, centre of industry, that cottager will tell you that for every local cart that used to pass the door, there are now probably twenty or thirty motor cars and traction engines, while the county has got to keep up the roads, which other people have the privilege of using. I think on this question, and it is a very important question for all agriculturists, we have had enough quibbling and evasion. My hon. Friend drew the attention of the House to the fact that the Chancellor of the Exchequer said, I think it was four years ago, that whoever stood at that Box next year, that was three years ago would have to deal with this question thoroughly. May I just say in passing how pleased we are, if it is not impertinent of me to say so, to see that the Chancellor of the Exchequer permits himself to be present to-day, but I would point out that it is not impossible that he may not be-standing at that Box next year. The question is a most important one for agriculture and agriculturists, and the local ratepayer, who has had so many promises, and has been deceived and put off on this subject, which affects every farmer, every agriculturist, and every smallholder in the country. I do hope that the Chancellor of the Exchequer will not put us off with some dim and distant promise, but that he will tell us what he is going to do this year.
§ Mr. LLOYD GEORGE
My hon. Friend the Member for Dartford (Mr. Rowlands) assigns as a reason for the reluctance of the Government to deal with this question the excessive dulness of the Session with which they would be confronted. I think the condition of the House to-day proves that we are dealing, not with a question of party interests, but with real business. It is, undoubtedly, one of the most important problems that could engage the attention of the House of Commons. I always thought that. It is a matter of deep regret to me that during the years I have been at the Exchequer I have not been able to deal with it up to the present moment. It was certainly my intention to have done so years ago. When I made that announcement quoted by the hon. Gentleman in his very fair, moderate, and exceedingly genial statement of the case,. I certainly thought it would be my pleasure and privilege to deal with the ques- 1177 tion. It is no use entering into the question of why it was not done—that would simply be inviting party recrimination, and I think we can dispose of this matter much more effectively if we eliminate that for at least an hour or two. May I also join with the hon. Gentleman in the tribute he has paid to those who voluntarily give their work, their time, and their energy for local work. The sacrifice they make is enormous, and I agree with him that there is no country in the world where so much work of that kind is done by some of the best people in the county and town districts, in fact, it is the envy of the whole world. There is no doubt that during the last few years their work has been rendered much more disagreeable by the fact that they have, in order to maintain any sort of efficiency, been compelled to impose burdens upon their neighbours which they deplored; and they are always forced to decide between work which is shoddy, inefficient, and inadequate, and the enforcing of rates which they feel in their hearts impose a cruel burden upon people who cannot afford to bear it. To that extent I am entirely in accord with the hon. Gentleman. He referred to the increase in education expenditure. That increase has been enormous, undoubtedly, during recent years. Between 1901–2 and 1905–6, that is, in the course of four years, the cost of education has doubled in this country. The figures, so far as I can get them, disclose that the cost of education rose from something just under £12,000,000 to something just under £24,000,000. I agree with the hon. Gentleman that that is a startling figure.
§ Mr. LLOYD GEORGE
I did not say out of the rates, but that was the cost of our education in this country and it was doubled in those four years. Those are figures for England and Wales alone. They are very remarkable figures. Since that time they have gone up to something like £29,000,000, which means that between 1902 and, say, 1912–13, there has been an increase of £17,000,000 in the cost of education in this country. I wish I were confident that we were getting our money's worth. I agree with, I think it was, the hon. Member for Tewkesbury (Mr. Hicks Beach), that education in the rural districts has been, until at any rate recently, very unsuitable. I remember making that observation in the course of a Debate in 1178 1902, because now and again we did lapse into an uncontroversial mood. I made it from a knowledge of the country districts, and I said that education at that time did not fit the children there for country life. Being in a village school myself, I know the kind of education that was given to us. That which dealt with life in the country was not one-quarter per cent, of it, and hardly appeared in the Time Table. Whenever it was done it was done by a schoolmaster who had some brains, and who did it of his own accord, though he was afterwards punished at the examination, and was told he was wasting his time. That really is the experience of everybody who knows anything about village education. Children are not trained for country life, and we are surprised that the moment they leave school they go to the towns, for which we have spent the money to equip them, while they leave the country, where we have not spent a penny in order to train them to earn their living.
I am very glad that there has been a great change in the whole direction of education in recent years, but I want to see an even more revolutionary change. Children ought not merely to be equipped for country life, but they ought to be trained to take an interest in country life. There is an enormous interest in country life, but that they cannot discover without it being pointed of. That they are never taught to appreciate. I hope that in the course of the next few years, whichever party is in power, a real effort will be made to teach children something about their own surroundings, and how very much superior country life is to town life to anyone who has been trained to interest himself in the things of the country. To that extent I am very glad to find myself in complete agreement with the hon. Member for Tewkesbury (Mr. Hicks Beach). A good deal of the money of the Development Commissioners has been spent on agricultural education, but even now we are not spending nearly as much as the United States of America, with all their enormous virgin resources. But we are working up in that direction, and I hope that the State in future will take a greater financial interest in agricultural development. On education generally the cost has increased enormously, but the proportion of that expenditure which the State contributes is less by 4 per cent. or 5 per cent., I think, than it was some years ago. The State is not maintaining its proportion of the expenditure. When I come to deal with the 1179 remedies I shall have to address myself to the point raised by my hon. Friend behind me. For the moment I am only reviewing the expenditure. [An HON. MEMBER: "The local rates for education have increased by £13,000,000 in eleven years."] Upon the Poor Law, before the Old Age Pensions Act, the expenditure was going up steadily. In the course of three or four years it had gone up by, I think, a million pounds a year. Since 1910–11 the expenditure has gone down, and it would have gone down still more—and this is a very significant fact—had it not been that the boards of guardians were supplementing old age pensions by improving their outdoor relief. Those who are engaged in Poor Law work know very well that one result of old age pensions has been rather to increase the amount given for outdoor relief. The rates would have been still more reduced if it had not been for that fact—a fact which is not at all to be deplored or regretted.
With regard to lunatics, the cost has gone up in recent years. Between 1905–6 and last year there was an increase of 15 per cent. Between 1895 and 1905 the cost went up by 64 per cent. There is nothing in the Return to show any reason for the enormous increase in those years. At any rate during the whole of the period the cost has more than doubled. I dare say that a good deal of it is due to the fact that the treatment of lunatics is more humane than it used to be. Now I come to main roads. Here the burden has increased very rapidly. I do not think that it has increased more rapidly than the education rate, but it has increased with alarming rapidity. There is one thing upon which we can congratulate ourselves. I attended the Road Board Congress, where there was, I believe, a larger representation of the whole civilised world than there has ever been at any other congress anywhere; there was not a civilised State in the whole world not represented. By common consent it was agreed that the roads of this country were the best in the world. That is quite new. They used not to be. I think that is very largely due to the enormous expenditure of the last few years. That is one crumb of comfort in this rather gruesome statistical review. The cause of the increase is undoubtedly the new form of transit, and the grievance affects not only the farmer but the trader. The hon. Member opposite very fairly pointed out that the roads are worn out and 1180 torn up by traffic which originates outside-the locality. These vehicles tear up the roads very badly, and the expense of maintaining the surface, and certainly of recasting the surface in such a way as to-make it difficult to tear up, is enormous to the counties concerned, but the benefit which they derive from the expenditure is by no means in proportion to the expense they have incurred.
A farmer on a deputation the other day instanced a stretch of thirty or thirty-five miles of road where there is practically no-local traffic at all, but there is a very considerable motor traffic which comes from outside the county, and passes far beyond it. He pointed out how enormously the rates had gone up in recent years for the maintenance of that main road—for the benefit not only of the people of the locality, but of people living outside. I felt that the case was quite unanswerable, and that it was an injustice to the local farmer that he should have to bear double and treble rates in order to maintain, a road for people who lived completely outside the district, and who simply passed through to another district. Another grievance which is also very acute has been mentioned. It is not merely a question of private motors; there are heavy vans of the town. This is almost a new development of traffic entirely attributable to the new form of traction. It is practically a new thing for the great stores to do a large retail trading business up to a radius of fifty miles or more of a town. They do the business of certain houses almost entirely. The telephone and petrol between them have completely transformed business within fifty miles of large towns. The amount of damage which these vans do to the roads is prodigious, and I cannot think of anything more unjust than that the local trader should have his highway rates doubled is order to maintain roads for people who are taking away the whole of his business. It is not merely the amount which he has to pay; I should think he feels the injustice of the burden even more than the actual amount that he has to pay. It is unjust, and it is irritatingly unjust.
The same is true about the railway companies. Here you have great motor vans, heavily laden with goods; when you hear them trundling along you begin to realise how heavily laden they are. You have, on the other hand, railway companies, whose business these vans are taking away, paying heavy rates in every parish through 1181 which they pass. I think it is unfair to them. [An HON. MEMBER: "They should lower their charges."] That is another question. Whether they lower their charges or not, I think they ought to have fair play in the matter of contributions towards the highways. That is undoubtedly a question which has to be faced. I do not know whether the contribution that could be obtained from them would be a substantial one, but, at any rate, a very severe injustice would be removed, and one would feel that there was a certain amount of fair play in the contributions. The hon. Member for Tewkesbury quoted something which I said when introducing the Budget of 1909. I confidently anticipated that, after providing for pensions, the Navy, and, I think, insurance, there would be a margin for the relief of local rates. It is not my fault that there is no margin. It is not the fault of anybody in particular. It is due to the European situation. The European situation has been such that, so far from our being able to reduce the cost of armaments, as we confidently anticipated then, the cost has grown enormously. At that time I was providing £24,000,000. It has gone up by enormous sums since then, and the money which I had anticipated would be available for the relief of local taxation has been consumed in expenditure upon the increased equipment of the Navy. That is the reason it has not been done. It is not that there has been any breach of pledge on the part of the Government; it is that there was that urgent national necessity which consumed the available cash.
The Government feel that they cannot make their pledge contingent upon anything of that kind, and that the problem has to be faced without any reference at all to other national demands. I think that that is the general sense of the House of Commons also. I have stood at this box year after year practically to make apologies, whilst fully admitting the case Everything said by hon. Gentlemen opposite and by my hon. Friends behind me, pressing upon me the urgency of the problem, I could not for a moment challenge; the injustice of the present position I could not contest; the inequity of the present distribution of the burden I could not for a moment dispute. Therefore, I could only make a statement practically defending further delay until we get the report of the committee. That committee has been sitting for some time. I do not think they have been wasting time. 1182 As the hon. Member for Tewkesbury very fairly admitted, it is a very complicated problem, and to imagine that a committee of that kind, a voluntary committee, composed of very busy men, not able to sit day after day, coming from very long distances, could dispose of the matter in a few months or even in a year or two, is to show a lack of appreciation of the great complexity of the problem. They are on the point of reporting. They have concluded their evidence. For some time they have been considering their report. I hope it will be in the hands of Members in the course of a very few weeks.
The Government have decided to take steps, and to take them this year, for the relief of local taxation. We feel that this is a question that ought not to be put off any longer, and that we cannot wait until the burden of armaments has gone down; that we cannot wait or put it off even because there is other pressing business. There is no business which can possibly be more pressing, because it is a fact that the burdens which come upon the people, at present, unfairly, are arresting all municipal development. The local authorities are anxious for housing reform. They wish to take steps with regard to education. They wish to improve local conditions. They are completely paralysed by the knowledge that if they take any further steps it means imposing a burden on the ratepayers that is perfectly intolerable. Therefore, the Government have decided this year to make provision to deal with this great problem. I am not going to venture into details at this stage: they will come later on; but I hope that when the proposals of the Government come before the House that the support which has been given to this Amendment pressing the Government to deal with the matter will be transferred to the Government when they are endeavouring to deal with the matter. After all, you cannot deal with a question like the relief of local taxation without raising money. I hope, therefore, that hon. Members will be as anxious to support the Government as they have been to press us to do this work.
There are only two or three general observations which I would make in regard to the method of dealing with the problem. I have been very severely taken to task because I opposed the Agricultural Rates Act. I never opposed it, because I did not think that local rates ought to be relieved. I opposed it because I thought it was the 1183 very worst method of relief for agriculture. I am perfectly certain that if that money had been given to agricultural development—to help agriculture directly—that there would have been no end of schemes about, and agriculture to-day would have derived tenfold benefit from the cash that it has derived from the spending of the money in the present very crude and imperfect form. Let me put a point to which I shall have to refer later. The hon. Member talked about prudence. He said that the moment a man improves his farm, that moment he has to pay for his improvement. One of the objections I took to the Agricultural Rates Act was the way the money was distributed under it, because those concerned got less in proportion to the amount they spent on improvements. The farms where you had the most buildings were the farms that got the least relief. What was still worse, farms in the districts which were very hard hit by agricultural depression got less in proportion than those districts where agriculture was comparatively prosperous. I say, and said, that against my own country, because at that time we were not as hard hit as the Eastern Counties, while under the Agricultural Rates Act we got just as much, and even more, than some of those eastern districts. I criticised the Act from that point of view. I never criticised it from the point of view of maintaining that agriculture was not entitled to relief.
The second point of view I take is this—it is relevant to the consideration of the question. I said it was unfair to raise money for the relief of one class of trader, whilst you gave nothing to other classes of traders but compelled them to contribute. I was attacked on that statement, and the case made for the agriculturists was this: that the farmer was practically paying upon this machinery—his stock in trade. So is the trader. So is the ironmonger. After all the trader is paying upon the equipment of his trade—that is to say, his shop. The manufacturer, too, is doing so. I said that it was very unfair, whilst we are recognising a principle in relation to the farmer, we were not recognising it for any other of the trades. I still say so. I say that the Government will not propose any scheme which will not give equal and fair relief all round, and upon a principle which will be applicable to all traders.
Let me state another point. Grants at the present time are very unequally dis- 1184 tributed. They are by no means distributed in proportion to the burdens. You may get one poor district where the rates are very high—because the assessment is essentially low—with the expenditure often higher than in a better district. Grants from the Imperial Exchequer at present are distributed without any reference to burdens. My right hon. Friend the President of the Board of Education has developed that theme, and the House will in due course be in possession of his ideas upon the subject. Within the last few days he has, I believe, received a deputation from the necessitous school areas. I hope it will be unnecessary to receive other deputations. We propose to deal with the matter, and by that I mean we propose to make actual financial provision for dealing with the whole problem. The worst of it is that unless you deal with it upon some general principle—if you simply give to localities—you will find that there are other localities just outside that are gradually creeping up into a bad condition, and you will never get a satisfactory solution of the problem. You must have some general and satisfactory principle laid down. Such a one is the principle laid down by my right hon. Friend, to proportionately relieve the burden. There are some very striking figures connected with the Board of Education, and my right hon. Friend has been good enough to supply me with some of them for illustration. Take the burden of elementary education. The expenditure on elementary education for every child in England and Wales averages £4 9s. 4d. per annum.
§ Mr. LLOYD GEORGE
That is a point I am coming to. In Barry it is £7 10s. 7d. Come to the place which my hon. Friend the Member for Pontefract represents, he is only contributing £2 12s. 1d. There are seventy-two authorities spending less than 70s. per head, and twenty-eight authorities spending 100s. and upwards. That is a very uneven distribution. Let us come to the rates. The elementary education rate averages 14.9d., very nearly 1s. 3d., but it varies from just a little over 2s. in Walthamstow to 5d. in Radnorshire. There are sixty-five authorities which have rates of less than 10d.; in sixty-five are rates of 1s. 6d. and upwards. When you come to the wealth and the resources of 1185 the locality, you find that the discrepancy is still the same. The produce of a 1d. rate per child averages 3s., but it varies from 9s. 1d. in Hove to 1s. 1d. in Walsall. In seventy-five areas a 1d. rate produces less than 2s. per head, and in thirty-nine more than 4s.; but the Grants up to the present have been distributed without any reference at all to this condition. I am perfectly certain the House will be in general agreement that this principle is quite indefensible, and that the State, when it comes to increase its contribution to local taxation, ought to rearrange the whole of the Grants so that the more heavily burdened districts shall receive a larger share of the contribution.
The second point is this: That when Grants are going to be made there must be greater guarantees taken for efficiency. If the State finds more money, I think it is also entitled to say: We must have also greater powers of seeing that the money is well spent; that unless there is a certain standard of efficiency maintained, not only for education and main roads, but for other local services, the State shall have the power to withhold or to abate the Grant. That is the case now in regard to the police. If a police service is not efficient, the Treasury, on the recommendation of the Home Office, withholds its Grants. There ought to be the same power vested in the State over all branches of local services. It is not in a position to do so now, for the simple reason that the part taken by the State during recent years has been that of imposing more burdens on the local authorities without an adequate contribution towards that expenditure. The Education Act of 1892 is a case in point. Two or three Acts of the same kind have been passed during the lifetime of the present Administration, where burdens have been imposed in localities without a proportionate contribution, or at all events, without maintaining a definite proportion of Imperial contribution towards these increased burdens.
§ Mr. LLOYD GEORGE
Under these proposals London, certainly would be favoured; parts of London, at any rate, would receive very substantial aid The third point is—and here I agree with the words of the Amendment—at any rate, I agree with something that has been said 1186 on the subject—the Mover of the Amendment "humbly regrets that no mention is made in His Majesty's Gracious Speech of such a rearrangement for the basis of local taxation"—I agree with him. To use a phrase which was more prominent years ago than it is now, we ought "to broaden, the basis of taxation." We have not here had much to do with Imperial taxation of late, but I quite agree that you ought to broaden the basis as far as local taxation is concerned. I do not think the present basis as the only means by which a locality can raise money for local expenditure is a defensible one. The hon. Gentleman put it very fairly when he took the case of the farmer. The moment a landlord or a farmer spends money upon his farm, up go the rates. If the landowner or farmer neglects his farm, down go the rates. At any rate that is the principle of the law. It is ignored in the interest of equity, but when you come to the towns it is not ignored. I remember when I said something about that some time ago somebody got up and said rural assessment committees do not enforce it at the present moment. [HON. MEMBERS: "They do on small holders."] That makes it all the worse; it aggravates the position; but I do not want to enter into that. I only point out that in order to call attention to the fact that that is the law at the present moment. The moment you increase the letting value of the holding, in whatever way you do it, up goes the assessment; and if you increase the letting value by improving a farm or by doubling the buildings, it is the duty of the assessment committee to increase the assessment. I agree with the hon. Gentleman that that is a thoroughly vicious principle. It is using legislation and taxation for the purpose of discouraging improvements, and when the Government come to deal with the problem from that point of view I shall look for the support of the hon. Gentleman and those who cheered the statement that he made.
I do not want to enter into any details of the scheme to be submitted by the Government. All I have to do is to say that the Government now, as they have always done, admit—as my right hon. Friend the Prime Minister, when Chancellor of the Exchequer, always admitted—the gravity and the urgency of the case. We thought we were providing cash in 1909 to deal with the problem, but the urgency of the national demand in respect to the Navy absorbed the whole of the 1187 available surplus. The Government have come to the conclusion that this demand is not merely a serious one, but that it is an urgent one, and that they cannot make their pledge to deal with it contingent upon any demands which may be made from any other Departments for increased expenditure, because the present situation is one of almost complete stagnation as far as progressive municipal work is concerned, and, therefore, we propose in the course of the present Session to submit to Parliament proposals for dealing with this problem.
§ Mr. H. W. FORSTER
The right hon. Gentleman began his speech by admitting the importance of the subject raised by my hon. Friend and by promising to meet it in an uncontroversial spirit, and I am bound to say the Chancellor of the Exchequer has happily followed the pledge he gave that he would avoid controversial topics. I have listened with great attention and care to the speech he has just delivered. Hon. Gentlemen who sit upon this side of the House have been pressing this matter upon the attention of the Government Session after Session on every conceivable occasion they could find, and I am quite sure my right hon. Friend the Member for Fulham (Mr. Hayes Fisher), who has taken so leading a part in this matter, and other hon. Members, will join with me in congratulating the Chancellor of the Exchequer, because he has not only admitted the crying evil with which we have to deal, but he bas stated his intention of dealing with it—at any rate to a certain extent. He reminded the House very truly of the enormous growth of local expenditure which has taken place in the last ten years, and I should like to call the attention of some hon. Members who were not here when the Chancellor of the Exchequer began his speech to the enormous growth to which he referred. I think the figures were so striking and significant that we ought to bear them in mind. He reminded us that the cost of education had grown from £12,000,000 in 1901–2 to something like £24,000,000 in the course of four years, and it is now little short of £30,000,000 a year. I think everybody who has got to deal with the question of these local services will do well to bear in mind the extraordinary rapidity with which the cost has grown.
I listened to the Chancellor of the Exchequer in a speech in which he was 1188 following the lead of my hon. Friend behind me in laying before the House the evils of the present system. The Chancellor of the Exchequer has an eloquent and picturesque tongue, and I do not doubt that it will be a solace, to a certain extent, to the minds of the local traders to know that at any rate they have the active sympathy of the Chancellor of the Exchequer himself. Before I come to the, question of the local traders, I would like to say how emphatically I agree with the Chancellor of the Exchequer in what he said in reference to the simplification of our system of education in the rural districts, a thing which I have always advocated very strongly, because I know from personal experience how absolutely unsuitable and unnecessarily complicated a great deal of the education given in our rural schools is, and I hope the President of the Board of Education will keep this matter in full view and will press upon his own Department, and the local authorities also, the desirability of making the system meet the needs of the districts. Personally, I believe in giving the local authorities far wider powers for the management of the system and the settlement of the syllabus than they have at the present time. I would not regard; them merely as instruments for regulating appointments and acting as paymasters for the Education Department.
Then the Chancellor of the Exchequer came in due course to the question of the upkeep of the roads, and I was very glad to hear the sympathetic view he expressed in regard to the grievances under which local traders have suffered during the past ten years. I welcome the vehemence with which the Chancellor of the Exchequer expressed his appreciation of the impossibility of the position which calls upon, men to find, out of their own pockets, some measure of the cost to make safe the path of the oppressor: in other words, to pay for the upkeep of the roads which, are destroyed by rivals who ruin them in their own business. We have been pressing the claim of the local trader for some little time, and I am very glad the Chancellor of the Exchequer has promised to-deal with the question. After reviewing this question, the Chancellor of the Exchequer gave us the reason for the delay which occurred since he promised to deal with it three or four years ago. He says the reason the Government did not deal with it was because the money he expected to be provided by the Budget of 1189 1909 had been swallowed up by other national services connected with the European situation. That may be the reason why the Government did not deal with it, but it cannot be the reason at all for the delay which has taken place in the Report of the Departmental Committee. If the Government find themselves able now to deal with this question before the Departmental Committee have reported, it only confirms us in the view we held all along that they would have been able to deal with it last year or the year before, or the year before that, because if the Report of the Committee is not necessary this year, no more was it necessary last year or the year before.
The right hon. Gentleman told us that the Government are going to make provision this year for dealing with this great problem and that they propose to deal with it on the principle that it is applicable to all traders. I am bound to say that having told us that, he has told us nothing more. I should have thought that the Chancellor of the Exchequer would have been able to give us a little more light as to the proposals the Government intend to lay before the House and not confined himself merely to using the general expression of intention with which he concluded his speech. As far as I am able to see, all that the right hon. Gentleman has done has been to deal with the allocation of certain sums of money which he proposes to grant for the relief of the burden of taxation and other local burdens. What we ask for in this Amendment is something far more than the allocation of the Grant. We really ask for a rearrangement of the basis of local taxation. The right hon. Gentleman referred to the question and left us in complete doubt as to what he was prepared to do and how he was going to do it. I should have thought he would have been able to give us a little more information?upon that subject before he sat down. I remind the right hon. Gentleman that the Departmental Committee which has been sitting for all these three years was appointed to deal, and practically to deal only, with the question of allocation, and I ask again if the Government are now able to deal with this question without the Report of the Committee, why did they not deal with it before? I do think that the conversion of the right hon. Gentleman to our view, welcome though it is, might well have taken place at an earlier date, but I see nothing in the 1190 speech which the right hon. Gentleman has made which leads me to suppose that he is going to make, at any rate, the fundamental alteration which I for one am anxious to see in our basis of local taxation. I cannot for the life of me see why you should throw, I will not say the whole burden, but so large a portion of the burden, for providing these national or semi-national services upon the present body of ratepayers. I had hoped that the right hon. Gentleman would have been able to tell us that he really was going to tackle the admittedly difficult problem of bringing in other forms of property for the provision of local revenue. My hon. Friend behind me referred to those who invest their money in foreign securities, and he expressed the hope that it might be possible to bring them into contribution in two or three years. I hope that will be done, and I wish the right hon. Gentleman had made up his mind to deal with this question at the present time. With regard to the Agricultural Rates Act, I do not think the right hon. Gentleman really appreciates the difference between the position of the farmer and the shopkeeper. The present system does throw the burden of the rates upon the farmer's stock-in-trade, but this is not so in the case of the shopkeeper. I am quite certain from the assurances of the Chancellor of the Exchequer that he intends to provide a remedy for this state of things, and intends that the system shall be made fair both to the farmer and to the shopkeeper, and other classes of the community. We shall all look forward with eagerness to the production of the right hon. Gentleman's plan. I do not know that I can add very much more on this subject, which has been well worn. It has been thoroughly threshed out in Sessions gone by, and I am quite sure my hon. Friends behind me will feel satisfaction at the nature of the success, such as it it, which has attended their persistent efforts. We are glad that the Chancellor of the Exchequer has taken the view which we have urged upon him repeatedly in the course of the last few years, and I hope he may still find it possible to produce a plan dealing with the whole problem, and not only with the allocation of Grants-in-Aid.
§ Mr. GEORGE THORNE
At this stage what one can most fittingly do is to thank the Chancellor of the Exchequer for his statement. The hon. Member who has just spoken seems to think that the desire 1191 for this change was practically confined to hon. Members opposite. May I point out that the desire for it has been quite as strongly for it on this side, and has been, not only in public but in private, strongly pressed upon the authorities? We are equally glad with hon. Members opposite at the promise which has been made, and we sincerely trust they will recognise what the Chancellor of the Exchequer said a few moments ago as to the support he looks for from Members when he has to provide the money to carry out his promise. As for the steps he is going to take, I for one am prepared to wait the short time which must intervene before the details can be given. It is impossible at this stage to indicate the details, which will come shortly. The satisfaction is that they are not to be postponed for another year, but will form part of the financial statement this year, and, like the hon. Member opposite, we are looking eagerly forward to that statement. I understand it will have two aspects, one will be a rearrangement of the basis of local taxation as indicated in the Amendment before the House, which is a matter we have been strenuously urging on behalf of municipal associations and in various other directions, and will form a large measure of relief to local expenditure. That seems constantly to be regarded as though it comes from organisations and municipal bodies who have been extravagant in their operations, and sometimes incompetent in their endeavours.
We have had a recognition this afternoon to the full that what they have claimed is only further support in regard to matters which are of national importance and national responsibility. Instead of their seeking to place an imposition upon the nation, I think it is the nation which has been imposing upon the local authorities, and at last the relative responsibilities are recognised, and work which is national in its character but locally administered is going to be chiefly regarded as a burden upon the nation as a whole. The advantage when would come in local affairs as well as in national must be manifest to all who take any interest in these matters. I can fully bear out what the Chancellor of the Exchequer said as to how the burden of rating at the present time constantly stands in the way of local endeavours and interferes with individual and private enterprise. It also stands in the way of local municipal development, and the relief which is promised—and we 1192 now know will come—will help enormously in the development of local progress and prosperity. On the other hand, the great local expenditure has necessarily interfered with the sufficiency and efficiency of these national services, and we can all look forward to a development, both in regard to education and main roads, which must be an advantage not only to the localities, but to the nation at large. We cannot discuss the details, because we have not got them before us, but we can readily and gladly wait the short time which must intervene. We look forward, with the eagerness of the hon. Gentleman who has just sat down, to the production of this plan, and when we get it we shall have made a large step forward in regard to adjusting local as well as national responsibilities. I conclude, by again thanking the Chancellor of the Exchequer for the statement he has made to the House.
§ Mr. HAYES FISHER
The hon. Gentleman who has just sat down informed the House that there was just as much desire, and always had been on his side of the House, for some great and permanent relief to local taxation as there was upon the Opposition side. If it is true that hon. Members opposite have had that desire during the last few years then they have shown it in a very singular way, because whenever they have had an opportunity of voting for any of the numerous Motions which would have hastened relief to the local ratepayers, they have made speeches in favour of such Motions, but have always walked into the Lobby and defeated those Motions, thus preventing the House registering its real verdict and forcing it to register a verdict against any relief being given to the unfortunate ratepayer. That is the history of the Radical party in this connection. The hon. Gentleman opposite expects us now to show a most effusive delight at the speech of the Chancellor of the Exchequer, but my expression of gratitude will be a very modified one. The Chancellor of the Exchequer must for a time in this matter lie under some suspicion, because for years past he has made the most solemn promises on this question. I could quote speeches which he has made inside and outside of this House, all of them promising early and immediate relief to the ratepayers. In this respect language has almost lost its meaning with the Chancellor of the Exchequer. A few years ago the right hon. Gentleman, in setting up the Departmental Committee which was appointed at my request, said 1193 it would deal with this question expeditiously and with a view to legislation at an early date. He said:—Next year, in 1910, whoever stands at this box will deal with this question, and deal with it thoroughly.In the mouth of the Chancellor of the Exchequer, next year and this year always comes to mean some time whenever it suits his convenience, and some time may possibly mean never. There has never been an instance of a Cabinet Minister making solemn and specific pledges at that box in the same way as the Chancellor of the Exchequer has done time after time and year after year, and it is a shame to have made such declarations and a degradation to the House of Commons which listened to them without making any adequate and sufficient commentary upon them. If my party sits on the benches opposite again, and I think we shall, if we were to make the same kind of promises, the language of hon. Gentlemen opposite about our pledges, I am sure, would be very much stronger than I have used about the Chancellor of the Exchequer. After all these very specific pledges, what can we say to-day except to express our hope that the right hon. Gentleman really intends at last to fulfil those pledges. The right hon. Gentleman's excuse before was that he could not fulfil them because of the European situation. To-day he has told us that whatever may be the European situation he will find large amounts for the relief of the ratepayers. I think that was rather a rash statement. The right hon. Gentleman gave another excuse for not fulfilling his most specific promises and obligations. He said:—You must remember that I appointed a Committee which has been sitting for some years.And he defended the Committee for not reporting. It is a great deal more than a year since the Committee took any evidence whatever, and it is three years since they were appointed. Why have they not reported? Does the Chancellor of the Exchequer mean to tell us that he could not have hastened that Report, because it was a Departmental Committee? We had no choice in the matter, and it was his own Committee. The right hon. Gentleman says they were very busy men, but he might have thought of that when he appointed them. He told us that they would deal with the matter expeditiously, with a view to legislation at an early date. I am going to express some gratitude. I am grateful to the right 1194 hon. Gentleman for the admission he has made to-day, for the second time, about the pitiable position of the ratepayers, and for his admission that the present condition of the rates has arrested municipal development, especially housing. That is all very true. The right hon. Gentleman went on to say that he would take steps this year for the relief of local taxation, and he said that this very year he would bring forward financial proposals. All we can say is that we must wait for the details. We have been told nothing except that the right hon. Gentleman will deal with this question. I hope he means to deal with it thoroughly and not in any piecemeal way. I do not quite agree with the speech of the hon. Member for Dartford (Mr. Rowlands), who spoke just before the Chancellor of the Exchequer, when he said all he expected was some concession in the matter of relief for the education rate in necessitous school areas. Is that all the Chancellor of the Exchequer means?
§ Mr. HAYES FISHER
I am glad to see the President of the Board of Education tion shakes his head, and therefore gives the House to understand that this question will be dealt with not only from the point of view of education, but also from other points of view. What the Chancellor of the Exchequer intended to convey was that he meant to deal with the whole question and not part of it—that he meant to give relief to the ratepayer possibly for roads, possibly for police, possibly for the poor law. He was going to look at the whole question much as the Royal Commission on Local Taxation looks at it. He was going to take a broad survey, and was really going, in his own words, to deal with this question thoroughly when, we understood, he proposed his next Budget. That is what we expect after his speech to-day. If my hon. Friend who moved the Amendment is given further assurances that the question will be dealt with thoroughly in every aspect of it, then possibly he may not think fit to divide the House to-day, but I cannot help, after all, remembering the speech of the hon. Member for the Borough of Dartford. He seemed to display rather an intimate knowledge of what was happening in the minds of the Government. He said that there had been a meeting of educational authorities. They had met and discussed this question of 1195 necessitous school areas, and they had rather come to the conclusion that £500,000 would satisfy their requirements. It is very strange that I cannot hear of any London, representative being summoned to that conference. They appear to have been excluded. One Member for a London constituency did manage to get in, and I think that he raised his voice on behalf of London. I was approached afterwards and was asked whether I would go on the deputation to the Chancellor of the Exchequer to-morrow. I understood that my presence would not be very welcome to other members of the deputation. Perhaps they thought that if London were going to get something out of this £500,000, there would be less for them. I understand the Chancellor of the Exchequer now says that he does not think the deputation is necessary. I still think, from the point of view of London, that it is very necessary.
I have the greatest sympathy with West Ham and other constituencies which suffer from high rates, and where a 1d. in the £ produces a very small amount, but, if the education rate is very oppressive in West Ham, it is also very oppressive in Poplar, in Bethnal Green, and in many other of the poorer parts of London. You must not look at London as a whole in the matter, you must look at the way in which the rates press upon the poorer ratepayers of London. I maintain, if the grant of money to necessitous school areas is to be enlarged, that London has a very strong case indeed for sharing in that extra Grant. Let me put it to the President of the Board of Education. Up to the present the Grant has been limited to £350,000. When it was first started it was only £200,000. Then in 1910–11 it was limited to £350,000. It is rather a curious thing that the very year in which the limit of £350,000 was imposed London had a claim, as just a claim as other constituencies, to a share in this Grant. Then came the very extraordinary regulation of the Board of Education that no local education authority was to share in this Grant unless it had previously had a Grant. It was the doctrine of "to him that hath." I hope that doctrine will not obtain any more, because, if London had not been excluded by the mere fact that London hitherto had not had a share of the Grant, London in 1911–12 would have been entitled to £50,000, in 1912–13 to £170,000, which is practically a penny rate, and in this year to £312,000.
1196 Birmingham, Bradford, Leeds, Halifax, and many other places get a share of this Grant. Why should London be left out? London is most unfairly treated in the matter of education. The Exchequer Grants for London are only 28 per cent. of the whole cost of education, whereas they are 52 per cent. for the rest of the country. London for many yars past has paid a far greater share of the cost of its education through her rate than any other place. Education in London is necessarily very costly; it is £3 3s. 7d. more than in the rest of the country. I know it is sometimes said that London has a very high assessable value. It is quite true, and there is something in it, and I do not want it to be disregarded; but while it should not be disregarded it should not have undue weight in the other scale. While London has a very high as sessable value, the cost of education in London is necessarily extremely high. There is the high cost of land, the high cost of building, and the high cost of salaries. I am quite sure that the right hon. Gentleman the President of the Board of Education will acknowledge that London is almost, if not quite in the forefront in the educational field as regards efficiency. We are doing more in medical inspection and treatment and matters of that kind. We have obeyed the injunction of the Board of Education that we should decrease the numbers in our classes down to forty and forty-eight for infants, a matter which alone is going to cost London an extra 4½d. rate. Again, we are the only authority, certainly the only authority to do it substantially, to give proper and adequate pensions to teachers. I say that we are most unfairly treated in the matter of these Grants. I can conceive no reason why, if additional Grants are to be given to necessitous school areas, London should be left out from its share of those Grants, and I hope before this Debate concludes that we may hear from the President of the Board of Education or from the President of the Local Government Board that in any proposals that are made, proposals that evidently have been communicated to the followers of the hon. Gentleman opposite—
§ Mr. HAYES FISHER
The hon. Gentleman did not hear the speech of the hon. Member for Dartford. He appeared to know a great deal more than the hon. 1197 Member. He even put the sum which he thought would satisfy them. He even told us that the deputation which is to wait on Ministers had gone into all the details as to which each area would require. He was full of knowledge. He might have listened at the keyhole of the Cabinet. He seemed to know everything. He told us more than, the Chancellor of the Exchequer. I hope that we may hear to-day from the President of the Board of Education or the President of the Local Government Board as to whether it is intended that London, which has an undoubted claim on every ground to be admitted to some share of any new Grant that may be made for education, is to be excluded or included in the category of the local education authorities who are to participate in this Grant. I do not think that I can refrain from supporting the Amendment, unless I do get some stisfactory replies from the Government as regards London. The Chancellor of the Exchequer did say that parts of London would receive very substantial aid. I have had a good deal to do with the finances of London, and I do not see how he is going to shape this Grant so that parts of London receive some new educational Grant. He must be aware that the educational rate is raised over the whole of London. It is not suited to the particular needs or requirements or wealth or poverty of particular districts in London. The rate presses on all alike. It is only that in some districts of London the rates for other purposes are so very high that places like Poplar suffer very severely from an extremely high rate. The rate for education itself is levied over the whole of London. I could not disagree with the general observations which the right hon. Gentleman made as regards the future control of any money which he might give. I quite agree with him that there ought to be a greater guarantee for its efficiency. Let him make the guarantee for efficiency as high as he likes. It will not interfere with us in London. We, at all events, are efficient, and have no reason to fear any proper guarantee for efficiency or any proper or adequate control. The right hon. Gentleman was very egmatical about broadening the basis of taxation. We have heard that phrase from the right hon. Gentleman very often. Last year, in his speech on the Amendment which I moved, he said:—I think that the local authority ought to have its choice of two or three subject matters of taxation. I have in my own mind an idea as to what yon might very well allow local authorities to impose taxation upon.1198 He did not enlighten us, and neither to day have we been enlightened in the slightest way as to what sort of revenue he really thinks ought to be at the disposal of the local authorities, and where the Chancellor of the Exchequer of the local authority might step in without poaching on the preserves of the Imperial Chancellor of the Exchequer. We should like to hear a little more about that. There is one tax which we have always been told by all authorities, and particularly by any hon. Gentlemen opposite who hare ever sat for a London constituency, that the local authorities certainly ought to enjoy, and that is the rate on site values—all these various taxes which have been put into the Finance Bill, the taxes on land—
§ Mr. HAYES FISHER
Not by the hon. Gentleman, who does not sit for a London constituency, but by every man opposite who has ever sat for a London constituency. The Members of the Government and the Secretary for Scotland have always said to London constituencies, "We are going to put rates on site values, on reversions, and on undeveloped land, and they will inure for the benefit of the local authority; They will go to the relief of the rates." That is the only sort of revenue which the Chancellor of the Exchequer has ever indicated as being a proper source of revenue for local authorities. What did he do He immediately took them. Then he changed his mind and said, "You shall have half"; but he changed his mind again and said, "I must have the whole." Then he said, "It is only temporarily; you shall have half next year." I asked him the other day whether the local authorities were going to have the other half, because the time limit has just come. The Chancellor of the Exchequer said he only took the products of these taxes until 31st March, 1914, and the local authorities were looking to enter into their inheritance; but they were made fools of, because the Chancellor of the Exchequer told me, in answer to a question, "I am going to bring in the Revenue Bill shortly, and I shall take these taxes for at least another year. I want them, and you cannot have them." He is going to take the only new source of revenue which has ever been indicated by which local authorities can reduce the rates. He might have given some indication as to what these new rates are which in 1199 future are to be at the disposal of local authorities for the purposes of education, for the purposes of the Poor Law, and for the purposes of the police. We have got very little from the right hon. Gentleman except general promises. He said, "Wait and see: the day is coming when I will be able to do something for you." That is a very useful speech for the purposes of the Division to-night. It enables hon. Members opposite to vote with a perfectly clear conscience. Having made speeches in favour of the ratepayer, they can go into the Lobby and say, "We were perfectly satisfied with what the Chancellor of the Exchequer said and we did not think it necessary to press him for further details. Therefore we voted for him, because he told us that in a very short time he will produce substantial sums of money for the relief of the rates." I am a little suspicious—more so, perhaps, than hon. Members opposite, and I cannot help thinking that we have a right to be suspicious. These promises Have been made so often; the ratepayers have been put off so often with all kinds of devices. At one time it is because the area of taxation is wrong and must be altered. At another time they are waiting for the right hon. Gentleman to settle his differences with the single-taxers, and he seems to have satisfactorily done so in his great speech at Glasgow, when he said, "There are half-a-dozen ways of rating ground landlords." He has not, however, told us one to-night. I should have thought that if the Government had really a practical proposal to make they would have outlined it to-day. But it is only lip service. I do not believe that hon. Gentlemen opposite or even the Cabinet have ever considered this single tax question in principle; they certainly have not done it in detail. They have no scheme by which they can carry out this most complex and difficult problem.
The right hon. Gentleman at Glasgow quoted, with great approval, the Report of the Minority Committee on the rating of site values. Does he hold to the principles of that Report. It did examine several schemes, but did not find one workable. They were schemes put forward by eminent men, the late Mr. Costello, of the London County Council, and Mr., now Lord, Justice Fletcher Moulton, both very able men. But every scheme was condemned as impracticable. The county council tried for many years to formulate 1200 some really practical scheme of rating site-values for the benefit of the ratepayers, but they only adopted sixteen resolutions that is the nearest they got to the desired point. I do hope that the ratepayer is not to wait for his relief until hon. Gentlemen opposite have made up their minds on some very complex scheme for rating or taxing site values, because, if so, I see that relief fading away in the distance. I hope that money will be put into-this Budget irrespective of any legislation for taxing site values and altering the areas or basis of taxation. We have-waited so long. The rates keep rising and rising, they become every year more and more oppressive on industry. Every year the local authorities are saying, "We should like to do this or that; we should like to do more for the medical treatment of children; we should like to pay our teachers better, and we should like to carry out the various educational schemes suggested by the Board of Education, but our ratepayers cannot afford it. We cannot do anything more." I believe every body in this House is earnestly desirous to-take a long step forward and to provide more cottages and do away with the slums. The rating question consequently becomes a more serious and urgent question. We are told there are so many authorities which desire to build houses and clear slums, but that they cannot do so because it is too expensive, and would only tend to submerge the ratepayer. Until we can get substantial relief from the Chancellor of the Exchequer we cannot carry out these objects, however admirable, and however much desired by men of all parties.
§ Mr. CHIOZZA MONEY
I am rather sorry the right hon. Gentleman who has just spoken devoted so much of his time to controversial points. He very easily dissembled his gratitude for the utterances of the Chancellor of the Exchequer. I submit he was not quite justified in saying that my right hon. Friend and his predecessors in this Government have neglected the question of local rating. If I desired to make a controversial point, I might remind the right hon. Gentleman that his party was in office for a very much longer period than ours, and so far as they were concerned, it was always a case of "Jam yesterday, jam to-morrow, but no jam today."
§ Mr. CHIOZZA MONEY
I think that point has already been discussed sufficiently. Let me deal with what has been done by the present Government. The right hon. Gentleman, I think, forgets what has been effected for local authorities by the social legislation of the present Government. Take, for instance, the Old Age Pensions Act, which is really a measure in equalisation of the rates all over the country. I speak from memory, and subject to correction, but I rather think that in England and Wales it is fully equal to a rate of 1s. 8d. It is not only a contribution to local taxes, tout it is a measure equalising the rates as between rich districts and poor districts. Then, also, there is to be taken into consideration, in the future, the not inconsiderable effect on local burdens of the National Insurance Act. We shall only feel those effects gradually in regard to local burdens, but no one can contend that they will not be felt in time to come. The Mover and Seconder of this important Amendment had a great deal to say with regard to the agricultural interest. I should be the last to deny that the agricultural interest needs relief, but it is only right to say, since that subject has been raised, that, after all, if the farmer in this country has something to complain of with regard to local rates, he has less than nothing to complain of with regard to Imperial burdens. As was well pointed out, the Solicitor-General, in a speech he recently delivered on another subject in this House, few British farmers fail. As the House knows, the profits of a farmer are estimated in a perfectly arbitrary way—at one-third of the rental he pays. Therefore, a farmer who rents a farm of 500 acres at £1 per acre, pays a rental of £500, and one-third of that only is taken as profits, namely, £166. He gets the exemption of £160, and pays Income Tax on only £6. He pays, in fact, 4s. 6d. I hear it suggested that he makes no profit at all, but it cannot be alleged that the British farmer, in recent years, since the rise in prices, has been in that position. Moreover, if in any year a farmer of 1,000 acres has a bad year, he can escape by claiming to be assessed under Schedule D, and thus in a bad year he escapes altogether, even under the arbitrary rule.
I hope that Members interested, as many of my Constituents are, in the agricultural industry, will not believe that my object is to deny the claim of the farmers, which has been so well put forward, for further relief in regard to local taxation. 1202 I am afraid it is necessary to be rather-dull in dealing with such a subject as this. I want to deal rather broadly with the question, because of its extreme importance, and because we have now foreshadowed to us the beginnings of direct action in regard to the alteration of the incidence of local taxation. I have, too, in my mind, the cases of the towns of this country which so badly need a larger contribution from the wealth of the country. The more I see of our industrial districts, and of our great centres of population, the more I am convinced that we must do everything we can in this House to secure the direction into urban channels of a great part of the work of the country. I think our towns are becoming less and less worthy of us in comparison with many of the towns on the Continent. When one compares a German town of to-day with an English town of equal population, one cannot but be struck with the fact that civic life in Germany is, somehow or other, obtaining from its wealthy citizens greater contributions than are obtained in our towns.
In that connection I should like to remind the House, and it is exceedingly important, of the historical aspect of this matter. How is it that so much of the wealth of the towns is escaping a proper-contribution It is for this reason: that or local taxation—our local rating system—began, very much like our Imperial direct taxation, in the seventeenth century. It was designed to levy both upon personalty and realty, and in both cases, for a perfectly obvious reason, personalty escaped any assessment. In regard to the attempted Income Tax of the seventeenth century, it escaped, just as it did in regard to the local Income Tax. The Land Tax of William and Mary was, of course, an Income Tax. It was not possible in those days to assess personalty, so that what was intended to be Income Tax became, as time went on, more and more a tax upon realty. Similarly, with local rates. Of course, as I need hardly remind the House, the question of the local assessment of personal wealth remained long in question in this country, and I may point out that it is only by virtue of the Expiring Laws Continuance Act that year by year we deprive the local authorities of their right to levy upon the inhabitants—upon personalty. This did not matter as long as the greater part of the wealth of the country was derived from agricultural operations—I hope I am not boring the House, but it is important that we should 1203 consider this point—it did not matter to the country and it did not matter very much to the local authorities. Until a quite recent period in British history this was a poor agricultural country, and it remained so down until four or five generations ago. It was not until about 120 years ago, or thereabouts, that we began to develop large industries. Then came, at first slowly and afterwards more rapidly, what we call the industrial revolution, which changed an admittedly agricultural country with a small population into the large and populous country in which we now live, that bases its wealth and the livelihood of its population chiefly upon Industrial work performed in urban areas. When that change occurred, then the error in our rating system which I have described became a great misfortune for the towns of our country, because under a system which rates private householders or shopkeepers, or storekeepers, or manufacturers, merely in regard to the annual value of their premises, it is most obvious that men enjoying considerable incomes, not only the considerable incomes derived from investments, to which the Mover referred, but also in regard to large incomes derived from industrial work, began to escape their proper assessment for local purposes.
This is a most serious matter. Here I submit to the House we have come to the great difference between local taxation in this country and in Germany, and we have a large explanation of why it is that we see in this country a large town exhibiting to the world an appearance of sordid poverty, while in Germany you have a town with a smaller income, where the wages are smaller, where the range of salaries is small, where the Burgomeister, the chief citizen, the paid official of the town, may only get a salary of £1,200 or £1,500 for an office which over here would be worth £4,000 or £5,000. There you find that town exhibiting to the world, comparatively poor as it is, at all events a superficial appearance of cleanliness—I think it is something more than that—of great public buildings, of order, and of civic spirit. I do find the explanation of that largely in this difference between the small levy that we make upon wealth for our towns in this country and the greater levy which is made in Germany. I pass from that to remind the House of the fact that local rates cannot wholly be regarded as taxes. Of course there are thousands 1204 of definitions of taxes. They have been perpetrated by different economists at different times, and all of them differ from each other. Generally speaking, a tax is a forced contribution for something which is not directly, at least, enjoyed. Some part at least of our rates is levied for purposes which are directly enjoyed; that is to say, they are nothing more than tradesmen's bills. What, for example, a manufacturer pays for the drainage of his work ought to be as much a charge on his business as any of the other charges that fall upon him. It is exactly the same sort of thing in reality as the charges for materials out of which he makes his goods.
You must have regard to this in any plans you make with regard to altering the basis of our taxation. I submit to the House that this can be secured, in the first place, by a classification of properties in regard to local taxation. I think a great deal can be done in that regard. It is impossible to suppose that we can, at our time of day, get entirely rid of the present system of rating, and that we can entirely change its basis. We cannot do that, or rather, if we do it, we shall create more anomalies than we destroy. But I think that if we combine, on the one hand, the classification of our existing rating system with, on the other hand, an attempt to secure a proper contribution from the wealthy, then I think we can combine a system which will have regard both to the principle of benefits received in the case of beneficial rates, and to the principle of ability to pay in regard to true local taxes or onerous rates. I submit that as a general principle. Having regard to realty or, broadly, to landed capital, how can this thing be secured? I do not think there is anybody in the House who will contend that the unearned increment that attaches to land is not a proper subject for local taxation. If I have any doubts as to the possibility of rating land owners for local purposes, it is not because I do not desire that they should not contribute to local purposes; it is mainly that I cannot, on the closest examination—and I have given some time, no one could have given more than I have to this subject in recent years—find a plan by which the thing can be done equitably. The Prime Minister to-day, as we expected of him, in reply to a question said, that existing contracts would be respected in anything that was done in that regard.
§ Mr. CHIOZZA MONEY
I thought it was existing contracts, and I think it was generally understood by the House to mean that.
§ Mr. CHIOZZA MONEY
I am afraid, with all respect to my hon. Friend, that I must state the basis on which I believe it is intended to put them. That brings us to this position. That any rate of that kind becomes a tax on the existing occupiers, and, of course, it becomes a tax which is exceedingly unjust not in exceptional cases, which we regard as making bad law, but, unfortunately, in an enormous number of cases. Even if you had no respect to existing contracts, you get into another series of difficulties, with which perhaps we shall be able to deal on another occasion; but, at any rate, when one has, in a country like this, all the complications of leases, subleases, and mortgages—an enormous proportion of the property in the country is mortgaged—the attempt to do this thing which I admit to be a desirable thing becomes so exceedingly difficult in practice that I am confident that the more it is examined, as it was examined by the Royal Commission on. Local Taxation, the more it will be condemned by those who desire to carry it into effect.
So much for that approach to the subject What about the question of endeavouring to get a contribution from capital? The question of a local income tax has not been much discussed in this country. It is very difficult to obtain information with regard to it. For some time past I have been doing my best to obtain information by writing to correspondents in Germany, and I think I have now obtained a broad and fair idea of what the Prussian system amounts to. That a great deal can be urged against it I am quite sure. It is open to a great 1206 deal of criticism, yet, when all is said, I think we must make allowance for this: That in towns that are admittedly well-managed, which are managed by professionals trained for their work, this system is adopted, is carried out in practice, and there is no Prussian town that dreams of abandoning it. That, at least, should make us respect it. A Bavarian friend of mine tells me they are very anxious to get the same system introduced into Bavaria, which seems to show that it is appreciated there. I do not think it would be proper to discuss it in detail in this Debate. I only submit to the House that the question of a local income tax at least deserves closer and better attention than it has received so far in this country. Upon the most superficial examination of the tax there are obviously anomalies, but I cannot say that they are greater than the anomalies which attach to any other system that has been proposed. I am no lover of taxes. I have never heard of a tax yet which was fair to everybody upon whom it was imposed, and I do not believe that an absolutely fair tax will ever be devised. But of those I have examined, it does appear to me that the Income Tax, if carefully thought out and adjusted, contains less anomaly—I will not go further than that—than other taxes.
If the system of a local income tax is to be abandoned, and I confess I shall abandon it with regret—if the House should abandon it, then we must, by some other means, obtain this greater contribution from wealth of which I have spoken towards the local expenditure of the country. There is an obvious way of doing that, namely, instead of raising your money locally, to raise it nationally, by what we call our Imperial Taxes, and then to distribute it by the most equitable and common-sense system we can devise to the local authorities. If we take over certain services—main roads, education, and what not—if we make those a charge upon the Imperial Exchequer, then, because taxes are more fairly levied than rates, we shall make a larger levy upon the wealth of the country. The ratepayer and the taxpayer are not the same person, although it is sometimes said that they are. If we throw a greater burden upon the centre, or take over at the centre, some of those services which are now, by common consent, admitted to be national services, we do make more equitable the system of local taxation. I cannot pretend on this occasion to say that I have made 1207 up my mind upon the question of a local income tax, or that I have sufficiently thought out in detail the alternative plan that I have mentioned. I hope I have said nothing that is dogmatic, because I feel anything but dogmatic upon this subject, and those who have examined local taxation must speak the least confidently about it. Of one thing I am quite sure, that if any attempt is to be made by this or any other Government—I hope it will be this Government—to alter the basis of local taxation, it must, in the first place, have regard to obtaining from the wealth of the country a larger contribution towards the expenses of the country. If in the future we fail to do that, I am convinced that it will be a serious thing now for the great industrial population of this country. Here we have some seven or eight out of every ten people in the towns living lives of a character which, considered as a whole, are not worthy of the wealth we enjoy. They are not worthy of civilisation. If our towns are to become what they ought to be, if they are to house their inhabitants worthily, if they are to provide their inhabitants with the amenities which ought by this time to be the common possession of all her people, most certainly the Government must find some way of obtaining that larger contribution of which I have spoken. I have tried to speak in general terms only, and I hope my right hon. Friend will throw some light upon what is in the mind of the Government in regard to this all-important matter. It is one upon which I feel considerable anxiety. With regard to the proposals which are made with so much force by some of my hon. Friends behind me, I would ask them to believe that I not only respect their enthusiasm, but I respect the object which they have in view, which is to obtain from unearned increment a larger contribution to local taxation. I only point out to them that unearned increment in a society like ours is expressed in many different ways, and I submit to them that by the method I have suggested—broadly, of course; not in detail—we should obtain a levy upon unearned increment in its broad sense, and not only as it is revealed in respect of land values.
§ Viscount HELMSLEY
I think the Chancellor of the Exchequer was very right when he said this Debate was rather a non-controversial oasis in our Debate, 1208 because I find myself very closely in agreement with the speech of the hon. Member who has just sat down. As regards the Chancellor of the Exchequer, I think we are entitled to know whether what he proposes to do this year is in conformity with what the Departmental Committee is going to report or whether he is taking action quite independent of that Committee, because it seems to me rather-peculiar that he should announce that he is going to take certain steps this year when he tells us the Report is on the verge of coming out, and when he has refused for the last three years to take any steps on the ground that a Committee was sitting. I think we ought to have been taken more into his confidence and told whether he had anything in the nature of an interim Report from the Committee, and whether the proposals which he is making, this year are in any way based upon it. I do not quite agree with those hon. Members who have said that they do not think the farmer has a greater grievance as regards rating than the urban trader. I do not think it is in the least necessary for the purpose of the agricultural argument to say that urban traders have no grievance. I think they have a grievance and a very considerable grievance, but I also think the grievance of the farmer is much larger still. It was disputed in the course of the Debate earlier in the afternoon that the farmer was rated upon his stock-in-trade, and one Member said that the urban trader was rated upon his stock-in-trade just as much as the farmer. I do not think that is really the case, because it seems to me that the comparison would be, say, if a cotton manufacturer were rated upon the raw cotton in his warehouses he would be on the same basis as the farmer who is rated upon the land, because it seems to me that the land stands much more in the same relation to the agricultural industry as the raw cotton does to the cotton industry than the buildings of any urban trader or manufacturer whatever, because the two things are more in proportion to the amounts required for making the same amount of profit. From that point of view, I think it is perfectly fair to say that the farmer has a bigger agricultural grievance than the trader has.
There is something certainly in the contention of the hon. Member (Mr. Chiozza Money), who said the farmer gets rather lightly off his Income Tax. I think that is perhaps to a certain extent so, but if 1209 you offered the farmers of the country to be rated on their incomes in accordance with their average profits during the three or five years previously instead of under the present system, and, on the other hand, that the rating system will be altered in their favour, they would perfectly well agree to have the Income Tax system altered if only they could get relief from the rates which they are as keen upon at present, and I feel sure they would very much suffer by this change. The question of roads was alluded to very sympathetically for the Chancellor of the Exchequer. I am sure it is very satisfactory to those who represent agricultural constituencies, where, I think, the difficulty of the road question is felt more pronouncedly than it is in the towns, to get so sympathetic an agreement from the Chancellor of the Exchequer as we did to-day. I should like to remind him that I myself brought in a little Bill last Session to deal with this every important question rather on the lines which have been suggested in the course of this Debate, I do not know whether by the Chancellor or by some other hon. Member, that is, on the lines of centralising the main trunk road throughout the country, and of having them paid for and maintained by a central authority like the Road Board. I believe that proposal is the only one whereby you can really keep up the roads of the country, having regard to their nature at present, as through lines of communication, fairly and without causing undue burdens on the?districts through which they pass. I hope, if I bring in that Bill again this Session, we shall find an opportunity for discussing the proposal.
Let me come now to the Chancellor of the Exchequer's observations about the alteration of the basis of local taxation. I do not quite know what the Chancellor of the Exchequer means by that. He has not told us if he proposes to broaden the basis of taxation really in the sense of giving local authorities power to raise a greater variety of taxes, or if the broadening of taxes is going to be more in the direction, as I suppose we may gather from the answer to the question by the Prime Minister, by narrowing the basis of taxation by taking it off land and houses and putting it only on the land. That is certainly altering the basis, but I do not think it is altering it in the way in which it ought to be altered if local taxation is to be levied fairly on the principle laid down by hon. Members opposite, of ability 1210 to pay. It seems to me that the chief fault of our rating system has been to leave so large a proportion of the national income out of account altogether in levying your local rates. It is rather curious to see what proportion of the national income which comes under review for Income Tax is got from the different schedules. I find—this is nett taxable income—that 23.5 per cent. comes from Schedule A, 5 per cent. from Schedule B, 6.5 per cent. from Schedule C, 62.2 per cent. from Schedule D—and Schedule D is the schedule which deals with profits of businesses and industries—and 7.3 per cent. from Schedule E. The nett result of that is that the property which is liable to local taxation affords a basis for the levying of the national Income Tax of only 24 per cent. of the assessable income which is taxed, whereas the other schedules, which amount to 76 per cent. of the total assessable amount, are not derived from property which, as such, is subject to rating. Therefore, although, of course, I am aware that that only gives a rough outline, which cannot in any sense be held to be directly comparable, yet it becomes apparent from that that by far the larger proportion of the income of the country is not tapped at all for local purposes, either in town or country, and to my mind, however satisfactory it may be to get Grants from the Exchequer immediately, this year, I, for one, if the Grant is adequate, shall think it highly satisfactory; yet I maintain that a system of Grants can never be entirely fair, and can never take the place of a whole reform in the system of raising rates. That is why I say I agree so much with the speech of the hon. Member (Mr. Chiozza Money).
It seems to me on the a priori argument that must be the right way of dealing with the problem of local taxation. After all, by the accidents of history, personalty is relieved from local rates, and you have the rates levied on real property only. How are you going to make it more just and more fair, as between the owners of wealth, if your only reform is, as some hon. Members suppose, not to increase the forms of wealth which you are taxing, but to diminish them by the buildings and to tax only the land for this purpose If the land was still the source of all the revenue of the country, if the land even was still by far the largest capital asset of the country, there would be something to be said for it, but considering that you have this large accumulated capital to deal with and the 1211 huge amount of income derived from that accumulated capital, it seems to me, to say the least of it, absurd to pass all that on one side and to put all your rating and taxes upon the land.
I should like to refer to what takes place in Prussia and in the other States of Germany. There they do not seem to be deterred by the fetish which has deterred English local taxation reformers from the difficulties of putting on a local income tax. I am quite aware that the Royal Commission did report that they thought the difficulties were still great, and that they did not see their way to imposing a local income tax, but I cannot help thinking that if the matter was investigated de novo, in the light of experience which other countries have, a different aspect might be put upon it. I think it is a great pity that the Chancellor of the Exchequer, when he appointed his Departmental Committee, did not also give it a reference to inquire into whether or not some system of local income tax was possible in this country. I have got my information on the German system of local income tax from an article in the Journal of the Statistical Society of 12th April on "German Finance." I find it stated that the objects for which the taxation is to be levied are taken into account when the taxation is levied. For instance, objects of wide and general public benefit are met by additions to the State Income Tax whereas expenditure which confers benefits on a particular trade or industry, or upon property owners, is met out of a tax on land, buildings, and industry, which seems to me to carry out the principle that those who derive benefit should pay in proportion to it; while for mixed purposes, on things like roads, which are common to both, the expenditure is paid for by taxation in equal proportion out of Income Tax. In Prussia the local income tax goes far below the level at which the State Income Tax starts, and I do not see any reason why in this country a local income tax, if imposed, should not go below the £160 limit at which the State Income Tax starts at present.
There are many ratepayers who are not possessed of incomes of that amount. We have always been deterred, and the Royal Commission were deterred, from recommending a local income tax by the difficulty of assessing owners of incomes from property in different parts of the country. Perhaps a man gets his income from one 1212 place and spends it in another, and that has always been held up as a reason why it is impossible to impose a local income tax. That is not a difficulty which is held to be insuperable in Germany. No doubt it does present difficulties, but it can be got over in some such way as it has been got over in Germany, or it could be got over by devising some such system as a clearing house, which would determine how income was to be allocated. If you take all the local self-governing authorities in Prussia you find that 36 per cent., of their revenues, or 245,000,000 Marks, out of a total of 669,000,000 Marks, was raised, from the income tax in 1907. Out of fifty-two towns in Prussia, twenty-seven of them got 50 per cent. to 60 per cent. of their revenue from local income tax in 1909–10. The same applies in Saxony and other states in Germany, and I think it would be well worth while if the Government would go into this matter before determining on the system of local taxation to be adopted, after the Committee have reported as to how Grants should be allocated to relieve present needs. I do not know whether the Government would entertain the idea of appointing another committee to consider the possibility of imposing a local income tax. Like the hon Member opposite (Mr Chiozza Money) I do suggest to the Government and the House that there is a possibility that this would be a real means of solving the difficulty of local taxation, and that it would be a means alike of making it more easy for towns and rural districts to meet the expenditure which Parliament has put upon them during the last few years.
§ Mr. OUTHWAITE
The Noble Lord opposite said that he finds himself in agreement with the hon. Member for East Northamptonshire. I am not surprised at that. I suppose every landowner would prefer a local income tax, which my hon. Friend advocates, instead of a tax on land values. The obvious effect of a local income tax would be this. If you raise money by a local income tax, you tax a man who uses land in proportion to the extent to which he produces wealth, while at the same time you virtually allow a landlord, who lets his land lie derelict, to escape taxation altogether. That is the position very largely as regards our present rating system which we wish to see altered. The Chancellor of the Exchequer referred to it in his speech. He said that the landowner who uses land under the 1213 present rating system is heavily rated, while the man who leaves his land idle escapes rates. The same tiling would happen under a local income tax. That is a principle which we desire to see abolished. So far as a local income tax is concerned, I think it may be said to have met its death at the hands of the Royal Commission as being impracticable. The hon. Member for East Northamptonshire said he had not come to final decision on the matter. I think he spoke rather airily on the subject of the transfer of these services to the Imperial Exchequer and the financing of them by way of the national Income Tax. Those matters to which the hon. Member referred fall on the rates, I think, to the extent of £40,000,000 a year, so that if you transfer them to the Income Tax, you would have to raise about double the amount which is already raised by Income Tax. I do not think that that is a proposal which the present, or any other Chancellor of the Exchequer would endeavour to carry out. We have been challenged by the right hon. Gentleman the Member for Fulham (Mr. Hayes Fisher) on the question of the rating and taxation of land values. He said that no practical proposal has ever been brought forward along these lines. I contend that the Land Values Taxation League have brought forward a scheme which embodies practical proposals. They are the only people who have brought forward any definite proposals in regard to the taxation of land values. The proposal as regards the transfer of services is that a national tax on land values should be levied to meet the increased expenditure created by the transfer of these services, in whole or in part, to the Exchequer. I would like to point out in relation to my own Constituency what the effect would be. The borough of Stoke-upon-Trent exhibits in its worst degree the evils of the present system. It is wholly a working-class constituency, and consequently an extraordinarily heavy charge for education and poor relief is put upon the ratepayers. We raise in that borough £381,678 a year. We have to raise for elementary education £63,000, and for higher education £10,000–making £73,000 for education. We have to raise for poor relief £73,596, and if you add the charges for main roads, police, asylums, and lunatics, the total for the1 national services is £186,150. That is, roughly, half the amount raised in rates has to be raised for the financing of these services. The rates 1214 are 10s. in the £ in Stoke-upon-Trent, and in the borough of Hanley the rates are 11s. per £. That is the present system.
I desire to be practical, and not put forward theory. Unless the sytem be altered, that district, which should be a flourishing manufacturing centre, must naturally be crushed in its industry. Some method of reform must be found. I wish to point out how the reform which we suggest would operate for the relief of local ratepayers. I take education, in the first place. I think it will turn out that the valuation of the United Kingdom will be between 5,000 millions and 6,000 millions, but for the purpose of my argument I will bring it down to about 4,000 millions. Upon that capital value of the land a 1d. in the £ is equal to £16,000,000, which is the extent to which the cost of education falls on the rates. I am taking the value of the land less the capital expended upon it. The revenue so derived would enable us to transfer the cost of education from the rates to the Exchequer. I have taken the valuation which has been made under the Finance Act. Take the case of the cottage of a worker at Hanley who is getting 20s. a week. The cottage is valued under the Finance Act at £125–that is the gross value of land and building under your present system. That cottage is assessed £8 a year. The rates being 11s. in the £, the man has to pay £4 8s. a year on that miserable hovel. The full site value of the cottage is £20. If you take the education rate at 1s. 10½d., or roughly 2s., he pays for education 16s. on the rater at present levied. But if you could transfer the cost of education to the Exchequer by a tax of 1d. on land values, he would pay 1d. for every £ of land value. He has £20 of land value, the value of his site, and the owner of the site would pay 1s. 8d., that is 1s. 8d. instead of the 16s. that he pays to-day for an education rate of 2s.
§ Mr. OUTHWAITE
I am taking 1d. in the £ on the capital of the land, which is equivalent to 2s. in the £ on the annual value. There the relief takes place by the transfer from a high rate value on land1 and buildings to a tax on the land alone. If you take the case of a cottage which I find in the rate books, I find the gross-value for the cottage and land is £235. The full site value, detached, is £33. The 1215 cottage is assessed at £12 and the education rate is £1 2s. 6d. With an education land tax of 1d. per £ the amount payable would be 2s. 9d., and the owner is relieved. The same thing would happen if the transfer of poor relief were made in the same way. Then, I found out the value of the finest business premises in the town, what they are assessed at, and what they pay at present. The full site value was estimated at £12,000 per half acre. The value on the land is worth £24,000 per acre. The amount assessed is £980 and the rates paid are £539 per year, and for education they pay £88. If you were to transfer the education rate to an education tax they would pay £5 instead of £88. Even there you have a great reduction. In a poor locality like this you have a great demand for revenue, because the poor alone live there, and where most poor are living there are most children to be educated and most poor to be relieved. There is the greatest demand for revenue and the least capacity to meet it.
Take another site, in the centre of one of the great cities. The City of London has very few poor children to be educated, and the value of the land is enormous. There you have a small demand for ^revenue, and an enormous capacity to meet it, but by making the basis of the assessment for education not the locality but the whole of the land value of the United Kingdom, then, where the value is great, a greater contribution is made to these services. You relieve poor localities by calling upon the landowners in great cities to pay a great deal more than they contribute at present towards these services. The hon. Member for East Northants (Mr. Chiozza Money) said that the scheme suggested is impracticable. In other countries where the scheme is in operation they had not the advantage of his criticism, but they were able to carry out this method of taxation with a fair amount of success. I do not say that it is a perfect system, because it is difficult, I know, to bring a new system of taxation into operation, but they have not found the initiation of the system by any means surrounded by the difficulties which have been suggested. Difficulties are suggested which really have not any existence. A feeling is being created to-day, by statements which are being made without justification, which does endanger fair consideration being given to these proposals.
1216 To prove this, I think that I can say, on behalf of my Friends of the Land Values group, as well as for myself, that we have no part in the proposals of the Budget of 1909. The Increment Tax, for instance, is no part whatever of our proposals. I have always been opposed to the Increment Tax. But we want to secure a valuation of the land of the United Kingdom, which we have been denied by another place. We desired to get a valuation of the land of Scotland to start with. A Bill was passed through this House and rejected in another place, and we had to go by way of another method to obtain a land valuation for the United Kingdom. If this system is adopted the Increment Tax will be abolished, and a more just and equitable method of taxing the value of the land will be substituted for it. But we hold that this is the right system for altering the basis of taxation and rating, and that it is the most beneficial system. It does something more than raise revenue, from what is considered to be a just source. The Prime Minister described it as the communal source—the communal value of the land. Ws hold that it is the just source to go to, because the value was created by the people as a whole, and what they create they are entitled to take for communal needs. But we attach far more importance to this: levying taxation in this way on the value of the land would compel the owner of the land, or encourage him it any rate, to use his land, or let it to somebody else who will use it more profitably. The result will be to set up a demand for labour, to increase the production of wealth, and to help in the solution of other problems besides those of labour.
§ Mr. J. M. HENDERSON
I did not intend to go into this question to-night, but I am induced to do so by the statements of the hon. Member who has just sat down. My hon. Friend the Member for East Northants says that the proposal is impracticable. Iproposeto show that this is so from the statements which have been made by the last speaker. He spoke of a cottage with a gross value of £125 and a rateable value of £8. Taking the rates at 10s., the individual, who is owner and occupier of this cottage, would have to pay £4; the ground value is £20. Taking that at 5 per cent., which is a very generous allowance, there is produced £1 per annum, which is the value, of the ground. Where is he going to get the other £3? He has got to pay£4 rates. Where is the other£3 to come from? It is three years ago since these 1217 gentlemen published a book which they called the "Plea for Urgency," in this very matter, and they put forward something like this to show how very beneficial this particular form of taxation would be. I wrote a letter to the secretary, Mr. Llewellyn Davies, I think it was, and asked him where he was going to make up this £3. His secretary wrote back to say that Mr. Davies was on holidays, and when he came back he would answer my letter. In October, after giving him two months for a holiday, I wrote again reminding him of this letter and asking for an answer. I have never received an answer to this day, and I never shall. He cannot answer it—it is impossible to answer it. The other case which the hon. Member gave was exactly the same.
§ Mr. OUTHWAITE
There is no difficulty in telling the hon. Member where to get the balance. I did tell him where to get it.
§ Mr. HENDERSON
The other case was that of a cottage with a gross value of £235, and a land value of £33. Taking an annual value of 5 per cent, on £33 you get £1 13s. He has to pay £6. Where is the other £4 7s, to come from? I do not know. If it is to come from some big taxation of the land, which is supposed to be worth £3,000,000,000–how is it going to be worked out? I do not see. They do not know. They have never worked out a problem for the City of London with its suburbs. They have not even tried to work it out. It is an absolute impossibility. When one hears of this taxation of land values, one might suppose that land values are not taxed. I once was foolish enough to have that notion. There is nothing taxed like land. Take a city which is built on—the City of London, or any other city. There is not a single site built on that is not taxed with rates and taxes to anything between 35 and 55 per cent. of the annual receipts from that land. I challenge any man to deny that. Is there any other property taxed like that?
§ Mr. HENDERSON
I will prove it. I will take a case in which I draw the cheques for the rates myself. The building cost 1218 £200,000. The land cost £200,000–that is, £400,000. The rating is upon £16,000 per year, and the rates amount to one-third of the value in the year. Is not that land taxed? Is not that land rated? When a man builds a new house in the City of London, he goes before the assessment committee, and they ask him what did he pay for the land. He produces his conveyance, which shows the price; 4 per cent. is taken on that. He produces his building contract, and 5 per cent, is taken on that, and on that total, subject to the reductions of one-sixth for repairs and renewals, he has got to pay to the extent of six or seven shillings in the pound. Is not the Land Tax there? They do not seem to know it. You have that taxation now. Every penny of the land and house-is rated and taxed at 6s. 8d., 7s., or whatever it may be, and then there is 1s. 2d. Income Tax, and the 9d. Inhabited House Duty. They say that the system they propose has been practised in other countries, and the Colonies have been referred to, as if the Colonies settled the whole question. I have looked into that part of the subject. What is the position in New Zealand? In that Colony the towns can rate on the capital value, or what they call the unimproved value, or the annual value. But mark this, if they rate upon the unimproved value, they are limited to their general rate on the annual value—that is to say, the general rate on the annual value is 2s. 1d. or 2s. 6d. The rate of a halfpenny, or whatever it may be, on the unimproved site value must not exceed that. The consequence is that some towns of the Colonies do it one way and some another. Wellington and Christchurch, New Zealand, do it upon the unimproved value, and Auckland, Dunedin, and other places do it on the annual value, as we do here.
If anyone went to the Colonies and told them that their object was to try and tax the land up to 20s. in the £, he would turn them dumb. There is no such policy in the Colonies as that. In this country you are dealing with a community which has been long established, whose rates and expenses are high, and your policy would exhaust the whole of the land value. You can find all over Scotland farms of which the prairie or unimproved value of the land, deducting the cost of improvements, is absolutely worthless. The rent which is yielded to the landlord is no more than a fair interest of 4 or 5 per cent, on buildings, fencings, and other improve- 1219 ments put upon the land. [An HON. MEMBER: "They could go rate free."] If we are told that they can go rate free, what is going to be done about the parish councils and other local bodies in the district? Where are you going to get the money for them? But as a matter of fact, the present taxation of buildings is nothing more than a rough-and-ready Income Tax. You can go back to the time of Elizabeth, when they tried to settle this question of contribution to the State and to local authorities, and it was the old expression, "That a man should be rated and taxed according to his means and substance." The moment you go beyond that fundamental principle, and try to put the whole of the taxation upon one class of business or property the results are disastrous. It should be remembered that property is of different kinds, and is not confined to land These men who do not own a piece of land would escape altogether the taxation proposed by hon. Members below the Gangway.
I remember that the hon. Member for Norfolk stood up in this House and advocated this policy, and he said, "I do not own any land; I tenant chambers in the Temple." Nobody ever suspected that he ever owned land; of course he would not. The same hon. Gentleman wrote his views in one of the magazines, and he said that if a man invests £1,000 in railway stock he ought not to be taxed more than the Income Tax, but if he invests £1,000 in land, we ought to take the interest of that from him because it was created by the community. A more absurd proposition never was heard of. The idea was this: that the man who buys £1,000 worth of stock in the Great Western Railway is encouraging industry, but the man who buys a plot of land to build a house is not encouraging industry, and, therefore, if he does not encourage industry he had no business to spend his money on land. Where that is going to lead them I do not know. The proposition is unthinkable. I advise him to take the three thousand millions and work out local and Imperial taxation on that amount. He will find that if he puts 4 per cent, on the three thousand millions there is not enough to pay local taxation, leave alone Imperial. [An HON. MEMBER: "Oh."] At all events there is nothing like enough to pay the Imperial taxation, leaving out the local taxation. But to do that you have absolutely to take the whole value of the land, and if you apply it up to 20s. in the pound, 1220 you will absorb the whole lot. You say that is encouraging industry. Can anyone imagine a more disastrous thing to the country than that if this policy were once embarked upon. Just consider the awful position in the value of everything, not land alone. Nobody knows better than I that the bankers and solicitors' offices all through the country have in their safes the deeds of three-fourths of the whole of the land of the country, and, so far from their being idle, money is borrowed on those deeds and invested, and it goes through the whole community, being invested in mercantile and industrial concerns.
Once let it be known that this security is going to be annexed for the purpose of paying taxation for the relief of everybody else, what becomes of that value? The mortgages would fall in, the securities would be sold, and there would be a panic such as never would occur even in a great war with Germany or a rebellion in Ulster. I do not fear much my hon. Friends, because they are very few, but I do think there are a great many Members who really have not studied the question. They dropped into the trap carefully laid for them; in the appeal which they made to the Government a year ago. Just consider what it was. I am sure that if they had worked out the figures they would never have entered it. My hon. Friend the Member for Newcastle-under-Lyme (Mr. Wedgwood) said that he was quite satisfied with the policy that they advocated. He said the proposal, first of all, was that we should relieve the people of taxation upon all sorts of food. That represents thirteen millions. [An HON. MEMBER: "Ten."] Well, ten millions. As I have shown, the site value is already taxed to anything from 35 per cent, to 55 per cent. To do what you want, you would require to put on another 15 per cent. In addition to that, there would be the local authorities' taxation, which in the Glasgow Bill was 10 per cent. That is another 10 per cent. That brings it up to something like 75 per cent., and that would very well satisfy the hon. Member for Newcastle-under-Lyme. There is no hope in that policy. The only hope lies in the policy in which we seek to tax every man according to his means and property as his contribution to the general Exchequer and local authorities.
§ Mr. HENDERSON
There, again, you are face to face with the Land Duties. You cannot have the Land Duties and at the same time tax a man who does not build upon his land, if there is no demand for building. You are frank enough to admit that that tax is not yours, and I quite agree with you.
The fallacy under which these Gentlemen labour is that if there is a piece of vacant land they think there is always somebody ready to go and build on it. It is the greatest fallacy. Again, they think that land is the foundation of all property. Nothing of the kind. The first thing is money. You give a man an acre or twenty acres of land; the first thing he wants is the money; he cannot touch it without money; he must have money even to buy a spade, to begin with. Do you not know that 75 to 80 per cent, of the people live in hired houses? Do you not know their old adage, "Fools build houses and wise men occupy them." When you sell a piece of land there is absolutely no interest whatever that the man who buys it should build upon it homes for other people to occupy; he may build a house for himself, but that would take a very small amount. If you take a large town like Glasgow, you find that it only absorbs for extra population something between forty-five and fifty acres a year, and smaller towns in proportion. There are towns which on the average absorb eight or ten acres a year; yet these Gentlemen would tax the whole of the land as though it were all going to be built upon, and that people were anxious to rush in and build houses, knowing that there was nobody to occupy them. The first demand is the demand for occupation, and unless there is a demand for occupation no builder would be such a fool as to put his money on land in the shape of houses and wait for the time until tenants came along. Unless there is a demand, the land is never built upon. I say a policy such as these Gentlemen advocate would absolutely destroy the speculative man who builds houses for other people. Remember that twenty per cent. of the people must build for the other eighty who occupy the houses. Very few men build their own houses, and those who do hardly ever expect to get their money back. They do it for their own convenience. It comes back to this, that it is not only in this country this difficulty as to local taxation has arisen. It has been experienced in America and in Canada, and they have 1222 had congresses dealing with the matter for years. We, in this country, have had Royal Commission after Royal Commission. They have tried to find out the incidence of local taxation, and most of them have given it up in dispair. The whole question conies down to this, whatever is a man's ability to pay on that and on that alone should be founded his contribution to the general Imperial taxation and to local rating. With regard to Income Tax, there is, of course, a difficulty in that a man may have two residences. He may have one in a town, commensurate with his income, and he may have a bungalow at the seaside, which would not be commensurate with his income. It would be unfair to tax him as to the seaside place on his income in the same way as he would be taxed in, say London, where his ordinary residence happened to be. That, however, is a question of adjustment. On that line, and on that line alone, or on some such line which fulfils the sound condition which is as old as the time of Queen Elizabeth, that a man should be taxed and rated according to his means and substance, on that ground you are safe, but the moment you depart from it for any fancy sort of franchise you are sure to be wrong.
§ Mr. SANDYS
I do not propose to follow the hon. Member in the direction which he has taken in a controversy which is so stirring hon. Members on the other side. I should like to make one or two remarks with reference to the speech of the Chancellor of the Exchequer. I hope that we shall not be regarded as in any way unkindly if we regard the right hon. Gentleman's statements as more or less in the shape of a death-bed repentance. On so many previous occasions the right hon. Gentleman has held out hopes to us that something was going to be done to relieve the burdens of local taxation, which fall with such special weight and severity on the agricultural community, that he must forgive us if we look with a little bit of suspicion at even the rather more definite promise which he has made this afternoon. However, as he has stated that something definite is going to be done, and that that something is going to be done this year, I hope that the statement which he made this afternoon is not classed with those other good intentions with which the road to a General Election is usually paved. I would only observe that it seems to an ordinary back bench Member on this side 1223 of the House, who is not acquainted with the secrets of the Government, that already their programme is somewhat overcrowded, and that there may be some difficulty in giving effect to the right hon. Gentleman's pledge. There was one part of the Chancellor of the Exchequer's speech which gave me particular pleasure, and that was the tribute of admiration which the right hon. Gentleman paid to the gratuitous services which such a large class of individuals in this country give for the public good and for the public welfare. I would like to remind him that a considerable proportion of this unpaid public service is given by the country gentlemen of this country, a class against whom some of his most bitter attacks in the past have been delivered, perhaps without thinking of that which has appealed to him to-day, namely, the fact that that class gives such a large amount of unpaid service to the country. Perhaps that may cause him to hesitate in the future before he completely eliminates that class of the community.
I do not propose to deal with the question of relief to the education rates, as it has been very largely dealt with by hon. Members on both sides of the House, but I desire to supplement what has already been said with regard to the latter portion of this Amendment, namely, the matter of the maintenance of the main roads. It certainly appears to me that in view of the great changes which have taken place in the character of the traffic along the main roads of this country, that the time has arrived when the whole question should be reconsidered and put on a different basis altogether. There is no question, of course, that it is largely in consequence of the entire change in the traffic conditions on the main roads that this burden of taxation for the upkeep of those roads is becoming heavier and heavier every year. I would like to call the attention of the House to the conditions in the county with which I am most closely connected, namely, the county of Somerset. I find that the expenditure upon main roads in Somerset in 1906 amounted to £72,000. It had gone up in 1909 to £83,000, and in 1913 to no less a sum than £101,000, while the estimate for 1914 is £118,000. That is to say, there has been an increase within the last twenty years of what will amount to a 4½d. rate, since a 1d. rate in the county of Somerset produces about £8,000. Towards the im- 1224 provements in the roads in the county the Road Board contributed in 1912 £9,000, and in 1913 £5,000 odd, and in 1914 the estimate supplied to me by the county council authorities was £14,000; but when I interviewed the Road Board quite recently I was glad to learn that instead of £14,000 the estimate should be £16,000, which is certainly very satisfactory from the point of view of Somerset. I understand that no one suggests that in Somerset we have any cause of complaint against the Road Board, and certainly I should like to pay my tribute of gratitude for the extreme courtesy with which the Road Board has always afforded me any information which I desired.
There is no doubt that this enormous increase in the cost of the upkeep of the main roads in Somerset—and it is similar, I am sure, to the case of other counties—is almost entirely due to the complete change in the character of the traffic. Fifteen years ago the traffic upon the main roads of the country was almost entirely of a local character, and even the most far-sighted persons of that time must have thought that it would probably always be local in character. Two generations had passed since the great railway companies had practically monopolised all the long-distance traffic in the country, and it must have seemed then that the main roads of the country which had previously been the great arteries of commerce and of traffic were likely to become of less and less importance. The introduction of mechanically propelled traffic changed all that, and every year sees an enormous increase in the number of mechanically propelled vehicles of every kind on the main roads, and every year there is a larger amount of goods which used to be carried by the railways now being transported along the main roads of the country. Therefore, the traffic which used, to be local traffic has now become general traffic, and it is that general traffic and through traffic which does the greatest amount of damage. I was glad that the Chancellor of the Exchequer referred to a question which causes great dissatisfaction in the country districts, namely, the traffic of those enormous lorries which now carry the merchandise from the big stores in the big towns and distribute it all along the countryside. That is a most serious evil to the country community, and especially to the country trader who suffers double damage. He finds that his trade is being seriously interfered with by the 1225 competition of those large businesses, and at the same time he has to pay increased taxation in order to keep up the roads which those vehicles destroy.
In my own Constituency this question has become a very acute one, and in addition to this motor-lorry traffic, there is also now rapidly developing an enormous and, as I understand, an exceedingly lucrative business of carrying about excursionists in motor char-a-bancs. This business in this part of Somerset is carried on principally by a very powerful and highly organised company, which has its headquarters, not in my Constituency at all, but in the city of Bristol. These great vehicles, each one of them carrying a very large number of excursionists, tear about the country roads doing great damage, because they are in a great many cases traversing roads which are quite unsuited and were never constructed for that class of traffic. That traffic is not any sort of advantage for the local people who pay the rates. It affords no means of conveyance to them either for passengers or for goods, and, in fact, so far from being an advantage, it is the greatest possible disadvantage, because these motor cars block the roads and render them extremely dangerous for ordinary traffic in the district. I was talking to a leading farmer in my Constituency the other day, and his wife told me that as soon as the excursion traffic began in the district she ceased to drive along the country roads because she was afraid to do so. That is the state of Affairs which exists in my part of Somerset, and I have no doubt it exists in other localities which happen to be situated in the neighbourhood of seaside resorts. Thus enormous damage is done to the roads, and, instead of those who make use of the roads or make profit out of those excursions having to pay the cost, the damage has to be made good by the local ratepayer. This heavy burden in connection with this class of motor traffic on the roads is one which is always increasing, and in connection with which fresh developments are always taking place. It is most desirable, I think, that every facility possible should be given to those who live in the big towns to get away into the country, and no doubt the development of the motor omnibus has been extremely useful in this respect. We find these enormous vehicles penetrating further and further into the country districts in the neighbourhood of big towns, or, indeed, anywhere within a 1226 radius of thirty of forty miles. In order that a profit may be made, these motor omnibuses have to be very large, and constructed to carry a large number of passengers. They are therefore necessarily heavy. With these omnibuses constantly passing over country roads an enormous amount of damage is done, which has to be made good by the local ratepayers. I think that the local authorities would be in a position to lessen the heavy expense to which they are put if only they had proper control over this traffic, which I think they are entitled to have, because, after all, they are the people who pay the piper. Before a tramway is constructed Parliamentary powers have to be obtained. The local people can give their evidence before the committee, and if it is shown that the construction of the tramway will seriously interfere with the amenities of the district, or will be of no use to the inhabitants, there is a chance of successfully obstructing the Bill and preventing the construction of the line. But the local people have no control whatever over this new traffic which is being developed in every direction in the country districts, and yet they are the people who have to bear the greater proportion of the cost. I was in communication not long ago with the Local Government Board on this very question, and I found that this traffic is being regulated by an Act of Parliament passed no less than eleven years ago, when motor traffic, as we know it to-day, was absolutely in its infancy, and the development to which I am alluding had never been thought of at all. The Local Government Board, in writing to me on this subject, gave me some idea of the confusion which results from attempting to regulate this traffic by such an ancient Act of Parliament. This is what they said:—I am directed by the Local Government Board in advert to your letter with reference to the regulations regarding motor vehicles, and to refer you to the provisions of the Locomotives, on Highways Act, 1896; the Motor Car Act, 1903; and the following general regulations made under these Acts, namely, the Motor Car (Registration and Licensing) Order, 1903; the Motor Car (Use and Construction) Order, 1904; the Heavy Motor Car Order, 1904; the Heavy Motor Car (Amendment) Order, 1907; the Motor Car (Use and Construction) (Amendment) Order, 1909; the Motor Car (Use and Construction) (Amendment) Order, 1911; the Heavy Motor Car (Amendment) Order, 1912; and the Motor Car (Use and Construction) (Amendment) (No. 11) Order, 1912; and the Motor Car (Use and Construction) (Amendment) Order, 1913.You have to thread your way through all those to find the regulations under which this traffic is being carried on. I obtained these documents and have been trying to ascertain what the position is, but it is an almost hopeless task 1227 to find out what powers the local authorities have for the control of this traffic. The whole matter seems to me to be in a most unsatisfactory condition, and I seriously hope that, even if the Government find themselves unable to accede to the request in the Amendment that the maintenance of main roads shall become an Imperial instead of a local charge; at any rate, they will do something to sort out this confusion, which results from attempting to control this traffic by an Act of Parliament passed eleven years ago. I wish to say a word also in regard to the steam locomotive traffic. After taking out a licence, which, in my opinion, is quite inadequate, having regard to the damage which they are able to do, these steam locomotives or traction engines may any day travel entirely outside their area, and for the payment of a few shillings for a day licence they may travel enormous distances in some other part of the country, and do damage to the main roads amounting perhaps to hundreds of pounds, for which they make no contribution to the local authorities whatever. The cost of all this under existing conditions comes out of the pockets of the local ratepayers. The Chancellor of the Exchequer, I am glad to find, has now come round to the opinion which has been so often urged from these benches. In view of the fact that conditions have so entirely changed. I think we have made out a case for saying that the time has arrived when the maintenance of the main roads should be regarded as a national and not a local charge. The character of this traffic has entirely altered during the last few years, and it can no longer be regarded as a local traffic. It is, to a very large extent, a general traffic. Therefore, I say that the time has arrived when the burden should be borne by the taxpayer and not by the ratepayer.
§ Mr. ALDEN
I think we may say that the House is practically unanimous upon this subject, but I do not know whether we can be perfectly certain what the promise of the Chancellor of the Exchequer tonight really means. In all parts of the House there is, without doubt, general agreement as to what ought to be done. I am quite in agreement with what was said by the hon. Member opposite (Mr. Sandys). I do not know anything about Somersetshire, but I know that all over the country there is the same demand for 1228 relief with regard to the main highways, and I am sure that, so far as the sympathy of Members on this side of the House is concerned, he has the whole of it. I rise to try to clear up one point which has been left in some doubt so far as my own mind is concerned. I have listened to the Debate with great interest, and I feel that it is not really a question of making strong speeches. That would be rather on the lines of:—Thrice he routed all his foes,Thrice he slew the slain.We seem all to have come to the conclusion that something must be done, and personally I thank the Chancellor of the Exchequer for his promise, but I am not clear on one point. He admitted that so far as education was concerned, the cost upon the local rates has increased from £2,000,000 to £15,000,000 in eleven years, and that, so far as Imperial Grants are concerned, the amount has risen only from £10,000,000 to £14,000,000 in the same time. He admitted the case, and said that it must be remedied. He promised that it should be remedied, but he did not quite say when. He said that provision would be made this year. I presume that that means provision will be made in the forthcoming Budget; but the right hon. Gentleman did not say that the case of necessitous school areas would be met in that way. I want to put this—which is my only point—the whole case, and the need for help, has been admitted over and over again. I should much prefer that the help should be given to the areas that stand in need in proportion to their need; but if that cannot be done this year I think that the Government ought to make it perfectly clear to us that the highly-rated and overburdened areas such as have been indicated—I will mention one or two later—should be assisted this year. The trouble is that all these local educational authorities will in April be framing their estimates for the coming year, and they want to know when framing those estimates whether they are to receive the amount which has been promised in the past in relief of the education rate. That amount, everybody knows, is three-fourths of that which is raised over 1s. 6d. in the £.
I want to know whether it is possible for the Government to promise, or to say definitely, that this Grant will be forthcoming this year, so that the education authorities may be able to rely upon it. The Chancellor of the Exchequer, in his 1229 speech, said that the State has increased the burdens in respect of education without proportionate contributions. That is so. The right hon. Gentleman made a slight slip when he said that there were only sixty-eight local educational authorities with a rate of over 1s. 6d. in the £. I have looked up the figures, and I find that there are sixty-eight local educational authorities with a rate of between 1s. 6d. and 2s. in the £, and there are eleven additional authorities rated at over 2s. in the £. In some cases it runs up so far as 33.7d.—for example, Aberdare. There are eleven authorities with a rate which varies from 24.8d. to 33.7d. There are seventy-nine authorities with education rates of over 1s. 6d. in the £. It does seem to me that these authorities ought to be absolutely certain this year that they will receive a Grant proportionate to their needs. What does that amount to? Instead of £350,000 it means, roughly, £450,000, or at the utmost half a million of money. I hope in the course of this Debate, or before very long, the Chancellor of the Exchequer, or someone speaking on behalf of the right hon. Gentleman, will make it quite clear that these necessitous areas are to be assisted. That is really the only point I want to make to-night. I am grateful to the Chancellor for promising that there shall be a readjustment of the Grants. I could make some suggestions as to how these Grants might well be readjusted. I do not propose to do so to-night; though in view of the fact that local education authorities must come to a decision in April as to what foundation they may frame their estimates upon, they should not be left in doubt; the matter should be cleared up as speedily as possible.
§ Mr. ORDE-POWLETT
I only wish, for a few moments, to associate myself with what my hon. Friend has pressed upon the Government and upon the Chancellor of the Exchequer—that is the great urgency and importance of paying more money out of the Imperial Exchequer for the local rates. I must congratulate my hon. Friend who moved the Amendment on the success that has attended his efforts. He, at any rate, has got some sort of a promise out of the Chancellor of the Exchequer. We have had promises, or partial promises, made before by Chancellors of the Exchequer. I can only hope that this one may be carried out to the full. The excuse made by the Chancellor of the Exchequer for the non-fulfilment of these 1230 rating promises in the past was rather a lame one. He said that the burden of armaments and the state of Europe interfered with the provision of money from the Imperial Exchequer. Whatever the state of Europe or the condition of armaments in this country, the money has got to be found for the rates, and the only question to my mind is where the money is going to be found, and whether or not it is going to be found in a just way from the people; whether it is going to be spread justly over the whole population of this country. Now that the Chancellor of the Exchequer has promised to deal with this question, I hope that he will deal with it in no piecemeal way. If he does that, if he intends to give a promise here, or a sop there, I feel quite certain that the whole main question will be left for years to come. I am quite aware that there is no question, putting aside the paramount question of Ireland, that at the present moment is so important. There is no question upon which the people of this country are so eagerly concerned as with this rating question. Every Member of this House, at any rate, every agricultural Member like myself, is absolutely deluged and inundated with private requests, petitions, and resolutions from every conceivable local and public body, asking them to press the Government to deal with this question. Five years ago, I think, Debate was raised on this question. It was stated then by an hon. Member sitting on the opposite side of the House that the burden of the rates had come to such a pitch that something must be done. If that was the truth five years ago it is ten times more the truth at the present time.
Let me quote figures from the financial statement of a county council in the North of England. I refer to the Durham County Council. The expenditure of that council has risen by £235,000 since 1909, and the estimated increased Government Grant this year is £41,000, leaving the ratepayers to provide £194,000. The great proportion of this increase the county council financial statement gives under three heads: main roads, education, and the police. I hope the Chancellor of the Exchequer will live up to the statement that he made tonight, that he is going, at any rate, to put a certain proportion—and I hope a great proportion—of the cost of the main roads and of the cost of education upon the National Exchequer. A few years ago you could quite truthfully say that the traffic on the local roads was entirely local 1231 traffic, that of local farmers, local tradesmen, and so forth; there was no through traffic in those days. Everything, now, is totally altered. I know I can speak for my own district, which is a very favourite touring district for motor cars. In that district at the present moment, or in the summer rather, motor cars, lorries and char-à-bancs pass through continuously the whole day and damage the roads, and the increased expenditure necessary for repairing that damage is something appalling. Personally, I cannot see for the life of me why the farmers in that district, or the local tradesmen, should pay a rate upon their industry in order to make good the damage done by strangers coming into the district. Take education! There is an increasing cost for education going on year after year. I believe it is a necessary and an inevitable cost, but I should like to say this, that I hope if this cost is going to be an increasing cost, the system of education in our rural districts should be more applicable to the needs of the children who wish to learn the necessities of country life. The cost of the education system is possibly unavoidable, but it is growing year by year, and that cost has got to be paid. It is paid now to a large extent by the ratepayers of the country.
I call to mind one or two very remote country districts in my Constituency where the education rates fall with extreme hardship upon the agricultural industry. These are remote districts, and the rates to a considerable extent are used, not so much in these districts, but in the more largely populated areas of the county council area. The people in these remote districts have not access to these more populous parts and derive no benefit from the rates used in these more populous parts. I think it is only right and just that the Government should take over come part of this education rate, and a great part of it I hope, and relieve the local farmers and tradesmen from the burden of this rate. I know it is often said, farmers are great adepts at grumbling, but I think they have every right to grumble over the question of local rates at the present moment. It was said by my Noble Friend the Member for Thirsk Division (Viscount Helmsley) some four or five years ago that every farmer who brought a bullock to the butcher had to pay £1 at least in rates before he got there. I have been told by a practical farmer that at the present time he has to 1232 pay more than £1 for every bullock he brings to market. That is a terrible tax upon agricultural industry in this country, especially in face of the severe foreign competition going on at the present moment. I was very glad indeed to hear the Chancellor of the Exchequer say he was going to deal with these matters this year. I only hope that the promise will be carried out, and not thrown on one side as was done too often in the past. I think this promise is one of the greatest interest, and more especially in our rural districts, and I hope that the effect of this Amendment moved by my hon. Friend will be carried out in a just and equitable manner by the Government when the next Budget is brought in.
§ Mr. RAFFAN
As the Debate has advanced, points of controversy have naturally arisen, but I think that on all sides of the House the opening speech of the Mover was regarded as exceedingly temperate and well informed, and one which carried in its very argument the assent of all sections of the House. So far as the particular group with which I am associated are concerned, we, at any rate, have no quarrel with the suggestion that a large portion of the amount at present levied in rates should be transferred to the Imperial Exchequer, if due consideration is given to the manner in which that amount is raised now, and the manner in which it is to be raised in the future. But we regard that as important; we regard it as fundamental. After all, if you transfer this large sum from the ratepayers to the Chancellor of the Exchequer, it will not fall as gentle dew from Heaven. It will still have to be found by some persons or body. Indeed, if it did fall like gentle dew from Heaven, it does not appear to me and my Friends that it would be any particular benefit to the taxpayers, because if there were showers of gold which would deposit upon the soil the millions necessary to relieve the ratepayers, the Chancellor of the Exchequer would have no claim to it, and it would be for the benefit of the private landowners. There still exists considerable misapprehension as to the views of the group to which I belong, as shown by the speech of my hon. Friend the Member for West Aberdeenshire. He seemed to be under the impression that our views are that in present circumstances no portion of the local rates fall upon the landowners of this country. So far from that being so, our objection to a transference of this 1233 character, which does not carry with it the,ob/>eimposition, either in the form of national taxes or in the form of site value taxes, is the old objection, that any transference of this character would in the main simply mean a gift to the landowners; that that is our traditional lifelong attitude can be open to no dispute. I want to make one or two quotations, which ought to command respect not merely from this side, but upon both sides, in support of that principle. In the final Report of the Royal Commission on Local Taxation, and especially in the separate Report on Urban Rating and Site Values, signed by Lord Balfour of Burleigh, Lord Blair Balfour, Sir Eward Hamilton, Sir George Murray, and Sir Thomas Stuart, this statement is made:—There is overwhelming testimony to the effect that upon entering upon a tenancy lessees invariably take the amount of the rates into account, and that ordinary occupiers on the whole, and as a general rule, do the same.I might quote also from another Report presented to this House, namely, the Minority Report of the Urban Rating and Site Values Committee. In that Report I find these words:—Now we admit, and, indeed, contend, that a large part of the present rates falls on the owners of site value in towns. The more the burden of rates actually falls upon them now (and some eminent authorities maintain that the entire burden falls on them), the greater will be the ultimate relief which will accrue to them from the increase of State aid.I might also quote on this point a political economist of eminence, Professor Marshall, who states:—The removal of onerous rates yields a passing benefit to the tenant, but the greater part of the gain goes to the interim, and afterwards to the ultimate owners. If these owners have acquired the property since a rate was imposed, the reduction of the rate is a present to them of so much public property.Reference has been made earlier in this Debate to the Debates which took place in this House upon the passing of the Agricultural Rates Act, and the proposition I will now lay before the House was admitted in the very clearest language by the right hon. Gentleman the Member for Wimbledon, who had charge of the Bill, and was then the President of the Board of Agriculture. He said:—The occupier paid a certain sum for the use of the land, and in that sum were included rates as well as taxes. The effect on the owner was that if rates were high he got less rent, and if they were law he got more rent.It is true that the late Mr. Gladstone immediately seized upon that, and twitted him with the admission that those Grants-in-Aid were really Grants in aid of the landlords. It is now admitted that it was 1234 merely a measure for the purpose of giving doles to the landlord. The right hon. Gentleman the Member for Wimbledon stated that he was referring only to rural districts. It must be obvious that the economical effects would be the same with regard to urban land and rural land. If it be true that when leases are entered into both contracting parties take into account that rates which at that time the tenant may reasonably be expected to have to pay, it is obvious that that is an economic tendency which cannot apply to rural districts only, but must apply to urban districts. If that be so, then it is perfectly clear, if we remove from the rating authorities the burden which now falls upon them, and if that sum is raised from general taxation which presses upon other sections of the community, then this proposal will have the same effect which the Liberal party, and all shades of political opinion, maintained that the Agricultural Rates Act would have, and it would be mainly a dole to the landowners of this country.
The group with which I am associated would most energetically protest against any proposal of that kind. That this would be the effect is, I think, admitted in certain speeches from the other side, in which repeated and laboured attempts have been made to show that the landed interest is paying an undue share of public burdens, and that they should be relieved of a proportion of that burden which it is argued should be transferred to other sources. I am not surprised to hear that view expressed on the other side. It is the traditional view of the party opposite, and it is the view which one naturally expected to hear in that quarter. I must confess, however, that I do hear with some surprise, speeches like those delivered by the hon. Member for West Aberdeen and others, which indicate that they are in agreement with that view. That has never been the view of the Liberal party. The fathers of Liberalism took a different view of the position, and one of the most distinguished members of the Liberal party, the late Mr. Richard Cobden, so long ago as the year 1845, made a speech in this House in which he stated, clearly, that in his view the true history of this question was that in the old days practically the whole of these burdens fell upon the landowners of this country, and that bit by bit and stage by stage, having all political powers in their 1235 hands, they transferred these burdens to the masses of the people. I will read a short quotation from Mr. Cobden's speech. He said:—for a period of 150 years after the Conquest, the whole of the revenue of the country was derived from the land, During the next 150 years it yielded nineteen-twentieths of the revenue, for the next, century down to the reign of Richard III. it was nine-tenths. During the next seventy years, in the time of Mary, it fell to about three-fourths. From this time to the end of the Commonwealth, land appeared to have yielded one-half the revenue. Down to the reign of Anne it was one-fourth. In the reign of George III. it was one-sixth. For the first thirty years of his reign the land yielded one-seventh of the revenue. From 1793 to 1816 (during the period of the Land Tax) land contributed one-ninth, from which time to the present (1845) one twenty-fifth only of the revenue had been derived directly from the land.If it were possible to follow the fluctuations which have taken place since that time, I think it would be found that in the intervening years that that process has gone steadily on. Small as the contribution was in 1845, when Richard Cobden made that speech, it will be found that the proportion is less at the present time. It does seem to me that in taking up this position we are not speaking merely of any one group or any small section, but we are maintaining the traditional position of the Liberal party, that these doles and subsidies should not be given to local authorities in such a way that they may merely relieve the landowners of this country of obligations which are historically theirs, and burdens which they ought to carry.
It may be said that if we admit that the landowner is in this position, why do we then allege, as we do, that the present system of rating does constitute a serious discouragement in the making of improvements. I know it is very difficult to state in exact language how far the rate does fall upon the landowner, and how far it falls upon the occupier. Many attempts have been made at a definition. I have never professed to be a political economist, and any suggestion I make I put forward tentatively, and with diffidence. It does appear to me that in the main the rates which are in existence at the time when a lease is entered into are necessarily taken into account in the framing of that lease, and it does appear to me that those rates in the main fall upon the landowner and are a burden upon him. On the other hand, when increased rates are imposed, and they have increased very materially in the last ten years, then the occupier has no means under the present condi- 1236 tions of shifting such increase back to the owners, that they fall upon him, and to that extent they constitute a discouragement upon his improvements. In addition, the great discouragement of improvements arises in this way. When the tenant finds that his business expands and increases, and that it is desirable that he should build improved factories, improved workshops, and improved houses, then, upon these new improvements the rates fall with crushing force and to that extent, and it is a very great extent, the present system does very materially tell against improvements. Whilst it is desirable that the local authorities should secure relief for which they ask, it is equally desirable that the change should be accompanied by a national tax upon site values and by a system which would relieve improvements from rates and substitute a system of site values taxation for it.
The Member for East Northants (Mr. Chiozza Money) this afternoon endeavoured to show that this was impracticable in view of the pledge given by the Prime Minister, and, as I made an interruption, I should like to clear up what, in my view, is the interpretation of the Prime Minister's answer this afternoon. That, of course, is also not authoritative, but I have no doubt that the Prime Minister will himself more fully, later on, develop his view with regard to these existing contracts. When the Prime Minister stated that, in his view, due regard should be had to existing contracts, it would appear to me that the statement did not carry with it the interpretation placed upon it by the hon. Member, that, say, in the case of Scotland, where the superior has let land in perpetuity and has stipulated that the lessor shall pay the rates, the contract must stand for all time. That was the interpretation placed upon it by the hon. Member for East Northants. I need hardly say that I would be the very last man to suggest that the Prime Minister would not desire to carry out any statement which ho has made honestly in the spirit as well as in the letter, but it does seem to me that his statement is quite consistent with the proposal that there should be a time limit during which existing interests might have time to adjust themselves, and at the end of which all the interests enjoying the land should be called upon to contribute in proportion to the value of the land. I hope that is 1237 the real interpretation of the Prime Minister's answer, at any rate, I think it is.
§ 9.0 P.M.
§ Mr. RAFFAN
There cannot, but, on the contrary, our point of view has always been that in a system of land values taxation, fully developed, every interest should pay in proportion to the land value which it enjoys. I do not expect the Noble Lord to agree with me as to my policy, but, at any rate, I think he will assent to the proposition that if you adopt a system of land values taxation then to throw the burden for all time upon the lessor and allow the superior and his successors to go free is not a system of land values taxation under which each party pays according to his enjoyment; indeed, it is not a scientific system of land values taxation at all. While in the Prime Minister's own words due regard must be had to existing conditions and existing contracts, that does not appear to me to be inconsistent with such a proposition as I have indicated—that there might be a time limit during which these interests might adjust themselves. We have had an analogy in connection with the licensing question. The result of passing the Licensing Act of 1904 was practically to give to every licence holder a freehold in his licence. The Prime Minister belongs to a party which opposed that legislation, but, if he were asked if he proposed to alter that state of things ruthlessly at one sweep, and to say that the licensee should again hold, as he held prior to 1884, to sell intoxicating drink for one year and no longer, with no right of renewal, I think he would reply, "This is not our policy. We recognise the difference which the passing of the Act of 1904 made. We do propose to alter it, but with due regard to existing interests." That would not be inconsistent with such a Licensing Bill as that introduced in 1906. Parliament proposed to give a time limit, at the end of which, existing interests having adjusted themselves, the existing state of things should come to an end. It does seem to 1238 me that the Prime Minister's statement is not inconsistent with such a proposition, and I hope we shall learn that is the true interpretation of his policy.
My hon. Friend the Member for Hanley (Mr. Outhwaite), in a very eloquent speech this afternoon, has justified the policy of land values taxation and the policy of the land values group. I desire to say, with, reference to the speech made by my hon. Friend the Member for West Aberdeen (Mr. J. M. Henderson) that it is entirely incorrect to say that the experiments which have been made in the great British Colonies are of no benefit to us. We can, I think, profit by the experience of those who have experimented in Australia, in New Zealand, and in Canada in this matter. They have gone very much further in Australia than the hon. Member for West Aberdeen was inclined to admit. You have had a great land values tax proposed by the Australian Commonwealth. You have in the separate Colonies of New South Wales and Tasmania, and so on, a land values tax. There is in Tasmania a land values tax of one penny in the £ upon all capital value, without any exception of any kind. In addition to that, in a great many cities of the various Australian Colonies, the whole of the local taxation is borne by land values. It is easy to criticise administration as has been done by the hon. Member for West Aberdeen, but to my mind the one decisive test is this: No Colony which has ever imposed a land values tax for its own purpose has ever repealed it, and that is the case in these cities which possess local option and could impose a land values tax and could repeal it. In no single case have they, having adopted a land values tax, gone back to the old thing. While we welcome the promise which has been made by the Chancellor of the Exchequer this afternoon, while we are glad to find that the rating authorities are to be relieved of some of the burdens which fall so heavily upon them, we desire to impress upon this House and upon the Government the desirability, side by side with the policy of development outlined by the Chancellor of the Exchequer at Middlesbrough and Glasgow, of seeing that while we relieve the ratepayers, we do not merely give those fresh doles to the landowning class, against which the whole Liberal party protested so energetically, and that we set up side by side with it a new system of rating and of taxation of land values which, we think, holds so much promise for the future of this country.
§ Mr. CHARLES BATHURST
It is seldom, at the end of a speech, one can conscientiously say that, having listened to the whole of it, one is in entire disagreement with every word that has been uttered. But, so far as the hon. Gentleman's argument applies to agricultural land in this country, that is certainly the conclusion to which I have come. He has said that if the basis of local taxation is altered the money will have to be found by somebody, and that it will be in the nature of a dole to agricultural and other land owners if it is found in the way that appears to be adumbrated by the Chancellor of the Exchequer. I do not refute his general proposition that the economic tendency of reduction in local rates means eventually an increase in rent to the landlord. Other things being equal, no doubt that is so. But may I remind the hon. Gentleman that there is a large and increasing number of land cultivators an this country who farm their own land? That number has been very much increased owing to the apprehensions caused by recent legislation of a Radical Government, and in Ireland, which, I suppose, will receive the benefit of the proposed alteration, something like one-half of the total number of laid cultivators actually do farm their own land. How are you going to deal with this proposal in such cases as that? Even in the case of ordinary agricultural conditions in England the agricultural landlord and his farm tenant are in partnership one with the other, and in that industrial partnership the landlord provides no less than three-fourths of the total capital, at a rate of interest varying from 2 per cent, to 3 per cent. It is difficult to know where, in these days of dear money, the tenant could find capital so cheaply elsewhere.
The hon. Gentleman tells us that this is an historical burden of the landlord, and therefore, for the rest of time, he ought to bear it. My answer to that is, if there is no longer any logical reason for the burden, it is grossly unjust, as a mere matter of tradition, that it should continue to weigh upon his shoulders. The hon. Gentleman has himself supplied the answer. He has carried us down from the earliest historical times to the year 1845, and he has pointed out that continuously since then British land has become, less a source of national wealth, and the national wealth has been obtained to a greater extent in every generation from other 1240 sources. During the last thirty years the capital value of agricultural land has decreased by no less than £500,000,000, and whereas during the last twenty years the income from agricultural land has steadily decreased, the income from other sources of wealth has actually more than doubled. Surely that is the strongest reason, if you are going to follow the principle of the Act of Elizabeth, which inaugurated this class of taxation, and if you are going to make ability to pay the basis of such taxation, for expecting every class of the community, especially if they enjoy the benefit of those national services for which local taxation is levied, to pay their due proportion of the cost. It is not a fact that in every case, or, indeed, in most cases nowadays, a reduction in the rate burden benefits the landlord solely or mainly. The best illustration of that is the Agricultural Rates Act, 1896. As the result of that Act the whole benefit of the advantage given to agriculturists passed, in the course of six years, in the form of additional remuneration to the agricultural labourer. If I may venture to do so, I would say to the Chancellor of the Exchequer and his colleagues who are carrying on the land campaign to-day, that they would confer a far more lasting benefit on the agricultural labourer, and ensure him more continuously better remuneration, if some of the excessive burdens now resting on the industry out of which his wages are paid were substantially reduced.
But there is another fact in connection with this excessive and unfair burden on the agricultural industry which is evidenced by the official figures relating to the area of cultivated land in this country during 1913. During the last ten years there has, unfortunately, been an average reduction in the cultivated area of Great Britain of 100,000 acres a year. Last year, partly as a result of the threatened land campaign, and also because of the activities of the single-taxers, this reduction amounted to no less than 277,000 acres, or very nearly 200 per cent, more than the average of the last decade. This means not only that the national wealth, as represented by agricultural produce, has been materially reduced, but that this country is to a smaller extent every year providing for the nation's food, which ought, from a national standpoint, to be produced more largely at home. Docs the hon. Gentleman think that in the case of an old country like this, where the natural 1241 value of the land has long ago been exhausted, site values taxation is calculated to do anything more than increase the burden upon the agricultural industry, and reduce this cultivated area? I suggest to him that there is no logical reason in this country, whatever there may be in new countries across the seas, for taxation of this character. The value of agricultural land in this country is what many generations of human beings have made it. There is no longer any virgin soil in this country; there is no longer any intrinsic agricultural value in the rural land of this country, and if the hon. Gentleman says, "We are entitled to put a site value tax upon some of these values," my answer would be that we have in existence the Agricultural Holdings Act, which has for many years past assured to land cultivators full compensation for the whole of the additional value that they may have put into that land as the result of their activities or as the result of the expenditure of their capital. I am quite sure that the more the light of reason is brought to bear upon so-called site value taxation as applied to agricultural land the more its fallacies will be exposed, and the more impossible it will be for any British Government to incorporate it as part of the system of national taxation.
As regards the question of the general burden of local taxation, it has been somewhat depressing for local authorities during the last few years to be compelled to make frequent appeals to the Chancellor of the Exchequer to have the basis of the existing system altered and to have some of the taxes which are levied for national purposes transferred to the Exchequer, because in every case the answer has been: "The matter is sub judice. It is being considered by the Departmental Committee, and nothing can be said or done until after that Committee has made its report." I am glad to think that that Report is at last about to be presented. It is more than twelve months since the evidence was concluded, and it has been a matter of great surprise to most of us who are interested in local government that this Report has not been forthcoming long ere this. During the last few years, apart from the large number of Acts passed in this House which have increased the burden of the local ratepayer, the three main heads under which the increase has been greatest have been the number and salaries of our elementary school teachers, the trunk roads of this 1242 country, and last, but not least, the formation of county boroughs and the loss to the county in those cases of a, valuable rateable area. The latter process continued to be encouraged by the late President of the Local Government Board up to the end of last year, and was apparently encouraged by the whole of the present Government. May I point out to the present President of the Local Government-Board that there is no greater hardship, upon agricultural counties than such as is threatened in the county of Cambridge today, where practically the whole of the traffic, certainly the whole of the county motor traffic, comes from one or two county boroughs, and that area which is seeking to be treated in future as a county borough contributes not a single farthing to the maintenance of the roads outside the narrow boundaries of its own population. That is one of the grievances which we, who profess to be interested in the agricultural population, will continue to press upon the attention of this House.
In addition to that, for some time, the Government have been in the habit of pressing upon local education authorities the importance of reducing the size of the classes in our elementary schools, or, in other words, of increasing the number of teachers employed, and also of raising the standard of those teachers so as to increase the efficiency of the education. That is all very well, but unless the Government provides at least the equivalent of this additional cost, it is placing a burden upon the ratepayers of which their representatives who sit upon these authorities can only express their dislike by a reluctance to carry on their enormously important work of national education efficiently and in the best interests of the areas with which they have to deal. There is the strongest case, at any rate, for such part of the cost of education as is represented by the salaries of the teachers being taken over entirely by the State, which in such matters calls the tune, and therefore ought to pay the piper. If that were done it would represent to the local authorities something like 65 per cent, of the whole cost of education, leaving 35 per cent, to be borne by such local authorities, which is a very fair proportion for them to bear, in view of the fact that this is a great national and not a local service. We all know that recently there has been a strike in the county of Hereford of the elementary school teachers. I venture to say that if there had not 1243 been a strike of teachers, there probably would have been a strike of the local authority.
§ Mr. BATHURST
I believe it is a very low rate, and that, in fairness to the teacher, it ought to be higher than it is, but my point is that the county rate—after all the ratepayer does not differentiate between one rate and another—in Herefordshire is 2s. 0½d., which is exactly the same rate as is paid in the rich county of Lancashire.
§ Mr. BATHURST
Yes, I frankly confess it is much too low an education rate in Herefordshire. I am treating this from the point of view of a ratepayer and his attitude towards burdens levied for national purposes. The general county rate in Herefordshire is exactly the same as the rate levied in the rich county of Lancashire, and the equally rich county of Middlesex. What happens in those two counties as regards education? They are able to pay their teachers very much larger salaries, because they have a very much higher assessable value, with the result that they draw—there is no greater sinner in this respect than the county of London, and I am sorry my right hon. Friend the Member for Fulham (Mr. Hayes Fisher) is not here, because I should have wished to say a word to him on the subject—from the rural counties all the best of the teaching talent, because they have a higher assessable value, without any serious cost to their ratepayers, with the result that the counties which are most distant from the more populous centres, and from London, are finding it increasingly difficult to obtain the services of competent teachers as they are unable to pay such teachers on a scale which would put an undue and unfair burden on the local rates. In addition to that, the cream of our country schools does not remain in the country districts, but passes away into the towns where these employers for whom my right hon. Friend speaks, get the full benefit of their labour and their compet- 1244 ence without paying a single farthing towards the high rate which we, in country districts have to pay for their education.
One word about roads. During the last eight years, that is, the period during which the present Government has been in power, the cost of the county roads has increased from 50 per cent, to 80 per cent, in the various counties, and the institution of the Road Board, as we all know, so far from reducing this cost has immensely increased it. In the rural counties, where there is a low rateable value and a great length of main roads which are traversed by motor cars passing between the great towns, and which may themselves contain none of these towns, the burden has become very oppressive, and is every year becoming more serious. There is no county in England that suffers more in this respect than the county which I represent—Wiltshire—because there is a great through pleasure traffic from London to the South and South-West of England, and also to industrial centres like Plymouth and Exeter, along great lengths of picturesque roads, amid scant population and through counties of very low assessable value; and the grievance is accentuated in the county of Wiltshire by the fact that the War Office get the full benefit of many of the Salisbury Plain roads in connection with their camps at Bulford and Tid-worth, and contribute a very small proportion of the total cost of the maintenance of these roads—a proportion which is in no way reflected by the extent of the traffic for which they are responsible. The Chancellor of the Exchequer addressed this afternoon a most sympathetic, eloquent and insistent speech upon the grievances from which we suffer who have to pay these high rates for national services. It was quite delightful to hear a speech of that character from the Chancellor of the Exchequer, and still more in view of the fact that he has now, at last, promised us that within a few weeks he will translate his sympathy into pounds, shillings, and pence. He told us that he wished that country schools provided a more suitable equipment for the local population, and went on to say, and it was the most interesting part of a very picturesque speech, that he, in early life, wished that he could have received the sort of rural equipment which he desires for our country children. I wish the same, because I am quite sure that had he done so he might have addressed himself with 1245 that full knowledge, the absence of which we all so much deprecate, to the great land problem, to solve which he has set out upon a land campaign. But, after all, had he received such instruction in his village school, he might not have occupied the high place in the Councils of the Nation, which, to his credit, he occupies to-day. But, however that may be, I am quite sure of this—that it would be true economy, from the Chancellor of the Exchequer's standpoint, to allow the Exchequer to take over these national services. The taxable capacity, at any rate, of our rural population would, I am sure, be immensely increased if industrial development were not arrested by the present excessive local burdens which press so heavily upon it. I hope that now, at last, these assurances are going to be translated into action of a sound economic character, not tinged by any of the fallacies which have been associated with the site values group in the House of Commons.
§ Mr. M'CURDY
I hope it is a happy omen for the forthcoming Session that this Debate upon the Address, which commenced amid all the concomitants of party passion and strong dissension, is now ebbing out under a feeling of kindly agreement between both sides of the House. I think on both sides the announcement of the Chancellor of the Exchequer that the problem of rearranging the basis of local taxation is going to be taken in hand and translated into pounds, shillings, and pence in the course of a very few weeks from now has given, and will give, great gratification here and in the country. But although there is a gratifying agreement between both sides of the House on this matter, the Debate has already revealed some disagreement between Members on this side of the House with regard to the precise manner in which our local taxation is to be revised, and if, as we all hope, the ratepayer is going to pay less, it must necessarily follow that some one else will have to pay more, and as to who that somebody else may be there are obviously grounds for some difference of opinion. In the very able and powerful speech delivered by the hon. Member (Mr. Chiozza Money) he put forward very strongly the view that when the Government provide from Imperial funds Jarger sums towards the cost of education and the maintenance of main roads, as this Amendment calls for, the 1246 principles of sound taxation and equity as between different taxpayers will be best observed if we follow the sound Liberal principle that the taxes shall be imposed in accordance with the ability of those who are called upon to pay them.
On the other hand, we had a speech from the hon. Member (Mr. Outhwaite) and from another Member of the land values group, urging upon the Government that when this rearrangement of local taxation takes place, it shall be mainly upon the basis of putting some new tax upon the site values of land in this country. The hon. Member (Mr. Raffan) appealed to what he said was the traditional Liberal view in this matter, and urged the Government not to fall into the mistake of relieving the ratepayer for the benefit of the landlord. He said it was the traditional and sound Liberal view that, in the long run, relief of rates merely meant a present for the landlord. I entirely join issue with him as regards the application of that principle, no doubt very sound in itself, to the particular problem with which this Amendment to the Address deals.
We are dealing here with the large increase in cost in recent years occasioned by the development of motor transit upon our high roads, and also with the large increase, which I hope is only the precursor of a still larger increase in the future, in the cost of our national education. It has been pointed out, and it is agreed by all parties, that it is a very unfair and unjust burden which at present falls upon the local ratepayer, who is called upon to pay increasing sums in respect of the increased cost of education and high roads, the connection of which with the particular plot of land he happens to cultivate is not very apparent. "But," says my hon. Friend, "You must not relieve the ratepayer by putting the burden on Imperial taxes, because that would be merely a present to the landlord." I cannot see why it is not perfectly just and equitable to relieve the landlord under these circumstances. I cannot see why the local landlord any more than the local ratepayer should be called upon to shoulder the burden of the maintenance of highways which are utilised by the owners of industry of every description, or called upon to pay for the education of everybody's children irrespective of whether they are connected with agriculture or not. The hon. Member for Hanley put before us a picture of a tax of 1d. in the £ upon 1247 capital value of land, which would mean 2s. 1d. on annual value being levied in this country. The hon. Member said that would be sufficient to pay very much of the burden of education which at present falls upon the rates. I find it extremely difficult to understand the frame of mind which would contemplate putting such a burden as that upon one particular form of property for the purpose of bearing a burden obviously national in character. The hon. Member for the Leigh Division referred to traditional views. I sometimes think it would be an interesting occupation to consider how old on the average a doctrine in political economy generally is before it is taken up as a new truth by some political group. I cannot help thinking that the appearance of the single-tax doctrine in the twentieth century is a very curious illustration of the revival and recrudescence of long-forgotten economic fallacies. In the latter part of the seventeenth century, before the dawn of the modern science of political economy, there was a school of economists who were known as the mercantile school, and who preached the very same doctrines which were revived a few years ago. These were the doctrines of the balance of trade—the doctrine that the prosperity of a country depended upon its maintaining an excess of exports over imports, and the doctrine that when import duties were levied it was the foreigner who paid the duty. So far as my hon. Friends on this side of the House are concerned, they smile now with a superior air over the fallacies of the mercantilists, and over the revival of their doctrines a few years ago in the mouths of certain hon. Gentlemen opposite. But whilst smiling at the fallacies of the mercantilists, they swrallow with open mouths the exploded doctrine of the early French political economists, the "Physiocrats." Their political doctrines were probably more popular in all classes of society than the doctrines of any other political economists have ever been. For a quarter of a century it was held that the only sound method of taxation was a single tax on land. They held that doctrine because they held very strongly the view that land was the only source of wealth. It was an extremely popular doctrine in those days, and when the hon. Member for the Leigh Division says he can find no instance of a British Colony that has adopted a tax 1248 on land value and abandoned it, I invite him to enlarge his historical researches. Among the political economists who held that doctrine were two or three ruling princes of European States. In one of them, I think Bavaria, and two smaller European States, the doctrine of the single tax was tried in all its glory in the latter part of the seventeenth century and proved a miserable failure. The doctrine in those days had this excuse that commerce and industry were in an infant condition as compared with agriculture, and men-might well make the mistake of thinking that land was the source of all a nation's wealth, and that you were-taxing wealth at its source in the most simple and scientific manner. But as my hon. Friend (Mr. Chiozza Money) pointed out, we have moved very far from that condition in England to-day. So far from the land being the only source of the wealth of this country, it is infinitely more true to say that in the modern world the wealth of nations depends upon their coal, supply, and where, as in this country as in Germany, you have a coal supply, you have a source of cheap power, and you see nations growing rich and prosperous by means of industry and commerce, and that where, as in Spain, no such natural advantages are enjoyed, you find a state of things similar to the condition in this country 150 years ago.
It is a problem which the Government have now got to tackle, and when the Chancellor of the Exchequer in a few weeks translates his proposals into pounds, shillings, and pence, then I have no doubt there will be many disputes in this House between those who, like myself, take the view that the only sound canon for taxation is that you can only tax people and not things, and that the only criterion should be ability to pay, and those who earnestly think that they have found the philosopher's stone, a golden method which by imposing taxes on barren land is to turn it into fertile and productive soil. I do not, on the other hand, in any way differ from the view expressed by members of the land values group as to the importance of reforming our rating system; as I understand from the Chancellor of the Exchequer's speech that also must be taken into account when the re-organisation of local taxation is considered by the Government. But when we come to deal with this problem of the unjust incidence of our present rating system, there again I do think 1249 we must draw a very clear distinction between, what we may call the theoretical school, who desire to rate only the prairie value, and what may be necessary in practice to remove the actual injustices and the actual evils of our present system.
One illustration will explain my meaning. Take the case of a man who has purchased a farm of, say, 100 acres which has never been drained, and never improved by embankments, or fences, or work of that description. If for that farm he pays £3,000, and if his neighbour acquires another farm for the like sum of £3,000, but in that case the sum of £3,000 for the most part represents improvements of the kind which I have indicated, drainage, works, embankments, and the erection of buildings, perhaps a quarter or half a century ago, I cannot see any practical utility that would be served by relieving one gentleman of rates and taxes on the bulk of the money which he has invested on the farm which has been improved in that way, while making the other gentleman pay full rates and taxes because his predecessor in title had not found it necessary to lay out money on the land. On the other hand, I can well conceive that, as from a given time, as from the date of the next Budget, for instance, it might be, and in my judgment it would be the greatest possible encouragement for building, and the improvement of agriculture, that substantial relief, if not entire exemption should be given to future improvements, either for all time or for a limited number of years. I rejoice for my part that these very important questions are now to receive immediate attention at the hands of the Government, and I desire to associate myself in the expression of gratification at the statement made by the Chancellor of the Exchequer this afternoon on the subject.
I am sure that we are all very glad that the Government are going to take steps this year to deal with local taxation. I rise mainly to remind the Government that in Scotland a somewhat different system prevails. We have different areas and different forms of local taxation. The Chancellor of the Exchequer in answer to criticisms in our Debate last year, stated that, when this question was dealt with, it would be dealt with comprehensively. I trust that nothing will intervene to prevent Scotland being dealt with equally with England and Wales. I cannot help thinking that there is a slight 1250 danger in this respect, because in Scotland, the claims of the single taxes are very persistent and embarrassing. We have heard a great deal in Debate this afternoon from those who are in favour of the single tax, and those who are totally opposed to it. I am convinced that the long delay in the visit of the Chancellor of the Exchequer to Glasgow was caused by the difficulty of reconciling the divergent views of his followers in Scotland. I trust that nothing of this kind will prevent him dealing with the claims of Scotland. When he came to Scotland he referred to a new system of rating, and stated that he was going to introduce some system of withholding Grants for inefficient services. I do not know what this means, but we in Scotland are rather jealous of any extension of interference with our local, affairs from the central office in London, or even in Edinburgh. As it is we find a great deal of interference in Scotch Local Government.
I have a few figures to show that we in Scotland are feeling the increasing burden of local taxation at least equally with the ratepayers both in England and Wales. Further, we are getting a proportionately decreased share of the increased expenses from national funds. In 1894 the total amount raised by rates in Scotland was £3,600,000. In 1912 it has risen to £7,600,000. The average amounts raised by rates per head of the population in Scotland in 1894 was 17s. 7d. In 1912 it was £1 12s. 3d.; or an increase of 83 per cent. In the same way the proportion which the Imperial funds contributed towards this increased expenditure is decreasing. In 1907, the rates paid 44 per cent, of the total cost of education. In 1912 the rates share had risen to 48 per cent. The figures of 1913 are not yet available, but I think it will be shown that the rates for 1913 are even larger, because in Edinburgh in 1913 the Government Grants to the school board were down by £6,000, while the amount charged upon rates was up by £8,000. In Scotland we have a further grievance that requires to be remedied. We have far smaller rating areas for education, main roads and Poor Law administration than prevail in England. Consequently, in small areas with a large population, the incidence of the rates presses very heavily, even more heavily than in England. The education rates in the parish of Newbottle are 2s. 8d., while in Cupar (Fife) they are one and three-twentieths. Again, in Lundie (Forfar) they 1251 are 1¼d. There is an enormous discrepancy between the rates in the different parishes in Scotland, mainly owing to the small areas. The road rates in Midlothian average 1s. 4d. to 1s. 2d., in Lanark they are 6¾d., and in Sutherland, going to the top of the scale, the road rates rise to 2s. 2d. I think I have shown that in Scotland we suffer both from heavy charges on the roads and also from unequal incidence. I should like to point out that the late Unionist Government introduced a Bill enlarging the educational areas of Scotland, but owing to the opposition from Liberal Members at the time the Bill was dropped. Since then I believe there has been a considerable change among our former opponents, who have become convinced that large areas will prove the only solution of many Scottish educational problems. Anyhow, there is an almost universal opinion in favour of enlarged areas. The Solicitor-General for Scotland, who, unfortunately, has not a seat in this House, declared himself a few months ago to be strongly in favour of enlarged educational areas. I cannot see why time should not be found by the Government to introduce a Bill providing for those enlarged areas. It could be treated as an agreed Bill, and it certainly would relieve a certain amount of unfair incidence of the education rates, and also promote the efficiency of education in Scotland. I trust that, whatever happens, we shall also receive, along with England, an increased share of Imperial Grants towards local educational purposes, and that some Members of the Government will give an assurance that the claims of Scotland will not be left in any way behind those of England.
§ 10.0 P.M.
§ Mr. WALTER LONG
I think I can reassure my hon. Friend on his last point, for when any legislation has been passed that has involved a distribution of money in any part of the United Kingdom, I have never known Scotland to be left out, I have never even known her not to get her share, and having regard to the distinguished part Scotchmen play in public life, I think my hon. Friend may rest assured that when it comes to a distribution, whatever the case may be, Scotland will not be behind the door when the money is there. I understand that the President of the Local Government Board (Mr. Herbert Samuel) is going to reply on the Debate, and I hope he will not follow the very bad example of his right hon. 1252 Friend the Minister for Agriculture (Mr. Runciman), who accused me of attacking the Chancellor of the Exchequer, after he had sat down, or had gone home, if I make one or two remarks with reference to the Chancellor's speech, and which may not be quite as agreeable as most of those we have heard to-night. I am convinced it is asking a great deal of the Opposition to view the position in which we are placed in quite so rosy a light as that taken by hon. Gentlemen opposite, and by some of those who have spoken on this side of the House. What are the hard facts of the case. We have had during the last three years three important Debates on this subject. Three years ago for reasons I need not describe, the Government were a little bit uneasy as to their position, and the Chancellor came down, and he gave to us a most delightful speech, in which he dealt with all the injustices and unfairnesses which surround the rating question, and assured us that no one felt more strongly than he the injustice of the position, and that nobody was so anxious as he to come to the rescue of the ratepayer.
The only thing that held him back was the old difficulty of the allocation of the money that Parliament might be willing to grant. Some of us suggested that if he was going to have an inquiry he might review the whole system of local taxation, but we were told that it meant a postponement of the decision of the Committee, that what was wanted was a Committee which should have a more limited reference, so that the inquiry need not be protracted and a report promptly presented and acted upon. Two years have gone, and the Committee are still sitting, though we have been told that its Report is shortly to be presented. For what reason is it that we have been waiting for that Report two years? Because the Government were not able to act. But to-night we have heard that the Government are prepared to produce a great scheme dealing with the whole basis of local taxation, although the Committee is not going to report, even if the hopes of the Chancellor are realised, for some time. In this case it is Jedburgh justice—they are prepared to give judgment, and hear the evidence afterwards. If the Government deliberately give me to understand that they are prepared with a plan, they should produce their plan before the Committee produce their Report. What is the next chapter?
1253 Two years ago we had a second Debate in which the Chancellor of the Exchequer did not take part. The then Secretary to the Treasury (Mr. Hobhouse) took his place, and a change came over the scene. He is now Postmaster-General, and I congratulate him on his advancement. At that time he was Secretary to the Treasury, and subsequently he became Chancellor of the Duchy. He dealt with this matter as representing the Treasury, and he told us that all the difficulties which had been mentioned were imaginary, and he brushed them away, and entirely repudiated our case when we reminded him of the Chancellor's promise. The Government were then comfortable in their seats. But this Session another change has taken place. They are not quite so easy as they were on that occasion; they are not quite so certain, being on the Treasury Bench at the beginning of the Session, that they will find themselves there at the end of it. Therefore we have another announcement, an announcement of the most portentious character, and I hope that the President of the Local Government Board, who on some aspects of this question is far better qualified to speak than any other Member of the Government, will tell us distinctly what it is the Government means to do, because there is nobody in this House, I do not care where he sits, who has made the most elementary study of this great and difficult problem of local taxation, who does not know perfectly well that if the statements we have heard to-day from the Chancellor of the Exchequer are to be followed by legislation, it means a tremendous scheme, which will take the greater part of one Session of Parliament and will push out of the way practically any other legislation. Take the one difficulty alone—the allocation of the funds when you have discovered the system you are going to adopt as your permanent settlement of this question of rating and taxation. This House might vote ten millions of money, and might decide to give it in aid of education rates or highway rates, or any other kind of rates, but unless you have decided what is to be your system of allocation, it is impossible to say whether you are going to devote that money wisely or unwisely to the relief of local taxation. It was as to that particular point your Committee was appointed, and on which we have had no light from it or the Government, and it is with that difficulty still unpenetrated that we are told that the Government are going to deal, in this Session of all others, with 1254 this most complex and involved question. I say it is asking a good deal of His Majesty's Opposition to expect them to believe that that is a kind of announcement which foretells a real attempt to deal with this old problem.
I am afraid hon. Gentlemen opposite will think that I am not treating the Government or themselves fairly when I say that in my judgment that is not a forecast of a real attempt to deal with this great question, but that it is an attempt to dress up the shop-window prior to the firm going into bankruptcy. My belief is that this talk, which has been of an extremely vague character, is all tending to placate everybody, and to produce that interesting state of things to which the Member for Northampton (Mr. McCurdy) referred, sc that at the conclusion of the Debate, which began in rather a different way, everybody would be found more or less in agreement. If that was the object of the Government, they have no doubt attained it. I venture to say that the Government have taken upon themselves, by that declaration, an enormous responsibility, and if they have got a plan they ought to produce it. If they have not, then the Chancellor of the Exchequer had no right to make the announcement, and if it was done to keep people quiet, then I say it was trifling with the position of Ministers of the Crown. If they have really made up their minds that the greater part of this Session is to be devoted to the solution of this question, then they must follow up that declaration by the production of the scheme, and we shall await its production with very great interest. The Chancellor of the Exchequer made a very interesting speech this afternoon, and I confess it is a kind of speech from him that I infinitely prefer to his Limehouse manner. That is my view—I dare say the hon. Gentleman opposite does not share in it.
§ Mr. WALTER LONG
The hon. Member may have read it. I certainly did not hear it, and it may surprise hon. Gentlemen to know that I did not, and, except in this House, I never heard the Chancellor of the Exchequer make a speech. I have read his speeches, and I say again, and I am sorry to confess my bad taste, that I infinitely prefer the Chancellor in his attitude to-night from the position which he takes up as a public speaker at Lime-house and other places. To-night he was 1255 extremely interesting. He was in one of those moods when he was very anxious to be on good terms with everybody. He talked round and round his subject in a manner that was very attractive, but was not very elucidating to the problem which we have under consideration. For instance, you get some statements about rating and our action in regard to rating, which showed, as the President of the Local Government Board will not be able to deny, that he failed altogether to appreciate either the motive or the object of my hon. Friend in moving this Amendment, or the object which we had in view when in 1896 we passed through Parliament the Agricultural Rates Act. What did the Chancellor tell us to-night? In the first place, he was not quite accurate, although I listened to him with great satisfaction, because he was strengthening our case, when he said that the effect of our present rating system is to put a check upon development, and that the moment you add to the value of your property, the assessment committee is compelled by law to raise the assessment. I am not a lawyer, and the Chancellor is, but perhaps he has been so long Chancellor that he has forgotten some of his law. I venture to say that it is not the law.
The duty of the assessment committee is quite simple and quite plain. It is to take care that every hereditament liable to rates is rated at the rent at which it would let to a hypothetical tenant—that is the whole duty. There is the case that sometimes occurs where a tenant spends money with the best intentions, but where the result is not that he adds to the rating value for the next tenant, but actually decreases that value by money badly spent. Therefore, to say that the mere expenditure of money by addition to premises forces upon the asessment committee the duty of a higher assessment is really to overstate the case, and by doing so, I think, to do injury rather than good to those who are demanding the reform of local taxation. What did the Chancellor go on to say next? He told us of his objection to the Agricultural Rates Act, and he was quite accurate. I remember particularly when he made all those speeches which went on until six or seven o'clock in the morning night after night. I did not hear all of them, but I remember the tenour of most of them. I do not think he is quite 1256 accurate in what he says was his objection, but there is some justification for his contention, that when he was supporting that Bill he was not opposing the relief, to rates, but was opposing the form in which that relief took. I am not intending, even by implication, to suggest that the Chancellor is not accurately, and to the best of his ability, describing his action, at the time, but I venture to say that if he searches his heart closely he will find that although that was the particular method he adopted with that Bill, that he would just as gladly have adopted any other.
One thing is clear, and that is, he was determined to fight the Bill. He tells us he fought it not because he objected to the relief of rates, but because in the Bill the larger amount of relief went to the tenant farmer or occupier of the land who is the better off. That shows that the Chancellor has never tried to appreciate this problem of local taxation. We were not advocating the Agricultural Rates Act as a means of dealing with agricultural distress. The justification for that measure was to be found in a principle which has been established times out of number in this House. I know that the hon. Member for Stockton (Mr. J. Samuel) has been for many years an able and, if I may venture to say so, a perfectly fair advocate of the claim of the town for relief of local taxation, and he has presented with great force and power the hard case of the town which has so often to bear a very heavy burden of taxation. Those of us who have been arguing and fighting this question for more than a quarter of a century have never denied the justice of the case of the town. But the case we have put, and which the Chancellor of the Exchequer has touched upon to-night, although not quite accurately, is that, while our system of local taxation requires revision from top to bottom, there are two classes of ratepayers who labour under a double injustice, namely, the agricultural ratepayers and the ratepayers of this great Metropolis. I will tell the House why. The general injustice of the ratepayer is that he is called upon to do two things: he is called upon, as the owner or occupier of real estate, to bear a burden which ought to be borne by estate of all kinds, whether real or of a more passing character, and, as an hon. Member has reminded us, if it was not for the fact that property of another kind had been found to be fugitive in its character so that you could not trace it and tax it for 1257 local purposes, and therefore it had to be exempted, as it is every year in the Expiring Laws Continuance Act, property of all kinds would still be liable for all this expenditure. That is the fundamental injustice under which all ratepayers suffer.
But in regard to the occupiers of agricultural land, there is a second case which makes the injustice a double one, and that is the injustice with which the Chancellor of the Exchequer did not fairly deal. He said, "You must remember that under the Agricultural Rates Act you did your best to relieve the agricultural ratepayer, but you forgot the trader, who is just as much entitled to relief as the agricultural ratepayer." That is absolutely true. But the Chancellor of the Exchequer was not just when he went on to say, "You tax the agricultural ratepayer on his house and buildings—that is the farmer, the occupier of agricultural premises—but you tax the trader, not upon his residence, which may have nothing to do with his shop, but upon his shop." Yes; but the Chancellor of the Exchequer forgot that under the Agricultural Rates Act, the house and buildings are charged at their full value. The reduction is made only in respect of the land. Where the Chancellor of the Exchequer was unjust in this case was that he failed to realise the contention that we have always put forward, namely, that the land is to the farmer, not a part of his rateable hereditament in reality, but a part of his stock-in-trade. I know that this has been the subject of controversy in some quarters, and there have been a minority who have tried to contest that proposition. Supposing the controversy became acute, I could point to one fact known to everybody which proves what I am saying. In the earlier days of this controversy, many hon. Members will remember that we had a continuous dispute over the rating of machinery. The famous Chard case, which first brought the question into public notice, will be remembered. The contention of those who rated machinery was that in certain cases there must be machinery, or the work of the particular trade could not be carried on. They argued that the machinery was part of the floor of the building. The matter was argued before several courts, and after many years it was dealt with by legislation by agreement in this House.
That proved that, in the opinion of the law, because the decision of the assessment committee was upheld in 1258 these particular premises, where machinery was essential to the conduct of the business, the machinery was considered to be a part of the premises themselves. But in other cases, where, for instance, a warehouse was filled with the component parts which go to make up an engine, those parts were not charged as machinery or as part of the letting value of the property. Why? Because the shop or warehouse had to be let, not as a house full of bolts or parts of an engine, but as a shop or warehouse fib to hold certain articles, or in which a certain trade should be carried on. Therefore I venture to say that there is no doubt whatever as regards the agricultural ratepayer that he has suffered, and suffers to by a double injustice. He suffers the original injustice under which every ratepayer suffers, namely, that the owner of real property has to bear the whole burden of this part of our national expenditure; and he suffers under a second injustice, inasmuch as he is rated upon his stock-in-trade. No other ratepayer in the country is rated upon this part of his property. We consider that the agricultural ratepayer ought to be dealt with, first because his case calls for special consideration.
In addition to the agricultural labourer there is the case of London. The case of London stands by itself. It does not rest upon the same foundation as those which I have already described in reference to agricultural land. The injustice to London is the result of the growth of London—the creation of this marvellous Metropolis of ours. Everybody who has studied these rating problems, these social problems, as they affect London, knows perfectly well that the great difficulty with which we have always been, confronted has been that London is formed into these two parts: you have your enormously wealthy West End, with its limited number of residents, and its many opportunities for luxury and enjoyment—I do not mean artificial enjoyments; I mean air spaces, open spaces, broad streets, parks, squares, gardens, etc.—while, on the other hand, you have a great part of the Metropolis which contains a mass of our population where but few of these opportunities are enjoyed. Here the rateable value of the districts is bearing the whole burden of the rates. There is no alternative in the shape either of residential quarters or manufacturing quarters to add to the wealth of the place. 1259 That is the difficulty of London. London has grown with great rapidity, and its growth has brought with it great claims—educational, Poor Law, sanitary, and municipal. What is the consequence? I will I am not at the present time—it is not necessary—quoting more than two or three very simple figures, but there are some figures in connection with London which are of a very striking character. I take them from a very remarkable paper which has been issued by the London Teachers' Association. It is well worthy of study by any hon. Member who wants to realise what the case of London is. I need hardly say that I have examined these figures carefully and they may be taken as correct. Take 100 as the standard figure. I would ask the House to bear in mind that I am dealing only with the cost of elementary education. I think our figures have been a little confused this afternoon, for occasionally Members have been taking the total cost of education, secondary as well as elementary. I am only dealing with elementary, which, I think, is the only figure which you ought to take. In London the receipts in respect of elementary education are: From the rates, 71; from Parliamentary Grants, 28; from other sources, 1. In the counties (excluding London) the figures are: Rates, 45; Parliamentary Grants, 54; other sources, 1. In the county boroughs: From the rates, 49; Parliamentary Grants, 49; other sources, 2. Provincial boroughs (other that county boroughs): From the rates, 46; Parliamentary Grants, 52; other sources, 2. The urban figures are 47, 52, and 1. Let the House realise that, although I am dealing only with the question of elementary education, the figures are not the same as the others. I do not think the proportions are so large but the figures are in the same tendency and direction, namely, that London has been steadily paying more and more out of its own pocket; but the contributions from the public exchequer are decreasing in proportion to the general expenditure. Therefore the case of London stands as the case of the agricultural interests stand, by itself, and that is the demand made by my hon. Friends, and especially by the right hon. Gentleman the Member for Fulham, for specially favourable treatment. This is a most attractive subject to those of us who have taken part in such debates in connection with it, and we rejoice that even a small portion of our time should be 1260 taken up with its consideration. I wish I could feel as confident and happy as some of those Gentlemen who have spoken in this Debate from the other side. They are apparently quite satisfied that we are on the eve of great reform in connection with this question. I must say I do not think that we are asking very much from the Government if we ask the President of the Local Government Board, when he comes to reply, to tell us a little more in detail. I do not ask him to unfold the whole scheme, that would be a most unfair demand, but to give us some indication of what this great reform is going to be. Remember what it means.
The Chancellor of the Exchequer told us to-night he was going to make it impossible in future for the Assessment Committees to rate people on their own improvements. I think that in itself is a most tremendous change to make in the Law of Assessment in this country. I know something of the Law of Assessment. I myself brought in a great Bill which attempted to deal with the subject. We were unable to carry it because of the opposition it aroused in every corner of the House. It is one of the most thorny and difficult questions. We were told in a sentence that this anomaly was to be dealt with, and that the whole basis of local taxation was to be broadened. Surely we are entitled to be told what is the meaning of the whole basis of local taxation and given some idea of the direction in which it is to be proceeded with. We were told above all, that the Government had made up their minds, and that the Government are not to be deterred by anything, not even demands for the Army or the Navy. It does not matter said the Chancellor of the Exchequer, which of my colleagues come to me or how insistent their demands. The Government have resolutely determined to give this money owing to the local rates. We are entitled to ask, not the exact amount, but for some idea of the great sum that it is intended to give to remedy the existing injustice. Is a great rating scheme going to be dealt with, and is the Chancellor of the Exchequer going to tackle the difficulty of the immediate and remote benefit. Is he going to tackle Lord Balfour's Committee and that which calls most for reform, namely, that you make your ratepayer pay for expenditure from which he derives no benefit, and for which he gets no value and immediate benefits; and is he going to make the man who gets value 1261 and immediate benefit pay more than the man whose benefit is of the most remote character? Are these the direction in which the reform is going to proceed? I do not think it is unreasonable to ask that if we are, as the hon. Member who preceded me suggested, to join hands in congratulating ourselves on a great reform of this character, that we should have some indication of the lines along which it is to proceed.
The speech of the Chancellor of the Exchequer was vague in the extreme. I am only too glad that this change should have come about. I welcome the promise to deal with the question, but if this Debate is to be regarded as a serious one, and not merely as an attempt to get over a difficulty in a temporary way, then we should have more information than we have yet received. If the Government are sincere in their declaration that they are going to deal with this subject in a drastic way, root and branch, the sooner they produce their scheme the better. It is not a question of four or five weeks, or two months. If the Government are going to ask this House to put a measure of this kind on the Statute Book they must produce it at once in order that not only this House but the various rating authorities and ratepayers will have an opportunity of discussing it. If they do not do that, upon them, and them alone, will rest the responsibility of not realising the hopes they have raised today. My hon. Friend who moved this Amendment in such an admirable speech has been largely responsible for the tone in which the Debate has been conducted, and he has scored all he could reasonably expect. I confess that I would like to know more definitely what we are to expect. Of course, I am not going to look a gift horse in the mouth, and I ask my hon. Friend whether, in these circumstances, he ought to divide the House after the declaration which has been definitely made by the Chancellor of the Exchequer, namely, that they are prepared without delay in this Session, and in a root and branch and generous way to deal with this great question.
§ The PRESIDENT of the LOCAL GOVERNMENT BOARD (Mr. Herbert Samuel)
The right hon. Gentleman who has just spoken, held, as we all know, the office of the President of the Local Government Board for many years with great distinction, and I count myself fortunate that on the first occasion when I address 1262 the House holding that office, I should have the privilege of following him in the Debate, and also of speaking in a Debate which is in the main of a non-controversial character. And, indeed, the office I now hold is one which will not, I hope, be the centre of many political controversies, and one may trust will lend itself to a fairly peaceful political life. The Debate to-day has been one of a non-controversial character both in tone and temper. The House generally in all parts has welcomed the undertaking given by the Chancellor of the Exchequer to-day, and has approved the lines which he has indicated in general terms. The right hon. Gentleman who has just spoken has indeed made two criticisms with respect to the Chancellor of the Exchequer's speech. In the first place, he said, and others before him from the benches opposite have said, that we have waited now for several years before undertaking the reform of our system of local taxation, and the readjustment of the relations between Imperial and local finance on the ground that the whole subject was being investigated by a Departmental Committee, and yet today we come forward with a definite undertaking of Parliamentary action, although the Report of that Committee has not yet been presented.
Then the right hon. Gentleman made another criticism that the Chancellor of the Exchequer's speech was too vague and indefinite, and he called upon me to state more precisely what were the actual intentions of the Government. Those criticisms are really mutually destructive, and to a great extent they answer one another; but they are both answered by the fact that it is expected that the Report of the Departmental Committee, to which its members have given such intense and prolonged labour, will be published not in a question of months, probably not in a question of weeks, but it may be within the next few days. The Report is almost in its final form, and the members of the Committee anticipate that their deliberations will be over in a very short time from now. That being so, when hon. Members opposite moved an Amendment to the Address on this question, it was clearly our duty to indicate that we should act this year since we anticipate the Report of this Committee will be before us and before the House in time to enable us to do so. Equally, neither is it our duty nor is it possible for us to state the details of our proposals, 1263 for they must necessarily depend upon the nature of that Report and upon the consideration which we are able to give to it. The general lines of our policy are, indeed, a matter for the Government as a whole, and cannot be determined by any Committee no matter how able the men may be of whom it is composed, but the precise proposals and working out of the policy must necessarily depend upon the result of those investigations, and we should have shown small courtesy either to the Committee or to the House, if we had stated, or if I were now to state, what are the details and specific nature of our proposals before we have had an opportunity of considering this before and before it has been made public to the House and to the country.
As all the world knows, the subject is one of great difficulty and of great complexity, but of profound public importance and of undoubted urgency. Within the last twenty years the local expenditure of this country has risen in an amazing degree. The expenditure upon main roads in England and Wales has risen from £1,500,000 to £3,300,000 in a period of twenty years. I am comparing the year 1891–2 with the year 1911–2. The expenditure on police has risen from £4,100,000 to £6,700,000, on poor relief from £8,600,000 to £14,400,00, and on education—this is the most remarkable figure of all—from £5,100,000 to no less than £28,600,000, and the total for those four services alone has grown from £19,000,000 to £53,000,000, or nearly threefold in that short time. True, that there is a larger rateable value on which these local taxes can be assessed, and true that there is a largely increased subvention from the Imperial Exchequer; but the fact remains that the burden of the rates has unquestionably immensely grown within that period, partly no doubt due to the fact that there is a larger population for whose needs the local authorities have to cater, and partly owing to the fact that the cost of the same services has increased within that time, but mainly owing to the fact that in all these matters of local administration there is a far higher standard of requirement now than there ever has been before. Whether you take education, or the administration of the Poor Law, or the policing of the towns, or lighting, or drainage, or roads—in all 1264 these particulars the public needs more, and rightly needs more.
This is surely not an evil. It is not art evil that there should be this higher standard of requirement. It is not ultimately an evil that a larger proportion of the growing wealth of the community should be spent socially through the State and the local authorities instead of being spent individually. Much of this expenditure, unlike a great deal of the expenditure which this House is asked to vote in matters of armaments, is beneficial and advantageous to the life of the community as a whole, and therefore its growth is not to be regarded, I venture to suggest, as a wholly unmixed evil. Certain it is that very much remains for our local authorities to accomplish, particularly, perhaps, in the towns. I do not think there is any man who can regard our great industrial towns with any measure of satisfaction: certainly any of us who are accustomed to travel in Germany, or to visit the newer countries, almost despair when we compare the existing conditions in most of our great industrial cities with any idea we may have formed of what a town should properly be if it is to be a worthy place for people to live in. Undoubtedly very much has been done. We have an immense deal of most devoted labour being given by members of our local governing authorities, both in town and country, to the improvement of the environment of the people, not only by country gentlemen, whose work in that respect has been properly praised to-day, but in the towns also. It is impossible to praise too highly the amount of voluntary unpaid labour which is willingly given by no fewer than 100,000 people in the United Kingdom, who are elected, or co-opted, or nominated members of the various local governing authorities. Apart from the parish councils, there are no fewer than 100,000 men and women actively engaged year in and year out in the work of local government. Certain it is that if we are to enable our local authorities to improve still further our system of education, to-strike even more efficiently than they are now able to do at the causes of ill-health; if we are to enable them to develop our towns on worthy lines, we must not only enlarge the powers of our local government authorities, but we must also give them more elbow room in matters of finance. The easiest method of accomplishing this would be to ladle out from the Imperial Treasury fresh doles of money 1265 on-the existing lines—merely to increase the Grants already made. That is the easiest, but I think hon. Members in all parts of the House will agree that that would be a wholly inadequate measure. The whole relations of central and local finance are ripe for revision. They are now in what may be described as a twisted tangle. The variety of the Grants made from the Imperial Exchequer to local authorities is immense. The complexity of them makes them almost incomprehensible and the time has come when the whole system should be straightened out. Of course it is true, as has been urged again and again to-day, that there are several services which are obviously national in their character, but which are defrayed to too large an extent by local taxation. There is one consideration, however, which I suggest to hon. Members should be borne in mind, and that is that the cost of these national services cannot be transferred wholly to the National Exchequer if you are still to keep local management. The hon. Member for South Wilts, whose interesting speech we listened to just now, suggested that these national services should be "taken over" by the Imperial Government, and frequently we hear in the country, recommendations that education and main roads should be paid for wholly from the National Exchequer. But is that consistent with local management? I do not think hon. Members would desire, if they gave it careful consideration, to see our main roads and our system of local education taken entirely out of the hands of the local authorities and entrusted to the management of a "horde of officials" of the Central Government.
If, therefore, you are to maintain in the hands of local authorities these services, necessarily you must require those authorities to levy on their constituents a very considerable part, at least, of the expenses of those authorities, and it is not sound policy to suggest that the cost of them should be wholly defrayed from, the national exchequer. Where you have local management, you must have to tome degree local responsibility for raising the money requried to carry on those services. Even the suggestion of the hon. Member for Tavistock (Sir J. Spear), who moved this Amendment, is open to some doubt—the suggestion that 70 per cent, of the cost of these services should be defrayed from the Central Ex- 1266 chequer, and 30 per cent, from local funds. That would mean that any local, authority which was willing to take £l from the pockets of its own ratepayers would have £4 to spend in its own district—£3 from the Exchequer and £l from the locality. I very much doubt, for my own part, whether so small a proportion of local expenditure would be found to be an adequate check upon extravagasce. The Government certainly propose to-review, as the Chancellor of the Exchequer has said, the whole system of the relations of Imperial and local finance, and hon. Members from Scotland and from. London who have in this Debate pleaded the cause of their own localities may have no fear but that they will receive equitable treatment in the changes that are to be made.
It is not only the relation between local and Imperial finance that needs review. The whole system of local taxation itself demands early revision. In its main lines the scheme of local taxation which now exists in this country has remained almost, unaltered since the reign of Queen Elizabeth. Its main features are the same, I believe, as those that were adopted at the time the Poor Law was first established. We have come to a moment when we must review that system, and review it in the light of the fundamental principles of taxation. The first of those principles, as I suppose every economist agrees, is that men should be taxed, whether for national or for local purposes, according to their ability to pay. That is the first test of fairness in any system of public finance j that men should be called upon to make an equal sacrifice. There is no doubt that in the early days of our rating system it was to fulfil that principle, at all events in the towns, that the placing of rates upon houses was adopted, in order to secure rough justice and that men should be taxed according to their ability to pay. If a man lived in a large house it was assumed he could pay a considerable-amount of local taxation. If he lived in a small house it was assumed that he was a poor man and could pay only a small sum. Now, the whole condition of our national life has so far altered that our local system of rating, based in the main upon the occupation and ownership of houses, bears only a very slight relation to ability to pay. Factories have grown up, machinery is installed in them, business premises have been created separate from residences, which was almost 1267 unknown in Elizabethan times, and the conditions are so fundamentally altered that it is essential that this fundamental principle should be reviewed. It is quite clear, too, that one method of reform must be to secure a larger contribution to local taxation from personalty. There are, how-ever, more ways of effecting that than the local Prussian Income Tax, the cause of which my hon. Friend (Mr. Chiozza Money) has pleaded to-day.
The second principle, which is equally valid with the first, is that values which in a special degree are socially created can properly be subjected to special taxation. I will give an illustration, which, I am sure, will receive acceptance in all quarters of the House, that of liquor licences. I am not speaking now of the amount of taxation imposed upon licences, whether it is too much or whether it is not too much, but the principle of taxing the liquor licences as such I do not think will be disputed in any quarter of the House, because Ministries of all parties have approved and have adopted that method, among others, of taxation. A liquor licence is taxed because its value is socially created. It is the product of the law, which creates some measure of monopoly, which does not allow free competition in the sale of liquor, which creates a valuable thing, a liquor licence, and therefore is justified in taxing it. The brewer pays his Income Tax like other men, but over and above that he has to pay special taxation upon his liquor licences for the reason that their value is socially created. And the same principle, in our view, applies in a large degree in the case of land. Apart from the improvements which the effort and expenditure of individual owners may have made, the value of land itself is a socially created thing to a larger degree than any other value. Therefore it is that we hold the view that supplemental to the first principle, which is a fundamental principle, that men should be taxed in accordance to their ability to pay, there is this additional principle, that land and other socially created values may justly be made the object of special measures of taxation. Therefore, to us it appears that the right method at which we should aim is neither a single tax upon land values nor a single tax upon incomes, but that our local system of taxation, like our Imperial system of taxation, should be a mixed system, and combine within itself 1268 various elements, each of which is just and each of which may be made a source of proper and useful revenue to local authorities. It would be improper for any Member of the Government at this stage, before we have received and have had time to consider the Report of the Departmental Committee on Imperial and Local Taxation, before the House has had time also to consider it, to make public in any specific manner the proposals which the Government contemplate, but the broad lines have been communicated by the Chancellor of the Exchequer, and I think have received general approval, so far as he has indicated them, from all quarters of the House. To this great and indeed most difficult question the energies of the Government in the sphere of domestic reform will in this year be in very large measure devoted.
§ Sir J. SPEAR
In view of the definite promise of the Chancellor of the Exchequer and the sympathetic spirit he has shown with respect to the claims which were presented, I beg leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ Main Question again proposed. Debate resumed.
§ Viscount CASTLEREAGH
As there are a few moments in which it is possible to have a general discussion, I should like to ask the Prime Minister whether he is in a position at the present moment to tell us the definite date upon which he proposes to explain to the House the measures he proposes to take with reference to Ireland?
§ Mr. SPEAKER
An hon. Member has given notice of a Motion upon which he proposes to raise that question. As that notice takes the form of a blocking Motion it prevents the discussion of the subject now.