§ There is no greater injury that can be inflicted on any country than to neglect the great problem of health, of training, and nurture of the young. How are we to go about settling this problem? Merely to ladle millions into the coffers of local authorities without any conditions, and without overhauling the system of local taxation, would be a thoroughly vicious proposal; it would help little, and settle nothing. We should be just repeating the old pernicious experiments of doles, and the problem would still be with us. We have carefully surveyed the grounds in order to ascertain the defects of the present system, and how best they may be remedied without creating greater evils than those we endure at the present moment. What are the defects of the present system? Here I am basing myself very largely upon the evidence given before the Committee and the Royal Commission's reports. The first is this: That although the taxpayer and the ratepayer are identical persons, yet some contribute more than a fair share, and some considerably less than a fair share towards the burden of local taxation. This is true even when you come to the present method of dealing with local rates. Take the present method of valuing property. It is objectionable from every point of view. It works unequally, unfairly, partially. It is unsound and unfair. Some properties are valued to the full; other properties are valued at a nominal figure. Valuable land escapes contribution altogether because it is not put to the best use. You get a great house which may have cost scores and hundreds of thousands of pounds valued at a few hundreds a year, and you can get a 66 tradesmen's premises, which only cost a few thousands, valued at the same figure. The less a man improves his property the less he contributes; and the more a man improves his property the more he is subjected to a levy for the local rates. It is not true to say that the extent to which you improve your property is always a test of means—at any rate, not in the initial stages. It may not be a test and proof of success, but the cause of collapse. A farm with very good buildings is rated at the very highest, and if the buildings are neglected, and bad and inadequate the rates are low, and the good landlord is penalised. The landlord who puts land out of cultivation for sport has his rates cut down. The landlord who converts poor soil into good has his rates put up. That is a perfectly indefensible system of rating. Let us take the other test—the contribution in proportion of means. I take the different classes of the community upon the basis of income. The workman in the town contributes about 5 per cent. of his income to rates. The man whose dwelling is within the frontier of the Super-tax pays 1 per cent., or at the outside 2 per cent., so long as his income is not made out of large premises which, of course, would be very highly rated; but the man of private means contributes something like 1 per cent. towards the rates if he is a Supertax individual. [HON. MEMBERS: "We cannot hear."] I am sorry. He contributes in the proportion of 1 per cent. of what he is worth. The provincial tradesman contributes about 9 per cent. of his income to the rates, and the London tradesman contributes 13 per cent. I could give a few more cases.
§ Mr. LLOYD GEORGE
I put him in the same position as a ratepayer; he suffers about the same. The reason why I did not want to take his case separately, is that there may be a dispute as to whether the farmer or the landowner is paying. That is why I put the case, rather, of the trader than the farmer. The reason is that the basis of taxation is too narrow. It is not that the ratepayers, taken as a whole, have not got the means to face their liabilities and to discharge the obligations imposed upon them by Acts of Parliament, but that the present method of taxation imposes the burden on too narrow a basis, and that in certain districts it is not spread fairly and evenly, which is why it irritates and creates a serious grievance. 67 The community could carry much more if it were thoroughly spread and could carry it with much better heart. There is another defect of the present system to which I may call attention, because I should like the Committee to realise the points that impressed themselves on the Government in order to realise why we propose certain remedies. There is great inequality now between rich and poor districts, and I have given you some illustrations. I gave some, but hon. Members opposite said, "Those are Socialist or Liberal." I gave one district that is Tory, and I could give many more. I am not at all sure that Birmingham is not one of the districts. In those districts the needs are greater, and the rateable value is lower. There are some cases in which the rates which are necessary are higher in proportion to the total rateable value, and the communities are tending to become more and more separated into rich and poor, separated more according to their station, and the means and pursuits of the people who live in them. Even the motor-car is helping to shepherd the community into separate herds and flocks. There is no doubt at ail that the tendency of modern life is to leave those who are engaged in industrial pursuits to live more and more in the same area, and those who depend more upon the income of their capital to dwell outside that area. This is almost a new problem of local taxation. Those who have followed the growth of the rates in those districts will realise that this has created almost a new problem, and a very urgent problem, of local taxation.
Then there is another question. The Imperial contributions were largely fixed, and I think by Mr. Goschen, upon a basis which did not bear proportion to the expenditure. He, I think, departed from the old principle that the expenditure should bear some reference to the cost of the Service. He, I think, initiated the system of assigned revenues. The result is that the contributions from the Exchequer are becoming less and less in proportion to the magnitude of the expenditure in the local areas, in education, in roads, in police, and, in the case of public health, there is practically no contribution at all. The next grievance is a grievance that was created by the Agricultural Rates Act. I see it suggested that we opposed that Act. I did not oppose it myself so much as a contribution made by the Exchequer, but because it was the Very worst method in my judgment of 68 doing it. It created a rate difficulty of its own, and I am not sure that it was not as well described by the hon. Member for Chelmsford (Mr. Pretyman), who gave evidence before the Committee, as by anybody. It would have been all right if the rates had not gone up. If the rates had gone down, as I dare say that hon. Gentleman had very good right to anticipate at that time, it would have been a very good bargain for the rural communities. But the rates, unfortunately, have gone up. He is not responsible for that, and, on the contrary, I think he opposed most of those expenditures which have landed us in heavy rates. But, at any rate, the result has been this—that when you come to the increased rates, you first of all have to bear in mind the contribution from the Exchequer. [HON. MEMBERS: "Chair!" and "It is very difficult to hear you!"] The contribution from the Imperial Exchequer is a fixed one, so that when the rates go up, the result is that those who are not engaged in agricultural pursuits have not only to bear their own share, but they have to bear half the share which the farmers would have borne before the Act. If the contribution had gone up in proportion to the rates, then that would have been all right, but, unfortunately, that was not the principle upon which it was fixed, and the result is that it has created a grievance of its own in the rural districts.