§ Section twenty-seven of the Finance Act of 1896, as amended by Section twenty-two (1) of the Finance (No. 2) Act, 974 1915, shall be held to apply to occupiers of woodlands as well as to occupiers of land for the purpose of husbandry only.—[Mr. MacCallnm Scott.]
§ Clause brought up, and read the first time.
Mr. MacCALLUM SCOTT
I beg to move "That the Clause be read a second time."
The occupier of land for the purposes of husbandry at present enjoys certain advantages in the matter of the assessment of annual value for purposes of exemption or abatement. The proposal of this new Clause is that that advantage should be shared by the occupiers of woodlands also. The effect of the Statute quoted as amended is that for the purpose of claiming exemption or abatement "the income arising from the occupation of land shall be taken to be the annual value, except that if any person occupying land for the purpose of husbandry shows that the profits fall short of the annual value thereof, the income arising therefrom shall be reckoned to be the actual amount of such profit." The occupier of the land for the purpose of husbandry, therefore, if he can prove that his profits during the year are less than the annual value of his land, can be assessed at the actual amount of his profit. I suggest that this might be extended to woodlands also. Woodlands, might almost be classed under husbandry for the same purpose.
Mr. MacCALLUM SCOTT
Apart from any advantage which might be enjoyed by the occupiers of woodlands if they came under this Clause, there are good and sound reasons of public policy why we should endeavour to do everything that we can to encourage and develop forestry at the present time. It is not the object of this Clause to secure that in the lean years, when no timber is cut, and when, of course, there is no income arising from the land, the occupier of the woodlands should be able to be assessed on that standard of no income and when, in the year of cutting, he has a large income from it, he should then be able to go back to annual value. If the Treasury are willing to accept this Clause, I am sure they will be able to accept it in such a form that they can prevent that.
§ Mr. MONTAGU
I hope to prove to my hon. Friend that his Clause is dangerous in one respect, and that where it is not dangerous it is unnecessary. I flatter myself that I shall not take long to do that. Under Section 27 of the Finance Act, 1896, as amended by the legislation of last year, the assessment of woodlands, as well as of other land, is the full annual value of that land, except that, so far as land used for husbandry is concerned, at the end of the year you are to substitute the actual profits under Schedule D for the full annual value. What the hon. Member now seeks to do is to make that substitution of profits under Schedule D apply equally to woodlands as it docs to husbandry. If he achieved his object you would include in your concessions woodlands used for sporting purposes and woodlands used merely for the amenities of the estate, in which the profits might be very small, and which I am sure my hon. Friend would never attempt to tax according to the profits realised in a particular year. That is the part of the Clause which I submit to the Committee is dangerous. As regards the part of the Clause which deals with woodlands managed for commercial purposes, I would refer him to Section 22, Sub-section (4), of the Finance (No. 2) Act of 1915, which has already done the thing he now seeks to do. Under that woodlands managed for commercial purposes may substitute profits under Schedule D.
§ Sir A. MARKHAM
The occupier of woodlands has the right to be assessed under Schedule B as well as under Schedule D.
§ Mr. MONTAGU
Yes, I know. Under the law as it now stands land occupied whether as woodlands or husbandry are assessed on their full annual value. Then in the case of land occupied for the purpose of husbandry—I am quoting from memory—they are allowed to substitute for the annual value at the end of the year the amount of the profits actually realised. My hon. Friend seeks to extend that concession to woodlands. My argument is, that so far as woodlands are used for sporting purposes, there is no case made out; and that in so far as they are managed on a commercial basis, with a view to the realisation of profits, the occupier has, under the Section which 976 I have already referred to, the right of assessment under Schedule D on the actual profits arising from the occupation of the woodlands. Therefore, in regard to woodlands managed on a commercial basis, there is no necessity for the Amendment; and so far as they are not managed on a commercial basis it is a dangerous Amendment, which ought not to be accepted.
§ Mr. L. HARDY
The right hon. Gentleman has, I think, described the position perfectly correctly, but I think he has gone a little further than he ought in describing the position of woodlands in connection with other farming land, because undoubtedly it has been found that the amending Clause in the Act of last year is not nearly as full as the power that is given to land under husbandry. There are two limitations in that Clause which are acting against its operation. The first of them is, that you have to prove the commercial value, and there is no appeal from the general Commissioners in connection with the settlement of that question. It has to be done by the general Commissioners, and there is no appeal. My hon. Friend the Member for Oxford University (Mr. Prothero) has a new Clause on the Paper, which I desire to move at the end of new Clauses, dealing with that particular question. This limitation has been found to be a limitation which does affect the operation of the Clause. There is a further limitation which the right hon. Gentleman did not refer to, and that is that if an occupier of woodlands does apply under Schedule D, he can never go back so long as he is occupying those woodlands, and this has had such a serious effect that I believe in a vast number of cases people have been unwilling to take advantage of the concession given in the Budget last year, with the result that the Clause has become really of no effect. These two limitations are very serious; they do entirely differentiate the question from farm land. If the right hon. Gentleman could only see his way to make the concession wider than it is, I think it would be of very great advantage. I think everybody must acknowledge, after our experience during the last few months, that no hindrance in any way should be caused to the growth of woodlands. The Government is appealing to owners to cut down timber, and it is becoming one of the most serious things in connection with 977 many matters in this country, yet here we have undoubtedly a case where very great increase of taxation has been put upon woodlands. In consequence of the limitation of this concession given last year there is a very large amount of tax being put upon woodlands, seriously hindering that industry. Although I know there are objections to accepting the Amendment as it stands, I do think we ought to take this opportunity of pointing out to the right hon. Gentleman that the matter has not been satisfactorily settled, and that woodlands are being seriously prejudiced at the present time.
§ Mr. MONTAGU
I am disappointed to hear what the right hon. Gentleman has said, because he will recollect that the Clause dealing with woodlands, certainly in last year's Budget, was the result of negotiations, and that that had been accepted as a fair solution of a difficult case.
§ Mr. MONTAGU
I do not mean to grumble at the hon. Member for having raised it. I am only disappointed that the solution was not successful. It must be the object of every citizen of this country at the present moment to do nothing to discourage the growth of timber. Whatever happens in this War, our timber resources will be enormously depleted, and we ought to replace them, and people should not be discouraged by taxation. I do not think that this Clause will effect this object, for the reasons which I have stated. The right hon. Gentleman himself admits that he has put down a Clause in which he suggests an appeal from the General Commissioners to the Special Commissioners with regard to what are woods managed on a commercial basis. I do not think that that would do either, for the simple reason that the General Commissioners are likely to be much better judges than the Special Commissioners, and if he remembers the jealousies—proper jealousies—of the General Commissioners of the special, he will find that his suggestion that there should be an appeal from one to the other would be very hotly resented by those gentlemen who regard themselves as the citizens' representatives. My hon. 978 and gallant Friend the Member for Wiltshire has also got a new Clause on the Paper to do the same thing. I would make this suggestion. My hon. Friend behind me (Mr. MacCallum Scott) should withdraw his Clause, the right hon. Gentleman (Mr. Hardy) should not move his Clause, and the hon. and gallant Gentleman (Captain Bathurst) should not move his Clause, and we should reopen negotiations through the same parties as opened the original negotiations, and see if, between now and the Report stage, we cannot improve on the legislation which we passed so recently, so as to get rid of the objection to it, of which I hear now for the first time.
§ Sir G. YOUNGER
While I welcome heartily the suggestion of the right hon. Gentleman, I should like to remind him that when this particular Clause was proposed last year as a solution of the difficulty, I for one said I was quite certain it would not lead to the replanting of the woods which were then being cut down. Something ought to be done to remove this difficulty of replanting which has to be faced after the War if we are to retain our stock of timber to any very large extent, and this will involve a large outlay. I am very glad to think that the right hon. Gentleman has an open mind on the subject, and that he is willing to reconsider the whole matter.
I would like to associate myself with the words of the hon. Baronet. I am very glad that the right hon. Gentleman is prepared to reconsider the matter on Report, after we have had some little discussion on the subject with those who are interested in it. I am sure that we cannot ask for any more. It has been my experience during the last few months to travel about the country a great deal on Government work, and I was amazed and alarmed at the enormous amount of wood, some of it by no means mature, that is being felled in every direction. And in the interest of the nation, if we want to look ahead, we ought to make taxation upon woodland as easy as possible—at any rate, to those who are prepared to plant new woodland. As it is, there is no more serious tax falling upon any class of landowner than that which falls upon the owner or occupier of woodland. I mention a typical case that has come under my observation within the last few days. It is the case of an estate in Northamptonshire. The rates, which, I 979 think, are not excessive, are 3s. 8d. in the £. The Land Tax amounts to 7d., the tax on woodlands under Schedule A would be us., and under Schedule B 5s., and the Super-tax is 3s. 6d. This amounts in all to 17s. 9d. in the £ on the assessable value of woodland. This may go on in the case of the younger plantation for two generations, possibly more. The cost of planting would amount to something like £5 an acre. All this, if aggregated at compound interest over the same period would represent considerably over £100. It must be evident to everyone that taxation of this sort affects seriously the position of woodlands, at any rate, in the hands of the Super-tax payer, who, after all, is the person who has the means or ought to have the means of replanting, as he has the sort of estate upon which young plantations can be made, and who ought to be encouraged to plant. As it is, no man in that position in existing circumstances, and on the present basis of taxation, could be anything other than a lunatic who would dream of replanting any such ground to-day with a view to the nation having a larger amount of timber in the days to come.
§ Sir A. MARKHAM
I do not quite understand where we are on this proposed Clause. I think that my hon. Friend referred to another Clause which the right lion. Gentleman the Member for Ashford had on the Paper.
§ Sir A. MARKHAM
On the question of these plantations and woodlands the value of timber has risen by about 500 per cent, during the war, and in some cases by nearly 1,000 per cent. Many of these woods were of absolutely no value at all, and would hardly pay the cost of cutting before the War. To-day they are worth very large sums of money indeed. I think that the Government are bound to have regard to the fact that this great increase in value is due entirely to the War. In the North Wales district there is an immense area of woodland sufficient to last the mines of this country for three or four years with an enormous saving to the country as a whole. Under this Amendment wood- 980 lands are to be specially privileged, and if the suggestion of the hon. Member for Wiltshire is accepted, the taxpayer and the Treasury are going to be very heavy losers. I do not dispute the case which the hon. and gallant Gentleman has in mind, but it must be a very exceptional one. Unless the assessment of these woodlands has been unreasonably low, I cannot conceive a case in which the figure given can arise. I have bought a very large area of woodland since the War at a price 500 per cent, higher than the value of the timber before the War. That is an experience which other people can substantiate. I am not saying that all that money goes into the pocket of the landlord, but the State loses the excess profit, and as the hon. Member well knows, not a single penny of that pays any Excess Profit Duty whatever. The owner of that woodland escapes all taxation whatever, except ordinary Income Tax. Therefore the Treasury must have regard to the fact that there is this very large increase upon which owners of these woods pay no Excess Profit Duty whatever, although the excess profits arise solely from the War.
§ Colonel GRETTON
I have listened with great interest to the remarks of the hon. Member for Mansfield, and I quite understand the experience on which he has based them. Of course, he has great experience owing to his connection with collieries. Undoubtedly many plantations which are conveniently placed, and where labour is available, have been cut down freely, and very high prices have been paid for timber in that particular class of plantation. But that applies only to a very small extent.
§ Sir A. MARKHAM
The supply of wood for pit timber vastly exceeds all the other timber cut for commercial purposes.
§ Colonel GRETTON
I do not challenge the hon. Baronet's statement, but that does not apply to most of the timber which is grown. I offered some timber for pit-props, but the part of the country in which it was grown is not in the same position as some other parts of the country, for it happens to be at some distance, in addition to which we have no labour in the locality to which I refer to fell the timber, with the result that the colliery owners would not look at the offer, because they were not prepared to send labour into the district in order to move the timber. I had, therefore, to sell that timber at a very low price. As things 981 are, I am not complaining, but I only wish to point put that it is not really the case as put forward by the hon. Baronet, that the demand is limited to the supply of pit-props. There is a great deal of the timber in the country which is not affected by that demand in any way whatever. A good deal of timber has 'been cut down, and that timber has to be replaced. I do not think it will be disputed that owners of land suitable for growing timber have been growing timber, and they ought not to be discouraged in that work of afforestation which they are conducting in the national interests. I have no personal interest in this question, but I was glad to hear what the right hon. Gentleman said, that the Government is prepared to go into this case, and that where taxation presses with an undue severity that will discourage afforestation they are prepared to relieve the owners who are willing to spend money on afforestation from excess taxation. The Clause moved by the hon. Member opposite does not meet the case. As the right hon. Gentleman pointed out, there are woods where there are sporting rights which are already taxed. In other respects this Amendment does not appear to me to meet the case, and I hope he will withdraw it and allow this matter to be gone into in its widest aspect, so that afforestation may be encouraged by some relaxation of taxation.
I think the speech of the hon. Baronet the Member for Mansfield exemplifies extremely well the very unequal operation of the system which was brought into operation last year. The hon. Baronet is a fortunate man, because he purchased woodlands which were ripe for cutting, and at present he is perhaps making very considerable profits on those woodlands, and to my mind he has not been adequately taxed. He has selected Schedule B as the basis of his taxation.
Well, the hon. Gentleman is still more fortunate, because the profits made out of the use of wood for pit-props in his colliery are far greater than any profits passing to the owners of the raw material. My sole reason for rising at all was to emphasise the point—not from the landowner's point of view; I am sick of the prejudice which is hurled at the head of the landowner in this House—that what we want to do in future is to encourage people who have 982 the power and the means to do it to grow what is really a valuable national asset at the present time. My Amendment was on somewhat different lines, and perhaps I may be allowed to say what it was. I am not going to discuss the matter, but I want shortly to say that Section 22 of the Act of last year should not apply to any new or replanted woodlands of less than fifteen years' growth. I do not think the hon. Baronet would suggest that woodlands of less than fifteen years' growth ought to be taxed at the rate of 17s. 9d. in the £ for a period of something like seventy years before any value can be obtained by the owner out of such woodlands. If that be his opinion, I am quite certain that if he had his way in that opinion no owner of land suitable for the growing of timber, in such circumstances, would be such an idiot as to plant his land. The hon. Baronet suggested that 17s. 9d. is the charge on woodlands of this description, but the returns show that in a great many instances the charge is over 20s. in respect of these young plantations, which at the present time are so unfairly taxed. If the hon. Baronet can pick any holes in my figures. I should like to know what, the holes are.
§ Sir A. MARKHAM
I do not understand the hon. Gentleman's argument, for I pointed out the value the owners received from their woodlands, and I called attention to the point that the large profits which have been made must be taken into account in making the assessment. What is the use of getting up and saying that hon. Members on this side of the House are only too anxious to attack landlords?
§ Sir A. MARKHAM
Or words to that effect. It is surely a legitimate argument to say that the value of these woodlands has enormously increased. Is it right to tell the House that or not? If it is right to tell the House, why should this prejudice be set up, that hon. Members on this side seem to take a delight in attacking landlords? The hon. Member opposite seems to think that we know nothing about land on this side of the House, and that all the wisdom with regard to land lies on his side. I can assure him that is not so. Many of us have experience of woodland and their management, though, perhaps, it is not so great as that of the hon. Gentleman. At the same time, I submit the House ought to take into account the high value of these woodlands. The hon. 983 Member for Rutland (Mr. Gretton) referred to the difficulty of getting labour, but I would point out to him that the Minister of Munitions, in order to facilitate the obtaining of labour has agreed, in the national interest, to badge all men who are engaged in wood-cutting or in producing home-grown timber.
§ 10.0 P.M.
§ Sir A. MARKHAM
They are badged where they are employed in producing home-grown timber and cutting timber, which is available for the building of ships, and in view of the steps taken by the Minister of Munitions, this labour difficulty, to which the hon. Member referred, does not exist. Again, in regard to the distance of certain woods from railways, I may inform him that the colliery owners are making arrangements to send to those districts to obtain timber, so that the two arguments of the hon. Gentleman fall to the ground.
Mr. MacCALLUM SCOTT
The speech of the hon. Baronet has not disposed of the subject, and his reference to the high price of timber was, I think, rather irrelevant. So far as the existing timber is concerned, the amount in this country is very insignificant compared with that in other countries. What we are concerned with is to adopt some measure which will encourage the planting of fresh woodlands. However great the price of timber may be under the exceptional circumstances of the War, there is nothing in that price which would encourage anyone to plant a single acre of new timber. There were several points in the speech of the Financial Secretary to which I might reply, but I do not think there is occasion now in view of his very gratifying announcement that he is willing to reopen the whole subject. I therefore beg to withdraw the Amendment.
§ Proposed new Clause and Motion, by leave, withdrawn.