RATING AND VALUATION BILL

HC Deb 13 May 1925 vol 183 cc1866-925

Order for Second Reading read

The MINISTER of HEALTH (Mr. Neville Chamberlain)

I beg to move, "That the Bill be now read a Second time

The main purposes of this Bill are to simplify the methods of making and collecting rates, and to promote uniformity in valuation. Unfortunately, as is so often the case, the process of arriving at simplification is rather complicated, and, though I am anxious to avoid the censure usually bestowed on the Front Bench of taking up an unnecessarily long time, I am afraid that it will be necessary for me to trespass somewhat on the patience of hon. Members this afternoon if I am to give any clear explanation of the provisions of this Bill. This is not a party question. It would puzzle the ingenuity of the most extreme partisan to find an electioneering slogan in its clauses. In spite of the fact that there are some Amendments—I might almost call them diversions—upon the Paper, I yet hope, in view of the fact that in all quarters of the House there are bon. Members who have themselves taken part in local administration and know the difficulties which beset those who are carrying on with so much public spirit and credit that work for the service of the country, that from them I shall have general support for a Measure which is not only valuable in itself but which will pave the way for further reforms calculated to promote efficiency and economy in local administration, and to extend a greater measure of equity and justice in the distribution of local burdens

I would like to express my regret that a longer time has not been afforded to hon. Members to study this Bill before taking the Second Reading. That has been due to circumstances beyond my control. But, on the other hand, I would remind the House that the Bill is founded upon, and indeed in most respects is identical with, a draft Bill on the same subject, which was last year circulated lo all local authorities and others interested in the subject throughout the country. It was circulated in order that the Department might have the benefit of their criticisms and suggestions. We have received from them very valuable advice and some constructive suggestions, which we have to a large extent embodied in this Bill. In fact, I may say that, with the exception of the Clause dealing with the rating of machinery—which is entirely new and does not appear in the Bill of last year —this Bill may be said to differ from the draft Valuation Bill only in respect of alterations which have been designed to meet criticisms and suggestions received from those to whom the draft was circulated

Perhaps it would be for the convenience of the House if I were to begin by giving a very brief sketch of the conditions which we seek to reform, so that hon. Members may have some adequate idea of the chaotic condition of things which we find today, and may realise the necessity of overhauling a method which was designed to meet a condition of things that has long since passed away, and which in present circumstances may be called obsolete, cumbersome, illogical and unjust. In order to find the origin of our present system of rating, we must go back over 300 years in the history of the country. We must go back to a time when the population of the whole country was considerably less than that of Greater London today, and when the various parishes were almost entirely isolated from one another owing to the meagre and scant means of communication which existed in those days

4.0 P.M. Of course, at that time there were no local authorities in existence as we find them today, but wherever people are gathered together in communities the necessity arises for common services, for which it is necessary to raise money. Among the common services, in the days of which I am speaking, was the relief of the poor in each parish, and before the dissolution of the monasteries, that relief was largely maintained by means of alms from the monasteries, and by bequests and charitable institutions. When the monasteries came to an end, there was a deficit, but it was still sought to meet that deficit by voluntary means. In those days, as now, there was always a difficulty in getting by voluntary means sufficient contributions to provide the funds that were required, and so a law was framed, and in 1536 it was enacted that parsons, vicars, curates and preachers should be directed to "exhort, move, stir and provoke" people to liberality. That does not seem to have been effective, and in the reign of Edward VI some further Measure was found to be required, and another Statute was passed under which collectors were appointed, who were enjoined to hold what we should now call a flag day. On a certain Sunday they were to ask all people in the parish to contribute, out of their charity, a weekly sum for the relief of the poor. Still, that was not sufficient, and in 1563, in the reign of Elizabeth, a rather more drastic Measure was passed, in which it was enacted that if any person, "of his wilful and froward mind," obstinately refused to give a weekly sum in relief of the poor, he should be brought to the sessions, and there he was to be "gently and charitably exhorted "by the justices. If he continued forward, the justices were empowered to tax him, and if he still refused to pay the taxes he might be sent to prison. That seemed to parry matter further, but, still, the use of force was the very last resort. Last of all, we come to the famous Statute of 1601, in which, for the first time, overseers of the poor were appointed in every parish, and they were empowered to tax all the inhabitants in such competent sums as the overseers might think fit. But even then no guidance was given to those officers as to how they were to assess the parishes, or how they were to distribute the contributions which they were empowered to exact

I think the House will observe two points in this brief historical survey: first of all, that the parish, which was the unit taken for the purposes of the relief of the poor, was the only unit which could have been taken at that time on account of the difficulty of communication I have mentioned, and, secondly, in those happy days the relief of the poor was the main, and almost the only, service for which local rates had to be raised. But, later on, other services naturally developed, and the money required to provide these further services, such as the maintenance of roads, cleansing, lighting, and so forth, was raised in two ways—either by the addition of fresh charges to the poor rate, or by the levying of fresh rates, which, as a rule, were based on the same valuation as that on which the poor rate was based

These two methods continued to expand as centuries went by, but they received their greatest expansion in the last hundred years with the great development of local services, and with the increase in the number of local authorities. Today a parish is still given a local administration, and the overseers are still the principal rating authority, but other authorities make demands upon the overseers for their expenses, and the overseers are precepted by borough councils, urban district councils, rural district councils, and boards of guardians. The county councils also precept, but not frequently upon the overseers, as they make their precept upon the boards of guardians, who make the county demand upon the overseers. On the other hand, boroughs are empowered to raise rates for their own services irrespective of the poor rate, and you have improvement rates, borough rates, and general district rates, which provide funds that are necessary for police, for education, for sanitary service, and so on, and these borough rates are, in some cases, not levied on the same valuation as the poor rates, but the boroughs are themselves empowered to make separate valuations. Moreover, these different rates are not equal. Certain properties, for instance, are entitled to relief under one rate, and to no relief under another rate, although the two rates exist in the same area

So that it will he seen how extremely difficult it is to keep accounts straight, bow much bookkeeping is necessary, and how extremely hard it is for members of local authorities to see exactly what their various services are costing the ratepayers. In the rural parishes there are, again, special rates for services which are peculiar to individual parishes. The parishes may raise a special rate; there are library rates, lighting and watching rates, and some of these rates are really extremely trivial in amount, although they still require separate accounts and, in some eases, separate staffs. I have made an investigation, for instance, into lighting and watching rates, and I find that in 1922-23, out of 800 lighting and watching rates in the parishes, 723 were under 6d. in the pound, and 423 were under 3d. in the pound

The House will see, from what I have said, that there is today altogether an unnecessary number of rates, and, further, that this complicated and rather cumbrous procedure of precepts through overseers, is really a mere survival of the past, which has really no significance in relation to the conditions of today. Accordingly this Bill provides for the final disappearance of the overseers from the Statute of 1601. If hon. Members will refer to the Ninth Schedule, they will see there some of the rather quaint wording of that ancient Statute. The duties of the overseers are to be transferred, under the Bill, to the real, living bodies of today, that is to say, to the local authorities, the borough councils, the urban district councils and the rural district councils. They will form the new rating authorities, and the main rates, which I have already described to the House, will be consolidated into a single general rate, and only in the parishes in the rural areas, where special services still have to be provided, will there still be rates known as special rates, but, where those rates are really light, they will be included as special additional items in the general rates

. This reform, I think, is going to lead to a very great amount of simplification. From papers which have been circulated, probably the House is aware that, in urban districts, the number of rating authorities is going to be less than half of what it is today, and in the rural areas the reduction is to be far greater: from 12,882 rating authorities existing today we shall come down to 648. We are sometimes told that we are getting rid of a number of unpaid officials, and that we are going to substitute for them paid officials at an increased cost. I think hon. Members must bear in mind that there is already a whole army of paid officials in connection with this rating, and that assistant overseers, collectors of poor rates and other officials are employed in such numbers, that I am advised frequently they have all the apparatus of separate rate-books, separate rate demand notes, receipts, audits, cash books and the rest of it for, perhaps, a dozen or 50 ratepayers

As to the economy which is to be effected in this way, it is going to be very great. I think clear evidence of that is to be found in the fact that a large number of towns have already gone to the expense of obtaining a local Act in order to get consolidation of the rates. I believe in the present Parliament there are no less than 15 Bills before us now in which the same object is to be attained, and I am told by a gentleman, who is, I think, recognised as the greatest authority in the country upon this subject, that from his experience the consolidation of rates in urban districts will effect an economy equal to a penny rate, with the exception, perhaps, of some large towns, where the penny rate represents such a sum as £20,000 or £30,000, and where the economy will, probably, be found to range between £5,000 and £10,000 a year. One case has come under my knowledge of the consolidation of rates obtained by a private Act which has resulted in economy to a county borough of no less than a 4d. rate. So that the House will see there is a very considerable saving to be obtained by the proposals of the Bill in this respect

There is one other reform in this connection which I should like to mention, and which particularly affects rural areas. That is what is known as the precepting reform. I have explained that county rates are obtained by precept through the guardians, and the amount of money required for the county rates is apportioned among the various parishes concerned, according to their rateable value. The rateable value in many rural parishes is concentrated, frequently, in one considerable property. It may be the big house of the parish, or it may be a factory or a mine. If that house, factory or mine is temporarily closed, the valuation list remains as it was before, but the property is contributing nothing to the rates, and, as the county rate is in proportion to valuation, and not in proporion to the produce of that valuation, the unfortunate ratepayers of that particular parish may have to pay, perhaps, twice as much as those in an adjoining parish, although they do not get any corresponding benefit. That is swept away by the present Bill. The precepting reform consists of this, that there is one rate having uniform poundage right throughout the area, and, therefore, in special circumstances such as those I have described, the deficiency occurring would be shared by the whole body of ratepayers throughout the area, instead of falling upon a few particular individuals

I now pass to the new proposal in the Bill which refers to the collection of rates by owners. Under the,present system, owners of dwelling houses can elect, or, in some cases, be forced to come into what is known as the compounding system. Under that system the landlord pays full rates on the whole of his property, whether any of that property is void or not. It does not matter whether it is occupied or not: he undertakes to pay the rates on every house belonging to him. For that he is given a commission which ranges from 15 to 30 per cent. in the Poor Rate and 50 per cent. in respect of other rates. That means a considerable loss to the rates, especially in present circumstances, when void properties are practically nonexistent, and we propose, instead of that system, to introduce a new plan under which a landlord will only be compelled to pay over the rates which he actually collects. If, therefore, he is unable to collect the full rates, he will not be liable to the rating authority for the full rates but only for what he actually collects, and for that purpose he is going to be given a commission of 5 per cent". It will still be open to him voluntarily to undertake to compound on the old plan, but if he does so, in that case his commission is to he limited to 15 per cent

We believe that under these new proposals, local authorities will be able to get some considerable part of their rates collected on something like reasonable terms instead of the prohibitive terms to which they are subject today. In any case, the landlord who is collecting rates will be compelled to furnish the tenant with a statement, not only of the rent, but also of the rates stated separately—the rates in respect of the house. The object of that provision is to enable the tenant to realise his liability for the services which he is receiving and induce him to recognise that it is his duty as a good citizen to see that economy is properly exercised by his representatives on the local council. I believe Part I of the Bill with which I have been dealing up to the present, will receive general assent

I now come to Part II, concerning which there is more likely to be difference of opinion, owing to various fears as to the results which may arise from the proposals. I hope to convince the House that these fears are without any serious foundation. I mentioned in an earlier stage of my remarks that under the statute of Elizabeth no guidance was given as to how the inhabitants who were to be rated should be assessed, and the result of that want of guidance was want of uniformity. I may cite the case of the clothing trade, which used to be carried on in the southern and southwestern counties. It was decided that the stock-in-trade of the clothing trade should be rated, and the result was that the trade left those districts and removed itself further north where no such imposts was laid upon it. That is a fact which I ask the House to bear in mind, because it has some relation to what I may have to say at a later stage on the question of the rating of machinery. This want of uniformity, owing to lack of guidance, continued for a very long time, in fact, until 1836, when the Parochial Assessment Act was passed, which, for the first time, laid down the basis upon which valuation should proceed. In that Act I find it laid down that: No rate for the relief of the poor in England and Wales shall be allowed by any Justices or be of any force which shall not be made upon an estimate of the net annual value of the several hereditaments rated thereunto, that is to say, of the rent at which the same might reasonably be expected to let from year to year, free of all usual tenant's rates and taxes and tithe commutation rent charge, if any, and deducting there from the probable average annual cost of the repairs, insurance and other expenses, if any, necessary to maintain them in a state to command such rent. That is a provision which has a very familiar ring to those who know the definition of gross valuation which is generally adopted today. But although that basis provided that the valuation in an individual parish should be uniform, it did not provide that the same basis should be used in different parishes, and so, in 1862, the Union Assessment Committees Act was passed, which gathered together the different parishes into unions, set up in each union an assessment committee which dealt with the whole area of the union, and so provided for uniformity over a district larger than the parish itself. Even under that Act no scale of deductions was laid down, and there was no provision for periodic revaluations. That Act being still in force, and still being without that pro vision, hon. Members may understand what the position is today. To take the case, for instance, of a borough which includes areas situate in two separate unions, it is extremely difficult, if not impossible, to impose an equal rate over the whole borough, the valuations being on different bases in the two unions because one may have been revalued quite recently, while the other has not been revalued for a very long time. So difficult has this want of uniformity made things that, outside of London, it, is possible today to have no fewer than three valuations for rating purposes. There may be one for the borough, another for the county, a third for the poor rate, and, when it is remembered that in addition to these three there may also be a fourth for purposes of Income Tax, the House will see that things have got into a very tangled condition indeed

What is the way out of this tangle? I think when we remember the great development of local government and the large areas which are today covered by one service carried on by local autho rities, it is quite evident that we must try to get uniformity over a very much larger area than hitherto, and the area over which that uniformity is to be pre served should be coincident with the local government boundaries. So the Bill proposes to set up new valuation areas which instead of being areas of unions—of Poor Law authorities—will be in the case of a county borough the area of that borough, and in the case of a county an area to be delimited by the council of the county, after consultation with the rating authorities in the county, and to be submitted to the Minister of Health for his approval. For each of these new valuation areas we propose that new assessment committees shall be set up. In the case of the county boroughs the assessment committee will be appointed by the town council. In the case of the county it will be appointed by the county council, by the boards of guardians and by the rating authorities in the areas concerned. In order that we may not lose the wide and long experience of the overseers and guardians, it is provided that in the case of the county boroughs not less than one fourth of the members of the assessment committee shall be nominated by the boards of guardians. In all cases there will he included in the assessment committee two general commissioners of Income Tax. As a further effort to obtain uniformity over largo areas, it is proposed to set up county valuation committees to include members of the county council and members of the various assessment committees in the area. These county valuation committees are expressly directed to hold conferences at which may appear members of the assessment committees in county boroughs, as well as those in the county itself, and in this way it is hoped that a much greater amount of standardisation will be achieved than is possible in present circumstances

I observe with some regret that the appointment of these new assessment committees has been taken in some quarters as a reflection on the existing committees. For that view there is no foundation. The existing committees have done their work very well and they have been praised frequently for it by various predecessors of mine. But I think it obvious that their constitution does not fit in with the new state of things and with these much larger valuation areas. It is essential that the assessment committees should represent not merely the hoards of guardians, but the local authorities, who are responsible for the bulk of the expense. There have been very great changes in this respect in regard to the position of those who are responsible for the administration of poor relief compared with the other local authorities. For instance, I find in 1840 the total amount raised by rates in the country was just over £8,000,000, and out of that sum £4,750,000 was raised for the poor rate alone, and only a little over £1,000,000 was raised for the purposes of county authorities and municipal corporations. That offers a very striking contrast to what we find today, when the total amount raised in rates has risen to £142,000,000, and out of that only about £31,000,000, or 22 per cent., is attributable to the expenses of the guardians and overseers of the poor. That shows the change in the relative importance in value of these two sets of authorities, and I think is justification for the setting up of the new assessment committees proposed in the Bill

I have some fear that hon. Members who are not familiar with this subject may be puzzled by all this jargon about assessment committees, valuation committees, rating authorities, and the rest of it, but I would ask them to remember that the valuation area is to be a large area, probably comprising several rating authorities, and the assessment committee which represents that larger area may be regarded as a sort of court of appeal who will have to consider the valuation lists presented to them by the rating authorities representing the smaller areas comprised in the valuation area. I believe there has got about some sort of idea that these assessment committees are going to be unduly influenced by representatives of the Revenue. I cannot help thinking that some people—I do not say this House—have got the idea that, for instance, a revenue officer will be a member of the assessment committee which is to be the court of appeal. That is not so. The revenue officer is not a member of the assessment committee. It is true that he has a right to appear before it, but in appearing before it, and in stating his objections to any items in the valuation list, he is put in exactly the same position as any member of the general public, and is allowed to do no more than any other member of the public is allowed to do in the examination of witnesses before the committee. I cannot help thinking that those who have taken this view, that the assessment committee was going to be in favour of the Revenue, have been misled by the fact that these General Commissioners of Income Tax are appointed as members of the assessment committees. Of course, the General Commissioners of Income Tax are not servants of the Revenue at all. I have here a passage in the Report of the Royal Commission on Income Tax for 1920, and after discussing the suggestion that certain powers should be taken away from the General Commissioners, they use these words: We believe that to do this would create a great opposition and would be regarded as an injustice by the taxpayer, who often looks upon the General Commissioners as a natural safeguard introduced between himself and the revenue authorities It will be understood, therefore, that the real functions of the General Commissioners of Income Tax are very different from those which are sometimes popularly attributed to them, and that their presence on these assessment committees must rather be regarded as a guarantee that the interests of the general public will be taken proper care of than as any indication that the interests of the Revenue officer are going to have undue prominence

But let us return for a moment to the rating authority. It is provided in the Bill, in Clause 18, that they are to prepare fresh valuation lists every five years, in that respect following the practice of London, and it is further provided, in Clause 19, that the gross values, which are finally found for rating purposes, are to be taken as conclusive evidence of the gross values for Income Tax purposes, so that at last we get down to the ideal of one single valuation, not merely for rating purposes, but also for Income Tax purposes, which, for over 50 years, has existed in London, and in one of the Schedules of the Bill will be found a fixed scale of deductions, which will give that uniformity in municipal valuations which has hitherto been so conspicuously lacking. This ideal of a single valuation has been recommended for years past by Royal Commissions, by committees, by associations of local authorities, by surveyors' institutions, and so forth. I find in the Report of the Royal Commission on Imperial and Local Taxation, which came out in 1901, the statement: A general desire has been expressed by most of the witnesses, and in a number of resolutions which have been forwarded to us by public bodies, that it is desirable to have one valuation authority, and one system of arriving at valuations for the whole rating area over which common rates are raised; that upon such valuation all rates and taxes, both for local and Imperial purposes, should be charged and levied; and, further, that, if possible, provision should he made to obtain uniformity in valuation throughout the whole country. I have here also an interesting quotation from the evidence which was given before a Departmental Committee on Imperial and Local Taxation in 1912 by a very distinguished surveyor, Mr. (now Sir) Henry Trustram Eve, who said: We are unanimous in thinking that we want one rateable value for rates and taxes. and we took a leading part under the Bill of 1904 in that direction. I personally was one of the deputation of three that went to see Mr. bong. We asked for that, and we pointed out in our memorandum … that there were five rates and taxes which could have different totals presented to the ratepayers … The answer of the Local Government Board was that they had nothing to do with Somerset House, and we ventured to say that we wanted to talk to the Cabinet and not to the President of the Local Government Board; we wanted some Government to bring in a Bill that was above the Local Government Board and above Somerset House, so that we could have one rating value for Schedule A, poor rate, and Inhabited House Duty, so that the ratepayer would have merely one account that he could really remember and pay everything on. We were told we could not have it, and the matter dropped; but I hope that this Committee will seriously take it into consideration, because that is what the public want. I know it is argued that, although this principle of a single valuation may be very desirable in normal times, these are not normal times, and I think that some criticism has been directed against the Bill because it is suggested that, owing to the existence of the Rent Restriction Acts, rents on precisely similar properties are to be found differing very widely, and if you are going to have a single valuation, in which the Inland Revenue officer is concerned as well as the rating authorities, he will go forcing up the rate value for rating of any particular house of which the rent is in considerable excess, perhaps, of the normal rent charged upon similar property. I do not think there is any foundation for any fear of that kind. In Clause 76 will be found the old definition of gross value, with which we are all familiar, and in Clause 72 it will be found that nothing in this Bill is to affect the principles upon which hereditaments have hitherto been valued; and, taking these two Clauses together, it seems quite clear to me that the rating authorities, in preparing their valuation lists, will take what seems to them to be the normal rent which is being paid for a house as the annual value of that house, and that they will treat these exceptional rents, where they exist, as being what you might call fancy rents as being something more than the value, which is indeed being paid by the tenant, but which should not affect the annual value for the purposes of rating

That is what I believe will be the practice of the rating authorities. But then, it is said, if you are going to do that, you are going to deprive the Revenue officer of his right to get the proper amount of tax for the purposes of Schedule A. I have consulted my right hon. Friend the Financial Secretary to the Treasury as to what is the intention of the Treasury in this matter, and he tells me that, according to Clause 18, the new valuations will not be completed throughout the country until 1929, and that in the next ensuing Finance Bill after that time, it is proposed to make the gross value in this valuation conclusive for Income Tax purposes, as well as for rateable purposes, subject to such conditions as Parliament may then impose If the special conditions to be asked for in that Finance Bill involve giving powers to the Revenue officer to obtain the additional assessment upon these fancy rents, then, I think, two things may be said: First of all, that will not be giving the Revenue officer any greater powers than he has today. Today he makes his own valuation, quite independent of rateable value altogether. Secondly, if the idea is that the Revenue officer is going all the time to provoke the rating authorities to work up the assessments on ordinary properties to the highest possible point, give him these powers of putting additional assessments on fancy rents, and you will take away from him all inducements to raise the rateable value beyond what it should properly be, in the opinion of the rating authority

Having met, as I hope, the particular points which I know are in the minds of some hon. Members on that matter, I would like to say a word about the statutory deductions which are provided in the Schedules of the Bill. As I have said already, there is a great want of uniformity in the rates of deductions which are practised in different parts of the country today. I have seen a valuable statement of rates levied in 1924 and 1925 compiled by the Borough Treasurer of Preston, and, after pointing out that out of 217 towns with which he was dealing, in 97 there had been no revaluation since 1914, he goes on to say that the deductions vary in different cases from less than I5 percent. to more than 30 per cent I think that shows that, if you are to get any sort of standard by which you can compare the rates or valuations in one part of the country with another, it is necessary to lay down some kind of1 uniform scale. We have prepared and put forward such a scale in the Schedule of the Bill, and when we come to the Committee stage I shall be ready, of course, to listen to any arguments or considera- tions that may be brought forward with a view to showing me that that scale is not a proper scale, but I may say, in the meantime, that what we have done is to adopt the scale laid down in the Finance Act, 1923, and that where there have been in the past special reliefs for certain classes of property, such as, for instance, the relief of 75 per cent. afforded to agricultural land, that is included in the Schedule, and it is made permanent, the only change being that, instead of, as now, being a rebate off the rate, it will be a rebate off the valuation

Now I want to say a few words about Clauses 36 to 46, which deal with the valuation of special properties. Special properties, as the House probably knows, include railways, canals, and public utility undertakings generally, which very frequently are situated in more than one valuation area. The present practice of valuing railways is a very complex one. The valuation is parochial, and that is to say that what we have to try to ascertain is the rent which a hypothetical lessee of that particular part of the land which is comprised in that particular parish would pay for it —obviously a perfectly absurd and impossible method of procedure, and one made the more difficult since the War by the amalgamation of the railways which has taken place. It is, therefore, proposed in the Bill to set up a central valuation authority on conditions which are the result of an agreement arrived at, after very protracted negotiations, between the railways and the various local authorities concerned. This new railway assessment authority will be composed of an independent chairman, who will be an experienced lawyer nominated by the Lord Chancellor, a representative of the London County Council, and six other representatives of various associations of local authorities. The duty of the central authority will he to value each railway as a whole,in cumulo,as the lawyers say, and, having ascertained the value as a whole, which they will do by taking account of the net receipts of the railway, they have then to apportion it out among the several parishes through which the railway runs

With regard to the Anglo-Scottish railways, the task is even more difficult here, because the law and practice with regard to rating differ in the two countries, and it will be seen that they are not included in the present Bill. They are to be dealt with in a subsequent Bill, which will be introduced, probably not this year, by my right hon. Friend the Secretary for Scotland, to deal with the Scottish and Anglo-Scottish railways. They, too, will have to be valued as a whole by the railway assessment authority in England and the railway assessor in Scotland jointly. There will, first, have to be an apportionment between Scotland and England of the valuation, and then there will be a further apportionment in each country between the several parishes of the valuation so assigned. In the meantime some provisional arrangement is provided for in this Bill for dealing with the English railways until a final arrangement can be made. Special properties are to be dealt with by assessment committees, in which case the railway assessment authority will act as an appeal court

Mr. MacLAREN

Will that court he always in session?

Mr. CHAMBERLAIN

Yes. I now want to say something about Clause 22, which deals with the provisions as to the valuation of hereditaments containing machinery and plant. The rating of machinery and plant has been a grievance with manufacturers for a great many years. First of all, the possessors of machinery have argued that process machinery is really in the nature of chattels or possessions on which they ought not to pay rates, and they have further argued that, owing to the uncertainty of the assessments and the practice of the different unions as to valuing, machinery of the same manufacturer, or of the same kind owned by different manufacturers, situated in different parts may be differently dealt with according to the town in which it happens to be situated. They have sought to remedy this state of things by numerous private Bills, many of which have passed their Second Reading in this House, but have never reached the Statute Book. A Royal Commission in 1901 recommended that all such machinery and tools as were not fixed, or which were so fixed that they could be taken away without interference or destroying part of the hereditament should be exempt from rating—. That would be assimilating the practice in England to that which prevails in Scotland. More recently the matter has been again inquired into by a Departmental Committee, in 1923, presided over by a late Home Secretary (Mr. Edward Shortt). They found, first of all, that in the classification of the law and present practice there was a serious lack of uniformity which, if possible, ought to be rectified. Furthermore, they found that some manufacturers were entitled to relief, and they recommended that loose tools and plant and machines operated by hand or toot power should be excluded from rating altogether, and that the rest of the machinery used should be divided into two classes. One class to be considered part of the hereditament and to be fully rated; this was to include motive power, lighting, heating and electrical apparatus, lifts, elevators, railways and tram tracks, and plant or combinations of plant and machinery of the nature of the structure. The second class, which was process machinery, was also to be rated, but was to receive a rebate of 75 per cent. The Committee also suggested the setting up of a panel of referees to decide whether any particular piece of machinery fell into one or other of the two classes

I have considered these recommendations very carefully, and I have decided to adopt certain of them with certain modification. The Bill will be found to follow the recommendations of that Committee, first of all, in exempting loose tools and plant from rating altogether, and, secondly, in dividing the other machinery into two classes, one of which will be fully rated. I am very anxious that we should avoid unnecessary litigation in this matter. I do not think it is possible to put inside the Bill a complete schedule or category of the machines which are to be fully rated. On the other hand, I recognise that, if you put in a general recommendation, you run the risk of numerous cases in Law Courts, till a sufficient structure of ease law has been built tip

So I have adopted the expedient of setting up a Committee, and of leaving to that Committee to divide machinery into the classes, and to revise the classes at intervals. There is provision for objections to be heard. Proposals like this have been considered imprac- ticable before. I do not know why. After all, it is really only what has been done in the past when case after case has been taken to the Law Courts, and after an immense amount of eloquence, time, and money has been spent the matter has been decided one way or the other. I am not anxious to go through all that process again. That, therefore, is the proposal in the Bill I have carefully considered the suggestion in the Report that this machinery should be subject to a 75 per cent. rebate. What influenced the Committee was the desire to tide over by easy stages the transition from the rating of machinery to full exemption, which they feel in their heart of hearts is the thing to be done. I must say that I myself find it difficult to justify the expense and the protracted delay involved in valuing all this machinery foe which, after all, you are only to get 25 per cent. It does not seem to me to be a businesslike proposition at all. The valuation itself will certainly almost always be subject to dispute, and perhaps lead to litigation. Only the man who is carrying on the business knows the value of his machinery, and I cannot see the necessity of harassing manufacturers by a. process of the kind, especially at this time, when they are so much in need of relief

When I was considering this subject and when I was coming to the conclusions which I have put before the House, I did not have in mind any measure connected with the Budget. I was just thinking of what was the right course. I have myself in the past supported more than one of these Private Member's Bills which have been brought in for the exemption of machinery from rating. I thought it was a hindrance, and that putting a charge on a manufacturer for bringing his machinery up-to-date with the object of making the machinery and plant more efficient was handicapping him in competition with foreign competitors

But my attention has been called to the bearing of this upon the Pensions Bill by the speeches made by the Leader of the Opposition in the Budget Debate, and the way in which he attacked lay right hon. Friend the Chancellor of the Exchequer, because the first thing he said was that he was pretending to give relief by taking something off the Income Tax, whereas the real way to give the relief was by reducing the rates. The Leader of the Opposition pointed out exactly what I have been saying, that every time a manufacturer improves his equipment he puts upon himself a new charge, and the critics of my right hon. Friend the Chancellor said he had done nothing to relieve that. I do not think it was for the Chancellor to include in the Budget proposals for the relief of the manufacturer from rates. But here is the relief for which the Leader of the Opposition asks, so that possibly I may claim the support of the late Chancellor of the Exchequer in carrying out the policy which his Leader has propounded. If you are going to take a burden off the shoulders of one section of the ratepayers, and that. burden has got to be lifted on to the shoulders of some other of the ratepayers—[HON MEMBERS: "Hear, hear!"]—there is no advantage unless the burden itself is decreased. Hon. Members who cheered a moment ago lose sight of the latter point. What is going to be the effect of this relief? Is it not a fact that a great many manufacturers today are bearing burdens upon their industry which are not suffered by their foreign competitors? These burdens have to be borne whether they are making a profit or not. By them they are seriously handicapped in their work and it tends to increase unemployment. We start out to relieve them by the proposal to exempt. certain machinery from rating, and this is going to help them in their struggle, enable them to increase their output, and to employ more men; and therefore it is going to decrease the charge on the ratepayers, and generally relieve the total burden on the ratepayers

I am afraid I have kept the House a considerable time, but I wanted to make a full statement. I do not propose to deal now with any of the Amendments. They seem to me to be irrelevant to the purpose of the Bill. There is nothing in the Bill which makes it impossible for hon. Members opposite, at any future time when they happen to have the opportunity to carry the matter still further, for the better the machinery there is the easier it will be to do what they wish. The matter has been discussed in all parts of the country by various authorities and by those concerned, and it is one of great length, great complexity and great importance. Hon. Members will now have time to consider it, but only a short time in which to discuss it. The time has been shortened in order to meet the wishes of hon. Members who desired a further opportunity of discussing the silk duties, and I trust that the time of the House is not to be taken up by discussing proposals which, however they may be argued, have nothing to do with the proposals in this Bill. I hope that in our Debate today we shall discuss the provisions of the Bill as it is, and leave the merits or demerits of new systems of rating to be discussed again on some more suitable occasion

Mr. TREVELYAN

I beg to move, to leave out from the word "That" to the end of the Question, and to add instead there of the words

5.0 P.M.

while being in favour of a reduction of the number of rating authorities and uniformity of valuation, and being of opinion that the existing practice of rating machinery is detrimental to trade, this House cannot assent to the Second Reading of a measure which will impose the burdens removed from machinery on to dwelling houses and improvements instead of placing them upon land and minerals which should be separately valued. The right hon. Gentleman need be under no anxiety with regard to the interest which the House has felt in his speech. He has made a naturally dull subject thoroughly interesting, and at times even amusing, to us. Indeed, in a sense I am sorry to be moving this Amendment, for it would have been pleasanter to have spent all the time in praising and being thankful for the good things that he is offering us. All of us on this side of the House admit that many of the things which the right hon. Gentleman offers us are good. The view of the Labour party with regard to Bills that are brought in by the Government is not that we ought to object to everything that is brought in. Indeed, yesterday we helped forward on its way the Teachers (Superannuation) Bill. There is no desire to do other than help the better kind of legislation of the Government. Frankly, we are not sorry to see this Bill brought forward. It has been suspected of existence for some time, and every year, like a sort of sly rabbit, it has been poking its nose out of the hole and has gone in again. It has come out into the open now. So far, so good. But, more than that. there would, I think, be agreement almost everywhere in the House as to the need for reconstruction of the valuation authority and the reform of the administration of rating. Most of this elaborate Bill in principle would certainly be praised from this side of the House. There will, of course, be innumerable points to be dealt with in Committee, but with all that side of the Bill my comment on the Second Reading can be only a general approval

The substantial reduction of the myriad assessment authorities to a manageable number is good. I do not know whether the right hon. Gentleman can reduce the number still further than he proposes, but we would be very glad to assist him if he has such a proposal to make. It is a great reduction from 15,000 to 1,700. Then it is good that the valuation will now be under the control of the most effective and most democratically chosen authorities of the country. It is good that the valuation for local purposes will be linked up with national taxation, and that the Income Tax Commissioners will help to make the assessment, which is to be used for local and taxing purposes alike. The increase in uniformity is good. The disappearance of the variety of rates is good. The fact that the quinquennial valuation now practised in London will become universal is good In fact, the whole principle of the reform of the administration of valuation meets with our approval, as much as it does with that of hon. Gentlemen opposite

But that is not all the Bill. If the right hon. Gentleman had stopped there, and if that had been all the Bill, there would have been nothing more to say. But, the Bill is something besides that. It is a halfhearted tinkering with the basis of valuation and with the evils of the incidence of rates. The right hon. Gentleman has alluded to the two principal alterations in that direction. There is some exemption of some machinery which is now rated, and there is a new system of rating for railways. Of the general principles underlying the exemption of machinery, most of us on this side are heartily in favour. Most of us agreed with the right hon. Gentleman's statement that a high tax of 15s. or 20s. in the £ on a necessary part of the industry and the enterprise of this country is bad, and very bad indeed. What we ask is this: Why is it bad only for machinery? And why is it not bad for all machinery? It is bad for some machinery, but not for all. It is bad for loose machinery that you can work with your foot, but not bad for machinery that is worked by some impersonal motive power. Why is it more difficult for us to compete with foreign countries because our industrialists pay on this kind of machinery, and why is it not just as bad because they pay, in the terms of the Third Schedule, on such things as generating, storing, transforming, or transmitting of power, heating, cooling, ventilating, lighting, lifts and elevators, gas holders, blast furnaces, coke ovens, tar distilling plant, cupolas, water towers with tanks, and so forth? What is the difference? The proposal is, that certain kinds of machinery shall be exempt. Note what is not exempt. What industries are at the present time most depressed and most in need of relief? Shall we say the mining industry? How much loose machinery is to be exempt in mines? A little, possibly, though I do not know. The main machinery, certainly, will not be touched at all. I am told that none would be exempt. It will riot be denied that most of the mining machinery cannot possibly be touched by this exemption. Take our shipyards. Most of the machinery there will not be touched by this exemption. The same applies to the machinery of most of the iron and steel industries. The very places where relief is most wanted, in the opinion of all industrialists, is to be exempt from nothing. But it is worse than that. It is all very well for the right hon. Gentleman to say that there is to he an improvement in the general condition of the country because of the exemption of machinery but someone will have to pay the rates. There is to be an exemption for certain classes of machinery in certain industries. Nevertheless, someone will have to pay the rates. The rates will be paid by the unrelieved machinery, by the unrelieved shops, by the unrelieved houses, and by all the other industries and all the other structures to which this Bill gives no relief at all

. I am not sure whether the same thing applies to a certain extent to the other change which is being made in the incidence of rates. It is very difficult to tell what will be the effect of the changes with regard to the railways. The right hon. Gentleman told us nothing on the very obscure question as to what the economic effect of the change is to be on the railways. I think we probably agree with him that the present system is a most clumsy one—the system of assessing each bit of railway in each district through which it passes, and that whatever the merits of the system of assessment are, it will be a great improvement to have a central valuation authority for the railways. But there is obscurity as to what will be the economic effect on the railways. One thing is certain, and that is that the railways are rejoicing. I suspect that that means that they think that in one way or another, they are to be the gainers. If they are the gainers, if they, as well as the industrialists, are to be helped by the exemption and are to pay less, again I say that someone will have to pay more

Mr. WALLHEAD

It is the policy of broadening the basis

Mr. TREVELYAN

What we feel is this: The right hon. Gentleman has laid down the principle that the taxation of industry is bad. Why did he not go on to the logical conclusion? If he realised the evil of rates on machinery and on railways, how can he exclude the evil of rates on mills, on shops, on houses, and all the other things which are on the land and on which industry depends? The right hon. Gentleman was right in saying that we are working our local taxation under an indescribably bad and antiquated system. It is indescribably bad because it is so old. It had an Elizabethan origin. As the right hon. Gentleman pointed out, rates were at that time an insignificant matter. The same system, patched during 300 years, is now in operation, at a time when the rate is not a penny in the pound, but 15s. and 20s. and even 30s. in the pound. (HON. MEMBERS: "Poplar !"] It is not only Poplar, but many other places. It is such a bad system that everybody hustles to escape from it. Some industrialists and the railways have hustled best. What we ask for is justice all round, and not justice only for those who happen to be politically most influential and most able to make their voices heard in this House

Houses are the greatest need of our people today, and overcrowding is our greatest social problem. A tax on houses means fewer and dearer houses, and it means overcrowding, just as a tax on bread meant more expensive bread and starvation. If we were going to exempt anything in our rating system, we ought to have given priority to houses. We have a precedent for it. In New York at the present time new houses are not rated at all. I am not saying you ought to select one thing more than another, for our proposition is a general one, that all this enormously heavy taxation upon improvements, houses, mills and shops is bad, and that we ought to find a better basis of taxation. Let us not, however, pick out one thing or another in dealing with this question and give preferences to one interest or another, or, if it is done, do it on the largest scale, over the whole living of the people. In order to exempt houses and industries effectually, land and houses must be separately assessed. Then we can exempt houses, shops and factories, as we cannot do today; that is why we ask for the separate assessment of land. The principle we want to assert is that the proper basis of taxation is the communal value of land, and not the improvement value of the structures, whatever they are, upon it. The present system is too tender to land and too rigorous to enterprise

See what is happening today in the mining industry. As long as a pit is working, there arc rates to be paid on it—on the machinery, and on the whole property. The moment the pit ceases to be worked, there are no rates to be paid. But the values are still there. Moreover, the fact of that pit ceasing to pay rates throws more rates upon those industries which are still going on and which are, as likely as not, going on because, of their greater competence and greater capacity. Houses have a taxation of from 15s. to 20s. or more on the value. New houses are put up on land which, in spite of its value, has very likely had hardly any taxation at all upon it. The moment those houses are put up, heavy taxation is clapped on them, and, at the same time, on the land which has the houses on it. If houses are closed, no rates at all are paid upon the property. There is plenty of property—hon. Members see it every day —which is being unused, even in central and important parts of the City, where it is obvious that it could be used. Many Members of the House walk down Piccadilly every day, and ever since the beginning of the War they have seen there a skeleton hotel looking over the Green Park. I presume that has been paying no rates all these ten years. That is only one instance

Our point is that the existing system rewards the unenterprising, exempts the sluggish and profits the unsocial, while taxes and burdens are put upon properties which are doing best. I know quite well how bitter, and even relentless, is the opposition of a part of the Conservative party to every mention of land taxation, but there is another large section, even of the Conservative party, which has never been much alarmed. It has seen that there is nothing terrifically evil in levying the same amount of rates as you do now, but taking care that idle land pays high and used land pays less. That is what we want. I would like to quote the words used by Viscount Cecil of Chelwood when he was Lord Robert Cecil, at a rather hot period in this House, in 1909. He said: A large number of hon. Gentlemen of Conservative opinions have pledged themselves to the taxation of land values. But for what? As a substitute for our existing system of rating, which is a perfectly easy and rational proposition. He was objecting, hon. Members will observe, to the partial taxes which were introduced by the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George). He said that proposals such as we are now asking the House to agree with were a perfectly rational proposition as a substitute for our existing system of rating. He said, further: You have already the principle that land contributes to local rates and the question is whether the rates should be levied upon the improved value or upon the site value. I ask hon. and right hon. Gentlemen opposite not to discard too lightly the arguments we are putting forward. I do not know how long they think we shall be able to go on with the present unscientific system of rating. See what has happened in the last fortnight. There is no big proposal for relieving industry. The cry, the refrain of the Conservative party is, "Industry is suffering from burdens." What has happened? Sixpence is taken off the Income Tax, and £14,000,000 is put on to insurance. They first throw up their hats, and then they have to pull a long face. Then we get this Bill under which a few hundred-thousand, or a few millions, I do not know how much, is to be taken off certain manufacturers, but it is all to be clapped on to some other manufacturers, or somebody else. There is no way out there. Industry is going to be no better off

May I also put this to my hon. Friends opposite? Their other refrain is that the real solution of the problem of local government is economy in the rates. Has that been successful? For the last 25 years there has been a predominance of Conservatism on local bodies, and here and there the rates have been reduced by 1s., or by 3d.; but then they have gone up again, because not even the Conservative party can stem the main tide of social expenditure. It is no use saying that our great towns and other places where we want. to see social expenditure are not rich enough to pay. They are rich enough to pay, only we ask the wrong people in the wrong way. The people are poor, but the cities are rich. Industry is heavily taxed, but great wealth is being drawn from those cities every day. It is the system that is unjust, and nothing except a root change will ever bring real relief to the rate payer in industry. We have got to adopt a system under which industry is relieved, activity is relieved, the life of the people is relieved, and the communal values arc, taxed for the community who make them

Mr. SANDEMAN ALLEN

I should certainly not have selected this particular subject on which to address the House for the first time—a very complicated subject—in the presence of Members who are much more familiar with it, but for the fact that this voluminous Bill has been in our hands only for a comparatively short time, and it might be desirable that one who has studied the draft Bill which has been it the hands of people concerned for some time should say a few words about it. It may not always be possible to do it, but it certainly was a very happy thought of the Minister, in dealing with a complicated question of this kind, to publish a draft Bill with an explanatory memorandum in order that every authority throughout the country and every association representing interests which would be materially affected by the proposed changes should have an opportunity of studying them. The result is perfectly manifest in this new Bill. Many of the points which disturbed those who studied the draft Bill have been modified or eliminated, as far as one can see on a rapid study of the Bill

As Chairman of the Chambers of Commerce Committee appointed to study the Bill, I can tell the House that we went into it very closely, and in common with many others the members of the committee were entirely in sympathy with the objects of the Bill. The main object of the Bill is the simplification of the system, consolidation of rates, a more equitable method of dealing with precepts, a greater uniformity of valuation, a better representation on the assessment committees, and, two more important points, the quinquennial valuation and the single valuation. After the very able and lucid speech of the Minister it would be a presumption on my part to touch on those points beyond saying that I am sure those of us who have had experience on assessment committees or on city councils or other local authorities realise that the time for amending the whole system of rating and valuation in the country is overdue

We welcome this Bill as an effort to do this. There are one or two points I would like to bring to the attention of the House, and as it, is the first time I am addressing the House, I hope hon. Members will pardon me if I am not keeping quite in order. First of all, the question of expense has been brought before us. It seems to many business men that that is a very vital point. If this is really going to save a large amount of money to the country, and it does appear as though it will, that alone calls for a welcome on our part. With regard to the railways we must all admit that they call for special treatment, and they are therefor properly so provided for in this Bill. This scheme must be most closely examined, as I hope it will not mean the creation of another Government Department with a further army of officials

When we come to the details of the Bill, we find that in the draft Measure a central authority was proposed to be set up to deal not merely with railways but with public utility concerns and special properties and that proposal created a great deal of anxiety, because we felt that it was going to take away a great deal of the authority which local government possesses in different parts of the country, and we thought the country was going to be overburdened with a big single authority further increasing expenditure. Happily this has been disposed of and it now appears that the whole idea has been abandoned. When you come to other properties, surely it is an excellent arrangement that where they overlap in different areas, we should have a joint assessment committee rather than have people coming all the way to London. Therefore, I support this new proposal to deal with these important matters by means of a joint assessment committee

. Another point is the question of single valuation rates and taxes, and, as to this, there can be little difference of opinion as to the economy and convenience of such a system, but if we are to have the revenue officer at the assessment committee, it must be clear the one valuation will apply from the earliest possible moment. If that is going to be clone, and I understand it is clearly laid down by the Minister, though there is nothing in the Bill which says it is the intention of the Government to deal with it at a fixed later stage if that is done, it is only right and proper that the moment the new valuations are made, the representative of the Treasury who, after all, is the representative of this nation, should be the person to watch over those interests, and he should have a proper status and reasonable powers from the start. Reference has been made to the Commissioners of Income Tax. Those of us who are Commissioners of Income Tax, instead of terrifying people, as some imagine, we are simply protecting, as far as we can, the interests of the public

I rather wondered, when I saw on the Order Paper the Amendment which has just been proposed, what connection it had with the Bill before us. Of course, I realise that it is my lack of parliamentary experience that leads me as a business men to look upon this Amendment as entirely irrelevant. At all events, it seemed to me that what we were going to consider was the improvement of rating, and making an attempt to put in on a proper basis, instead of adopting a new idea altogether

I want now to confine my remarks to the question of the rating of machinery. A great deal has been said on this subject, and I do not know how far this House is aware of the extraordinary and absurd anomalies which exist in regard to this matter throughout the country. Scotland is in a very different position, and the Scottish law is particularly clear on matters of this kind. We have there a clear line of demarcation which is more or less set up under this Bill. What is properly structural is defined, and you have the whole hereditament as a rateable concern, and not what a tenant or a hypothetical tenant may choose to put in. In this country a different practice has crept in, and you have the absurd position of some of our manufacturing towns, where machinery is rated up to 100 per cent. value, and there are other towns where none of the machinery is rated, with the result that you have manufacturers in different parts of the country suffering under disabilities greater or less according to the views of the assessment committees in their own particular districts. Surely absurd anomalies of that kind which exist in different towns of the country should be put right at once

A great deal has been said about the various inconsistencies in our system of rating, and such a matter ought to be put right at once. The difficulty is that in some cases the burden will fall on those who have been escaping from that burden at an unfair cost to the industry in times gone by. Where the machinery has been rated highest, it has invariably been in an industrial centre in which they have derived their principal means of existence from it, and if the burden is going to be lifted from that industry so that it can go ahead, that necessarily must involve better conditions and more employment, and be a benefit to the whole district in which that industry is run. It is no use talking about average rates, because each district has to pay its own rates, and the inequalities only fall on one district. There are districts where the machinery is rated, and districts where it is not rated, and, therefore, the relief is only partial

On the general question of alleviating the burden, the unnecessary and rather wanton burden which has been placed upon industry in recent times, it cannot be too much insisted upon that this country today depends for its existence upon foreign trade. It is no use people talking about the home trade alone, because you have to realise that 75 per cent. of our existence, so to speak, depends upon our being able to export our manufactured goods, and, therefore, it is of the most vital moment that we should consider that question. The important point is whether we have gone far enough in that direction in giving the relief, at any rate in the interests, not merely of any of those who may be called industrialists, or anybody who may be called capitalists, but in the interests of everybody living in this country

It is vital that we should all put our shoulders to the wheel in order to develop our foreign trade, and in order to remove any obstacle out of the way. Here is something which is distinctly an obstacle, and without going into the interesting arguments advanced by the hon. Member who moved the Amendment, I would like to say that I feel that even he in his heart, and every one of us, are agreed on this subject that it is rightly removed. hope the Amendment will not be pressed. and if there are these wonderful new ways of extracting money from quarters which do not pay at present, let them be brought before this House in the ordinary manner, but let us face the business before us, namely, that of putting the whole system of rating and valuation as it exists today upon a proper basis and upon an economical basis with proper representation and economic handling of all the various industries and properties, which have entirely changed in view of the opening up of communication throughout the country, and which call for immediate alteration. Many of us will have something to say in Committee on the various points dealt with in this Bill. I trust the House will excuse me for having taken so long in putting these few points, but I felt that it was necessary that the Minister and the House should understand them. I strongly support this Bill

Mr. TREVELYAN THOMSON

I wish to congratulate the hon. Member who has just spoken upon bringing to the service of the House a deep knowledge of the important matters under discussion. The House is also fortunate in having such a complicated Bill as this presented by one who is a master hand in local government, and who knows the whole business of rating from A to Z. The Minister of Health has made this question as clear as it is possible to make such a complicated subject, and although we agree with him in regard to the first part of the Bill and the efforts made in the direction of the simplification of rating and assessments, at the same time some of us regret, that while an attempt has been made to deal with this complicated problem, the right hon. Gentleman has not gone to the root of the matter, and he has not attempted to deal with the injustice of rating from the very beginning

With regard to the question of the rating of machinery, the right hon. Gentleman laid great stress on the relief given to industry by the exemption of machinery from rating. We are all in favour of the exemption of machinery and of the exemption of improvements, but why stop at one class of machinery and at one class of improvements? Why not go to the root of the whole question as the Amendment foreshadows, and place the whole of the rating and assessment by local authorities on site values, and that would tend very greatly to alleviate the heavy burden which the right hon. Gentleman claims is now crippling industry? What will be the effect of these proposals if they pass in their present form I ask hon. Members to visualise what will be the effect in their own particular district. At the present time a certain sum of money has to be raised, and the proposal of this Bill is that in future a part of the contributors are to be exempt from their share of payments, and the consequence will be that the other contributors will have to pay more money. Therefore, if the Bill passes in its present form, without any form of relief being made available it means that every ratepayer in these districts will have to pay a higher rate than they are paying at the present time. Estimates have been made that, throughout the country, something like £10,000,000 of rates will be transferred from the machinery users to other ratepayers, that is to say, in the majority of cases, to small householders and tradesmen. Surely, the present time, when the problem of house- ing is so tremendous, as no one knows better than the right hon. Gentleman, and when rents are so high, is not the time to add to the burden of rents and rates. I have had a communication from an authority in my own district who estimate that the increase in rates which will accrue from the proposals of the Government will amount to 2s. in the £. Whether that be so or not—whether it be 6d. or 2s.—I submit that it is disastrous at the present time to remove a burden from one pair of shoulders on to those of the householder and other ratepayers

In the end it is no relief to industry. The right hon. Gentleman said that if machinery were relieved it would relieve industry of a first charge on production, which would enable it to compete and get more trade, but will that be so? As has been already said, you have to raise the same amount of money whether machinery pays or not, and if it does not pay—the hon. Gentleman shakes his head, but, surely, he does not suggest that the total rates levied in any particular town are going to he less, simply because machinery is going to be relieved The amount precepted for, the amount to be raised, is the same whether it comes from the machinery user or is spread over the rest of the community. If the machinery owner is relieved it goes on to the other ratepayers and the householders, and, if more rent has to he paid, then more wages have to be paid in order to enable the workers pay that rent: and, if more wages have to be paid, the industry has to bear it in the end. All these charges come out of industry in one way or another; it is only a question whether you take them through wages and rents or direct from the industry by way of rates. This, therefore, is going to be of no benefit to industrial areas, but is going to put a tax on the householder, a tax on the ratepayer, and the position will be a very serious one indeed. The right hon. Gentleman will have to face a tremendous outcry when this extra burden is placed on the rents of houses, and when those who are now unable to pay high rents are asked to pay higher rents because of this transfer of burden. Surely, the correct thing would have been to follow the example of what was done when relief was given under the Agricultural Rates Act, and make a grant from the Treasury, or, failing that, to explore new avenues of rating and taxation such as would be afforded by land values

The present system, as the Minister has said, penalises industry and development. Why, therefore, does he not follow that principle to its logical conclusion, and relieve industry entirely—relieve improvements, relieve buildings, and put the burden on the site value, which is the only sound way of getting a just basis for these charges? The right hon. Gentleman has lost a great opportunity. Apart from that, if he were not prepared to go the whole way, surely he might have attempted to remove some of the inequalities of the present system of rating. As he said in his interesting speech, when he sketched the history of rating, we know that originally the basis taken was the house or building which was, apparently, the only visible sign of what ability there was to pay. That may have been all right in agricultural days, but since the industrial revolution that basis has proved to be entirely faulty. At the present time, in any ordinary town, as it develops and loses its residential character, you may have one house still occupied as a residence, or possibly as a small shop, the income from which may be £100 a year, while in the same street a similar house may have been converted into offices used by a successful professional man, or possibly a merchant, earning £1,000 or £2,000 a year; and yet the rating is the same on both properties. Surely, that is a very unequal incidence of burden. The same question arises in the case of a works where, say, 1,000 men are employed, occupying a large area of land which is rated at so many thousands a year; while another man, possibly a successful merchant prince, occupies a few rooms in a palatial building for which he may pay £100 or £200 a year in rates, whereas he has made a bigger fortune than the man employing thousands of people in a large works. Therefore, you have a gross inequality of burden, and I submit that the time has come to scrap the present system entirely, and sec if the local burden cannot be made to have some relation to the ability to pay. That is done in some places on the Continent, and there is room for further exploration here to see whether the local burden cannot be more fitted to the shoulders that have to bear it

My great disappointment is that the Government have not dealt with this ques- tion on larger lines. Some figures were given to me by the Government the other day which illustrate this point as to added income and values. I was told by the Minister in charge that the rents from the frontages of property in Regent Street, which happens to be owned by the Government, amount to £450,000 a year. That is from property which 100 years ago was worth a comparatively small sum. Fortunately, in this case, the State is getting the whole, but there are many other frontages in important streets of London and other towns where there has been a. considerable increase in the value of the land due to the community that has grown up around it. That is a source of revenue which would relieve machinery, which would relieve industry of this heavy burden, and which the Government might have tackled. We cannot undo the past, but at any rate, in preparing for the future, we might see that this enormous increase in the value of land, due to the growth of the community, is tapped at its source for the relief of the ratepayer. Abroad you find something like 1,100 towns in Germany and Mid-Europe where they have had the foresight to legislate in the past along these lines, and where they are paying no rates at all, because of the communal value of the property which they own. It is no wonder that, in the competition for trade, we have to suffer when our industries are so heavily rated as a first charge, and have to compete with others abroad where no rates are paid owing to the foresight exercised in this way. It is unfortunate that, when there was this great opportunity of revising the whole basis of rating, the Government did not go to the root of the matter and follow out the principle which the right hon. Gentleman adumbrated when he indicated what a heavy burden the rates were upon industry—that they did not take steps whereby industry might be largely relieved of such a serious handicap to its development

6.0 P.M.

Sir ROBERT SANDERS

After what the Minister of Health has said, I am a little nervous about saying anything on the subject of the Amend merit, but I do feel that it might be desirable to say that Members of the Conservative party have not any sort of agreement or sympathy with the speech which has just been made, or with that made by the

as clearly as I can, that I think the ideas that have been foreshadowed by the hon. Member for West Middlesbrough (Mr. T. Thomson) and by the right hon. Gentleman the Member for Central Newcastle (Mr. Trevelyan) receive no sympathy or acquiescence whatever in the Conservative party. This is the old idea, which has been brought out over and over again, as to the rating of land apart from improvements. Take the agricultural land of the country: how do you arrive at the value of that land as apart from improvements? Suppose that you take the present value of the land and make that the original assessment. You will then take the capital value of the money that has been spent on improvements to the land, and deduct the interest upon that from the rental which is now being paid; but, if you did that, I venture to say that in four cases out of five you would get a minus quantity. That is really what would happen in the case of agricultural land. As a rule the rental received from the land does not amount to the interest upon the capital which has actually been expended upon it, that is to say, the value of the improvements. I think that will be found to be so in one case after another, but I actually have the figures of an estate where I know that, since the beginning of last century, over £100,000 has been spent on improvements, while the total product of that estate today is only about £1,500 a year. That is a strong instance, but you would find instances of that sort all over the country. Therefore, as regards agricultural land, the idea that you are going to get anything from rating the land when you have deducted the cost of the improvements is absolute moonshine

Now let me take the question of building land and the question of the site value. I hope I may he allowed to say a word on that, because I can claim to speak from some little experience of it. All my life I have been making a precarious livelihood by the development of land in the suburbs of London. I had the fortune, or the misfortune, to come into an estate consisting of big villas with big grounds, and within my memory —within the last 25 or 30 years—I have been down there and seen racehorses bred within four miles of where we are now sitting. I have been developing that ever since, and have been engaged in what I hope is the lawful occupation of trying to make some 20 or 30 houses grow where one grew before. I may claim, therefore, to speak with some knowledge and experience of this subject. I say that if you take a house in a position like that, with five acres of ground attached to Ha villa residence—the value of the site is an absolute guess. I do not say you cannot get it valued, because you can get anything valued. I have been dealing with a Government Department lately in connection with some land that was wanted for public purposes, and there were three different valuations, the lowest of which was only one third of the highest. They were all made by expert valuers. You can get a valuation upon anything, but it is a mere guess, and, in an instance such as I am considering—a house with five acres of land on the outskirts of at own you cannot tell the site value of that five acres, because you have to reckon with such uncertain factors as the cost. of making roads the requisitions of the local authority and the amount you are likely to get as rent for the land when you have spent all this money upon its development. It is not until the roads have been made, the plots have been let, and houses are beginning to go up, that you can form any accurate idea of what the value of the site is

I should have thought that the Budget of the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) would have been a sufficient deterrent to those who wanted to deal with this question of separate site values. Perhaps I might be allowed to give my own experience with regard to that. I was a good deal alarmed about it, but, during all the time that those taxes were in existence, I never paid one halfpenny to the revenue under these taxes at all. It cost me, however, hundreds of pounds to go into the valuations that were necessary to fill up the forms. What is the good of that to anyone? In my case it simply meant a certain pecuniary loss, but the evil effect of it was that it frightened not only the builders who construct the houses, but, what is more important, it frightened those who were behind them and financed them. In my own case I have always financed the builders myself, and I went on building houses just the same while these land Clauses were in operation; but, speaking generally, building stagnated and came to a stop because the feeling of security had been taken away from those who lent money to builders. During the four years before the Budget of 1910, the average construction of new houses was 118,900, while in the four years afterwards the average construction was 72,385; that is to say, in those four years there was a loss to the country, through the influence of that Budget, of 180,000 houses, which, of course, had a great deal to do with the shortage of houses that has come after the War

There is another matter which is dealt with in one of these Amendments—I think the Labour Amendment that has not been moved—and on which I want to say a word. That Amendment expresses regret that the 75 per cent. reduction on agricultural land is made a feature of this Bill. That is a provision in it which I welcome most heartily, because it makes perpetual what is now only a temporary provision, and what I think is a just provision. If you look at rating in the way in which it ought to he looked at, you want to rate the inhabitant or occupier of every house according to his ability to pay, and it is not fair to rate a man who is making his livelihood in agriculture on a higher scale than the man who makes the same income in any other occupation. That is the justification for the Agricultural Rates Act, and that is why I am very glad that this provision is being renewed. After all, as the Minister of Health has said, the original provisions as to rating were left excedingly vague. The reason why the rates were originally levied upon landed property was because that was practically the only form of property in the country at that time, and in the comparatively modern history of rating—within the last 100 or 150 years—there has been a gradual, persistent shirking, on the part of the newly developing industries, of their proper share in the local taxation of the country. That is why, at the present day. we find that those engaged in manufactures bear such a much smaller part of the rating burden than those engaged in agriculture

I apologise for having dealt with these Amendments at all; I now want to say a word or two about the Bill itself. I do not think my right hon. Friend imagines that this is a Bill which is going to create any great enthusiasm in the country. If I may put it from an electioneering point of view, there are not many votes in it. It is mainly a Measure to simplify procedure and administration, and from that point of view I think we ought all to welcome it heartly. The English rating system has grown up bit by bit, and various Acts of Parliament have been passed to deal with it piecemeal. The wonder is, not that it is not working extraordinarily well but that it has ever worked at all, and I think it is a tribute to the genius of the English race in adapting itself to any arrangements, however extraordinary and inconvenient, that we really get our rating system to work at all. I must say I am sorry that my right hon. Friend introduced a Clause into the Bill relating to the rating of machinery. I do not want to discuss that question now, but my right. hon. Friend knows as well as I do that this is a very contentious proposal, and the Bill seems to me to be a big enough and difficult enough one not to he overburdened with such a proposal, without which it could have got on perfectly well. I do not suppose my right hon. Friend will find the Bill very easy to get through Committee on this account, and I am rather surprised that he has burdened it with this extra provision

As to the railway Clauses I will say nothing, for the simple reason that I do not know anything about them. The only word I have to say in that connection is that I dislike, if I may say so, the preservation in the Bill of the provision as to the hypothetical landlord and tenant. Putting hypothetical people into Acts of Parliament at all is a practice to be avoided. But with regard both to this matter of the rating of machinery and the new system of rating of railways, I should be very glad if my right hon. Friend could give us some rough idea—it is quite impossible to give anything like accurate figures—as to what the burden is to be that is thrown upon the other ratepayers by the relief that is to be given to the railways and to the owners of machinery. In the country districts there is great distrust of these proposals. One of the features of the Bill is that he is disestablishing something over 11,000 rating authorities in the country districts. A disestablished authority is an estab- lished critic, and, on the whole, the assistant overseers and the assessment committees of boards of guardians have done good work. On the whole their assessments have been accepted with a minimum of friction, and I think it ought to be pointed out what the reason is, and that there is good reason for adapting these new authorities. In showing the people who are discarded the reason why they should be so, we ought to point out to them how we are going to substitute something better

Another point on which there is a go d deal of suspicion is the powers given to the revenue officer. I think it wants to be brought home to the country elector and to members of the old assessment committees that if it is true that the revenue officer is in the future to have a very considerable say in the valuation for rating purposes, it will also be true that the elected representatives will have a considerable say in what will become the value for Schedule A, and I think it wants to be made clear, and to be published as widely as possible, that these valuations which are now being made are not only to be valuations for the purpose of rating, but that they arc to be uniform valuations for the purposes of Income Tax as well. Then the idea is about that this is going to cost more. I think what the right hon. Gentleman said was probably conclusive. My own view has been all along that it will diminish spending very considerably, but it wants to be made more generally known. Then all these elaborate provisions as to appeals of course arc much less formidable than they look. When anyone reads the Bill, or extracts from it in local papers, and sees all these elaborate provisions about special valuation officers to be appointed for special occasions, and appeals to quarter sessions, and surveyors of taxes being allowed to make special applications for appeals, they give rise to the idea that they are much more formidable and elaborate machinery than they really are

Of course, the real answer is that these things are likely to occur in only very exceptional cases. But they are causing comment in country districts. And I suggest to the Minister that, as he wisely consulted the local authorities as to the drafting of the Bill, so he should now take steps—not for political purposes, but in order to make things work smoothly—to bring home to those who in the country districts especially are alarmed about the provisions of the Bill that they have not much to be frightened about. If he can think out any way in which to do so, through the Press or any medium he chooses to devise, I am sure he will be doing a good service to his Bill. He will also do a good service to local government if he can familiarise those. who had the working of the old system, and who will have the working of the new one with the strong points of his Bill before it actually comes into operation

I think it will be very important, especially if he can show that it will not cost more money but will actually save money, and, more important than all, if he can show them that this Bill is, what I believe it is meant to be, a step in the direction we all want. Whenever you talk about local rates to anyone in the country districts, they always complain that there are so many things that fall upon the ratepayer that ought to be national services. That is the great complaint of the countryside. They say "Why should we pay for all this extensive system of education, why should we pay for these beautifully made main roads which are used for the motor cars coming down from London or Bristol?" Proposals for altering the incidence of local taxation by shifting what are national burdens in to the shoulders of the nation have hitherto generally been met. by the right hon. Gentleman's Department by saying, "Before we can do this we must have a uniform system of valuation "—that a valuation is a necessary preliminary to any further extension of the system of grants by Government Departments towards what are now local services. If that is so, well and good. From the little experience I have had, I must say that when a Government Department says "we have to have this first," it is very hard to get your wishes carried out until the Government Department have got their wishes carried out first. What it really amounts to is that the Ministry of Health is saying, "You must have your pill before your jam." What I want the Minister to do is, if it is a necessary preliminary to the other alterations in the incidence of local taxation, that practically all local authorities want, if it has to be the pill first and the jam afterwards, to make sure when we have swallowed the pill that we are going to get our ration of jam

Mr. LLOYD GEORGE

This is one of those Bills that do not fill the House of Commons, because it is a very dry and technical subject, but, nevertheless, it is one of the most important Bills with which the Government could possibly deal. I am very loth to criticise it, because it requires a good deal of courage to tackle this problem at all. It is one of the most difficult problems that can be dealt with by this House, and whatever the right hon. Gentleman did would provoke a good deal of dissatisfaction amongst very powerful interests. I make allowance for that. It shows it is an act of courage on his part to have taken it in hand at all. Nevertheless, when the Government submit it to the House of Commons, we are bound to consider it on its merits. I was very surprised to hear the right hon. Gentleman scoff at the idea that the Chan cellor of the Exchequer had anything whatever to do with the problem. That is quite a new theory. I was Chancellor of the Exchequer for a good many years before the War. There was not a single year when I was not invited as Finance Minister, on Motions which came from the other side of the House—or rather they were onthisside of the House then —to consider the problem of what the Exchequer could do to relieve the burden of local taxation, and I cannot see how the right hon. Gentleman or anyone can possibly deal with this problem without somehow or other drawing upon same source of revenue, which, at present, the local authorities have not got at their command

The Bill is divided into two main parts. The first deals with the question of machinery and the other deals with the incidence of local taxation. With regard to the first, I say at once that I think it is a very great improvement upon the present untidy, uneven, ineffective, and rather ramshackle method of valuation. It is a very crude method at present, and produces a good deal of inequality and inequity, and very often there is the suggestion of a good deal of personal and local favouritism. To what extent that is justified I do not know, hut, at any rate, it lends itself to that. I admit that the right hon. Gentleman, from my experience of local taxation, has here sketched out a scheme of valuation which is, undoubtedly, a great improvement upon the present system. But when I come to the incidence of taxation, I feel myself very opposed to the provisions of the Bill. The right hon. Gentleman here is making alterations which will grant a certain measure of relief to certain ratepayers, but, as he himself points out—and, of course, it is quite obvious—you cannot relieve one set of ratepayers without passing the burden on to another set of ratepayers

I agree with my right hon. Friend who was spoken from these benches that it is all very well to talk about economy. I have heard the cry of economy raised at election after election, in county councils, town councils, urban councils, and parish councils, and the ratepayers' friend gets in. As my right hon. Friend said, no doubt for a year or two you get a half penny off the rates, but, ultimately, if you look at the transactions over five or 10 years the rates go up steadily. The House of Commons is responsible for that, but it is no use blaming the House of Commons. The House of Commons is carrying out the mandate which it receives from the constituencies, and if a Member of the House of Commons votes against something that involves an increase, his political opponents say, "Do you know your Member actually voted against some beneficial proposal that came from the other side of the House?" Members arc naturally nervous under those circumstances. The rate payers' friend is not alert when the General Election comes, but the men who want improvement; are there on the spot and recording their votes. Therefore, it is no use talking about economy. You may effect certain economics, but, in the main, the demand for improvement in the, social status of the people and rightly so—are so great that the conscience the nation is enlisted on the side of expenditure. Therefore, it is idle to imagine that we can achieve very much from economy. I am not preaching against economy. On the contrary, I am all for it, whether in national or local' expenditure. But it is idle for anyone who looks at the trend of things to imagine that he is going to reduce the rates by a more efficient expenditure of the money which is at the disposal of the local authorities

Therefore, when you come to relieve a certain class of ratepayers, it must necessarily fall upon another class. That is what the right hon. Gentleman does here, and he does not provide any new source of revenue at all. The best is always the enemy of the good, and in every Measure you bring in you can say, "Why did you not do a little more, and why did you not do something else? "I am very both to use that argument, and I would not do so except for the fact that this does not effect any real improvement at all, but aggravates the present condition. Take, if you like, what was said by the right hon. Gentleman opposite about the condition of agriculture. Agriculture, undoubtedly, has a very considerable grievance. When a landlord or a farmer effects improvements in his farm, or has additional buildings and doubles its value, the assessor soon discovers it. If you plant fruit trees, what every expenditure as capital you put into the farm, you are penalised by your rates being increased in comparison with your neighbour who has done nothing. That is a bad system. But if in those districts, in addition to that, you carry this Bill, which relieves people who undoubtedly deserve relief, the farmer is in a worse position than ever, because it will fall upon him, with the other ratepayers, to make up the deficiency. That is especially true of cases where you have the industrial and agricultural inextricably intermixed. Take Glamorganshire, and Yorkshire and Lancashire, where the relief here will be passed on to house property, to farmers and to others, people who deserve relief just as much as the owner of machinery, and they will find themselves in a worse position than ever. I do not think the House of Commons ought to pass the Bill in, that form without at any rate saying, "We are going to find you something which will make up for that."

It is no use saying there is no new source of revenue. There is. At present you have property, which ought to be rated, the value of which is created, not by any effort on the part of the owner himself, but by the combined efforts of the whole community. In addition to that, the very rates which others are paying increase the value year by year, and he escapes practically altogether{Interruption.]That is so.This is really not a smiling matter, because I think rates are about the most serious problem for industry at present, and, therefore, it is vital that if any relief is to be given, it is not given by imposing fresh burdens upon industry, but by imposing a burden on something which is the result of the industry of others, and not of the person himself

Take, if you like, the case of mines. That is a very good case in point. In the mining areas the rates are simply crushing. I am not sure the right hon. Gentleman did not come to me and introduce a deputation, when I was Prime Minister, to put in an appeal for a great grant from the Exchequer in respect of certain communities which at present were paying over 20s. in the £. I remember one of the cases he gave was a case in Wales. He thought that might appeal to me. It was the case of Bedwelty. It was, I think, 27s. in the £. Take areas of that kind. What happens? At present the rate falls upon the colliery owner, who has invested the whole of his fortune there, upon the workers and the traders in a district, but there is one man, who is deriving probably a large income from the district, who is not contributing one penny. Really, it is a scandal that that should be the case. At present you have over £6,000,000 a year drawn from royalties throughout the kingdom, drawn at the risk of the lives of a great many men. Anyone going through these villages knows that a good deal more money ought to be spent upon making them tolerable. Why is that not done? It is not because the urban councils are not doing their duty. They are going to the very limits of endurance in the taxation they are imposing upon these districts. There you get, perhaps in the same parish, thousands of pounds a year drawn by somebody who has contributed nothing towards the amenities of the parish, and, at the same time, is charging huge sums of money for the sites of houses for the people who are digging the coal. When you are relieving burdens, the burdens ought not to be transferred to the shoulders of people who at the present moment are finding it very difficult to struggle on from day to day. The burdens ought to be put upon the shoulders of people who have hitherto not borne in the slightest degree any measure of that burden. That is what the right hon. Gentleman ought to do

The same thing applies to all our great cities. What has happened during the last 20, 30 or 40 years, owing to the great industrial development of England? On the whole, the value of rural land has remained fairly stationary. On the whole, I do not think that rural land has appreciated much. There has been a nominal appreciation since the War, but that does not represent a real increase in value. That is not the case in regard to urban values. Urban values have gone up by millions, tens of millions, scores of millions, without any contribution from the owner of that land towards the expenditure which has helped to make his wealth. That is an injustice. That is an unfairness,

When you come to taxation, what happens? When you come to the taxation in Death Daties, you levy upon the whole value, whatever it is. That principle has been accepted even in the present Budget. The Chancellor of the Exchequer has introduced a Budget in which he has increased Death Duties by a certain percentage. There is not one of these cases where a man who owns urban land where the Death Duties are not paid upon the real selling value. Why should not that principle be extended to local taxation? It, is a principle which is accepted by Liberals, by Conservatives, by Labour men, by all parties in this House, and has been operated without any challenge at all. I do hope that the right hon. Gentleman will reconsider this matter. To carry through a Bill like this—I am not talking now about the matter of machinery—which will increase the burdens which are now being borne by deserving people in a Measure which is not fair and equitable, is unjust. The position ought not to be aggravated, as the right hon. Gentleman is doing it by this Bill. Unless he can see his way to alter that, I certainly shall do my best to oppose the Bill

Mr. CECIL WILSON

The introduction of this Bill is causing great concern up and down the country. I have received a telegram from the Rating and Valuation Bill, Yorkshire Conference, as follows: Rating and Valuation Bill, Yorkshire Conference, representing so per cent. of Assessment Committees and nearly £24,000,000 rateable value, unanimously deplore Second Reading being rushed eight days after publication of Bill, and urge postponement, to give time for proper consideration. From the Sheffield Union Assessment Committee I have received a similar telegram, urging that there should be some delay before the matter is pressed forward in the way suggested. There is a very general feeling all over the country in favour of a very important matter of this character not being dealt with quite so hastily. The Corporations of Liverpool, Sheffield and Rotherham have made representations to the Association of Municipal Corporations in opposition to the recommendations of the Inter-Departmental Committee on the rating of machinery. I will only quote one of the paragraphs in which they express their opposition. The Report does not justify the view that the adoption of the recommendations of the Inter-Departmental Committee will favourably affect the trade of the country. On the contrary, we contend that the disturbance of trade which will necessarily follow the adoption of those recommendations will seriously retard the improvement of trade generally. Representations from important communities, such as Liverpool and Sheffield, with all the industries which gather round such districts, cannot be passed by hurriedly, as though they did not matter in any way. May I quote also a Report of the Law and Parliamentary Committee of the Sheffield Chamber of Commerce, who at their meeting an the 17th April last reported on the question of rating of machinery? In one paragraph of the report they say: The Committee would also point out that if a large amount of machinery which is at present included in the rateable value were excluded, there would be a very substantial increase in the rates levied per £, which would fall upon the general body of ratepayers. There would be a relief to the manufacturer at the expense of householders, shopkeepers, and tenants of offices. That is a resolution passed by the Chamber of Commerce of Sheffield, to the members of whom, there can be no doubt a very substantial benefit would accrue. It has been estimated by the chief assistant overseer of the Sheffield Union that the, effect of this Bill, if passed, will put an additional 2s. in the £ on the rates. That is a very serious matter at any time. When we remember that already Sheffield is: one of the overburdened areas and that appeals are repeatedly being made to the right hon. Gentleman to find some relief, I am quite sure that he cannot desire that an addition of 2s. should be put on the rates of Sheffield, instead of any relief being secured. Already, there have been an enormous number of summonses issued for the nonpayment of rates. The effect of this Bill, if passed, will be not to diminish that number, but very seriously to increase it. I trust there will be further consideration of this matter before the Bill passes

Colonel VAUGHAN-MORGAN

desire to address the House for a short time on certain features in this Bill which concerns the ratepayers very closely. The right hon. Gentleman, in the very effective, lucid and informative speech in which he introduced the Bill, dealt to a certain extent with the points I desire to mention. I would remind the House that, for better or for worse, if we pass this Bill we shall definitely commit our rating system all over the country to the system of a single valuation list. I suppose that all of us present on this occasion may be reckoned as witnesses at the ceremony. I have no doubt that I shall, so to speak, sign the register, but, before I do so, I want to address a. few words of caution, if one may venture to do so, in order to suggest to the parents and guardians of the Bill some of the possible pitfalls and dangers that lie in its future path

We shall apply to the whole of England and Wales the principle of a single valuation list, so far embodied in the Act of 1869, and apply it only to the Metropolis. So long as there was no very great inflation in rentals, and in the value of residential property, that Act, no doubt, worked well. We may admit that it was free from serious defects and hardships. That was all very well for the period before the War, and in normal times, but since the War, with the housing shortage, and the existence, possibly side by side, of houses controlled, and houses uncontrolled by the influence of Rent Restrictions Acts, and owing to the building of new houses at expensive costs, and partly at the expense of the rates, we have in the same street, certainly in the same area, houses which commanded pre-War approximately the same rents and which today command rents varying from one another by anything up to 50 or 60 per cent. That represents a situation which has rendered the task of the assessment committees very difficult. At the quinquennial valuation of 1920, the assessment committees in the Metropolis met that difficult situation by resolving to apply in their valuation assessments the standard of pre-War rentals. I am not prepared to say that they were wrong in arriving at that conclusion. I think they were right in interpreting their duty in that light. They applied that valuation on the definition which appears in this Bill in Clause 76 of gross value. As far as the assessment committees were concerned, I think we may agree with what they did certainly I regard it as right

. Under the Act of 1869, there is another party to the valuation, namely, the Inland Revenue. What did the Inland Revenue say? They said to the assessment authorities, "For the purpose of local taxation, you may very well have done what you have done, and we are not disposed to quarrel with your decision as far as the levying of local rates is concerned, but when it comes to Inland Revenue taxation, we take a different view, and we have something to say on that point." What they said, in effect, was, "Rents have gone, up, and for the purpose of Inland Revenue taxation gross values should go up too." When that situation had to be faced two different methods of adjustment were proposed. One was the method of adjustment which had at the time, and I believe has still, the support of no less an authority than the Landon County Council, and a considerable body of opinion to which I personally subscribe considered that the best method of dealing with this difficulty was to establish a separate valuation for the landlord's Income Tax and another valuation for the local rates to deal with the local services performed by the local authority. That proposal was not adopted. It did not receive the favourable consideration of the right hon. Gentleman's department. What happened instead was that the Valuation (Metropolis) Amendment, Bill, now on the Statute Book, was brought in to remedy so far as possible the difficult situation which was found to have arisen. It certainly remedied in a large part the defects which had been disclosed, but it has not entirely removed the evil. I would suggest that the very necessity which has been recognised for an amending Measure of that sort is sufficient to indicate a recognition of the fact that a system of the single valuation list, where it is applied, requires some additional modification in order to avoid its operating with hardship on the individual ratepayer. That is a point which recent legislation to a large extent brings out

I have alluded to the fact that at the present time we have houses and properties commanding different rates of rentals, although of a similar character, and such as before the War commanded a similar rent. The incidence of the single valuation list, under the pressure of the Inland Revenue, seeing that it has a dual interest, does, in my judgment, tend to increase the gross value. So far as the landlords' Income Tax is concerned, I have not the slightest objection to the Inland Revenue exercising their authority in exacting full Income Tax on the whole rent received. But where the gross value, following as closely as it may under the single valuation system, tends to increase to the extent of, or in proportion to, the present increased rent obtained, then there is undoubtedly a hardship on the individual occupier. We see the tenant in the circumstances of today, owing to the shortage of housing accommodation or other circumstances, called upon to pay a rental higher than would normally be charged him, Are we, in addition, going to subject him to the obligation of paying rates for local services at a higher level and on a higher assessment than he otherwise would pay? Surely we want to avoid any additional hardship of that kind. But if we cannot have the principle of a separate valuation, then let us at least introduce some further precautionary measure which I would like to suggest later on to the right hon. Gentleman

In the course of the Debate to which I have listened this afternoon considerable reference has been made to the question of local taxation in proportion to ability to pay. With the permission of the House, I would like to digress for a moment to deal with that aspect of the question. The services rendered by the local authorities, for which charges are made which the community pays through the rates, have been, and are, usually divided into two main portions—what are termed "onerous charges" and what are termed "beneficial charges." The use of those terms will be familiar to hon. Members, but, by way of explanation, I may mention that under the heading of onerous charges are included the cost of Poor Law administration, education and main roads. Those services approximate closely to the services which are rendered by the national Government, and which arc in large measure paid by means of grants from the national Exchequer

So closely do they accord with national services that the practice today is constantly extending in the direction of making them a national charge. They are a national charge up to about half of their total annual cost. Those onerous services absorb at the present time about one-third of the total amount levied in the whole country by way of rates. They are charged, or they may be charged—they will be correctly charged in principle—in a similar way to that of direct taxation imposed in this country for national purposes, namely, in accordance with ability to pay. But those charges represent only one-third of the total sum levied and expended in rates in England and Wales. The other two-thirds, represented by the cost of beneficial services, should not, according to the best principles of rating and according to those on which I would venture to insist in this connection, be chargeable in accordance with ability to pay, but should be chargeable in accordance with the extent of the benefits received

Where we have a tendency to raise the gross assessment to the level of the rental, or approximating thereto, it may operate to increase the amount of rates paid by the individual occupier or property owner beyond that of his neighbour, and consequently, in so far as at least two-thirds of the expenditure is concerned, it prejudices him as compared with his neighbour, because houses, for instance, in the same street of a similar character even if today they command different rentals do not, so far as beneficial services are concerned, exact from the local authorities any different services, nor do those services cost any more to administer. To recapitulate the point which I have endeavoured to make, by adopting the principle of the single valuation list we run the risk of imposing hardship upon the occupier because the single valuation list, or rather a system which applies it, is endeavouring to perform the difficult task of at one and the same time serving two masters

If I am at all correct in believing that there is any risk of hardships being imposed upon the ratepayers I world like the right hon. Gentleman to consider the acceptance of a possible additional Clause. He has stated that Clauses 72 and 76 provide effectively against any risk of this sort. I should hesitate to disagree with him. At the same time he perhaps would not object to a proposal to make assurance doubly sure, and I would therefore ask him favorably to consider, in the Committee stage or at some convenient point, the inclusion of a provision, possibly as part of Clause 21, which I will venture to read to the House. After the assessment committee has made the necessary deductions from gross valuations the assessment committee shall take into consideration any inequalities of assessment which may be seen to result after such deductions and may have regard to the pre-War standard of rent in arriving at an assessment which will secure uniformity and equality of assessment as between occupiers of houses of a similar character. That, I venture to suggest, makes assurance doubly sure. If there is any risk to the occupier under the provisions of this Bill these words will remove it effectively. If it be suggested that this additional power or special provision is not desirable in this Bill, or will burden it too much. I think that one may fairly point out that the Bill and its Schedules are full of special provisions of a necessary and valuable kind, and that the right hon. Gentleman, when he was passing his Housing Bill in 1923, introduced certain powers of varying the rates in connection with houses converted from single houses into fiats and so forth, so that I have the necessary precedent. Undoubtedly, anything that will tend to reduce the burden of rates on house property will tend to encourage the building of houses, and anything which acts in a contrary manner must have precisely the contrary result. So much for that particular point

7.0 P.m.

There are only two other small matters to which I would like to draw the attention of the House, and perhaps the right hon. Gentleman may see his way to give them favorable consideration also. Clause 4 contains the provision that any enactments requiring that rates must he allowed by justices shall cease to have effect. If I am correct in my interpretation of those words, they remove the power of justices to quash a rate illegally made, and remove from the ratepayer the right of appeal which he has hitherto enjoyed. There is an example in recent history of a rate which was illegally made, and, on appeal to the justices, that rate was quashed. That undoubtedly is a simple, effective and inexpensive method of making an appeal on the part of the ratepayers. If you do away with that simple, inexpensive method you remove a protection from the ratepayer. If you say that that right is so rarely used that it may he unnecessary to preserve the machinery to allow of its being made, I can only say that I do not think that is a very effective argument, and there is no reason why you should do away with it because it does not often come into action

There is only one other point I want to add, and that is the case of the ratepayers on the outside of small towns in the neighbourhood of urban areas who do not receive the whole of the local services which their neighbours enjoy nearer to the centre of the town or rural district. They, for instance, do not enjoy the advantages of the main drainage, possibly they do not have the same advantages in the direction of dust collection, street cleaning and so forth. The practice largely is for the assessment committees to adjust the burden to those ratepayers, again in proportion to the benefits received, by assessing them at a lower gross valuation than they otherwise would do. Unless some provision of that kind be introduced, we shall have these ratepayers also suffering by the incidence of the system of the single valuation list. That. I think, will bear hardly on cases of that kind all over the country where they do require some method of adjustment, in order that they should bear their share fairly, and not unfairly, in proportion to their neighbours

Those are the three points which I venture to bring to the attention of the right hon. Gentleman. I trust he will see his way to give some favourable consideration to them, and thereby relieve certain possible disadvantages, which otherwise so valuable and excellent a Bill contains, and I think if he could see his way to do that, he would undoubtedly commend the Bill he has so effectively introduced to the favourable consideration of the country