HC Deb 24 April 1928 vol 216 cc863-9

So far we have been journeying in the wilderness of preparation. We now begin to reach the fertile and agreeable regions of rating relief. I am speaking, of course, not of the general reduction of rates which we believe will follow the main Local Government Bill of my right hon. Friend in the winter in consequence of this new system, but I am speaking of the special relief which is to be given to the producer, manufacturing and agricultural. I have said we shall concentrate our relief on the producer. These reliefs will be afforded in two ways. They will be afforded directly by reduction of rates upon premises used for the purposes of production. They will be afforded indirectly by the reduction of the rate burden upon the freight carrying railways, the canals, harbours and docks. In the latter case, however, the case of the railways, etc., the relief will only be afforded conditionally on those undertakings making equivalent reductions in their transport charges wherever practicable. The public utility undertakings—gas, electricity and water—are outside the scheme. For long we debated whether they should be in or out, but we came to the definite conclusion that they should remain outside. But with these exceptions any building or other property used for the purposes of production by means of manual labour will be included in the proposed relief—production not distribution. On the other hand, such buildings or parts of buildings as offices and residences lie outside the score of the relief. The object of the Valuation (Ascertainment) Bill, to which I have already twice referred, which will speedily follow the Budget Resolutions, is to separate one class of property from the other. The precise and formal definition of productive property will be set forth in this Bill.


A difficult task.


It is complicated and difficult but soluble and solved in our Bill. I am speaking in the more general terms which are appropriate in making a first presentation of this policy to Parliament. The properties which are to receive derating relief comprise every form of productive industry from the heaviest basic to the most complex and highly-finished forms, from the most prosperous to the most suffering, and, in addition, they comprise the freight-carrying railways, the canals, the harbours and docks. In the aggregate, these undertakings provide the means of livelihood for about 10,000,000 wage-earners. Over the whole of this area it is proposed at the rate payment of October, 1929, to reduce the local rates by three-quarters. The remaining quarter is left, not in derogation of the principle which we affirm that the tools and plants of production ought not to be subject to taxation, but only the profits arising from their use—the remaining quarter is left in recognition of the importance of preserving some connection between local industry and local fortunes in order that the local authority and local manufacturers may have some interest in common and take an interest in each other's welfare.

I have said that three-quarters of the rates on productive industry will be remitted in the rate payment of October, 1929. But the case of agriculture is exceptional. The operations of the successive Agricultural Rates Acts have already relieved agriculture of three-quarters of the rates upon farm lands and buildings. Parliament has for many years, and under Governments of every party, recognised the special claims of agriculture; and we certainly do not propose that they should be obliterated now. Farm lands and buildings will, therefore, from and in October, 1929, that is, after the rate payment of April, 1929, be at once completely and permanently relieved of all rates. The farmer will continue, of course, to pay rates on his residence in the ordinary way; but so far as agricultural production is concerned, he will be entirely free. There will be no chance of rates being raised upon him for any cause or in any district. The whole business of assessment and re-assessment, as far as he is concerned, comes to a final end. Out's out. To him, after the middle of next year, the rates are dead, and, as the poet said, "Stone dead hath no fellow."

Separate arrangements will be required for Scotland, where the incidence of rates and the general conditions differ in important respects from those o England and Wales. I will not complicate my statement with a description of these special and separate provisions. My right hon. Friend the Secretary of State for Scotland will take an early opportunity in the course of the Debate which will arise on this subject of dealing with them in detail, and also, no doubt, of explaining the provisions to those Members who are more directly concerned in the affairs of the Northern people.

To return to the main problem—and I shall not keep the House much longer—our object is to impart a real stimulus to the basic industries and to production generally. In addition, therefore, to the direct relief to be given by the three-quarters of the rates which are to be remitted in the case of productive industry, there will be given the further impetus of a reduction of railway and canal freights and of dock and harbour dues. I use the expression "railway freights" in order to avoid confusion with the expression "local rates"; and I recommend this vocabulary to those who take part in these lengthy discussions, otherwise time and trouble will be wasted. If the rating relief to the railways, which is to be passed on by them, were merely spread over the whole volume of traffic, it would be beneficial, but it would not cut deep enough to achieve our purpose. It is really no good taking all the trouble and running all the risk and facing all the expense which this policy entails unless you are going to cut deep enough to produce a definite result. We have, therefore, decided to propose to Parliament and to the nation—because, undoubtedly, this is a matter for general discussion—that the entire rating relief accorded to the railways, amounting, as far as we can at present estimate, certainly to not less than £4,000,000 a year, shall be concentrated on certain heavy traffics. One-fifth of the whole of that relief will be given to agriculture. My right hon. Friend the Minister of Agriculture will discuss the detailed apportionment of this gift during the summer with the representatives of that industry—an interesting and, no doubt, at times an exciting task for which his proved courage on the battlefield has rendered him singularly fit. The other four-fifths of the relief will be concentrated upon the following traffics—coal, coke and patent fuel, mining timber, iron stone, iron ore and manganese ore, and limestone for blast furnaces and steel works. That is the whole list. The President of the Board of Trade will, to-morrow, deal more closely with this aspect and will explain to the House more fully than I can now do some of the effects which certainly we do not exaggerate and will not attempt to overstate, but which we hope may produce reductions in the cost of production in various branches of our industries.

For the present, I will only say that these traffics have been selected for relief out of a whole range of traffics for the following main reasons, which are really a key to the view we take of this problem and to our line of thought on it. First, they will help the industries which employ the largest proportion of manual wage-earners to their business turnover, and which also account for nearly one-quarter of the total unemployment of the country. Secondly, they are to help the traffics to which the alternative of road transport is practically not available. No one can carry coal, or iron, or steel, or fertiliser, or live stock, or feeding stuff in large quantities for long distances regularly and profitably by motor. Therefore, as I have already explained, the heavy producers have no option or true bargaining power. That is the second point. Thirdly, we selected these traffics because practically the whole advantage of them will inure to the benefit of British productive industry. They are carrying British products or carrying the heavy raw material essential for our mining and other heavy businesses. Lastly, these traffics are selected because they either play a vital part in our export trade or lie at the very foundation of our economic well-being.

Let us see what the reliefs will amount to. Broadly speaking, and subject to negotiations which must follow—because it has been only possible to carry this matter a certain distance before it became a matter of public knowledge—subject to the negotiations which must follow on the basis of the tentative estimate of £4,000,000—these reliefs ought to afford a reduction of about 8 per cent. upon the selected traffics. I am assured that this reduction will—apart altogether from the direct rating reliefs—be a valuable aid to the competitive power of all these industries. Here, again, I must reverse the cumulative arguments which I used at the outset of my speech. Coal will have a rate reduction factor. This will benefit the railways who in addition will have their own rate relief. This will be used for reducing freights, and consequently it will cheapen the iron ore which arrives at the steel works, where again the special rate relief is accorded, and this cumulative relief will be passed on to the shipyard, where it will find the appropriate three-quarters relief. In fact, it will substitute a virtuous circle for the vicious circle. If these basic industries are restored to a prosperous condition, not through the agency of increases of price but through the agency of an increase of true competitive power, the benefit which they will derive will permeate upwards, tier by tier, to every part of our social and economic life, and will come back to us from abroad in the improvement of the balance of our trade.

We make these proposals after much consideration; and we give Parliament and the public the benefit of our considered opinion on what ought to be done. Three out of the four great railways are quite differently affected from the Southern Railway by these selected reliefs on account of the nature of their traffics. These three railways carry far greater quantities of the basic mineral traffics than the Southern, which is more concerned with agriculture. It is a very difficult problem, one of great complexity and delicacy, but nevertheless it, is being solved. In order that the freight advantages may be uniformly operative throughout all parts of the country, it will be necessary for the principal freight-carrying railways to pool both their reliefs from local taxation and the cost of their freight reductions. The railways concerned, I am glad to say, have agreed in principle to this course, and I am indebted to the heads of those great concerns for the trouble and goodwill which they have shown. I informed them at the outset that the principle was that the railways were to get nothing directly out of this relief; they were not to gain and they were not to lose. They are to gain only in the sense that if they carry more traffic as the prosperity of the country improves it will give a stronger assurance of employment to their work-people. But the relief is a relief which they are to pass on to the industries concerned. As to the canals and docks, for various reasons of detail with which I will not weary the Committee to-night, no special machinery is proposed to ensure the passing on of the reliefs. The canals practically follow the railway traffic, and most of the docks and harbours are either on a non-profit basis or under the control of interests which are concerned in keeping the charges as low as possible.