HC Deb 06 June 1928 vol 218 cc177-308

Order for Second Reading read.

The MINISTER of HEALTH (Mr. Chamberlain)

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

In order to make operative the scheme of rating, reform, which was outlined by my right hon. Friend in opening his Budget, three successive legislative steps are necessary. The first was that contained in the Finance Bill, the Second Reading of which was passed yesterday, and which provides the necessary money. The second is the sorting out of the various properties which are to be subject to relief, and that is the subject of the Bill, the Second Reading of which I now rise to move. The third stage will be the settlement of the actual amount of relief, and the method by which local authorities will be reimbursed for any deficiency on that account. The discussion yesterday ranged so widely over the whole field of rating reform that I do not think it is necessary for me to trouble the House with any lengthy exposition of the purpose of the scheme, or even of a complete outline of the method employed. By their vote last night, following upon the discussion, the House rejected the suggestion that any alternative to our proposals could be found in the rating of land or site values. It also rejected the suggestion of the Liberal party that a better alternative would be to distribute relief, on some undisclosed plan, to necessitous areas, or for the Exchequer to take over certain local charges; indeed, I think that one might go further and say that yesterday the House affirmed their belief in the principle that relief should be given to agriculture and to industry by way of a relief from rating, and it only remains, therefore, for us to-day to consider to whom that relief can be given.

I shall feel surprised if the House can come to any other conclusion, because both the plan of the Labour party, and that of the Liberal party, if one can call it a plan—it is only really a vague and misty sort of nebula—is open to the obvious objection that neither of them would accomplish the objects which we have in view. As far as I could understand the suggestion of the right hon. Gentleman the Member for Spen Valley (Sir J. Simon), his proposal was that the relief of rates from the Exchequer should be distributed according to the amount of unemployment which is to be found in any particular area. He described our plan as a subsidy to certain industries. I do not accept that description. It is, in essence, a readjustment of local burdens upon a newer and a more scentific basis. He would fritter away his subsidy by distributing it over every class of the population, thereby doing little to stimulate industry, and I should imagine, if it were to be distributed according to the amount of unemployment in an area, it would do more to encourage than to discourage unemployment.

The difficulty in which agriculture and industry find themselves to-day is that there is not sufficient margin between prices and costs. It would not be possible for us to solve that difficulty by increasing prices, even if it were desirable, and my Noble Friend the Member for Oxford University (Lord H. Cecil) made some pertinent remarks upon that subject yesterday. It might, perhaps, be possible to reduce costs, either with or without a decrease in wages, by means of the reorganisation of industry, but a process of that kind is bound to be long, bound to be slow, and bound to be accompanied by a great deal of suffering and hardship. There are, however, certain ways in which, I think, the Government can give some assistance to agriculture and to industry, in order to enable them to reduce their costs, and those ways are by a reduction in the dead-weight burden of local rates, and a further reduction in the cost of transport, whether by rail or by water, These are ways which have been indicated by industrialists and agriculturists themselves as those which would be most helpful to them, and these are the ways which the Government have adopted in the scheme which is now before the House.

Of course, the first effect of relieving certain classes of the community from a portion of the rate burden must be to diminish the sources of revenue of the local authorities, and, in some way or another, that deficiency has to be made good to them. The right hon. Member for Spen Valley appeared to think yesterday that that was the whole sum and substance of the Government's proposals. He said that the only money which will come to the local authorities is the reimbursement for the deficiency in which they would be involved by reason of the relief in rates, and he asked the question, several times repeated, whether this can by any possibility afford any relief to so-called necessitous areas. I must admit that I was surprised to find that he quoted my speech in the Budget Debate as authority for saying that no such assistance was to be given to necessitous areas. I must have been singularly unfortunate in my methods of expression on that occasion, though I do not think I am generally accused of any want of lucidity. I was under the impression that I had stated very distinctly the exact opposite. Hon. Members will recall that I had rather a short time in which to develop all that I wanted to say on that occasion, and if what I said led to any misunderstanding on the part of the right hon. Gentleman or any other Member I am very glad to have this opportunity of correcting a misapprehension.

I would like to say upon that, that the block grants which it is proposed shall subsequently he given to local authorities in aid of local burdens will be composed, first of all, of what is necessary to make good the deficiency of which I have spoken, and, secondly, of a sum of money which will be given in substitution for the percentage grants now given for the health services, for the assigned revenue grants, and for certain road grants. Adding all these together, we shall distribute a substantial part of those block grants, so far as health services, assigned revenue grants and road grants are concerned, upon the basis of a formula which will take account of local needs arid not of local expenditure. But that distribution on the basis of a formula will apply not only to those sums of money but also, in the first instance, to a proportion of the deficiency grants, and what I endeavoured to make clear before, apparently without success, was that whilst we shall begin by distributing upon the formula only a proportion of the deficiency grant at subsequent successive periods of five years we hope to increase that proportion until, ultimately, the whole grant is given solely upon the formula basis.

We are not concerned with this matter this afternoon, but in view of the obvious misunderstandings on the part of the right hon. Gentleman, I thought it was only right that I should make that explanation, in order that he may be under no delusion as to the actual effect of our proposals, which are not merely to afford to productive industries relief of three-quarters of their rates and to agriculture relief of the remaining quarter of the rates which it now pays, but which will further give additional and special relief to necessitous areas. In that way I hope we shall deal with a problem which has puzzled successive Governments almost since the termination of the War.

Let me now come to the valuation portion of the Bill. Perhaps I may venture to remind the House that this Bill does not in itself give relief from rates to any body or any section of the community. It is purely a machinery Bill, and it is therefore concerned chiefly with definitions. Before I describe what these definitions are, I would like to say a word about the procedure which I anticipate will follow upon the passing of the Bill. A good deal of criticism has been directed against the proposals of the Government on the ground that they do not come into force immediately. My right hon. Friend has pointed out that one difficulty in bringing them into operation immediately is financial, but there is another difficulty, and that is that this process of reforming the rating system is not one which can be carried through in a week or a month. It is one which requires a considerable amount of work, and certainly a considerable amount of time, to carry it through to a successful conclusion. I would like, therefore, to outline briefly the various stages of the procedure through which we have to pass. The first thing that will happen after the Bill becomes an Act will be that the rating authorities throughout the country will have to publish notice of the passing of the Act, and will have to direct ratepayers who wish to claim relief to send in their claims upon a prescribed form, which they will be able to obtain. It must be remembered that the passing of the Bill on to the Statute Book will probably take place just at the beginning of the general holidays in August, so that it is necessary to allow full time to ratepayers to make their claims, and by the time these claims have been sent in we shall probably have reached something like the end of October. The rating authorities, after having received them, will proceed to an examination of the various hereditaments in respect of which claims have been made, and will begin the preparation of the provisional draft valuation lists which will contain the particulars of the various properties in respect of which claims are being made Probably that will take them up to the end of March in next year.

The next stage is that the provisional valuations of the rating authority will have to be submitted to the revenue officer. Here, again, there seems to have been a certain misunderstanding. The right hon Gentleman the Member for Spen Valley, who seems to have fallen into every error that it was possible to make in giving his account of the proposals, compared the position of the revenue officer under this Bill with that of the revenue officer as he appeared originally in the Rating and Valuation Bill, 1925. There are very big differences between the two things. The purposes for which the revenue officer is wanted now are quite different from those for which it was proposed to include him in the Bill of 1925. Then the object of bringing in the revenue officer was to obtain a general uniformity of valuation throughout the country. Here we are not concerned, or he is not concerned, with uniformity of valuation. The reason why he is brought in here is because the Exchequer is affected by these proposals, seeing that the amount of the Exchequer grants will be largely determined by the amount of the deficiency in the rates of each local authority produced by the proposals in the Bill. Therefore the purpose of the revenue officer here is purely to protect the interests of the Treasury. He is not a permanent institution in this connection. He will be here merely upon these first provisional valuation lists. His duties will end with the 1st of October, 1929, and in any subsequent valuation lists that are prepared the revenue officer will have no part or lot.

In so far as he appears in the provisional list, his functions will be these. It will be open to him to object to the inclusion of any particular hereditament in the special list on the ground that it is not a hereditament which ought properly to be derated. He can also object on the ground that some part of the hereditament is being included in the list which ought not to be so included, but once the question has been determined as to whether a hereditament shall or shall not be included, then the revenue officer has no power to roam over the whole field and say, for instance, "This assessment is too low as compared with other assessments." It is specifically laid down, as hon. Members will find in the First Schedule, that when it comes to the actual valuation of the hereditaments the only function of the revenue officer is to object on the ground that an assessment is too high. In that respect, the officer is on the side of the ratepayer, and his interests are the same as those of ratepayers. The officer has to see, not that the assessment is not too low, but that it is not too high. Therefore, the position of the revenue officer is entirely different from that which he occupies under the original Valuation Acts, and therefore the objections raised on behalf of the ratepayer no longer exist. The revenue officer and the rating authority are directed to consult together in order to agree if they can, and, if they cannot agree, then the views of the revenue officer as well as the rating authority will be submitted to the Assessment Committee. The Assessment Committee will then have to examine the list as submitted to them, and I am advised that they calculate that the Assessment Committee would not finish their labours before July, 1929.

There remains a further stage. There may be an appeal from the Assessment Committee to Quarter Sessions, and we are assured that we must run practically to the end of September before we can be sure that the appeals to Quarter Sessions have been finally disposed of. That carries us right up to the 1st of October, the date when it is hoped that the relief may become operative. I think the House will understand from that account why it is that we are not able to bring in a scheme any earlier than the date to which I have referred. I observe that yesterday the right hon. Gentleman the Member for Hillhead (Sir R. Horne) addressed a plea to the Chancellor of the Exchequer to try and anticipate the date on which relief would be given. It is a curious thing that in the Debate on the Budget proposals my right hon. Friend was the one Member of the House who addressed himself to this particular question in exactly the opposite sense, and I remember on that occasion my right hon. Friend said that it must not by any means be assumed that the purpose of the scheme would be in any way injured by the fact that it did not come into operation until the Autumn of next year. My right hon. Friend the Member for Hillhead also pointed out that, in addition to the psychological effect, a stimulus would be given to expenditure by the knowledge that there were certain sordid and material considerations which entered into the subject, and he seemed to have in mind a fear that the relief which was coming on the 1st October, 1929, would be likely to cause local authorities to incur unnecessary expenditure. I would remind the House that in industrial affairs contracts are frequently placed many months before the actual execution of the contract begins. Take the shipbuilding trade. Many months may elapse after a contract has been signed before even the keel is laid down, and it would be possible for a shipbuilding firm tendering for the building of a new ship to take into account the relief from rates which would operate for many months during which they would be actually executing their contracts.

Lieut. - Commander KENWORTHY

Surely that would lead to the holding back of contracts.


Not at all. I am explaining that in arranging a contract for a new ship which would take a long time to build, and which would not be commenced until the middle of next year, shipping firms will be able to take into account the relief they will get from the rates, and they will be able to reduce their contract price accordingly.

Lieut. - Commander KENWORTHY

Surely, under those circumstances there would be a temptation for people who otherwise would be building ships to hold back their contracts.


I suppose the hon. and gallant Member thinks that they would get their ships more cheaply by holding back their contracts'? I admit that that would be a consideration, but it is not the only consideration which affects the terms on which a contract is based, and that would not have much weight if a shipbuilding company saw an opportunity of taking advantage of the relief which we are offering during the building of a new ship.

I come now to the provisions dealing with the distinction of hereditaments in valuation lists. The first thing which we have to do is to describe the various classes of property which are to be relieved. In Clause 1, they are described under three heads: (a) agricultural hereditaments; (b) industrial hereditaments; and (c) freight-transport hereditaments. In Clauses 2, 3 and 5 we define what we mean for the purposes of this Bill by these different descriptions of property. I do not think that Clause 2, which contains a definition of agricultural hereditaments, offers any particular difficulty, because agricultural land is defined in exactly the same way as it is already defined under the Agricultural Rates Act, with one notable addition. We have included in the definition of agricultural land for the purpose of rate relief land used for a plantation or a wood, and we have done this in order to encourage afforestation, which I think is a plank in the policy of every party. I do not think anybody will criticise the Government for having taken this opportunity of giving a little encouragement to the owners of agricultural land to produce woodlands. Agricultural properties are defined in the same way as in the Rating and Valuation Act of 1925, which already gives them relief from rating to the extent of three-fourths of the full amount.

I come next to the Clause which I think contains the most difficult part of the whole of this business, and that is the definition of industrial hereditaments. When we are thinking and talking in general terms it is easy to describe what we mean by an industrial hereditament, and everybody has in mind perhaps a cotton mill, a mine, a machine tool works, or a blast furnace which obviously comes within this description and which obviously is the sort of pro- perty to which we desire to give relief. In all the vast industrial network which spreads over the whole country, it is not so easy to distinguish sharply between processes which are manual and clerical, processes which are manufacturing or distributing, processes that merely involve protection from the weather, and processes which involve storage for the purposes of storage and not of manufacture. Every factory, of necessity, contains within itself elements which are non-productive, and, on the other hand, there are many non-productive undertakings which contain within themselves elements that are productive; and, although in logic and in theory it might be right to attempt to enter into every little detail, and to separate out every particle of every property and classify it on the one side or on the other, in practice a process of that kind would present almost insuperable difficulties. It would be an interminable process, it would be extraordinarily costly, it would lead to endless disputes, and I doubt if it would be possible in the end to effect any result which everyone would agree was entirely satisfactory and beyond criticism. think, therefore, that it is perfectly clear that for practical purposes we must have something rather more rough and ready than that, and, after very long consideration, the Government have decided to adopt, as the basis of their classification, this criterion, namely, whether a property is or is not a mine, a factory or a workshop.

These three terms are. well known and are familiar. They have governed the practice of the Home Office in the past. Most factories and workshops are registered, and they do not in themselves present any particular difficulty. In fact, one may say that these definitions alone would cover the vast majority of what we should ordinarily regard as industrial hereditaments, without giving rise to any particular doubt or hesitancy. I would point out that these definitions in themselves are very wide. They cover a very large field. They would include, for instance, processes like packing or sorting: they would include the stores in a factory; they would include such properties as a railway siding within a factory, a canal basin, or a wharf; they would include the prime motive power of the factory, whether steam, or gas, or electric; and they would also include, not merely the original productive work, but work of repair carried on, as it frequently is in a factory, alongside of the original production. That, as I say, brings into the net a very large proportion of the properties with which we have to concern ourselves. But there are, of course, as I said before, in every factory a number of premises or portions of the factory which are not in themselves productive. You have, to begin with, the offices of various kinds. There will be the directorial, the managing offices; there will be the offices connected with purchasing and costing; there will Le laboratories; there will be recreation premises, and quite a number of other portions of the factory which are not themselves directly concerned with the process of manufacturing. We have dealt with those properties in Subsection (2) of Clause 4, and the effect of that Sub-section is that, where the value of all those non-productive or nonindustrial premises in a factory does not exceed 10 per cent. of the industrial part, they are ranked with it and come in for the full de-rating.


Is it 10 per cent. of the total, or of the industrial part?


Of the industrial part. Where, on the other hand, such premises are in excess of 10 per cent., then the excess, and the excess only, will be fully rated. If I may just give a little example, supposing that the annual value of a works or factory was £2,000, and that of that £2,000 the industrial part represented £1,000 and these other properties £100, then, since 10 per cent, of £1,900 is £100, the offices and other premises in that case would share in the full relief given to the rest of the factury; but supposing that the value of these premises was £200, leaving £1,800 as the net annual value of the industrial part, then you would have to compare £200 with £180, and in that case £180 would be de-rated and £20 would be fully rated. That is a plan which, as I am advised, will, in the great majority of cases, cover all these premises; that is to say, there will be very few cases indeed in which these premises will amount to more than 10 per cent. of the value of the industrial part of the factory, and, therefore, in all those cases it will not be necessary to separate them out in the valuation list at all, but they will go in with the rest of the factory.

Up to this point the matter is pretty plain sailing, but now we come to a rather more difficult matter, and that is When you come to the border-line where manufacturing, official, clerical and distributive work slide into one another; and the fact is that there is every possible gradation of such variations to be found throughout the country. It would be quite impossible to put into an Act of Parliament anything in the nature of a schedule which would separate out all the properties and classify them according to the particular category in which they should be placed. They must, I think, be dealt with on broader and more general lines than that, and what we have done, therefore, within the limitations of the factory or workshop which forms the basis of the relief, is to say that, where a hereditament is primarily used for some other purpose than that of a factory or workshop, it is not to be deemed, for the purposes of this Measure, to be an industrial hereditament at all. In Sub-section (1) of Clause 3 we have put down a list of items, (a) to (f), and we say that when a building or hereditament is primarily used for the purposes of a dwelling house, a retail shop, a distributive wholesale business, storage, a public supply undertaking, or any other purposes which are not those of a factory or workshop or any combination of those purposes, it is to be excluded from the de-rating principle. I should like to say just one word about the public supply undertaking, because that stands, perhaps, on a slightly different footing from the others in the list. A public supply undertaking is defined in Sub-section (3) of Clause 3 as any undertaking primarily carried on for the supply of gas, water, electricity or hydraulic power for public purposes, or to members of the public, or to any one or more undertakings carried on under any special Act or Order having the force of an Act, I may say, in explanation of the last part of the sentence, that this is designed to include a place like Lots Road Power Station, which supplies power primarily to a railway. Of course, a public supply undertaking in these terms is undoubtedly to a considerable extent productive. It is not wholly productive, but it is partly distributive. It does not confine itself, either, to supplying whatever it produces to industry. It supplies it to individuals, and, on the whole, seeing that in order to relieve from rating public supply undertakings we should have to burden the national finances to the extent of something like £4,000,000 a year, there was no sufficient advantage to be obtained by de-rating them to justify our diverting for this particular purpose so large a sum of money which could be better employed in giving direct relief to industry itself. After all, these various public supply undertakings are all more or less in the nature of a monopoly. There is no guarantee, even if they were de-rated, that the relief that is given would go to stimulate industry, which of course is the purpose which we have in mind, and therefore, for these reasons, we have included heredita. ments used primarily for the purpose of a public supply undertaking among those which are excepted from the purview of the Bill. As to the rest, I do not think anyone will quarrel with the general principle that you ought not to call a property an industrial hereditament and de-rate it simply because it contains in itself a small element of production though its primary purpose is something entirely different. For instance, it would surely be absurd to de-rate, let us say a confectioner's shop because the sweets were boiled in a back kitchen. It would be equally absurd to de-rate a furniture repository because in the yard there was a carpenter's shop for the purpose of doing small repairs to some furniture.

I dare say there will be some criticism directed to this word "primarily." It will be suggested that its use involves an element of doubt which could only be settled by a lengthy process of litigation. I hope if anyone criticises the word, he will offer some suggestion for a better one. Here again you have to consider that there is every kind of variety of conditions to be considered. I have given long thought to this problem. I have been unable to find any way by which you could once and for all settle in this Bill how a particular property, when conditions vary so much, is definitely and finally to be classified. I think it is a question that must be left to the common sense of the rating authority. The rating authority will take each claim upon its merits. It will consider the broad question, "Is this hereditament being used primarily for the purposes of industry and production, or is it being used primarily for one of these other specified purposes? "It will make its decision as to whether the hereditament is or is not to be inserted in the list, and, if the claimant is dissatisfied with the decision, he can take it to the Assessment Committee, and, if the Assessment Committee is against him, he can take it to Quarter Sessions, and then to a higher Court. There must, no doubt, be cases which can only be ultimately settled by a decision of the Courts, but I do not anticipate that this Clause, if it remains as worded, is likely to give rise to any very considerable annount of litigation. I think the common-sense view will prevail. We have chosen this word "primarily" deliberately, to indicate that we want the matter viewed on broad principles, and I believe in the absence of any better suggestion this will be found generally to meet the case.

Before I leave this Clause I want to make one general observation. In drafting the Bill, we have been guided by two general principles. The first is that the test of whether the property shall obtain relief or not is to be the purpose for which that property is mainly intended to be used, and the second principle is that we have tried to provide that we shall not by our proposals create any new unfairness or injustice between one section of an industry and another, or between one industry and another. It will he found, for instance, that where a manufacturer houses his fleet of motor lorries at. a garage in his works that garage is to be excluded from the benefit of any relief. The reason for that is because in housing his motor lorries in his works he has come in competition with a haulage contractor who has also a garage in which he houses his motor lorries, and he is really in competition with him in that respect. Therefore, out of a sense of fairness as between that manufacturer and that haulage contractor, we exclude that garage from the benefit of relief. But I say frankly to the House that in the condition of secrecy which must necessarily attach to the preparation of a Budget., and in the short time that has been at my disposal since the proposals of the Budget were made public, I do not pretend that it has been possible for me to get that complete information about all the ramifications of industry throughout the country which I should have liked to have in my possession. If, therefore, in the course of our discussions upon this part of the Bill fresh information is brought to our notice which has not previously been before us which would lead us to suppose that in fact the proposals, as drafted, would inflict some hardship or injustice upon any individuals or trades, we shall be ready to give the most sympathetic consideration to any evidence of that kind, and we shall endeavour, if possible, to find some way of remedying that injustice.

4.0 p.m.

There are, of course, two ways in which such Amendments might be made. They might he made by extending the relief that is to be given to those who are not at present included in the Bill. On the other hand. it might be a better way to exclude from the purview of the Bill some who now come within it. I cannot, of course, at this stage say which might be the better way in any particular case. All I want to say at this stage is that, while we have in this Clause done our best to cope with an extremely difficult and complicated subject, we do not regard what we have set down here as necessarily the last word. We are quite prepared to keep an open mind on any evidence which may be brought before us which would induce us to introduce Amendments. In Clause 5, we deal with freight-transport hereditaments which are specified to include freight-carrying railways, canals, with which are included inland navigation canals, and docks, which include harbours, jetties and piers other than piers used purely for pleasure purposes. Perhaps the House will bear in mind that the case of these freight-transport hereditameets is rather different from that of industrial hereditaments, inasmuch as the rating relief given to the freight-transport hereditaments is not intended to be retained by them, but is intended to be passed on to industries, and in the case of railways we have definite arrangements that it is to be passed on to specified industries, namely, coal, iron and steel and agriculture. The railways which will come under the definition comprise the four amalgamated lines, together with 15 smaller lines, which are either owned or worked jointly by two companies. It includes also the Metropolitan Railway, and about 29 light railways and miscellaneous railways which pay a small sum in rates—I think it is only about £8,000—but which could not be left out of the scheme without creating some anomalies which we do not think it desirable to perpetuate.


Does it include tubes?


No — only freight-carrying railways. Canals, as I have already mentioned, include particular hereditaments like the Nene and Trent Navigation. Docks include not only the properties belonging to the statutory undertakings, but also wharves owned by private wharfingers and used for public traffic, hut not wharves which are file property of some particular industrial concern, and used exclusively for its own purposes, where those wharves are not included within its precincts.


Will the right hon. Gentleman say whether docks will include fishing docks?


Yes, certainly.

Lieut. - Commander KENWORTHY

Will the right hon. Gentleman explain a little further about the private wharves? Are we to understand that if a company builds a wharf for loading its own materials, for example, it is not going to receive relief unless it opens the wharf to the general public? Is that the idea?


That is precisely the idea, and I think the hon. and gallant Gentleman will see why. I have explained that the relief afforded to, freight-transport hereditaments is not intended to be retained by them. It has to be distributed among industry, either generally or to some particular industry. In the case of a private wharf owned by a company, it cannot be treated in that way, because if you give relief to that wharf it will go to the benefit of that company instead of being distributed among industry generally.

Lieut. - Commander KENWORTHY

Will that apply to breweries also?


In Clause 6, which deals with the entries in the valuation lists, and declares what parts of freight - transport hereditaments are excluded from the rating relief, it will be seen we have taken out dwelling-houses, hotels, refreshment rooms and warehouses which are merely intended for purposes of storage and not merely for purposes of housing goods in course of transport, and there again, of course, we are excluding those properties because they are of the same nature as other properties outside freight-transport hereditaments. We desire not to create unfairness between one class of owner and another. I think I should also draw attention to the proviso in Sub-section (1) of Clause 5 which deals with hereditaments primarily used as general offices belonging to a freight-transport undertaking. Those offices, which are entirely separate from the actual working properties of the undertakings, will not be de-rated, and, if I may give the House a conspicuous instance, the offices of the Port of London Authority, which are quite separate from the docks, would come under that proviso, and would be excluded from the rating relief which is given to the docks themselves.

I do not think I need detain the House with comments at this stage upon the remaining Clauses of the Bill. Clause 7 includes some minor Amendments of the Rating and Valuation Act which are merely consequential in character. Clause 8 deals with the expenses of the revenue officers which, I suppose, we shall discuss upon the Financial Resolution. Clause 9 deals with the application of the Bill to Scotland, and my right hon. Friend the Secretary of State will have something to say about that in a later stage of the Bill.

Before I sit down I would like to say a word about the Amendment which stands upon the Paper in the name of the official Opposition. This Amendment is divided into three parts. The first part says: That this House declines to assent to the Second Reading of a Bill which proposes a new practice in the assessment of property for local rating, bound to create unfair and unjust discrimination between particular enterprises and between industries and localities. I must say I admire the cool audacity of the party which condemns these proposals for their unfair discrimination between different classes of property, when that same party only yesterday was proposing to single out one particular class of property for special penalisation while leaving other classes of property, whose wealth is derived in exactly the same way, absolutely untouched. I think nobody can deny that there does exist now a very unfair discrimination in rating as between one industry and another, and as between one locality and another. I shall be glad to hear what the right hon. Gentleman has to say in support of the charge he brings against us, but we maintain that if our proposals do not absolutely remove the existing inequalities and injustices—and I defy anyone to produce a plan to do that—at any rate they will do a great deal to reduce them, and they will benefit the whole community by the stimulus they give to industry upon which this country as a whole must depend. The second part of the Amendment states that the Bill is preparatory to a scheme for subsidising certain industries without regard to the conditions of each industry or of the special needs and circumstances of different areas. That part appears to be entirely premature, because the Opposition have not seen the scheme yet, and, therefore, it is impossible for them to say whether or not it answers to the description which they have given. As regards the third part, that also is purely imaginary, because that is a part which declares that the scheme is calculated to increase the burden upon householders' property, and this is obviously entirely irrelevant to the present proposals, which cannot increase anybody's burden any more than it relieves anybody's burden. What this House really has to decide to-morrow afternoon is, in the first place, whether relief by way of rates is to be given to agriculture and to industry at all, and, if so, to what various classes that relief is to be given? That is the question it has to decide. We take note that the Opposition is not going to give that relief at all, and upon that issue we gladly accept their challenge here in this House, and hereafter in any constituency in the country they choose.


You ran away from your constituency. What about Lady-wood?


I beg to move, to leave out from the word "That" to the end of the Question, and to add instead thereof the words: this House declines to assent to the Second Beading of a Bill which proposes a new practice in the assessment of property for local rating, bound to create unfair and unjust discrimination between particular enterprises and between industries and localities, is preparatory to a scheme for subsidising certain industries without regard to the conditions of each industry or of the special needs and circumstances of different areas, am' is calculated to increase the burden upon householders and shopkeepers and upon road transport and the distributive trade generally. I should not for a moment delay accepting the challenge the right hon. Gentleman has given in his concluding observations. We are prepared to meet him here. We are prepared to meet him in the country, and we look forward with confidence to the verdict of the electors at the General Election upon this issue and other issues. The right hon. Gentleman is always calm, except in his perorations—calm and lucid in his exposition of any Measure he submits to this House, and if the merits of the scheme he has proposed this afternoon were equal to the merits of his speech, this Bill would receive the unanimous support of this House. I have never, in my rather long parliamentary experience, heard a Minister submit a, first-class Measure to this House in terms of such damning praise as the right hon. Gentleman has used this afternoon. I know nothing of what has taken place between the two right hon. Gentlemen, who are sitting like brothers upon the Treasury Bench just now, nit if there had been a quarrel, I could imagine no greater revenge than that which the right hon. Gentleman has taken in the terms in which he has submitted this Measure this afternoon.

The right hon. Gentleman is amazed at the audacity of the terms of the Amendment which I now move. When he gave reasons for holding that view, I felt that I could never hope to compete with him in audacity, for I have the highest. respect for the intelligence of the right hon. Gentleman, and I know he is far too intelligent to have believed for a moment what he said when dealing with the Amendment that we submitted to the House yesterday, or in what he said in regard to our attitude to rating relief generally. The right hon. Gentleman said Oat our Amendment yesterday singled out a special class of the community and it proposed to put upon them a heavy burden which would he unfair, because they had just as much right in the possession of that wealth as any other people in the community had. The right hon. Gentleman knows that that is not true. People generally who are in possession of the wealth, except the rentier class are in possession of wealth because they have earned it, but the ground landlords are in possession of wealth in the creation of which they have done nothing whatever. They are simply pocketing the property of other people; and—this is the point—those other people are the whole community. Therefore, that is the justification for the Amendment which we moved yesterday. However, that is out of the way.

We have to consider the Bill which is now before us from the point of view of the existing rating system, and, in anything I may say this afternoon, I do not depart one iota from the position I attempted to put on behalf of the Labour party yesterday. I am assuming the existing rating system. But this is the thing that we have constantly, at all times, to bear in mind. In considering these proposals, we have to ask what is the purpose for which the Government have introduced them. That is the test. What is that declared purpose? It is to relieve what they call productive industries from what they further call the burden of rates, with the object of bringing prosperity to those industries. That is the test which we have to apply to these proposals. Will this relief stimulate these industries? Will this relief provide more employment? I am going to answer those questions because by the decisions upon those questions this scheme stands or falls. The party opposite do not object to that way of putting it. I think I am stating the terms upon which the Government have brought in this Bill quite honestly and fairly.

First of all as to the burden of rates: There are few things about which more nonsense is talked than about the burden of rates. Rates are not in themselves a burden at all. What constitutes the so-called burden of rates, as I believe I said yesterday, is the unfair incidence. I might take an analogy between indirect and direct national taxation. Some of our national taxes fall with much heavier weight upon certain classes than they do upon others. That is what is wrong with our local rating system. The incidence is not equal. It is not fair. The burden of rates falls with different weight upon different classes of local ratepayers. I say that ii; is nonsense to talk about the burden of rates as rates. Rates are just as much an essential part of the costs of production as wages, and far more so than rent. When people opposite talk about the burden of rates, when at meetings of the Federation of British Industries and the Association of Chambers of Commerce they talk about the burden of rates upon production, they seem to assume that nothing is given in return for the payment of rates. Why, there is no expenditure incurred, either by a firm or by an individual, which gives a better return, or which gives the same value as the money which is spent from rates. Therefore, the question which we have to decide is this unfair incidence of the burden of rates, and what gives force to the present outcry about the burden of rates is that the circumstances and conditions of the last eight years have raised this question into prominence, because certain localities and certain industries are now bearing and have had imposed upon them a much heavier incidence of local rates than was the case before the present trade depression began.

Let me give you the facts. We will take the poor rate, because it is very largely a matter of the poor rate. The average Poor Rate per head of the population in England and Wales in 1914 was 6s. 8¾d. In 1927, it was 12s. 5½d. That is, without taking into consideration the changed value of money, it was nearly double, a rise of 85 per cent. This, I think, is a very significant thing in connection with this question. In 1914, as 1 said, the average Poor Rate was Gs. 8¾d. In 1919, notwithstanding the depreciation in the value of money and the increase in the cost of commodities, the average Poor Rate was only 7s. 8½d and, if you translate that into the then value of money, only about one half of what it was in 1914.


May I ask the right hon. Gentleman a question. What does he mean by Poor Rate Does he mean the relief of the poor? [Interruptian.] The Poor Rate has a different meaning in different places. Does he mean expenditure on the relief of the poor, or does he mean what is in other places the Poor Rate—two entirely different things?


The Poor Rate—the amount levied for the purposes of Poor Law administration. Now this is a very important point. In 1919, the average Poor Rate per head of the population was 7s. 8½d. Two years later it had risen to 13s. 7d. That, as I say, takes no account of changed money value. That is really the crux of this question of the burden of rates. It is very largely a problem of certain areas. Kensington raises from the whole of its rates £7 165. a year per head of its population, while poor Poplar, with an enormously smaller capacity to pay, has to raise £6 17s. per head a year. If we take the whole of Great Britain, in 1914, the whole of the rates per head of the population averaged £3 Os. 6d. We talk about this burden of rates, about the great increase in rates, and yet in 1926, allowing for the changed value of money, the rate had risen only to £3 15s., that is, from £3 Os. 6d. to £3 15s., and in the meantime there had been a great advance in municipal services. The municipalities had had additional burdens placed upon them, and yet there had been an increase of only about 16s. per year per head of the population. It is, as I said, very largely a question of certain areas, areas which have been affected by the abnormal unemployment of the last seven years. Take Tyneside, a very depressed area. The Poor Rate in Newcastle has risen since 1914 from is. 2½d. in the £ to 4s. 4½ in the £. The Poor Rate in Wallsend has risen from 10½d. to 6s. 11d. In Sheffield, a depressed area., the Corporation Rate has risen only by 60 per cent. This is less than the increase in the value of money, and therefore the Corporation Rate is less in reality than it was in 1914. But the Guardians Rate has risen by 397 per cent. The six boroughs on the Tynside are spending less, apart from Poor Law, than before the war. That is, translating it. into present money values.

It is equally untrue to say, or, shall I say, it is equally unfounded to say that the increase of rates has a material effect in trade depression, or that the rating scheme which is proposed by the Government will meet any real need. The Chancellor of the Exchequer yesterday gave a numerous number of figures show- ing the percentage of rates arid profits in various industries. What in the world is the relation between rates and profits? The comparison is what is the bearing of rates upon the costs of production'? That is the only thing that we have to consider, because, unless your rate relief is going to lower the costs of production, it cannot improve trade. The Chancellor of the Exchequer agrees. Well, to what extent this proposed rate relief going to lessen the cost of production? The Balfour Committee on trade went into this question, and a recent report of their's gives some very instructive and illuminating figures. They give the figures for Scotland, because they had not then the materials regarding England and Wales; but they said that, no doubt, the same percentages would be applicable to this part of the country. As a matter of fact, answers to questions have been given by Members of the Government within the last few weeks which show that the percentages given by the Balfour Committee are approximately the same for this country.

According to the Balfour Report, the industrial undertakings which are going to be relieved contribute only one-eighth of the rates of this country, public utility companies, which include railways, one-eighth, louses and shops, two-thirds, and land only one-twelfth. Take coal mines. The coal industry is one of the industries which is said to be suffering from the burden of rates, and the relief which is to be given is to put this depressed industry upon its feet once more. Answers to questions which have been given by the Government expose the utter absurdity of such a claim as that. An answer was given a month ago as to the burden of rates upon a ton of coal, and the average for Great Britain is less than 3d. r. ton. It varies from 1.13d. to 4.31d.; the average is 2.8d. Royalties impose more than double that burden upon every ton of coal. The mines could not work, no industry could work, if it were not for the services provided by the rates. There would be no roads, no water, no sanitation, no lighting. The coal mining industry gets these services for less then 3d. a ton, while it pays 6d. a ton to the royalty owners and gets nothing from them.

Let us go wider afield. The Chancellor of the Exchequer dealt yesterday with a number of what he called the basic industries. He showed that the proportion of rates to profits varied very considerably; in some cases, it was 20 per cent. and in some as low as 2 per cent. I repeat that that has nothing whatever to do with the question. The only point at issue is, what is the burden on the costs of production? It is by reducing the costs of production that we can hope for an improvement in trade. The Balfour Committee got returns from 23 basic industries—coal, cotton, engineering, tin-plate and others. They found that the increased burden imposed by the increase of rates since 1913 had only been from .35 per cent. to .55 per cent. upon total output. That is an infinitesimal burden spread over all these industries on the rates which they pay. The figures in regard to railways are very surprising. There had been a decrease of the burden of rates on total working expenses from 6.3 per cent. to 4.6 per cent. in 1924.

We have heard a great deal about steel. Figures have been given to show that the burden of rates has risen from 3s. to 21s. That is very misleading, because rates arc fixed for a period, and output may vary very considerably within that. period. If output went down by one-half or by three-quarters and the rates remained stationary, then, quite naturally, there would be a very considerable increase in what we call the burden of rates per unit of output.

The CHANCELLOR of the EXCHEQUER (Mr. Churchill) indicated assent.


The Chancellor of the Exchequer agrees. That is very largely the explanation in regard to steel. If we take the whole of industry to-day, the amount of relief which it is proposed to give will average only 1.5 per cent. on the value of total output. Is there any hon. Member on the other side of the House who will get up and say that. that small amount of relief is going to lessen unemployment and is going to stimulate industry? Take the coal trade. The figures from various districts show that there is a loss of from 1s. to is. 6d. a ton. The average amount of relief which is to be given under this Bill is under 3d. a ton. Is the coal industry which is losing, say, 1s. 3d. a ton, going to be restored to prosperity by relief of less than 3d. a ton? Figures were published last week in regard to ascertainment in the South Wales coalfield, and they showed that the selling price of coal in the last 15 months had fallen by more than 2s. a ton. There we get the problem or an important part of the problem. This is due to competition and very large competition among the British coalowners themselves, who in their competition are selling British coal in the Continental and foreign markets at less than they need to do if it were not for the competition among themselves.

Take agriculture, which is to get total relief. The average relief at the present time is 75 per cent. I submit this question to hon. Members opposite. 75 per cent. of the relief of rates on industry is, we are told, going to bring industry back to prosperity. Agriculture has had for some time a relief of 75 per cent., and yet hon. Members opposite tell us that that industry was never in such a parlous condition. I do not say that it is cause and effect, but agriculture has been going more to the bad with every relief of rates that has been given to it. Industry will get under this scheme about £30,000,000 a year of relief. Houses and shops will have to pay—I am speaking of England and Wales only—£122.000,000, and they will get no relief. Rates are a far greater burden upon shopkeepers and householders than they are upon any other class in the community. They take a far larger percentage of the shopkeeper's profits and. a far larger percentage of the householder's income.

If the Minister of Health had wanted to do something which would really encourage trade and increase employment, he ought to have proposed the complete de-rating of houses. That would have been done by what he described as the unjust proposals which we made yesterday. If he hid de-rated houses—houses are just as much a factor in production and just as much an item in the costs of production as the factory itself or the machinery within that factory—he could easily have solved that problem which is troubling both his heart and his conscience to-day, namely, the terrible problem of the slums. I have taken this line so far, because the claim which the Government make for these proposals is that they will stimulate industry; but examination of the facts shows that the relief which they can possibly give, the full relief which they can possibly give, is so small that it can make little or no effect upon the costs of production.

The Chancellor of the Exchequer told us that he was limited by his financial resources and that he could not fritter away his limited resources over the whole field. That is precisely what he has done. The burden of rates is a special problem. It is largely an area problem, a needy area problem, but the Chancellor of the Exchequer has not confined the expenditure of his limited resources to where the need is greatest. As a matter of fact, although the Minister of Health denied it this afternoon, this scheme is nothing but a subsidy. There is no justification for the claim that he made, and I do not wonder that it was received with ironical cheers by my hon. Friends behind me, when he said that this proposal is upon a scientific basis. It is, I believe, nothing but a subsidy. We have had experience of the subsidy given to the mining industry. What good did that do? It did not prevent a great catastrophe in the industry; it increased the profits of certain of the better mines, but it did nothing to restore prosperity to the poorer mines. That experience is going to be repeated by the scheme which the Government are now proposing.

Supposing the scheme had been given as a direct subsidy. In that case, certain tests, surely, would have been insisted upon. There would have been certain safeguards. An industry to receive relief would have had to prove that it was an efficient industry, that it was a substantial industry, that it was suffering abnormal unemployment or that it was the subject to exceptional competition. No such guarantee as that is insisted upon. This relief is to be given to the just and the unjust.


Who are the unjust?


I am coming to some of the particular friends of the Chancellor of the Exchequer who may be classified under either of these two heads as individual opinion may decide. This relief is not to be given according to the need of the industry or the number of people who are unemployed. A subsidy certainly would not vary from town to town and from county to county. A subsidy would have been graduated according to needs; but this Bill proceeds on quite the opposite line and gives relief irrespective of need and fails to give relief where it is most needed. The only test that is provided —I am not at all surprised that the Minister of Health was so apologetic in dealing with this part of the Bill—is that they are carrying on something which has been decided to be a productive industry. Yesterday I pointed out the absurdity of trying to discriminate between what is productive and nonproductive industry. They are like the two blades of a pair of scissors; unless the two work together each is altogether useless; and it is a perfectly fantastic proposal to make the discrimination suggested in this Bill. Now I come to the special friends of the right hon. Gentleman the Chancellor of the Exchequer. He referred yesterday to the brewers and the relief which is to be given them—


How can they be described as our special friends because for two successive years I have taken £5,000,000 extra from their reserves?


The right hon. Gentleman has not taken a penny from the brewers during the last two years. What he has done is to reduce their credit, their time credit, from three months to one month. I can remember the time when they were allowed only 15 days' credit, and I give that tip to the Chancellor of the Exchequer for his next Budget. In order to relieve a possible embarrassment he may want £2,000,000 or £3,000,000, and he can find it by reducing the brewers' credit from one month to 15 days. It is not for me, however, to give tips to the Chancellor of the Exchequer; I may need them for my own financial resources. This relief, we are told, is to find more employment and encourage production. Is it the desire of the Government that there should be more employment in the liquor trade? Is it their desire that this trade should be more prosperous, that more money should be spent on drink? Every increase in employment in this trade, every increase in its prosperity, every increase in the expenditure upon this commodity means the further depression of every useful trade and industry in the country.

The Chancellor of the Exchequer yesterday advanced the argument—I am quite sure he had his tongue in his cheek—that the £400,000 which is to be given to the liquor trade—I am speaking of England and Wales only as we have not the figures for Scotland with its prosperous Scottish distilleries—is going to percolate down to the man who buys his gill of Tory ale. I thank the Chancellor of the Exchequer for that observation. We have always suspected the close association between the brewers and the Tory party and we have it confirmed now by the admission of the Chancellor of the Exchequer. He says that this £400,000 of rate relief will, by the working of immutable economic laws, result in a reduction in the price of beer.


I never mentioned any such reduction.

Viscountess ASTOR

I was watching him.


The right hon. Gentleman cannot deny that the words he used were that it would go to the benefit of the consumer; and, if it goes to the benefit of the consumer, it will not remain in the pockets of the brewers. Does every reduction in the cost of production, every improvement in trade, go to the consumer by the working of immutable economic laws? Let us see what happens with regard to the brewing trade. In 1914 the profits of the brewing trade were £10,000,000; in 1922, £19,250,000; and in 1927, £24,500,000. Their profits have increased by 150 per cent. since 1914; and it is to add greater prosperity to this trade, to find more employment, that this £400,000 a year is to be given, which is as much, the House will note, as that which is to be given to the shipbuilding industry. Will it reflect itself in a reduced price of beer? The Prime Minister, when he was Chancellor of the Exchequer, reduced the Beer Duty and I believe he got an understanding from the brewers that they would reduce the price of beer by 1d. per pint. I believe they did; they reduced its specific gravity. The weaker the beer the better it will please me. [HON. MEMBERS: "Hear, hear!"] Hon. Members opposite who laugh at that remind me of the story of the man who was drinking his beer at the counter of a public house. The landlord, who was a very affable fellow, said, "It looks like rain," and the man, putting the beer to his mouth, said, "Aye, and it tastes like it!"

I have not time now to deal with all the absurdities and contradictions which appear in this Bill. Let me just refer to one. A confectioners shop, a bakery, or a tailors shop, as such, is not a productive enterprise, but if it is a few yards away from the premises it becomes a productive industry. Then there is that very curious definition of agricultural land in regard to cottage gardens. If I understand the proposal in the Bill the assessors of the right hen. Gentleman are to be employed in battalions going about like the man in the Bible, whose name I have forgoten for the moment, with a measuring rod. They will measure these cottage gardens. If a garden is two square yards below a quarter of an acre it is not productive, however well it may be kept, but, if it is two yards over, it becomes agricultural land, although it may not be cultivated at all. There is another curious thing with regard to these cottage gardens, and that is that the quarter of an acre must be occupied by people of the labouring classes. How many of the labouring classes have cottage gardens of more than a quarter of an acre? See the absurdity of the proposal. You may have a clerk, a banker's clerk, who, in order to add to his in come, bring up his family respectably and give them a good education, cultivates his garden in his spare time. He does not belong to the labouring classes and therefore, it is not a productive industry in which he is engaged. The Bill is full of absurdities and contradictions of this kind, but it is on a scientific basis says the Minister of Health.

The Chancellor of the Exchequer yesterday when replying to me said, after paying a highly deserved compliment to the moderation of my speech: "Is that all you have to say"? It was all I had to say yesterday. I have had something more to say to-day and I hope the Chancellor of the Exchequer when he replies to-morrow night will have the courage which he did not manifest yesterday and deal with what I have said. Nothing has been said against the proposals which we have put forward except what the Minister of Health has said this afternoon. I have great respect for Parliamentary procedure. We were not discussing this Bill yesterday; we were confined to the narrow point of the provision which is contained in the Finance Bill. The Minister of Health has told us that there is to be a further Bill dealing with Grants-in-aid. I will not deal with that now, but I hope the scheme will be put forward in a form in which it can be understood. As far as the present Bill is concerned, the point is the 75 per cent. de-rating of industrial premises and the full de-rating of agricultural land.

5.0 p.m.

The right hon. Member for Hillhead (Sir R. Horne) made a speech last night. He is not here this afternoon, and may I say without offence that the right hon. Gentleman never comes down to this House except to make a speech in a Debate which he has not heard. The right hon. Gentleman said yesterday that this rate relief would be a great help to industry. The spectacle of—I suppose I may call the right hon. Gentle-man a business man—the spectacle of a politician turned captain of industry, coming before this House in, forma pauperis to tell us of the depressed state of trade, and, cap in hand, begging for State assistance—I hope this is a Parliamentary expression—is always to me a, contemptible display. Here are the great defenders of private enterprise. They say to the State "Hands off private enterprise!" That is so long as it is profitable; and then when their incompetence and mismanagement have made an industry unproductive, they come to the State to get them out of their difficulties, and they dip their hands into the pockets of other people for their own assistance.

In the general Debate on the Budget I ventured to describe this proposal as a fantastic monstrosity, and exception was taken to that expression. But I say with assurance to-day that there are now 10,000 people who hold that view of the proposal to one who held it when still under the glamour of the rhetoric of the Chancellor of the Exchequer. This Bill will give no relief to industry in the sense that it will stimulate employment and red ace the cost of production. It will, as we state in our Amendment, create now inequalities and injustices by discrimination between industries that are equally entitled to consideration. It is not a Bill to which the House of Commons ought to give its assent. If this Bill claims the honour of being a remedy, it is little better than an imposture.


The House has just listened to a speech which, I suppose, may be considered as affording that considerate co-operation which was promised from all quarters of the House when this scheme was first brought forward. [HON. MEMBERS "No, no!"] Perhaps I should say the considerate cooperation which was invited. Whether it may be so defined, must be left to the judgment of individual Members opposite. It appeared to me to be a speech which was composed partly of innuendo and partly of special pleading. The right hon. Gentleman the Member for Colne Valley (Mr. Snowden) began by chaffing the Minister of Health for a supposed difference of opinion between himself and the Chancellor of the Exchequer. He said that he had no knowledge upon which to base that statement and that he had no reason to suppose it to be true. I think that in this ease he Lave an example of about the same amount of evidence as that with which he supported a great number of other considerations that he put forward. At any rate, we can say that, if there are ever differences of opinion between the leading politicians of the Labour party, not very much research is needed for the public as a Whole to discover them, because they are openly reported almost every day for the information of all those who are interested in politics of any kind.

The right hon. Gentleman made a certain number of criticisms, of detail. He was very eloquent about the wickedness of giving relief to the extent of £400,000 to the brewers, and he maintained that this must inevitably go immediately to the benefit of their profits. Incidentally, he did not remark that, if this premise be true, £700,000 of it must almost immediately return to the Treasury in the shape of increased payment m Income Tax [Interruption.] Indeed it would, because under Schedule D it would be regarded as having increased their profits. Nor did the right hon. Gentleman refer to the fact that, in so far as the shareholders of these brewery companies are concerned, they would be liable to payment of Super-tax, and another £160,000 of it would come back to the Treasury. The right hon. Gentleman made a detailed and bitter attack on the definition of a cottage garden, and said that it was an absurd and unworkable definition. He did not mention that the definition was taken from an Act passed in 1896, and that it has been for 30 years the definition governing the law of rates in these matters. In fact, the right hon. Gentleman's criticisms of detail were wholly removed from any strict regard for the actual facts.

But we have one thing for which to be thankful. In his speech, the former Chancellor of the Exchequer has for the first time challenged the whole principle of this proposal. We are grateful for that. On the Budget Resolutions he was silent on the main principle, and now, for the first time, we have a general attack made upon the principle of the relief of rates to productive industry. I do not know whether the attack has been deferred only because it has been necessary to take the opinion of the Labour party. Usually, I believe, the opinions of the Labour party leaders are formed only after careful and anxious consultation with their party members. Whatever may be the reason, for the first time there has been a direct attack upon the whole principle that underlies these reforms.

The right hon. Gentleman went on to say that rates were not a burden on industry, and he supported that paradoxical argument with a number of statements which did not seem to me to be altogether convincing. He complained very much that the figures which the Chancellor of the Exchequer gave yesterday were figures based upon the relation between rates and profits. He said that there was no point in that, because we ought to consider the relation between rates and cost of production. After all, the Chancellor's figures were given in view of the two Amendments on the Paper, and they were wholly relevant to both those Amendments. The complaint yesterday was that this relief would be given to a greater extent to prosperous industries than to depressed industries. Therefore, the figures showing the relation between rates and profits were absolutely relevant to the questions raised in the Labour and Liberal Amendments. If the Chancellor of the Exchequer had produced figures showing the relation between cost of rates and cost of production, they would have been interesting, but not relevant to the two main charges which were embraced in both the Amendments. Therefore, I think that for the right hon. Gentleman, after having put the Amendment on the Paper, to charge us with giving a greater amount of relief to prosperous than to unprofitable industries, and to attack us because the Chancellor of the Exchequer has the audacity to do a thing hardly ever done by many Members of the party opposite, namely, to make a speech relevant to the subject under discussion —for the right hon. Gentleman to accuse the Chancellor of the Exchequer of that, seems to me to be rather hard and to be straining the ordinary rules and customs of Debate.

At any rate, taking the wider argument which comes under review to-day, the right hon. Gentleman attempted to put forward the view that this amount of relief was not only wrong—of course, it was wrong, because it was to help a lot of what he regards as worthless people, the leaders in industry—but it was quite useless, because it was farcically small. We could always, were it possible, put forward a scheme of even greater magnitude, but it does seem paradoxical for anyone to argue that relief to the extent or £29,000,000 from the basic cost of production is of no value at all. £29,000,000 is not £200,000,000, but it is £29,000,000. The right hon. Gentleman argued that it was nothing at all.


Why not make it £100,000,000?


If the right hon. Gentleman would institute a scheme for raising in one year £100,000,000 of fresh taxation in order to make possible the great reforms that he has in mind and can explain so excellently to the House, then it would be interesting to hear him, but from the practical point of view, it is obvious that what can be done in any one year is limited; it must of necessity be limited by the kind of financial power that can be produced to support it.


This scheme is not for one year.


No, but it is a growing charge amounting to £29,000,000, to support the de-rating of industry. If we consider the only alternative plan that has been put forward, we find that it would give far less help to the cost of production than the plan of the Government. The total amount raised in rates is approximately £173,000,000. If you nationalise certain services, as has been suggested by the Liberal party in their Yellow Book and from other quarters, if you take certain services altogether away from local expenditure and put them upon national expenditure—


Did you not suggest it six months ago?


That is perfectly true, but I do not hold the view with as much tenacity as some hon. Members opposite, who put forward views without the slightest regard to argument or development. The object that the Government have set before themselves is to revive industry, to give it every possible help towards reviving. If you use this £29,000,000 for the de-rating of industry, you obviously give it the greatest amount of relief which is possible, but, if you take certain services and nationalise them, you spread that amount—for the present year there is £173,000,000 raised in local rates—and you give industry exactly one-sixth part of the relief. Under the Government scheme, on the other hand, you give it three-quarters of relief from the rates paid. Hon. Members opposite would dissipate the forces at their command instead of concentrating upon the point which it is most important to capture. They would allow their power to be dissipated in an effort which would be only one-sixth as powerful. The right hon. Gentleman opposite tells us that even this effort, this amount of help to industry, is negligible. How much more negligible would be the amount of relief which could be only one-sixth as great!

I think there has been some misunderstanding of the scheme in general by an attempt to argue it as if what we were trying to do was to give a few millions here and a few millions there, and to dole out money to certain depressed individuals or industries or areas. Surely, we ought to argue, and are entitled to argue, that this scheme is not a dole, but a reform; that this is not largesse, but a change of principle. The right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George), who has what we may call the dole mind, naturally likes the idea of just throwing money here and throwing money there and never trying to apply any consistent principle in connection with it. I am bound to say that I was surprised to hear the late Chancellor of the Exchequer denying the principle on which we are proceeding here, because the only occasion, I think, on which I have ever made a speech in this House which received the slightest support or applause from the party opposite was when I argued in favour of that principle and heard hon. Members opposite argue in favour of exactly the same principle. That principle surely is this—that when you tax by means of Income Tax you tax the profits which industry makes, but when you tax by means of rates you tax the essential machinery which has to be employed by industry before any profits can accrue.

There is a great distinction between the system of rating as applied to industrial undertakings and the system of taxing profits by means of Income Tax. I have had that principle supported by hon. Members opposite time and again when we have had Debates on such subjects as necessitous areas, and, as I say, we on this side have been regarded by hon. Members opposite as seeing a little of the light only when some of us have put forward arguments on those lines. Now the Government of the day come forward aid accept that principle. They accept it on a generous and wide basis, and, to m3, honest amazement, the Opposition—instead of congratulating the Government on a tardy conversion to this principle which they had long been preaching, while criticising the details of the plan—to-day, for the first time, through the mouth of the right hon. Gentleman the late Chancellor of the Exchequer, pour scorn upon the whole principle and argument on which this scheme is based. The rates, the right hon. Gentleman says, are negligible. They do not really make any charge on industry and are not a burden upon industry at all. Thus, the right hon. Gentleman really gives the lie to what has been written, not so much, I am bound to admit, in Conservative newspapers and Conservative propaganda during the last ten years, but a great deal of what has been written in Opposition propaganda and from which some of us on this side perhaps have learned. I am surprised that the right hon. Gentleman should take up such an attitude, and it is all the more remarkable because he did not attempt to make any counter suggestion of a practical kind which would alleviate the present depressed condition of industry.

He did, indeed, attempt to do one thing which I notice has already been attempted by some of the leaders of the Liberal party. He attempted to mobilise against this reform the only forces in this country that can be mobilised against it, namely, the forces of those who may not be direct beneficiaries of the scheme. The right hon. Gentleman says to the shopkeeper, to the distributor, to the householder, "You are not going to get relief from your rates, and you have good cause to 'grouse.' You ought to be very indignant with the Government because they are relieving all these great industries and are not giving you any relief." It is an attempt, as far as I can see, to appeal to selfishness and cupidity, but I believe that attempt will fail. Many hon. Gentlemen opposite belong to or represent great industrial constituencies. If those hon. Members go to the shop-keeping and distributing classes in those areas and ask them when are things most prosperous for them, the reply will be, "When the men are at work in industry." If hon. Members opposite go to the householders and ask them when they reach a higher standard of life, when are their homes happy, when is the constant pressure of poverty—which in one form or another, to our regret, does press very hardly on many parts of our population—to some extent raised and alleviated, the reply will be, "When the great works are operating." I am perfectly certain that this appeal to the people who may not he direct beneficiaries but who are bound to be the greatest indirect beneficiaries of the scheme will be a failure. They are the people in whose behalf the whole of this plan has been promulgated, and they will not be easily 'misled by an attitude so unhelpful as that of the right hon. Gentleman the Member for Colne Valley.

To those in this House and to others who are actively engaged in politics, it seems that there is now a decision by the Labour party and the Liberal party to oppose this scheme root and branch. That is not altogether the opinion of less biased observers. I was very glad to read of the support of a man who commanded great respect while he was a Member of this House, a man who is one of the most intelligent and well-instructed of modern writers on politics. Mr. E. D. Simon, who was vice-chairman of the Liberal Industrial Inquiry, said this about the scheme: Mr. Churchill is to be congratulated on having tackled an exceedingly important problem with characteristic courage and vigour. His speech contains an admirable statement of the unfairness of the. present system and the main proposal he makes is one which should be heartily welcomed. We heard another bearer of that same name, and the welcome which he gave to the proposal yesterday. Those of us who read the more squalid Sunday newspapers have already seen the kind of welcome which has been given to it by the right hon. Gentleman the Member for Carnarvon Boroughs. But whatever may be the decision of the official leaders of parties, or caucuses of parties, I am convinced that this scheme, which has been put. forward by the Government, backed up by the whole support and the enthusiastic support of the Conservative party, is going to carry with it far greater numbers of persons and far more powerful influences than merely those who are officially attached to parties. They represent quite a small part of our population to-day, but this scheme will have the support of that great mass of independent opinion upon whose final suffrages all of us ultimately depend.


The hon. and gallant Gentleman the Member for Stockton-on-Tees (Captain Macmillan) acts in this House as a kind of judge of other people. He accuses those of us who have brought some power of criticism to bear upon this scheme of being animated by selfish- ness and cupidity. I would point out- to him that the Government are open to the same charge and that those who receive the results of the scheme might equally be charged with exercising selfishness and cupidity in supporting the scheme. I make no such charges but, as I listened to the Minister of Health, I could not help wondering what kind of Bill for the alteration of the rating system the right hon. Gentleman would have introduced if he had had his own way. It has not been mentioned yet in this Debate but it is the fact that the particular method here proposed of altering the rating system has no backing other than that of the Government of the day. We have had a vast amount of information as to what ought to be done with regard to the rating system. We have had more than one Royal Commission in England and Wales and we have had the Dunedin Commission in Scotland. None of the authorities who have analysed this problem of the inequalities of rating has even suggested a method of approach such as that proposed in the Bill. It is not only the leaders of the Labour and Liberal parties in this House who think that other ways may be better than this way. So far from that being the case, the Chancellor of the Exchequer and the Minister of Health can claim this amount of originality—that with the exception of the first draft of the report of the sub-committee of the Liberal industrial inquiry, nobody has ever suggested this method of handling the problem of rating in this country.

We got the key to the mind of the Minister of Health in his use of the word "scientific." It is quite obvious that if the right hon. Gentleman had his way he would bring in a Bill to deal with the whole rating problem scientifically. It is remarkable that in all the speeches from the Government benches here and from Government -platforms outside the House on this subject, no mention has been made of the Government's attitude to the Poor Law although Poor Law expenditure is 19.3 per cent. of the local expenditure in England and Wales. We do not know the attitude of the Government regarding the poor-rate or the authorities which are to handle the Poor Law problem. Before the Bill receives a Second Reading, the House is entitled to some information as to the relation of the Bill to the Poor Law problem. The various Commissions which have dealt with this problem have come to these conclusions about the rating system; that it is full of anomalies, that it is a thing of shreds and patches, that it is inefficient and uneconomic, that it is unequal as between man and man and property and property and lastly, that under post-War conditions, when unemployment has become very grave in certain areas and certain industries, that it bears unequally as between one district and another and one industry and another. My first criticism of the Bill is that, so far from being scientific it is definitely unscientific. So far from lessening the discrimination between one property and another aid one area and another, it will increase the discrimination between individuals. between districts, between areas and between property.

A scientific Bill would have tried to reform the whole system and the real Debate in the country will not be as to whether this Bill should be adopted as the nation's method of dealing with the problem of the distressed areas or no Bill at all, but will be as between this Bill which is not scientific and a scientific Bill. Frankly, I differ from the right hon. Gentleman the Member for Colne Valley (Ally. Snowden) about the incidence of rates. His argument about the average o' rates is as fallacious as the argument of the Secretary of State for War last night when he talked about dissipating, the whole of the relief over the whole field of necessity after the method advocated six months ago by the hon. and gallant Member for Stockton-on-Tees and other hon. Members of segregating the problem of the able-bodied unemployed man from the other rating problems. It is true that taking the right hon. Gentleman's averages all over the country, the burden of rates is not as high as it seems, but you cannot deal with the problem in that way. If you are shipbuilding in a certain shipyard in Scotland, your rates will he 8s. 9d. If you are shipbuilding in Jarrow your rates will be 20s. 6d. It is fatal to pretend that that burden of rates is not a charge on industry and a difficulty in the way of the revival of trade. The figures I have just given are actual figures of the rates in Jarrow and in Leith.

This Bill makes a revolution in rating, but does not do so in order to reform the whole system. It deals with the abuses pointed out by previous Commissions, not by a fundamental reorganisation of the rating system, a scientific reorganisation, to use the term employed by the Minister, nor by disentangling services that are not local from those that are. It proposes a method of discrimination. I was very interested to hear the Minister use three other words besides the word "scientific." He talked about hope, and doubt, and definition. So little faith had the Minister in the Bill as drafted that he expressed doubts as to how it was going to work and hopes that it would work out; and, further, so lacking in science did he believe his own definitions to be, that he admitted, in defending the Bill, which he said was a scientific readjustment of rating in this country, that he had not had the time to receive the information necessary to make up his mind as to what the scientific definition ought to be for the application of his own scheme.

I have taken some trouble to analyse the science of this Bill, and how it wilt work out between industry and industry. The first complaint that I make against the Bill as a Bill is that it is vaguely drawn. So vaguely drawn, in my judgment, are at least three of the definitions that there are bound to be thousands of border-line cases, and I think the Minister of Health is very optimistic in anticipating that he will get the valuations necessary under the Bill completed by the 1st October, 1929. It will be within the memory of the House that the valuations under the Act of 1925 are by no means complete yet. Now there is to be a further turmoil, a different standard of values, and a different standard of assessments, because we are to have certain properties which are to be excluded altogether from rates and other properties which are to have 75 per cent. of their rating assessment taken away from them, an entirely different and a new standard of discrimination. What is happening under this Bill is that the properties that yield rates can be roughly divided into four, namely, houses, shops and offices, agricultural land, enterprises mainly municipal—to which we now have to add distributive—and, finally, produc- tive industries, the industries which will be the recipients of this relief.

I have taken the trouble to get an answer as to what is the estimated yield of rates in Scotland this year—thanks to the courtesy of the Minister of Health we have similar estimates for every district in England and Wales—and I find that in Scotland houses and shops are expected to yield £14,302,000; agricultural land, £1,498,000; undertakings mainly municipal, such as gasworks, electricity works, water supplies, sewerage, and other enterprises of that kind, £1,473,000; while a group of seven productive industries are expected to yield £4,127,000; a total for Scotland of £21,400,000. For England and Wales, according to the Minister's estimates for 1927–28, agricultural land will yield £4,108,000; the productive industries are supposed to yield, £28,237,000; the undertakings which are mainly municipal in character, plus licensed houses and one or two other kinds of property, are to yield nearly £70,000,000; while houses, shops, offices, and other classes of property yield £121,000,000.

If we analyse that, we find that with regard to the four groups this Rating Bill makes a discrimination, first, against all houses, shops, and offices, wherever they are situated, whether in necessitous areas or areas which are not necessitous, that agricultural land is to have 100 per cent.—including woodlands, I see in the Bill—and that the undertakings which are mainly municipal are to get no relief at all; and, added to that, there are the distributive enterprises, although so vague is the definition that I do not understand how the Chancellor of the Exchequer can have made any accurate financial calculations. I want to ask a question on that point in a moment, but the undertakings which are styled productive will yield throughout the country nearly £50,000,000, with the result that agricultural land, plus 75 per cent. relief of the total yield by productive industry, will involve the Chancellor of the Exchequer, if he is to make up the whole of the relief to the local authorities, in an expenditure between £30,000,000 and £32,000,000.

In his earlier speech, the Minister of Health gave the House the impression that his four-fold formula which was to apply to necessitous areas would not begin to operate with the beginning of the scheme. Whether or not that is his intention, I do not know, but that was the impression which many Members got, and not only my right hon. Friend the Member for Spen Valley (Sir J. Simon). Since the total amount of the yield from this group of industries, according to his own figures and those of his colleague the Secretary of State for Scotland, amounts to £32,000,000 in round figures, and since the revenue for which the Chancellor of the Exchequer is budgeting from all sources is estimated by him to amount also to £32,000,000, what sum of money does the Minister or the Chancellor of the Exchequer or do both of them estimate will be needed to apply the fourfold formula outside the operation of the relief of the 75 per cent.? Has there been any estimate made? We understand that there are to be block grants instead of percentage grants, but if, on top of the block grant system for health services, we are to have, as the Minister said, an application of the formula in terms of population, of need, of children, and of the area concerned, it seems to me that, unless there is to be a reduction in future years of the amount granted by the Exchequer to the local authorities, in lieu of the 75 per cent. which is remitted to productive industry, there will be a great deal more money needed if anything is to be done to meet the statement of the Minister that this is a plan not merely for productive industry, but to meet the needs of the necessitous areas. I venture to ask whether any estimate has been made on that point.

I understand that the hon. and gallant Member for Stockton-on-Tees has changed his mind. He has now left the House, but I would like to put this point: One of the strong points against this scheme is that it does not do what it pretends to do. It does not deal with the necessitous areas as such. Here are two towns on the North-East Coast, both of them necessitous, namely, Jarrow and Stock-ton-on-Tees. Stockton is nearly twice as large as Jarrow, but no Member of this House who knows both towns, or who has known them in recent years, would deny that of the two areas Jarrow is much more a necessitous area than is Stockton. What will happen under this scheme? Jarrow pays in rates this year £150,000, and Stockton £269,000. Sitting here and making a rough calculation, I find that the relief to productive enterprises in Jarrow will amount to about £13,000, but in Stockton it will amount to over £50,000. That may explain the sudden change of front of the lion. and gallant Member for Stockton.

This is a Bill which discriminates not merely between area and area, and between industry and industry, but between town and town. I have here some figures of two towns of much the same size. Burton-on-Trent, with a population of 49,000 in round figures, pays rates of 14s. 6d. in the £, whose total yield is £214,000. The breweries of Burton-oroTrent pay in rates, £59,900; there are certain other mills there which pay in rates £11,000, and productive industries in Burton pay now £78,000. They are to have a remission of three parts of that rate, with one exception, but the brewers in Burton are to get three-quarters of £59,000. Take Wakefield, which is a mixed town of nearly the same population—a little larger, with 56,000 inhabitants. Its total rates come to £270,000, or larger than Burton. Its relief, according to the White Paper, will be 75 per cent. of £54,000, as against £78,000 in the brewing town of Burton; whereas, when you put together two mining areas in Durham, namely, Blaydon and Brandon, with a population of 54,000, paying in rates £194,000 a year, the total relief in that area will be three-quarters of £43,300. Those who have been in Burton, in Blaydon and Brandon, and in Wakefield since the War know that if we are to aid industry, the area that wants this money is not Burton-on Trent, but Blaydon and Brandon. Illustrations of this kind from the White Paper of the Minister could he multiplied a hundredfold, and I doubt not that they will be multiplied in the course of the Debate.

Now let us take industries in the same town. Take Edinburgh. Here is a prosperous business, that of Messrs. McVitic and Price, which is assessed at £2,910, with £180 deduction, and here is a shipyard assessed at 21,913, with £78 deduction. If this scheme is really to help industry, the question that I put to the Minister is not as to whether, if we had to choose between no scheme and this scheme, we would have no scheme rather than this—we would rather have this than none, obviously—but as to whether this is the best way to apply £30,000,000 inside both the areas and the towns. Is it doing what we want to do to help the recovery of trade and to remove the unemployed men from the Employment Exchanges, to give a prosperous industry like a biscuit factory in Edinburgh a greater relief than shipyards in the same city which are badly wanting it? I think that when the Minister was putting the case, he knew that so far from being scientific, this Bill is adding anomaly to anomaly and discrimination to discrimination, and I do not wonder at his doubts about the working of the Bill.

The Bill discriminates against the small business man and in favour of the large producer. The house of a doctor, the store of a co-operative society, and the ordinary householder's tenant in necessitous areas are heavily burdened. A large proportion of the wages of the workmen in these areas goes in rent. I believe the law is that, when rates are compounded for, a clear statement should be made how much is for rates; but in many areas that is more honoured in the breach than in the observance, and if the working people in these areas knew how large a proportion of their rent went in rates, there would be a great deal more scrutiny of the objects for which rates are levied than there has been up to now. This Bill does not discriminate between the prosperous and the unprosperous industries. The result is that £29,000,000, which might do a great deal to solve the problem of the necessitous areas, and to help the great export trades on to their feet, will be wasted, and it will indeed be, as it was rightly called by the right hon. Gentleman the Member for Colne Valley, a subsidy to industries that do not require it.

In the course of the Debate, it seems to have been assumed that a distressed area is distressed in proportion as it is industrial. That is not so. Until we get a great deal more explanation about the application of the fourfold formula, we shall put this question to the Minister: What is going to happen in the areas where thousands of able-bodied poor live, but where they do not work? There is a mining village in Breconshire where live men who, when in work, work in the Merthyr Tydvil district. The rates in that village are extraordinarily high because unemployment is rife. There is not a single productive industry in that rural district, except one small piece of railway line; yet, under this Bill, scarcely a penny will go to help to solve the rating problems of that very distressed mining district. That is only one district. No doubt the hon. Member for East Ham North (Miss Lawrence) will put the case for her district. There are many scores of districts which, unless a great deal more science and a great deal more money are forthcoming than have as yet been foreshadowed in any of the speeches from the Treasury Bench or platform, will not get the relief they ought to get, and we shall find more inequalities and more injustices in the working out of the Bill.

It is not my task to outline alternatives. The fact is that the root of our rating problem is in the tangled services. We have added to the local services, social services and road and transport services, and in these post-War times we have added to them a mass of able-bodied unemployed men, in some areas numbering tens of thousands, who cannot be dealt with on a local basis, and who will not be affected in the slightest degree by the operation of anything contemplated in the scheme put forward from the Treasury Bench. The scientific way is to disentangle these services one from another, and then to decide how best to handle the social services which the nation, not the locality, should bear, and to decide upon a scientific method of financing them.

There is one thing I ought to say in view of what fell from the Treasury Bench last night. It is not the intention of the Liberal industrial policy to end by segregating the able-bodied unemployed, and making them a national charge, although I should have thought that the last person in this House to argue against centralised control of the able-bodied poor would be the Minister of Health and his colleague, for the whole trend of their recent legislation has been to take out of the hands of local authorities the handling of the problem of the able-bodied poor in the very areas where the distress is greatest, and the problem most acute and difficult. My own view, and the view of my party, is that the able-bodied unemployed ought to be segregated, and more than that, side by side with a scien- tific handling of the problem of the able-bodied poor, there should be a great and far-reaching policy of capital development, which would make work for these fellow-citizens of ours, instead of leaving them, as they have been left to live during the last eight years, registering at Employment Exchanges and drawing unemployment pay.

This Bill has not, I think, the full mind of the Minister of Health behind it, and he will he wise if he withdraws it, and brings out from its pigeon-hole the draft that has probably been in his own mind, because he knows enough about local administration to know that this Bill will not lessen the anomalies, but will add to them, and will cause, up and down the country, border line cases which will give local authorities, not for months ahead, but for many years ahead, hours of public discussion before they can decide as to which property is and which is not entitled to relief under this Bill.


The speech to which we have just listened will leave on the mind of the House the impression that this is a matter which is best dealt with as one of principle, rather than as one of specific instances. The question of principle is the one with which I want to deal. The exposition of the Liberal principle, which, I suppose, we have just heard, leaves me rather cold. There is in the Liberal party a large band of great employers, who are great supporters of the principle of cheap production based upon cheap wages.


No, no!


They get their deserts, for they very rarely obtain election to this House. Therefore, it is left to a band of theorists to expound Liberal principles here. I want to look at this matter from the point of view of industry as a whole, and I want to say that industry has no intention of being regarded as a beggar in this matter. It is not out to ask for anything which is not reasonable, and is not—if I may use a word which has been bandied about to-night—scientific. Industry wants to secure a fair chance in this country; and wants to look at the provisions of this Bill in the light of that desire, to see whether it will help industry to secure a fair chance, and to secure relief from some of the unreasonable loads which have been placed upon it. The adjustment of rates is not a new principle; rates have been adjusted in many cases before this Bill was thought of. The question, therefore, is not of a new principle in the sense of the adjustment of rates, but whether the principle can be so extended as to carry the main burden of social services away from the cost of production of industry on to the profits of the country as a whole, including industry. Industry has in the past laboured under two serious burdens. One is the increasing cost of social services, and the other is I he lower conditions of competitive labour abroad. I understand that this Bill is not supposed to deal with the second of these difficulties. The question of competition with lower conditions of labour abroad is entirely out of the picture, as far as I can see in the present case, and remains to be dealt with by a further tackling of the problem of safeguarding, which, I hope, lies in the future of our political programme.

6.0 p.m.

It is only in so far as this Bill offers relief from the increasing burden of social services, that industry is ready to examine it. There the problem arises whether it is reasonable for industry to bear the cost of social services or not. The tendency in the past, particularly where industry has tended to form itself into great organisations and great corporations, has been for an increasing measure of social services to be rendered by industry, and for industry to be looked to for the impulse towards a higher social organisation among the people connected with any specific industry. That is a tendency which, I think, many people have regarded with some doubt. It tends really to a sort of feudalism, which might almost end by segregating the people into definite industrial clans, almost separating them from the world around them, and their conditions must really depend so largely on the prosperity or otherwise of the industry with which they are connected, that a great irregularity of opportunity and social amenities must supervene. It follows then, that if a higher average is to be aimed at, rather than a high standard in specific instances, the average must be secured by taking the social services off the industries altogether, and placing the social organisation of the country, not. on the funds which can be applied by industry irrespective of profits, but upon the income and profits of the country as a whole. Therefore, it seems to me that it is right to relieve industry of the bulk of the cost of this ever-increasing social organisation. The cost has been growing rapidly in recent times, and has reached a point which bears very hardly on industries which are only partially occupied. That is another point which seems to prove the lack of science shown in leaving the burden of those services on industry itself. Rates which may not bear hardly on a fully occupied industry bear much more hardly on an industry which is occupied only perhaps to the extent of 75 per cent. of its capacity, and if through foreign competition or other causes that industry falls to a 50 per cent. of its capacity, the burden of the rates must become insupportable. That has been the experience of the heavy industries in recent times.

Therefore I welcome the principle underlying this Bill, but the details of it must call for long and detailed criticism in Committee. This is not the occasion to raise Committee points, but the separation of industrial valuations will, I fear, lead to a good deal of difficulty. An enormous number of questions must arise among small industries which will give rise to difficult points of definition, and I think the Minister has shown courage in undertaking what must inevitably develop into a hard and an arduous task in the elimination of these difficulties. But the principle remains, and the principle is worth fighting for, and I hope the Minister will feel his reward when this Bill receives the acceptance of the House. As regards the Amendment, I do not think the objections raised in it can be regarded seriously. A Bill like this must give rise to an infinite number of special cases: but those do not matter if the principle for which we are working is a sound and scientific one.


I wish to begin my few remarks on a humble, ground-floor level. Other Members have spoken about the policy and principles of the Bill, but when the right hon. Gentleman introduced it he described it very truly as purely a machinery Bill, and it is on that humble plane that I propose to begin. In the first part of my speech I want to make the assumption that my right hon. Friend the Member for Colne Valley (Mr. Snowden) was quite wrong, and that the Chancellor of the Exchequer was quite right and that it is indeed a brilliant and a noble idea to relieve local difficulties by a class subsidy. I am going to suppose that the householder needs no help, and that the local services need no help; but, having strained my imagination into making that wild hypothesis, I want to come down to the facts and see what the Bill really does, on the supposition that the principles and the objects of the Chancellor of the Exchequer are perfectly right. On that narrow ground I want to say that this Bill Will introduce confusion into trade and industry, that it will cost the country very large sums in the employment of a multitude of officials to perform a multitude of useless tasks, and that certain parts of the Bill are absolutely unworkable and must be, and will be, withdrawn at once.

I must ask the House to have a little patience with me while I go into details. I will begin with a part of the Bill which, I prophesy, will hardly survive a week, and that is the part dealing with docks. The right hon. Gentleman is an expert in machinery, but I am sure it has not escaped the House that he showed an altogether unaccustomed nervousness in dealing with the machinery of this Bill. In the case of docks, it is proposed that buildings used for housing goods in course of transit shall be relieved, and buildings used for goods not in course of transit shall receive no recognition. In the Port of London or in any other docks the same buildings are used indiscriminately for goods in course of transit and goods not in course of transit. The words "in course of transit" are no casual expression; they are a term of art. I suppose very few words in Acts of Parliament have been the subject of more judgments and definitions than these words "in course of transit." Those are the words which occur in Section 45 of the Sale of Goods Act, and the Courts, which have been very busy on this matter, have decided that where goods are delivered by the carrier to await orders course of transit ends, where the goods are delivered to the shipping agent of the buyer course of transit ends, and where the Port, of London holds goods on behalf of the buyer after arrival course of transit also ends.

Let the House see how this machinery of the Bill will work with the enormous mass of traffic which passes through the docks. The docks have great warehouses which are used indiscriminately for goods in course of transit, and for goods which are being sold or being kept or matured at the docks. Take the wine trade. In the wine warehouses there is no distinction between goods in course of transit and goods not in course of transit. The distinction is between bonded warehouses and duty-free warehouses. A man may buy, and often does buy, a case of brandy with the bill of lading right through to the purchaser, and keep it at the docks for any time, for 10 days or 10 years.


There is no member of the Government present.


I really do not mind. I was trying to develop an argument with reference to the machinery of the Bill, and I am going to ask the right hon. Gentleman the Parliamentary Secretary to say how he proposes to distinguish between parts of a warehouse which are used for goods passing through in course of transit and parts of the warehouse—it may be the next yard of the floor space—used, say, for storing a barrel of brandy which is intended to stand there for 10 years. Another point is that some of the goods in the bonded warehouses change hands while stored. Now I turn to the tobacco trade, which is very much like the wine trade. Some of the tobacco goes through the warehouse quite quickly, and some of it stops in three or four years, and even longer. In the same warehouse you can have side by side cases of tobacco which are in course of transit and are there for only a few days, and. cases of tobacco which are there for the purpose of maturing and may remain for years. Again, in the Port of London there are very large frozen meat warehouses. Some of that meat is there in course of transit, meat which has been bought and which is there until the buyer comes and fetches it; and there is a great quantity of frozen meat which is stored there permanently, or at least stored there for the purposes of sale. Then take the wool trade. That is a big trade. We must be careful with the wool trade, because we have already frightened part of the wool tmde away from London. There are in London two gigantic storehouses through which the wool passes, and in which some of it stays for, perhaps, six months and some for a couple of months, waiting until the wool sales take place. Those storehouses have got to be rated according to whether the goods are in course of transit or not in course of transit.

The same thing is true of grain. In the case of grain stored in bags, nobody knows how long it may be there. One cargo in bags may have been sold and be in course of transit, and the rest of the grain may be there waiting for sale. The timber trade is another tremendous business in the docks. Some of the timber passes out of the docks shortly after its arrival, but most of the timber stops for, perhaps, six months or perhaps twelve months. The Port of London has two rents—rents for goods in transit, which are in the docks for only a short time, and special rents for goods which are not in course of transit. They put the two classes of goods in the same warehouses, yet the Minister, who is art expert in machinery, proposes to rate all those gigantic warehouses of the Port of London according to whether they contain goods in transit or goods not in transit. Lt will not do. That bit of the Bill has rot to come out very quickly, and I think I know what the Government will have to do. The Government will have to do what they ought to have done long before they drafted this Bill, and that is, go to the Port of London and to the docks and "do a deal" with them. Trey will have to ask them whether they will not have a flat rate on their buildings, and in that way get rid of this absurd system of valuation. The dock section has got to come out of the Bill. No human being can administer it.

In the sum way, I think the Government will he forced to do a deal with the railway companies, because they also have bonded warehouses in which there are two (lasses of goods reposing together, and nobody in the world can tell, until you look at the hills, which goods belong to one class and which to another. As a rule, the railway companies mop e slowly in these matters, but when they find the trouble they are being put to they will go to the Government and ask for the withdrawal of this absurd Clause dealing with warehouses in order that they may have a flat rate. The merchants will also have something to say about these proposals. The Minister of Health said that people had private warehouses and storehouses to carry on their trade, which is precisely the same business as they do in the Port of London. Do hon. Members think that the merchants are going to take these proposals lying down? Is it fair that a man who rents a place at the docks is to get off with a quarter of his rates, while the man who has private ware-houses is to be penalised? After you have dealt with the docks and the railways you have to deal with the merchants. The truth is that the whole of this Bill, if we take its object for granted, is full of absurd proposals which proceed on the assumption that you can draw a distinction between production and transport on the one side and commerce on the other. The whole thing is absurd. In a country like ours, with an old and a complicated trade, production, retail distribution, and transport are interlocked in such a manner as to form different parts of the same enterprise, and you can no more dissect commerce from industry than you can dissect a vital part of a man's body and expect him to live.

I come to the provisions of Clause 3. Tinder this Clause the little baker is to go on paying rates, but the big baker is to be exempt. Is it reasonable to introduce a discrimination of this kind among people in the same business, because one man chooses to use his premises for two purposes? Take, for example, the best West-end shops. You will find that a small bespoke dressmaking establishment will get no relief at all. The West-end tailor with bespoke premises will get no relief, while the people who have large ready-made clothing establishments will get relief. Those trades are at daggers drawn, and exactly the same thing applies to the high-class boot-makers and the rest of the trade. Not only this, but the domestic workshops will be hit, and the very poor people will also be hit by these proposals. Now I come to the big people who will be hit. Take the warehouse question. I could not, at first, believe that it was the intention of the Minister of Health to propose such a provision as that which is contained in the Bill with regard to factories and warehouses. Warehouses which are used for distributive purposes will be exempt from rates if they come within the meaning of a factory as defined in the Bill. Take the definition in the Factory and Workshops Act of non-textile factories, for instance. Warehouses are named in that definition. If a person has a moderate-sized business which has its distributive side on the same premises, that will be exempt from rates; but if you happen to be a very big business man and your distributing business is carried on in another hereditament across the road, you will have to pay the full amount of rates. There are big businesses which do nothing but pack and distribute chocolates in separate establishments, and they will have to pay full rates. If the Minister of Health thinks that these people are not going to let him know about their difficulties, I am sure he is very much mistaken.

Let me take as another illustration the Nottingham lace trade. I want the Minister of Health to tell the House whether the lace warehouses of Nottingham will be relieved or not? The lace warehouses of Nottingham receive the lace from the manufacturers, and they do their own wholesale distributive business. That is an integral part of the Nottingham lace trade, but it will get no relief at all under this Bill. I could give instances of this kind in many other trades, and I am sure we shall find many of these businesses sending deputations to the Minister of Health asking for some explanation in regard to these extra-ordinary proposals. These are not the people whom the House as a rule deals with in this way. This is not a case of cutting off the insurance benefit of the labourer or telling an unfortunate person that he must spend two days in the work-house or do stone-breaking. These traders are people who will be a good deal more troublesome to the Conservative party. They are people connected with big businesses, and they are the backbone of the Conservative party. When I look at this Bill and consider the delightful and exhilarating days which are before us in Committee, when I think of the result of this 'Measure electorally, I find it almost impossible to restrain my pleasure. The relief which a business man will get for his production will be more than counterbalanced by what he will have to pay for the increased cost of transport. Hon. Members must not imagine that manufacturers and business men do not realise the trouble to which they will be put under this Bill, and they will not be able to make up on the swings what they lose on the round abouts.

This is a Measure which will promote a great deal of discontent. Consider for a moment the stages through which this Bill has to pass. First of all, we have the valuation lists and the amendments to those lists which are to be made by the revenue officer. Then there is a final appeal to Quarter Sessions. Will such a procedure be a cure for unemployment? It will certainly lead to a great increase in the employment of surveyors and members of the legal profession, and I have no doubt that at the dinners held in connection with surveyors' organisations they will end by paying a glorious tribute to the memory of the Chancellor of the Exchequer and the Minister of Health for what has been done for them under this. Bill. This Measure will lead to the appointment of a multitude of officials. It will cost the country £150,000 a year, and it will cost the local authorities a great deal more than that sum. Why have we got to work this amazingly complicated and disagreeable thing when it would have been very simple indeed to deal with the problem on proper lines? It is absurd to single out a particular class either for taxation or for the remission of taxation, and you cannot do it. The problem is primarily a geographical one. It is not true that the rating system is bad everywhere because the average rate imposed is quite bearable.

What is true about fluctuations of currencey is equally true about the rates. It does not matter so much what the rate is if it keeps steady. In certain districts the rates have run up like rockets, and in some places everybody in the locality is overburdened. In some places the people have to pay as much in rates as they pay in rent, and this is something which stops enterprise in housing. This is not a class problem at all, and we must relieve the overburdened localities as soon as possible. If we arc asked why the rates differ so much in different dis- tricts, the answer is that the bulk of the difference is due to the poor rate. If hon. Members go further into this question and examine closely the poor rate, they will find that, as a rule, indoor relief has remained steady while the cost of outdoor relief has gone up considerably. It is simply a question of the unemployed having to be maintained by means of the poor rate, and the only remedy for this state of things is to take the burden of the unemployed off the local rates, and let the charges for the maintenance of the poor be made a national one. When you have once done that, you will have nothing more to do for the necessitous areas except a necessitous areas grant of very moderate dimensions. The amount that we are spending on the fantastic business of trying to relieve production without helping commerce or transport is very nearly enough, if it were not wasted, to blot out these oppressive rates.

The £31,000,000 is not as much as I should like to see, but, compared with the sum (f nearly £50,000,000 which is spent on the Poor Law, it is quite an appreciable amount. It is rather more than the whole expenditure on out-relief ill England and Wales, and the amount which we are wasting upon people who are prosperous and do not need it would be enough to put an. end to the scandal of necessitous areas, to set them on their feet, to make every household free of the burden of rates, to enable houses to be built, to relieve wholesale and retail trade and shopkeepers and dwellers in those localities. We talk about economy, but I think that nearly half this money is pure waste. All this money, which in these times we ought to scrutinise so closely, is to be wasted on this wild and fantastic scheme. We are wasting, not millions, but hundreds of thousands of pounds, in appointing officers to of carry out these useless and intricate tasks. I cannot believe that the common sense of the nation will not be shocked as soon as the details of this Bill come out. We shall do our best, and, indeed, it will be a labour of love to bring home to the Minister in Committee the various inconsistencies and imperfections of the Bill, but I cannot help feeling (hat, when the country compares the absolute simplicity of our proposals with the long, slow, complicated, costly and invidious methods proposed by the Chancellor of the Exchequer, their choice between the intellectual merits of the two parties will not be very difficult to make.


As a Member representing an agricultural division, I should like to take this opportunity to assure the Minister of Health how welcome this Bill is in the rural districts. No one can contend that this agricultural relief is being given to a prosperous or flourishing industry. I do not think that even the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George), with his versatile brain and wonderful power of imagination, would contend or try to make people believe that agriculture is not depressed. We have been told very often that this is a new principle, and it certainly is a new principle as regards productive industries other than agriculture, but it is not a new principle as regards agriculture. Agricultural relief was first given by the Conservative party in 1896. It was extended by the Conservative party in 1925, and the Conservative party is now going to bring it to a final conclusion by de-rating agricultural, land altogether. There is just one question that I should like to ask the right hon. Gentleman. The Chancellor of the Exchequer told us that, after these proposals have finally gone through, all farm lands and buildings will be completely and permanently relieved of rates. I should like to know whether we are to understand that this refers, not only to all general rates, but also to special rates. There are many special rates which apply to limited areas for special services. For instance, there are drainage commissioners' rates, burial board rates, lighting rates, recreation ground rates, and many other similar rates levied for special purposes in certain limited areas, and, perhaps, when the right hon. Gentleman replies, he will be able to tell us whether these proposals apply to such special rates as well as to the ordinary Poor Bate, police rate, and all the other general rates.

None of the relief provided for in this Bill is to come into operation until October, 1929, and, of course, it is quite easy to see that it would not be possible to bring in that relief, in most cases, until all the necessary machinery has been set up, because we are starting upon a new principle of ascertainment, and the present valuation lists do not contain the necessary particulars, so that they have all to be revised upon a new basis. There is, however, absolutely no reason for any delay in giving the relief to agriculture. In the case of agriculture we have given relief for many years, and at the present moment agricultural land is only rated on one-fourth of its value. It would, therefore, be perfectly easy merely to extend the relief which agriculture gets to-day, and to relieve it entirely as from October of this year instead of October of next year. I quite realise that there are other depressed industries besides agriculture. I know very well the condition of the coal industry, and how depressed that industry is, but, after all, they cannot possibly get relief under these proposals until all this machinery has been set up, and, that being so, I think that we, as agriculturists, are entitled to ask the Chancellor of the Exchequer to consider ante-dating the relief as regards agricultural land if he can possibly find the money.

Everyone knows how depressed the agricultural industry is. The cost of production is enormously high, and it includes, of course, the cost of wages, the cost of fertilisers and so on, and the cost of rates. All of these are a great deal higher than they were in pre-War days, while at the same time the price of agricultural produce has been steadily falling, and to-day it is comparatively little higher than it was in pre-War times. We have, however, no control over agricultural prices. Agricultural prices depend upon the conditions of the world's markets, and the only way in which we could increase agricultural prices would be by putting on protective duties. We know that our election pledges render that impossible, and we also know by our experience that the urban population will not on any account agree to protective duties in order to help the farmers. Therefore, we can do nothing really to help the farmer as regards prices, and, if we are going to give him any help at all, we must look to the other side of his account book, to the expenditure side, and see whether we can do anything to help him to reduce the cost of production.

Parliament has set up a compulsory Wages Board, forcing farmers to pay a certain wage to their agricultural workers. No one to-day will contend that the agricultural worker is a highly paid man. He is a very highly skilled man, and, compared with many other workers in this country, he is getting a very moderate wage. But we have to remember that it is a wage which has been forced upon the farmer by Parliament, and, after all, wages are the principal item in the cost of production. Parliament has forced that wage upon the farmer, and, therefore, it is an item, and the principal one, over which he himself has absolutely no control. Today, in consequence, the average cost of labour, as compared with pre-War times, has gone. up by 105 per cent. or thereabouts, while the average price of agricultural produce has only gone up by about 50 per cent. Feeding stuffs and fertilisers also have very greatly increased in cost; the price of feeding stuffs has increased by something like 50 per cent.

Then we come to the rates. It is very difficult to compare the increase in rates on agricultural land, because of the various reliefs that have been given, but I have been going into the increases in some of the parishes of the county in which my constituency is, and I find that in most of these cases the rates have practically doubled, and in some cases considerably more than doubled. I have also been looking up the returns issued by the Ministry of Health giving the increases in 100 typical rural parishes. Before the War, according to these returns, the rates in every case were below Ms. in the £. In 40 of the 100 typical parishes the rates were under 5s. in the £, and in no case were they above 10s. To-day there is not a single one of them with a rate under 5s. in the £ In 34 of the 100 the rate is between 5s. and 10s. in the £; in 55 of the 100—that is to say, in the majority of these cases—the rate is between 10s. and 15s.; in l0 cases it is between 15s. and 203., and in one case it is over 20s. That shows that the general average rate has risen from the 5s. to 10s. level into the les. to 15s. level. It has been an enormous increase.

Although rates do not figure so largely in the total cost of production as many people imagine, yet they are a considerable item. In many parts of the country, however, especially in the most depressed parts, they are not a very large item. In the most depressed parts of the country—in the Eastern counties, the corn-growing counties, where a very large amount of labour is employed—the proportion of the total cost which comes under the heading of labour is infinitely greater than it is in a pastoral district, but. I imf,gine that all over the country the average amount which, in the farmer's outgoings, would be accounted for by rakes would be from three to five per cent. We are going to relieve him of that altogether, and for that I am sure he is ver3 grateful. I know that. Members who represent urban districts often feel, in all quarters of the House and quite irrespective of party, that those of us who represent agricultural constituencies are always pressing the Government for something, and that we are always, trying to enlist the sympathy of the Chancellor of the Exchequer. Many of them think we are the spoilt babies of Parliament, but while we press a great deal, and while agriculture has had a great deal of attention, and possibly consideration, from Parliament since the War, yet it has got really very little of practical use until now, when it is going to get this great relief and agricultural credits.

On the other hand, Parliament, certainly on one occasion, has treated the farmers extremely badly, so badly that it is only now that confidence is being restored in Parliament and in the pledges of responsible Ministers. It took a very long time for the farming community to forget the repeal of the Corn Production Act within a very few months of it having been passed, which caused so many farmers who had bought their land and sown their crops on the strength of the guarantee that was given, instead of making a decent livelihood, to make very big losses. Because of that, and became of the really depressed condition of lie industry, I should like to urge the Chancellor, if he can find the money and if he can see his way, to extend this relief as from October this year, instead of October next year.


We have been discussing what, I presume, the Government conceive to be one of their most important Measures, and one in which they consider they are putting forward, in conjunction with the Budget and the Measure that is to come in the Autumn Session, a real Conservative reply to the difficulties from which, it is said, we are suffering in industry. But I have not been in any way impressed with the display of enthusiasm on the part of supporters of the Government. We have really been listening to a number of funeral orations. The hon. Member for Dudley (Mr. Lloyd) first of all repudiated the idea that private enterprise was coming in any sense of the word cap in hand, but all the way through he was pleading that there was a heavy burden on industry, especially with regard to the increased cost of social services. If there is any criticism to be made with regard to the increased expenditure on social services, the blame must lie with those who are responsible for the conduct of private enterprise. Expenditure on social services is made in the hope of being able to improve the health of the people, educate the people and do things of that character, and a very large amount of that expenditure, particularly in the towns, is produced by reason of the deficiencies of the captains of industry in the management of their industry. Therefore, when they are complaining about the burden upon them, they themselves are responsible for that burden.

I emphatically agree with my right hon. Friend the Member for Colne Valley (Mr. Snowden) that there is a lot of nonsense talked about the burden of the rates. As a matter of fact, both the rent and rate charge are taken together by anyone who is concerned in regard to his business. They consider the amount of rent they are prepared to pay in order to be able to have premises in a certain location that is necessary to the conduct of their business. Poplar is often criticised, and it has a very high rate; at the same time, very large industries have not gone out of the district. They have remained, because they know very well that they might go to other places where the rates might be lower, but they would have to pay higher rents and they would be no better off than at present. The whole effect of the Government policy which is being pursued in these three Measures which will be before us is to make a very handsome present to the landlords. It is the greatest landlord relief Bill that has been introduced by any Government. The hon. and gallant Gentleman who has just sat down has spoken of the necessity of agricultural relief. Despite the fact that you have 75 per cent. relief on your rates on agricultural land, you are still complaining about the parlous condition of your industry, and when you get this further 25 per cent. relief, as has been said, landowning will no longer be a liability. Everyone knows this 25 per cent. relief is not going to benefit the farmer or the farm labourer, but the owner of agricultural land.

The Minister seemed to be very much amused at the drafting of the Amendment. First of all, we are protesting against the introduction of this new practice in the assessment of property for local rating. It will add to our complications in having three new definitions in the list, and it will necessitate the employment of a very large army of officials in order that the work may be carried out. The right hon. Gentleman himself set out a very elaborate programme, which was the justification for postponement of the relief until November of next year. He said, with regard to the question of relief, that we did not know what the proposals would be in the Bill that is promised for the Autumn Session. I presume we shall get that Bill in the Autumn Session. I remember when we were promised a London rating Bill, and we have not got it yet, though two or three years have gone by. He says we cannot criticise it, because we do not know what the conditions of relief will be. At any rate, we know that, as far as what are termed industrial undertakings are concerned, there is to be 75 per cent. of relief, and as far as agricultural undertakings are concerned, 100 per cent. What we do not know, of course, is what is going to be the basis of the distribution to local authorities, but we know what will be the relief to the persons who are to get it. It is to he given to what is termed productive industry as a whole. It seems to me that the Government have in no sense of the word faced up to the various factors which are responsible, to a certain extent, for the considerable amount of depression which has existed in some parts of the country. We have the Report of the Balfour Committee. We have, for example, changes taking place in regard to industry by reason of the fact that certain raw material is no longer accessible in the place in which it was, and that it is accessible in some other place. They refer to this question in their second Report, and say: The virtual exhaustion of ironstone in Scotland and the high cost of local ore on the North-East coast of England have compelled these districts to rely largely on ore or pig-iron transported from other areas or imported from abroad. On the other hand, Lincolnshire and the East Midlands have enjoyed the advantage of the proximity of cheap ironstone. The effect on costs of this difference of situation is shown by the fact that while Lincolnshire and the East Midlands have more than maintained their output of pig-iron, the output of pig-iron for steel making in Scotland and the North-East Coast fell by 1,300,000 tons between 1913 and 1921. Obviously, under that, an argument might be put up that there might be relief as far as the Scottish and North East Coast was concerned, but there is no reason why there should be any relief given to Lincolnshire and the Midlands where, in the circumstances shown by this Report, the industry is more prosperous than it was before.

There is another and much more serious question than that, and it is whether industries are to receive relief which have brought about the conditions in which they are by over-capitalisation. The Balfour Committee was very emphatic on that point. It tells us: In the years 1919 and 1926 over 200 cotton-spinning undertakings clanged hands at grossly inflated prices, based on momentary conditions and on the unreasonable expectation that these conditions would continue. In addition, between 30 and 40 companies which did not undergo reconstruction were recapitalised on the same extravagant basis, either by transfer to a new company without substantial change of control or by the issue of bonus shares. The precise amount of the total inflation cannot be stated, since many of the under-takings in question possessed assets sot represented by their share capital. On the basis, however, of information ralating to a large sample of reconstructed companies, it appears that the total sale price was about eight times the paid-up share capital of the concerns acquired, and that rather less than half the sale price was represented by the paid-up share capital of the new companies, the balance being made up of loans, realisation of assets, or profits on current contracts. They go on to say: It is of interest to compare the subsequent fortunes of the over-capitalised cotton-spinning undertakings with those which remained on their former financial basis. Particulars are available for a. group of about 310 companies, including 210 'reconstructed' mills with about 21,000,000 of spindles, 35 other recapitalised mills with about 3,500,000 spindles, and 65 concerns unaffected by inflation wh.ch own about 6,500,000 spindles. The average dividends paid in the seven years 1921 to 1927 by the first group "— that is the over-capitalised group— was 1.3 per cent., by the second group 6 per cent., and by the third group 8.7 per cent. Here, under these proposals, those companies, which have really—to use a hard but, I hope, Parliamentary word—swindled the public, are to receive relief under the scheme the Government is putting forward.

7.0 p.m.

I do no think we could have a more hotch-potch Measure and proposal presented to us than the Government are presenting to us in this legislation. We on these benches are accused of putting forward wild proposals, of knowing nothing about industry and of not being able to run enterprises. We heard this afternoon, throughout these discussions, attempts on the par t of apologists for the present system of society to claim that they have done the right thing. Practically, every Debate during the present Session and during the present Government's term of office has shown all the way through. that, so far as the present controllers of industry are concerned, they are absolutely incompetent to work their industries as industries should be worked, as a social service for the benefit of the community. Having failed at that and having produced the results which have been produced, the production and intensification of the misery among large sections of the. working-class, all the Government can do is to bring forward a proposal which will for the moment give temporary relief to the captain s of industry, which will give a present to the landowners, and which will put a burden on the community. A Tory Government always looks after its friends, and this is one of the finest examples we have had of this kind of work.


Most of the speeches so far in this debate have been adressed to the House on points of detail. Speakers from the Opposition have claimed, on behalf of the Liberal party and of the Labour party, in the ease of the first, that all our salvation will be found in the taxation or land values and, in the case of the second, that, if our system were to be replaced by a socialist state, all would be well. Even if we acepted both those principles, we have still to remember our first great need, namely, that the basis of prosperity in this country is the profit on production sold abroad. Whatever Government you have, considering that you have to buy your food and raw materials abroad and have to meet intense foreign competition very often, you have to make a profit under those conditions in the international markets of the world. It is not altogether a question of the great. industrialists failing and being incompetent; it is largely a question of two main causes which have to be borne in mind. First of all, the large mass of capital we saved in this country which was available every year for investment and, secondly, the very large trade which we had, amounting practically to a pre-war monopoly throughout, the world—both those sources of income to this country have largely disappeared. That is the real situation to be faced, whatever Government is in power and whatever method of control we have for our industry. It goes still further than that, and that is where, as the hon. Member for Stockton (Capt. Macmillan) said, those of us, who have pressed forward certain principles ever since we came to this House, have to thank the Government not only for a recognition of those principles but for giving us a Minister of Health who is determined to press them through to their logical conclusion.

Some Members complain that these proposals which he has brought forward are not in accord with same hide-bound theory, and one which would need no alteration in its passage through this House. Anyone can be a theorist; it takes a very big man indeed to recognise that he may be wrong and is liable to be corrected. The latter is the position the Minister of Health takes up to-day when he offers this Bill to the House. Unfortunately, the rules of debate do not allow one to anticipate what. Bill is coming later on in the Autumn, hut it does seem to some of us that the present Bill is not only the beginning of a very great change in the rating arrangements of this country but the beginning of a real recognition that the basis of taxation itself has to be changed. In making this change in valuation, this is possibly only one of the Bills which will have to he brought forward, whatever Government is in power, in order to bring to a logical conclusion those alterations in taxation which are necessary as a result of the increase in population and of the change in the ways in which population has been distributed. In the old days, it was easy enough to take as a basis your local industries and tax them to provide for everyone the limited social services which were then provided and used. But, since that time, as transport has altered and it has become more easy to move about and as people have chosen to live further from their work, it is no good refusing to face the fact that a great many people, by moving outside our great cities, have been able to escape burdens they should properly bear. This alteration is the beginning of the recognition of that fact and of the intention to restore some evenness in the conditions of taxation in the future.

In choosing production as a basis to start the change, surely the process is entirely logical. The right hon. Member for Colne Valley (Mr. Snowden) said that production and distribution were like two shears of a pair of scissors and that yon could not separate them. That may be true, but, taking the simile of a pair of scissors, if the two shears are equal, the liability ought to be equal in each case. The liability should not, as at present, remain entirely on the shear which carries the production, while, on the shear which carries the distribution, you have allowed to be established a number of sheltered industries which are not today hearing their proper burden. That is to a great extent why the Government have intervened and are attempting to restore a fair balance between production and distribution. Do not let us make any mistake about it. There is not going to be any distribution at all unless there is production and production for profit, which is the whole basis of prosperity in this country. Of course, if we were a self-contained State, we might be fairly prosperous with a population of about ten millions, but what is the good of talking about social services and higher wages and better standards if you refuse to face the fact prosperity must depend upon the profit you can make in international trade. Once you face that, you must realise that yon must hamper production as little as possible, and then, when production has made as big a profit as it can in international trade, take that profit and tax it in such a way as is fair and reasonable all round.

Very few speakers have pretended during the Debate that rates are not a burden upon production. Of course they are. How can it be denied that so much paid out is not so much added to your costs? It is not here a question of what rates should be spent on social services or what should be done in the localities for education, water, and so on. Everyone admits that. It is an assistance in efficiency and therefore in production. Where the Government have seen the point, and quite, fairly, is that hitherto the distribution of our local taxation has not been as fair as it might be.

Some details have been picked out from this Bill and complaints have been made here and there. I was very surprised to-day to hear so old and practised a. hand as the right hon. Member for Colne Valley asking the House to draw a special conclusion from general averages. He said that 3d. on the whole of the coal industry was all that the Bill would benefit the industry and he asked if that was going to make pits pay that were not paying to-day. A great many of us know something about the conditions of the coal industry and have long ago agreed that, under existing conditions, a good many pits will have to go out of production in any event, and this of course means less total production. When you deal with re-arranged production, then you will see that the benefit will be much more than 3d. on the ton; probably 6d. or even Rd. Not only that, but there is the reduction on materials such as pit props carried as supplies for the pits, and coal to its markets, so that you get double relief there. In some instances, colliery companies would be receiving a benefit of ,anything from 6d. to 8d. and even Is. a ton altogether. Those who know the cost and margin of production in those cases and who know how those costs are spread over a large area, know perfectly well that that would be all the difference between profit and loss and all the difference between employment and unemployment.

The benefit does not work out only in these individual instances: it is spread out really over a large area. The hon. and gallant Member for Stockton pointed out a little earlier in the Debate that if you had better employment, if you had places running it a higher speed, you would of course have more wages, and the shopkeepers themselves, if trade and wages are better, making more profits. It seems to a great many of us that, when this Measure was produced to this Home as a scheme to get the basis changed in our rating system, it was not looked upon in that way at all, but was picked up at once as an opportunity to play battledore and shuttlecock for party purposes, taking out one industry here and another there, and saying to one, "You have not got anything out of this while the other industry has. Therefore vote for us."

Lieut.-Commander KENWORTHY



The hon. and gallant Glentleman says "Protection." I have no doubt that during the Debates OH this particular Measure many of us who may Protectionists will be called Free Trailers or will be called Protectionist: when we are frank Free Traders. My object in voting for this Bill—and I hope the Minister of Health will give us an opportunity to suggest alteration: which occur to us from our practical knowledge—is simply to treat the question as an industrial one. Surely we can treat rating as an industrial question. The division of the spoils, when we come to it, may be a most important thing. hut I hope we may look at the Bill from another point of view When the whole scheme has been worked out a little further, it will be found necessary, not only to consider it in relation to existing areas, but a great saving may possibly le made by the alteration of areas and therefore in the rates and as a consequence in the burdens upon industry. Therefore, we may in the future, if possible, have a much larger local government area, or, if not an actual change in the local government area itself, then a system of joint boards of public services which will, once and for all, get rid of a great many small authorities and small people who simply hang together under the pretence of what is called local patriotism, but which is nothing more than self-interest. If that can be done, I am perfectly sure that the full benefit of this scheme which is now initiated in the first of this series of Acts will work out in a direction which the House itself, I believe, even to-day, does not appreciate, but which those who have long known the conditions and those who have thought out the changes which may be possible under the new proposals have realised. The general scheme may possibly result-in a greater saving of rates than even this Bill can possibly mean. There are many details in this Bill about which one would like to ask questions, but one has to keep to one's time, and I hope there will be opportunities in Committee.

Commander WILLIAMS

The right hon. Gentleman the Member for Colne Valley (Mr. Snowden), in one or two of those very short sections of his speech when he devoted himself rather to argument than to his usual form of running down his opponents, compared the two classes of industries, as has just been stated, to the two blades of a pair of scissors. But, if you go back to his old speeches, and more particularly to other speeches made in this House by the various Members of his party, you will find again and again that they have complained that the distributing side of industry is getting too many benefits. If I understand anything at all about this Bill, it is a deliberate effort to take something from the distributing side of industry, which is doing well or comparatively well, in order to help the producing side. That, I think, is the main object of the policy which has been laid down in the Bill and in that part of the Budget relating to it. An appeal has been made and will be made from certain interested sections in this House—it may be on behalf of the miners, it may be on behalf of the agriculturists, it may be on behalf of the shipyards—that they, in particular, should get their share of relief earlier than the rest of the community. I would venture to appeal very strongly to the Government not to give preference in this matter to any particular industry or trade. If this is good—and I believe on the whole that this system of relief to industry is good —then, however good a case can be made for agriculture or coal or shipping, or any other industry, it would be unfair to select particular industries and give them earlier relief. I would far rather that the Government should be absolutely impartial in this matter and that they should not give relief to one industry until it was possible to give relief to the whole of the heavy industries at the same time.

The right hon. Gentleman the Member for Colne Valley said quite clearly in his speech that rates in themselves were not a burden upon industry. That was the statement he made very clearly and very directly. If rates are no burden at all, I wish he would pay some of our rates. If they are not a burden and cause no trouble, why should he not take them upon his own shoulders? The fact remains, however easy it may be to get up and make critical speeches at this time, that it has been admitted by all parties at different times and in various sections of the House from time to time—even by our own party as well as by the Opposition—that one of the most crushing things which to-day is driving money out of the big industries, driving it abroad, or, at any rate, making it impossible for us to compete in foreign markets in many cases, is the burden of the rates upon industries, whether those industries are making a profit or whether they are not. I feel sure that if only the right hon. Gentleman the Member for Colne Valley had had the time when he was in office to think out this problem there would have been no one who would have been more pleased than the present Minister of Health.

There are two points in this Bill which affect a particular line of industry in the west country, the position with regard to which I should like making quite clear and definite. In Clause 3, Sub-section (3) you are dealing with mines. You refer to the Coal Mines Act, 1911, and to the Metalliferous Mines Regulation Act, 1872. As far as I understand the position, it will undoubtedly be all right as far as tin mines, copper mines, and coal mines are concerned, but I want to be absolutely certain that a. similar amount of relief will be given in the case of two industries, one purely a west country industry and the other one of wider origin. Will clay mines or clay pits be covered by the Measure? This is purely a legal and technical point, but I think that it should be made quite clear that clay works are definitely covered by the Measure. We ought also to be certain that granite quarries and other stone quarries, which are, after all, on the same footing, are covered by these proposals.

There was another point which my right hon. Friend answered in reply to a question which came from below the Gangway, and that was the point in conection with harbours and the fishing industry. From that, I conclude that it is absolutely clear and direct; that they will get relief from the Government just the same as other industries. I raise these points, because they are of essential concern to the west country, and, that if this relief is going to he given to productive industry, we ought to include not only the large industries such as agriculture and mining but also the smaller works, and particularly the clay works in the West of England.

We were told by my right hon. Friend the Chancellor of the Exchequer some time ago that, as far as the direct tax-payer was concerned, the future was not particularly rosy or hopeful. The Budget and the present Rating Bill will not be very hopeful or very helpful to the direct taxpayer. Possibly, there are very few Members in this House who are more directly representative of the ordinary, direct taxpayer than myself. From the point of view of the direct tax-payer, arid I say this quite frankly as representing them fairly largely, the one great trouble which has prevented relief being given to the direct taxpayer during the last few years has been the fact that we have had a million men o at of work in this country and a million men who have had to be, in one way or another, supported by the Government. That is clear and obvious, and, until we can do something to get these men back into productive work, I cannot see how we can hope to obtain relief for the taxpayers in this country. For that reason, if for no other, I welcome the fact that the Government are making a real effort to help to relieve the worst burden the nation has to bear to-day, and that is the heavy amount of unemployment.

Lieut.-Commander KENWORTHY

I am much obliged to the Minister of Health for his courtesy in giving way to me when he was introducing the Bill. It is not often that I address myself to the Minister of Health for various reasons. I felt rather sorry for him when he was speaking. He must have been acutely conscious of his position in introducing this Bill, for I have never really heard such an extraordinary hotchpotch of anachronisms as this Bill contains. I only cheered up when we heard the challenge at the end of the right hon. Gentleman's speech. He offered to fight anyone: in any constituency of the country on the details of this Bill. I ask him: "Where will he begin?" And I make him a personal challenge. Shall fight him in Ladywood or will he fight me in Hull?


What about Sea-ham and Aberavon?

Lieut.-Commander KENWORTHY

I pause for a reply. Is he going to contest Ladywood himself at the next Election, or is the weather so fine that he would like to have a by-election now? One of us could take the Manor of Northstead and the other the Chiltern Hundreds. He can get to work, and he can choose the weapons, or, in other words, the constituencies. In the meantime, I anticipate what I should ask on that occasion by a couple of questions now. He told as that a private wharf belonging to a company on the riverside or the dockside is not to be exempted because it is transport. That affects the pit props to which an hon. Member referred and which are unloaded by a timber merchant at a wharf, because a wharf gets no kind of exemption. A fish dock, apparently, is going to get exemption, and I am very glad and desire to support the plea that was put forward from various quarters.

May I ask the Minister if I am right in supposing that a private railway siding gets exemption as a transport hereditament and that a wharf does not? If that is so, what logic is there in that? One company, in Ladywood presumably, has a private siding and gets relief in rates because of its private siding. Another company engaged in exactly the same business which happens to be in Hull, which has a private wharf used for the unloading of the same kind of raw materials, is to get no relief. Good gracious, what fairness is there in that? I will tell him now in anticipation of our coming contest that one of the principal firms in my constituency have already calculated that they are going to pay an extra £1,000 a year in taxation because of the Petrol Duty from the date of the Financial Resolution, and that they will only get relief to the extent of 500 a year on rates starting in October, 1929. That is what they are going to make out of this.

The other point is this. I put it to the right hon. Gentleman when he was speaking. If the costs of production are going to come down in October, 1929, what is the inducement to people to place longterm contracts for ships or engineering work now? Surely, the result will be to create a kind of hiatus, and people will not want to enter into contracts until the Government's policy comes into play. You are going to make employment worse, except for one class of the community, and that is the lawyers, when the appeals begin to be made against these anomalies and anachronisms. This Bill is one of a series. They are paving-stones of good intentions. I give the Government full credit for that. I am sorry that the Chancellor of the Exchequer is not here, because I love to compliment him on good intentions. These are the paving-stones of good intentions leading to the Government's political downfall.

Why does not the Minister of Health talk in the same language as the Chancellor of the Exchequer? I will give an example. Yesterday, the Chancellor of the Exchequer dealt with a criticism that a relief of £500,000 a year is going to be given to the brewery companies, and he said that this would inevitably result in a reduction in the price of beer. He had no promise, but he relied—


He did not say that.

Lieut.-Commander KENWORTHY

I heard it, and I always pay great attention to the Chancellor of the Exchequer and also to his Parliamentary Private Secretary the hon. Member for Aberdeen and Kincardine, Eastern (Mr. Boothby), when he speaks. He was most refreshing. They are both exhilarating. The Chancellor of the Exchequer defended the argument that the price of beer would come down, and when I asked him if he had a promise of such a thing, he said that he did not rely upon promises. I suppose he has had a taste of that from the sugar refiners. He relied, he said— I am quoting him rather loosely—on the inexorable economic law. When I asked the Minister of Health to-day why he does not propose to exempt from rates the private wharf, he said that they were not certain that the exemption from rates on a wharf would be reflected in the price to the consumer. There we get a difference of opinion between the two right hon. Gentleman. The Chancellor of the Exchequer says: "Of course, all these reductions will be passed on to the consumer," but the Minister of Health says: "No. They will go to private profits and the consumer will not benefit, if it is the case of a private monopoly." I have not misrepresented the two right hon. Gentlemen. The Minister of Health knows that. I have not misrepresented him. I invite his explanation, here or elsewhere, and I await it with great interest.

I would like to reinforce what was said by my hon. Friend the Member for Mile End (Mr. Scuff). We had the Prime Minister making a foray into Lancashire the other day and, with great courage, demanding that the cotton industry should cut out their dead wood, or the dead water he might easily have said. These companies in Lancashire that will not put their house in order, that will not rationalise, that will not reorganise, that will not decapitalise, are to receive this subsidy and there is no guarantee that they will do what is necessary to put their industry upon a proper footing. We have been accused of dealing only with mere details. I want to go to the root objections to this Measure, and I challenge the hon. Member for Aberdeen and Kincardine, Eastern, to answer me when later he takes the Floor. He intends to speak. We find that the only Conservative Members who come into the House are those who intend to take part in the Debate. One of the great objections to the whole of these proposals is that the Government do not insist upon efficiency. Efficiency is our great need to-day, and everyone knows that. We are going to subsidise the cotton industry in Lancashire, and it is common knowledge and common ground that the whole of the cotton industry needs reorganisation. It needs to shake the surplus water out of its capital.

Take the coalfields. The Parliamentary Private Secretary to the Chancellor of the Exchequer has made remarkable speeches on this subject and has written some remarkable articles, which I have read with great delight, in which he has taken the mineowners of thin country to task for not putting their industry into an efficient state for productive purposes. as they have done in Germany and other countries. These people are to be subsidised by this Bill. All that they are doing, in the Midlands and Yorkshire, at any rate, is practising ca' canny and reducing the production of coal. They are keeping on their mines, efficient and inefficient, and are not trying to reorganise. They are trying to carry on by reducing output, and yet these are the people who are going to be subsidised. I admit that the intentions of the Chancellor of the Exchequer originally were honourable and worthy, but I suppose the vested interests, as usual, have been too strong. I see one or two hon. Members of the Conservative party present who claim to be progressive, and I would ask them to address themselves to this question. We have heard a great deal about the distributing trade. The trouble to-day 'Is that the country is too wealthy in goods. We have an over-production of goods of all kinds. We can produce more boots, clothing, food, coal and iron than we can use. We have all the sources of wealth but we cannot distribute them. People cannot consume them. Only a few people are wealthy, and they can only consume a certain amount of primary articles, and therefore they have to spend their money on luxuries or invest it abroad, or in other ways.

If the Government really want to help the trade of the country, let them tackle this terrible problem of distribution, in other words, the poverty of the people. Let them distribute the goods which we ran produce. It is a terrible problem, the greatest problem of modern civilisation. We are trying to tackle it en these benches. We may make mistakes, but we believe that the great cure for the evils of the present time lies in an increase of the purchasing power of the masses of the people so that, they can consume the surplus of 'production. [HON. MEMBERS: "Hear, hear!"] Yes, hon. Members opposite know that. Is this Bill going to help?


Every time.

Lieut.-Commander KENWORTHY

Are hot. Members opposite pleased with this new political reaction whereby they penalise the progressive trades like road transport, petrol transport, in order to bolster up—forgive me, my railway friends—the dying, obsolescent transport undertakings of passenger carrying on railways. Is that new Toryism? Is that a new attempt to put back the hands of the economic clock? I despair of the Minister of Health. His last new thought came to him at the end of the last century. I despair of hon. Members on the back benches opposite. Let them make their voices heard. We have heard one criticism from one hon. Member opposite. He want ed the agricultural relief to come this year. I support that. He said that there was no way of stabilising prices. We on these benches have a way of stabilising prices for farmers. I have not time to develop these arguments, but I should be glad if hon. Members opposite who do, I believe, want to help the country out of its troubles, would examine these points and would make their views have greater effect on their own front bench.


I have listened to the hon. and gallant Member for Central Hull (Lieut.-Commander Kenworthy) with interest and attention and with enthusiasm. Many times have I come into this House and listened to him speaking when there was no chance of my speaking and when I had no intention of speaking. Therefore, I think who gibe which he- addressed to hon. Members on this side of the House was unjustified and almost unworthy of him.

Lieut.-Commander KENWORTHY

I am very sorry if I have offended the hon. Member. I do not want to hurt his feelings. He is a most industrious Member.


I am very glad to hear that, and I accept the hon. and gallant Member' statement, but he made one remark about the Chancellor of the Exchequer -which I should like to refute. He said that the Chancellor of the Exchequer had stated that the price of beer would be reduced as a result of this proposal. The Chancellor of the Exchequer said no such thing. He did say that, in accordance with the inexorable working of economic law, such rate relief as was granted to the brewers would find itself expressed in definite benefit to the consumer. [HON MEMBERS: "What did that mean?"] It might well mean that the beer is more worth drinking—I think that was the intention of the Chancellor of the Exchequer—and a little less like rain, to refer to the story told by the ex-Chancellor of the Exchequer. The hon. and gallant Member for Central Hull went on to say that we were producing a great deal more than we could consume. I quite agree with him. He said that was due to the fact that people of this country have not sufficient purchasing power and that the distributive trades are not in a sufficiently efficient condition. I gathered from his argument that he maintains that, if we increase the purchasing power of the people of this country to a sufficient extent, and we also increase the efficiency of the distributive instrument, then we can vastly increase our wealth and be able to consume all that we produce. But I would suggest for his consideration that there is a limit to the amount of bridges, ships, the amount of heavy iron goods, and the amount of coal, especially in view of the competition from oil, that any country can consume; a limit which, I suggest, has long been passed in this country. I am certain that, unless we can command a very substantial overseas market for these particular classes and categories of goods, we can never expect to regain any reasonable measure of prosperity in the basic industries of this country, because in connection with these particular basic industries there must he a limit, and a very definite limit, to what the particular country of origin can consume, quite regardless of the amount of purchasing power of its own people and the efficiency of its own internal distributing trades.

Lieut.-Commander KENWORTHY

Is it not the argument of the Protectionists that a secure home market means easy export?


I was trying to argue that we want to increase our exports. The argument of the Protectionist is that a secure home market enables you to compete more efficiently and more easily overseas. My only argument at the moment is that, unless we can compete easily and efficiently overseas and unless we can produce particular classes of goods at a price which the foreigner is prepared to pay, we can never expect to regain any great measure of prosperity in the particular heavy industries, because there is a fixed limit to what we can consume ourselves.

The only other point in the hon. and gallant Member's speech to which I wish to refer is that where he said that the Labour party have a scheme for the stabilising of agricultural prices. It is a scheme in which I personally have long been interested and about which at one time I was almost enthusiastic; but I suggest to the hon. and gallant Member that since the Labour party has begun to absorb the co-operative movement of this country—I see the hon. Member for the Hillsborough Division of Sheffield (Mr. A. V. Alexander) in his place—we have heard a great deal less about these schemes for State control, and I suggest that as the influence of the co-operative movement in the Labour party increases we shall hear less about the stabilising of agricultural produce and of bulk purchases on a large scale.

The reason why I rose was to make one or two remarks about the speech of the right hon. Member for Colne Valley (Mr. Snowden). He made a very interesting speech. He attacked two things. He attacked our diagnosis of the evil of the burden of rates and said that we were wrong in our diagnosis, and he attacked the principle of our scheme for dealing with this particular problem. Therefore, we can get right down to fundamentals at once. I have heard one or two hon. Members opposite complain that we have been dealing only with details and not with fundamentals. I should have thought the very opposite had been the case. The right lion. Member for Colne Valley at any rate got down to fundamentals, because he said that we are utterly wrong in our diagnosis of the evil, and that our scheme was founded on rotten principles. If that is not fundamental, I do not know what fundamental can mean. It is very valuable that we have this definite statement from leaders of the Labour party opposite that they disagree with us fundamentally on questions of principle, arid not merely on matters of detail.

We believe that our principles are sound. The right hon. Gentleman made a very categorical statement to the effect that to say that rates were a serious burden on industry in this country was fantastic. I can hardly express the vehemence with which we on this side contest that point of view. If that be the case, I should like to ask why the Labour party yesterday laid so much stress upon the necessity for taxing the site values of land in order to relieve industry from the present intolerable burden of rates? They cannot have it both ways. Yesterday they said that we have to tax site values in order to relieve industry of the heavy burden of rates and to-day they say that rates are not a. burden. The two things are mutually contradictory.


I am sure the hon. Member does not want to misrepresent my right hon. Friend. What, the right hon. Member for Colne Valley (Mr. Snowden) really complained about was the incidence of rates.


I am coming to that point, but I remember very clearly the right hon. Gentleman the Member for Colne Valley saying that all this talk about the burden of rates or. industry is fantastic nonsense, and that passage will be found in the OFFICIAL REPORT tomorrow morning. That is not the view which is taken on the Liberal benches. The Liberal party has pointed out time and again the great and iniquitous burden of rates on productive industry, and I cannot do better than quote verbatim from a paragraph in the famous Yellow Book. In three chapters in this book the rating system of this country is indicated in flaming language, and the first paragraph deserves the serious attention of hon. Members. This is what it says: On the test of the injury done to industry it is our system of local rating much more than our national taxation which is open to severe criticism. Rates, except in so far as they are expended on services directly beneficial to the ratepayer, operate as a heavy ad valorem, @ tax on houses, on factory buildings, on fixed capital Equipment generally. For poor relief, public health, education, and other objects of local expenditure we exact contributions from our industries, not in proportion to the profits they make, but in proportion to the amount of fixed capital they employ. This is an extraordinarily vicious principle, so vicious that. we should hardly tolerate it if immemorial usage did not blind our eyes to its significance. It penalises enterprise and capital development. It puts a premium on doing things in ways which require only a small plant to the detriment of ways which require a large one.


A masterly statement.


Could you get language which would express the position more forcibly? Yet the right hon. Member for Colne Valley says that all this talk about the burden of rates on industry is fantastic nonsense. We thus get the respective views of the Opposition. On this occasion, we on this side join hands, if only for a moment, with the somewhat exiguous forces which occupy the Liberal benches. But the right hon. Member for Colne Valley supported his indictment of our diagnosis of the evil and the principles on which the scheme is based by quoting a whole list of averages, the average cost, the average prices, the average relief over the whole field of industry. That is a most false and misleading method of argument when dealing with this particular problem. The right hon. Gentleman said that the relief to productive industry would amount on the average to about 1.5 per cent. of the cost of production over the whole country. Even a relief of 1.5 per cent. may be of immense value in competitive industries where the smallest margin makes the difference between a dead loss or a profit, and may -make it worth while to carry on the business. If it was to be a. flat rate over the whole field of industry of only 1.5 per cert. relief, I still say that the scheme is worth putting into operation because margins are so small where exporting and competitive industries are concerned.


Is the margin small in respect of the coal industry?


Yes, I think it is a matter of pence only where some of our foreign markets are concerned. The margin in the export price of coal in many European markets is a matter of pence, and in other trades it is still more so, so that a benefit of 1.5 per cent. to productive industry would in itself be fully justified. But that is a most misleading for 11 of argument for the right hon. Gentleman to take up. In very many cases of individual firms and factories the result will be a relief far greater than 1.5 per cent. of the cost of production. The whole point of the scheme is that it is to mitigate the unfair incidence of rating and the inequalities of the present system. That is the object of the scheme, and those industries which are worst hit, which are situated in the most depressed areas, and have to pay the highest rates in proportion to their profits, will get the greatest benefit under this scheme. The right hon. Gentleman took the case of the coal industry and said that the relief would amount to 2.d. or 3d. per ton of coal. That again is an average for the whole of the country, and as an argument is wrong, false and misleading.

Why should you take an average? In any case, in taking this average the right hon. Gentleman has omitted to mention the benefit which will come to the coal industry through the relief in railway freights, which will add another 4c1. to the amount of relief, so that he would have to put it at 6d. per ton of coal. But in many cases it will be far more than that owing to the high rates in certain areas. There are many instances of particular collieries where the burden of rates amounts to well over 1s. per ton of the cost of production, and that will be almost completely removed by the present scheme. When he said that coal mines were losing more than 1s. per ton on each ton of coal produced, again he was taking an average over the whole country. There are some coal mines which are not losing 1s. per ton, but about. 4d. or 5d. per ton, in some cases 3d. per ton. After the scheme comes into operation that loss will definitely be turned into a profit. It may be a small profit, but in an exporting industry like coal the distinction between profit and loss, however small, is absolutely vital. The difference of ld. may make all the difference to the prosperity of the coal industry and those engaged in it.


Will it meet the case of other mines who are losing 1s. 6d. per ton?


Of course, there are some mines which are losing 1s. 6d. per ton, and those mines are generally found in the most distressed areas. They will get the greatest amount of relief under this scheme. It may not be enough to bridge the difference between profit and loss. I do not say that it will turn a loss of is. 6d. into a profit, but it will turn it into a loss of about id. per ton, and if the coalowners will reorganise themselves and carry out the necessary improvements in plant and machinery, and reduce their overhead charges, they may be able to put on that little extra and so turn that loss into a profit. But there are many coal mines which are making a loss of a few pence only and those collieries will inevitably be put on the right side, and be able to make a profit. As I have said, the right hon. Gentleman contended that the total average rates over the whole of the country were not a serious burden on the community. Under the formula which was referred to by the Chancellor of the Exchequer in his speech at Newcastle, the block grants from the Exchequer are to be distributed having regard to the needs of each locality, that is, having regard to the number of children in the locality and the spread of the population in the district, so that up to a point the right hon. Gentleman's plea for special treatment for these necessitous areas is met.

There is a. further principle underlying this scheme, which was attacked by the right hon. Gentleman, and that is the proposal that the tools and plant of production should not be taxed as such. That is the principle on which the whole scheme rests. We are proposing to relieve them up to three-fourths of their total rates. The right hon. Member for Hillhead (Sir R. Horne) suggested that they should receive equal treatment, and there is something to be said for The suggestion. There is no doubt that, if carried to its logical conclusion, the principle would mean the de-rating of industry altogether, but we have to cut our coat according to our cloth, and £26,000,000 is a lot to hon. Members on this side although it does not mean much to hon. Members opposite. That is the principle on which the scheme is based, that the tools and plant of production should not be taxed as such, and in this proposal I find that we are supported by the experts of the Liberal party in the "Nation" as well as the Yellow Book. I remember reading more than a year ago a most forcible leading article in the "Nation" in which it said that rates were a tax on capital not on profits, and that it was an unfair and vicious system. That is the basis of our scheme, and upon that principle we are perfectly prepared to take our stand and fight in every constituency in this country against those who say that the principle is unsound and our diagnosis of the evil is at fault.


Who said it was unsound?


The right hon. Member for Colne Valley. He said most definitely that it was wholly unsound and that our diagnosis was absolutely wrong. I suggest that when we go to the constituencies in the country there will be many working people who will not share the views and opinions of the right hon. Gentleman. They will not allow for a moment that rates are not a serious burden on productive industry. Rates are in many cases a tax on capital and they fall with the greatest severity on those particular firms which have the largest factories and employ the greatest number of men, irrespective of any profits they may make. There never was a system so unfair and so unsound, and I suggest that this scheme of reform is overdue. I have already detained the House long, because I was inspired to further efforts by the hon. and gallant Member for Central Hull.

8.0 p.m.

Let me mention one or two of the advantages which will accrue to productive industry under the scheme outlined in the Budget Speech. First of all, in spite of everything that the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George) said, in fact the greatest benefit will go to the worst hit industries, to those particular industries which are labouring in the heaviest seas and making the least profits and are in an absolutely vicious circle, because in exact proportion as unemployment increases in those particular areas, so the rates are raised, causing fresh unemployment. That vicious circle will be broken, because those particular industries which will be getting 75 per cent. relief of rates will get far more direct relief from the Exchequer than the industries in any other districts.

The second thing is that under the present system the oppressive burden of rates is cumulative. As the Chancellor of the Exchequer pointed out, at every stage rates fall with a heavy hand on the products of industry, from the coal that is mined to the finished product which is put on a ship. Rates and freights and harbour dues—at all stages the burden of rates falls on the products of industry. In exact proportion as hitherto the weight of rates has been cumulative on the product of industry, so in future the relief will be cumulative. Therefore, when the right hon. Member for Colne Valley recites average figures of 2d. or 3d. taken over the whole community, he loses sight. of the fact that in every stage of manufacture an additional 2d. or 3d of rate relief is to be added in the production of a particular commodity.

We have heard a lot about the Petrol Duty and the hardship imposed on the motoring community—a community which, I maintain, is the best able of all communities in the United Kingdom to bear a tax of this kind. [HON. MEMBERs: "How about the landowners?"] I am not going to be led away to a discussion of taxation of site values. That would occupy half an hour more. Taken as a whole and including the tax which has been imposed upon petrol, the Budget does strike a better and luster balance between road and rail and between coal and oil, to the immense advantage of this country, and I believe it will give a direct incentive to those who are engaged in investigating scientific methods of pulverising oil from coal, and that too will he all advantage to the future of the country.

Finally, the Government scheme is designed to give a real stimulus to the basic industries of the country. We are giving atlay:£26,000,000 in a comparatively restricted area. We are proposing to spend £20,000,000 upon a spot practically, of industry in this country. That is hound to decrease by that amount the cost of production of commodities. I cannot share the views of hon. Members opposite that it is altogether bad to encourage the prosperous, the growing and the enterprising industries of the country. it seems to me that those industries are the most hopeful for the future. While every effort should he made to keep on a more or less stable basis, within reasonable economic limits, the basic industries upon which the economic wealth of the country was founded in the last century, it is equally necessary to put every ounce we can into the development, to the widest possible extent, of those industries upon which the future of this country may equally depend in the course of the next generation. It is no use scorning the motor-car industry, the artificial silk industry, or the highly technical electrical industry, because they have not a whole series of representatives in this House. Do not let us scorn them and say that, merely because they happen to be making profits now, it is doing harm to relieve them by striking off an unfair and vicious burden. Rather let us help them and enable them to expand still further and to give more employment and to bring more revenue into the Exchequer.

It seems to me to be a most irrational and ill-conceived argument to say that because we are giving a certain amount of relief to the rising young industries which happen to be making a profit now but which may make a loss next year, that vitiates the whole scheme. We do not want to put a premium on inefficiency and to make everyone study how to conduct business at a loss in order to get the maximum amount of State relief in remission of rate burdens. This stimulus will also enable the heavy industries to reorganise themselves. It is more desirable, perhaps, than anything else to-day that those industries should reorganise themselves from within, and that they should amalgamate and co-operate. More than anything else the suicidal policy of price cutting, internally and externally, in the last four years, is responsible for the plight of the coal industry to-day. But this scheme, by giving a real stimulus to productive industry, will inspire these people to get on with a task of which they were beginning to despair. It will enable them to carry out vital reorganisation, and improvement of plant. Everyone knows that it is very difficult for iron and steel works or a collier to get any financial accommodation from banks at the present time. This scheme will enable increased financial accommodation to be obtained from the banks. Of that there is no doubt. When the hon. and gallant Member for Central Hull said that we were now engaged in treading the paving stones to an era of increased prosperity, I most heartily agreed with him.


A certain number of hard words have been thrown at this side of the House by the Chancellor of the Exchequer and the Minister of Health. I hope it will not embarrass the Parliamentary Secretary to the Ministry of Health to receive a few words of very modified blessing from this quarter of the House. After all, I have no doubt that when this legislation was framed those who considered it had the distressed areas, and amongst them the town of Middlesbrough, in mind. I happen to stand here as the successor of a man whose name will always be associated with the question of rating reform, because for many years in this House before the question had been taken up by any large number of people, the voice of the late Mr. Trevelyan Thomson was always heard on this matter. In his last days, when he was too ill to come to the House, and he heard the first hint from the Chancellor of the Exchequer that something of this kind was to be done, he said, "Thank God, there may be something for Middles brough at last."Following upon that, I am bound to view these proposals at any rate in a sympathetic spirit.

One does find, at the first, that there is something for Middlesbrough and similar places, in one respect at any rate, without any qualification. I refer to the relief in regard to railway freights. That is something which I welcome without hesitation. I only wish it were possible to give this particular form of relief at an earlier date. I say that all the more because I think it is so essentially a desirable thing. I believe that the right hon. Member for Hillhead (Sir R. Horne) suggested yesterday that this part of the relief might be separated from the rest. Quite obviously, to anyone looking at the Bill the discrimination in the matter of railway freights is a much easier matter than the much more complicated process of finding out exactly what a productive industry is. The latter may take time, but the other part of the relief appears to me to be a much simpler matter and something for which the funds necessary would not be so great. It might be considered, therefore, whether this particular form of relief could be given at an earlier date.

When I come to the wider question of the relief of rates, I dissociate myself at once from what was said by the right hon. Member for Colne Valley (Mr. Snowden) with regard to rates not being a burden. I cannot believe that he meant strictly what he said. [HON. MEMBERS: "He did not say that!"] He said it as clearly as anything that I have heard in this House. He may have meant—in which case I agree with him—that is so far as rates are spent and you receive value for them, the expenditure is not waste of money. But that does not prevent rates being a tremendously heavy burden on some people and some businesses. If they find themselves in the position of having to pay what are really other people's bills, and they have been in that position for many years, with a great multitude of able-bodied poor who are really a national concern—if they find that bearing upon them with a very heavy weight, and bearing upon the whole district and not on a few selected ratepayers, anything that can be done to relieve that burden must necessarily meet with the sympathy of anyone who represents a district like that. I do not therefore wish to look a gift-horse in the mouth, but I do want to see how far that horse is going to carry me.

As soon as one looks at the details of this Bill and the way in which it is worked out, one is painfully conscious that so much more might have been done, and done so much more quickly, if only the whole business had been tackled in another way. There is this burden to be considered, not merely coming on the few big firms but on all the people there who have these tremendously high rates to pay. These rates are reflected in rents collected from the poorest of the population. I respectfully suggest that it is not in any way unfair for Members of the Opposition to go to those, in any districts like that, who are not benefited, and point out to them the plain fact, which they are bound to realise in the end when the scheme comes to be worked out, that they are in point of fact going to get nothing out of this scheme directly, whereas if it had been tackled in another way they might have had a great deal. However, my first feeling is of immense gratitude to the Chancellor of the Exchequer because he has raised this question. I do not go back upon that in any sense, for I believe that now this question has been raised we shall never go back I o the old bad system again. If it is found that this particular scheme is defective in detail, time I hope will cure that, and we shall get a still more perfect scheme later. Still my gratitude will remain that the Chancellor of the Exchequer took up the question for the first time.

But there is a very close criticism that must be made, and that is as to the method by which the very laudable objects that. the Chancellor of the Exchequer has are being pursued. Under this scheme, a whole host of unnecessary technical difficulties are being raised. The Minister of Health was distinctly nervous—he is riot usually nervous—when he came to one word in his Bill. That word was "primarily." If that portion of the Bill is helpful to no other depressed industry, it will certainly be helpful to the depressed industry of the law, to which I happen to belong. I can see that a tremendous amount of work will be thrown on the lawyers in interpreting this particular point. The right hon. Gentleman said "We have to find something. Can anyone suggest a better word? "Frankly I cannot do so.

What I want to point out is that the use of the word "primarily" flows from the fact that the right hon. Gentleman has selected an extraordinarily difficult frontier to define. He has set himself the task of defining the frontier between productive and distributive industry. The difficulty lies in that fact, and it was not necessary to have had that difficulty. The scheme in the Yellow Book, by which the Liberal party stand would have given a Frontier, easy to define, between national services and local services. It could have been settled once and for all. There would have been no litigation and no delay in seeking an interpretation. I can see other difficulties as well. For instance, there will be considerable difficulty in defining what are warehouses, properly so called, and what are merely temporary shelters—a difficulty which was anticipated by the right hon. Gentleman himself in his speech. But after all, these are comparatively minor objections and I would not level any very heavy criticism against the Bill merely on the ground that it contains terms which are difficult to define. The fundamental criticism is that this is a question of shifting a burden, and that the burden remains a burden still, even though it is transferred to the taxpayer. It is a burden upon the petrol-user and others, and it is not a burden on the rich alone, because the petrol tax, with its ramifications, will bear on all classes in the nation.

For that reason, we on this side are justifiably anxious to see that the money so raised should reach the people who need it most. The hon. Member for Aberdeen and Kincardine, Eastern (Mr. Boothby) said quite fairly that we ought not to grudge money going to prosperous industries. Neither should we if there were unlimited supplies of it, but when on the admission of the Chancellor of the Exchequer it is only by scraping and paring and taking the butter out of the dog's mouth, that we can get money at all, surely it is legitimate to examine closely the needs of each of the recipients and to say that we object to the money going to the prosperous industries when there are so many others who need it more and who will not get it to the same extent. Although, undoubtedly, a great step has been taken by the Government in raising the question of rating reform, it is much to be desired that, either by their own Amendments or by the action of future Governments, the rating reform which is now proposed should be altered and placed on a wider basis, whereby the money raised with so much difficulty from the taxpayer may be given to those who really need it and not to those who are already prosperous and flourishing.


The Minister of Health said that the great question which we had to decide was whether this scheme of rating relief was to go through or not. As the representative of an agricultural constituency I have no hesitation whatever as to my course of action. I welcome with enthusiasm this scheme for helping the primary producer. As far as agriculture is concerned, rating relief is not entirely new. As long ago as 1896 this House decided that the burden on the owners and occupiers of agricultural land was too severe and that relief was required. That was again the case in 1923 and both the Liberal party and the Labour party opposed those reliefs, just as they are opposing this relief to-day, on the ground that all such relief went into the pockets of the landlord. Both had the opportunity of repealing those reliefs but neither party took advantage of that opportunity. Was that out of consideration for the feelings of the landlords?

This scheme in my humble judgment, will be the best means of assisting all, or nearly all, who are engaged in agriculture. British agriculture is extraordinarily diverse and too many of the schemes which have been propounded to help us in the difficulties which we have had to face since the War, have tended to help one section and leave out another, or actually to hinder one section while helping another. This scheme, however, assists all, because all pay rates. There is an interesting sequence of events inregard to these reliefs to which I would draw the attention of the house. The relief in 1923 followed on the unusual depression in agriculture in 1922; and that, in turn, followed on the disastrous coal stoppage of 1921. So, we have this sequence of events. First the coal stoppage of 1921; then an unusually bad year for agriculture in 1922, and rating relief in 1923. Again, we had a year of severe trade disputes with the disastrous coal stoppage in 1926; then we had one of the worst years which the farmer has ever had to face in]927, and now relief is, at any rate promised, in 1928. These sequences of events should be noted not only by the taxpayers but by that section of the Labour movement which seems to consider that the promotion of industrial disputes is the high road to working-class prosperity. For my part, I cannot understand that perverted ingenuity by which hon. Members opposite, both Liberal and Labour seek to argue that the whole of this relief is going into the pockets of the landlords or the proprietors of businesses. At any rate, that belief does not seem to be shared by the hon. Member for West Middlesbrough (Mr. K. Griffith). He seemed to believe that a considerable amount of relief and stimulus would be given to the trade of the borough which he represents.

The Minister of Health said he had an open mind in regard to the question of relief as between one claimant and another or as between one individual and another, so that no unfairness should arise, or, at any rate, so that any unfairness should be minimised. I will draw his attention to what will be an anomaly in certain areas. I understand that the sea defence rate is not included in this Bill. That rate presses with great severity on a comparatively small number of persons near the sea coast. It may amount to 5s. or more in the £. I believe there is a classic example in Lincolnshire where, on one occasion, it was proposed to levy a sum of no less than £80 on a holding of 13 acres. Those rates have been a little more spread about in recent years, but still they form a very heavy burden indeed, and it often happens that the very same people who pay these sea defence rates also have to pay special drainage rates and that the two together amount to a very large proportion—perhaps half, perhaps more—of the total rates which they have to pay. Of course. they are going to get relief from the ordinary rates, like the other farmers, but still that leaves over a very considerable burden, and if nothing is done to relieve that burden, this anomaly will arise, that you will have farmers on one side of a line who will be entirely relieved of rates and farmers on the other side of that line who may be paying rates of 5s., 6s., or 7s. in the £. That seems somewhat unfair, and I would like to ask the right hon. Gentleman to give his attention to those particular little communities which in the past have struggled against the encroachment of the sea, which have kept the sea out and in doing so have often led lives in very difficult conditions, and which have succeeded eventually in establishing some fertile tracts of land.


Is not such a charge legitimately an owner's charge?


Yes, it is an owner's charge. It is an owner's rate, but, of course, it is passed on in the shape of rent to the occupier. If that rate is relieved, it is not only the owner who will get the benefit, but the occupier also, and I would like to point out that a large number of the owners of such land are also the occupiers, men who have lived there and whose fathers before them have fought the sea. Such relief would go all the way through and would. be taken into consideration in future lettings. I would like to urge that it is not unfitting that provision against such a calamity as the. breaking through of the sea, which might be on an enormous scale and which might amount to what is called an "act of God," should be shared to a very much greater extent than it is by the general community.

There is one other class to which I should like to draw attention, and that is the poultry raiser. The poultry raiser stood, of course, to have been hit with a good deal of severity by the tax on kerosene. He has, very happily, been relieved of that, but he still stands, in the readjustment, to pay a good deal perhaps of the petrol tax, and I should like to ask if he is included in this Bill for rating relief. It cannot be denied, of course, that the j oultry raiser is a producer, and it would seem to follow naturally that he should be included, but I should like to have an assurance on that point. Seeing that many poultry raisers produce an article which is valuable in inverse proportion to its age, it is necessary often for them to use motor transport to get the goods which they produce, namely, the eggs, t o market as quickly as possible. Therefore, the poultry raiser does not stand to gain very much as things are at present, and I hope that he will be fully included in the rating relief which is promised.


It has been repeatedly asserted by speakers on the other side that we or these benches are opposed to affording any relief to the burdens which may rest upon industry. It was asserted a little while ago by the hon. Member for Eastern Aberdeen (Mr. Boothby), and earlier by the lion. and gallant Member for Stockton-on-Tees (Captain Macmillan). I am going to make a statement which is not only my own view, but the view of the Labour party, that not only are -we in favour, by the right method—that is the whole question at stake—of relieving industry of its burdens, but, so far as I am concerned, so long as there is a single pound of unearned income, either in the way of land values or other forms, I would relieve industry of every penny of burden upon it; and that it the view of my right lion. Friend the Member for Colne Valley (Mr. Snowden) as well. It is an entirely misleading statement to make that we object to relieving the burdens on industry, because the Labour party has always stood for using national income, particularly unearned income, to meet the obligations of Government and to relieve trade and industry in every possible direction. What we object to in this Bill is not the fact of trying to relieve industry of its burdens, but the method which has been adopted. We say that the method is unsound, and not only unsound but inequitable in its incidence and in the selection which it makes of certain classes of ratepayers in the distribution of the relief which is going to be given. Not only do we regard this proposal as unjust and entirely unfair, but we believe that it would fail to achieve what the Government say is their intention.

What are the facts of experience? The hon. Member for Horncastle (Mr. Haslam), who has just sat down, has been referring to the fact that this is not the first time that this policy of relieving rates has been applied. He has mentioned that since the year 1896, a matter now of 32 years, this very principle has been in operation as applied to agriculture. What has been the result? In spite of the fact that for 32 years this policy has been carried on, agriculture is worse than it was ever before.


May I point out that after the relief of 1896, agriculture enjoyed a certain measure of prosperity down to the Great War.


This is the first time we have learned that. I have taken a close interest in the ups and downs of agriculture as a student of it, and as one who has had some association with rural life for many years, and I never knew a time when agriculture was prosperous. It has always been on the point of bankruptcy, always wanting relief, and always crying for protection in one form or another. Can the hon. Gentleman recall a single year, even in the most. prosperous times to which he refers, when farmers were not demanding protection on the ground that they could not afford to do without it? Under the 1896 Act an annual subsidy was given to relieve the burden of rates upon agriculture alone of £1,320,000. That continued each year down to 1923. In 1923, the 50 per cent. was increased to 75 per cent., and under the 1923 Act, an additional £3,500,000 was contributed by the Treasury each year as further relief to agricultural rates.


That resulted from the strike of 1921.


I am coming to that, if the hon. Member will have patience. Now, only five years later, we are asked to vote annually another £4,000,000 odd additional each year. Taking the three contributions, there will, when this Bill becomes an Act of Parliament, be a definite annual subsidy from the public taxation of £10,000,000 or thereabouts for the relief of agricultural rates alone. I object to it, until you place the burden upon the right shoulders. Place it upon land values; if you place it there, I shall not object to it, and we will support the needed relief to farmers and of all rates on improvement, so that we can give a stimulus to industry. A subsidy of over £100,000,000 has already been contributed from the public purse, and we are now to have a stabilised £10,000,000 a year for agricultural rate relief alone. I come to the point about the industrial disputes. The hon. Member who preceded me argued that these concessions have always followed some industrial dispute. I am wondering what will occur, so far as agriculturists are concerned, when the next dispute takes place. There will be no more rates of which the farmers can be relieved, so I suppose that they will ask for 50 per cent. relief of their rent. What is the result of it all? Nothing but continued stagnation.


The wage of the agricultural worker has more than doubled in that. period.


Surely the hon. Gentleman knows perfectly well that in 1896, when that policy was started, the average wage of the agricultural labourer in the Midlands was 14s. or 15s. a week. In 1913, when the last normal conditions prevailed before the War, it was about 16s. The doubling came as a result of war conditions, and the cost of living doubled at the same time—


But. it is not double now.


It is futile to argue that there has been a doubling of wages. We on these benches object to this proposal of meeting this admittedly great and pressing national problem, not only on the ground that the method is wrong, but on the ground that it is unfair. The relief ought not to have come from the taxation of industry, as is being done; the proposal we are now discussing is based upon the Bill of yesterday, in which, in order to provide this relief, certain industries using petrol are to be taxed. We say that it is unsound and wrong, and a. violation of the grandiloquent announcement of the principle by the Chancellor in his Budget, that taxation ought not to rest upon the tools and plant of production. If a motor lorry carrying commercial goods is not plant, what is it? If it is not a tool of industry, what are the tools of industry? The Government, which are now trying to affirm that principle, have been violating it every year they have been in office. Increased taxation on industry has been embodied in the Widows' and Old Age Contributory Pensions Act, under which 8d. a week for every male worker is levied upon industry.

Mr. DEPUTY-SPEAKER (Mr. James Hope)

I do not see what connection that has with the subject under discussion.


It is merely en illustration of the violation of this principle, and I only use it in that way. We do not object to relieving industry of burden, if you relieve it in the right way. This relief is to be given to about 30 per cent. of the rate burdens of the country, and something like 70 per cent., comprising the mass of the people of the country, are to have no direct relief at all. No householder, no shopkeeper, no ordinary individual, whatever his economic position may be, is to have any direct relief at all. Has not the ordinary householder in a working-class area as much need for relief as the brewers and the tobacco manufacturers In the West Riding of Yorkshire, in 1913, we had the working classes living in houses for which they were paying, on the average, about 6s a week rent, or 24s. per month, and with the system of commutation of rates which was generally in operation those rents included the rates. The same houses to-day have had a 40 per cent. increase in rates put on them. The rates then were 7s. 6d. in the £ in 1913 and are now 16s. 8d. in the £, and now the pre-War 6s. a week house has to pay rates as well. The pre-War house for which the rent was 6s. a week, or 24s. a month, is now 47s. 6d. a month. Do not those people need relief? There is not a penny for them, and we say it is absolutely inequitable to give relief to one class only.

We do not say that relief should not be given, but we criticise the methods which are applied in this Bill. What we say is that if there is a genuine desire on the part of the Government to meet this problem of stagnating industries, they ought to adopt methods which will be equitable and will not increase the burdens on the community. Cannot they see that in the land values of the country there is a natural source from which relief might be obtained without having to burden any industry with such a tax as the Petrol Duty? The right hon. Gentleman the Member for Colne Valley mentioned yesterday that the capital site value of this country—judged on the basis of that of New Zealand, where the site vain has actually been ascertained—would amount to £10,000,000,000. I quite agree with the right hon. Gentleman that it would not be fair to adopt that figure, but it is perfectly safe to assume that it would be £5,000,000,000. A tax of 2d. in the £ on a capital value of £5,000,000,000 would bring the Chancellor of the Exchequer £40,000,000 a year, and he w mild not have to put a burden upon the users of petrol and would be able to give relief to all who were entitled to it. Those are the lines the Labour Party want to see followed.


I was interested to hear from the hon. Member for Dewsbury (Mr. Riley) that he did not object to the grant of relief to agriculturists and others engaged in productive industries, but wanted that relief paid for by taxation of land values. I should have thought the proposal to raise money by taxation of land values bad long since been exploded, and I should hardly have believed that anyone, particularly after the statement made by the Chancellor of the Exchequer yesterday, would have given any serious thought to such a proposal. Assuming, however, that there are Members who still believe very large sums can be raised by taxing land values, I would like once again—I say once again, because it has been clone again and again in this House—to point out to hon. Members that the Increment Value Duty and the Reversion Duty contained in the 1909–10 Budget proved an utter and a ghastly failure. I am not going to remind the House of the immense sums it cost to collect the paltry amount of £1,300,000, but I am going again to point out—


Some reference to that subject would be in Order, but an actual discussion on the merits of the taxation of land values seems to me to go a little wide of this Bill.


Am I not in Order in pointing out the absurdity of the argument put forward by the hon. Member for Dewsbury on the question of the taxation of land values? Am I not right in pointing out that his arguments are unsound and that the relief would not be obtained in the way he suggests?


I was a little uncertain when the hon. Member for Dewsbury (Mr. Riley) was speaking, but I did not think he went on long enough for me to call him to order. The hon. Member is perfectly entitled to show that one attempt in that direction has been a failure, but I do not think the discussion should be switched off from this Bill to a more remote subject.


As long as I can get it placed on record that that attempt to raise a large sum of money was a ghastly failure, I am quite satisfied. I should like to make one other passing reference to that suggestion for raising the money, in order to remind the hon. Member opposite that if land values were taxed in that way the burden would be passed on at once to the tenants and would not be borne by the owners of the property. As regards the methods of relief, in common with my hon. Friend the Member for Horncastle (Mr. Haslam), I welcome anything which can be done to assist those engaged in agriculture and in the productive industries, because I have in my constituency a. very large number concerned in agriculture and a very large number of industrialists. There are many engaged in the hosiery trade, who have suffered very much from unfair foreign competition and have not obtained, as they had hoped to do, a measure of temporary protection under the Safeguarding machinery. Naturally they will welcome the relief which will be given, and for that reason I in my turn welcome the Bill. The point has been raised as to landlords obtaining the benefit of this relief. I think there is very little in that argument, because in that past when relief was given to agriculturists, it is the fact that landlords did not take advantage of it, speaking generally, to increase the rent of the tenant, and I see no reason to suppose that it will be done now, except of course, in rare cases. There will be special cases; it is idle to suppose they will not occur, but taking landlords as a whole, I am satisfied they will not take advantage of this relief to raise rents against tenants.


Is it not the fact that the landlords sold their land to their tenants at very high prices?


I have yet to know that this Bill extends relief solely to the owners of agricultural land. I should have thought the hon. Member for Mile End (Mr. Scurr) would have known better than to make that interruption.


Is it not a fact that £4,000,000 is set on one side for agriculturists only?


I am discussing this Bill as a whole, I am not discussing it in parts. I am dealing here with the relief to be given to agriculturists. The point raised by the hon. Member for Mile End relates to the ownership of farm lands.


The hon. Member spoke of the relief given under the Agricultural Rates Act, and he said that nobody took advantage of that relief by raising rents. I say that the landlords did take advantage of that Act by selling their land at higher prices.


I do not admit that that is the case. No doubt some landlords did sell their land At higher prices, but a large number of them retained their land, and did not increase their rents. I wish to refer to the question of the revenue officer. Hon. Members will doubtless recollect that when the Rating and Valuation Bill of 1925 was introduced, strong objection was taken to the presence of the revenue officer, because it was thought that his presence would tend to screw up the assessments to the detriment of the ratepayers. Under this Bill, I do not think there is any comparison between the position of the revenue officer and the position which that officer held under the Bill of 1925. Under that Bill, the revenue officer had a say in the preparation of the valuation lists, and he was entitled to discuss the question of values with the sub-assessment committee which was set up under that, Measure. Under the 1925 Act, the revenue officer had power to cross-examine the ratepayers, but that is not so under the Bill we are discussing. The taxpayer is now being called upon to contribute £29,000,000 to the local authorities in relief of rates, and, therefore, the revenue officer is entitled to come upon the scene.

Some hon. Members may think that that opinion is inconsistent with the view taken up in 1925, but I suggest that the position has entirely changed. Under the Act of 1925, the revenue officer was there for the express purpose of increasing the assessments, but under the Bill which we are now considering the revenue officer will be there to see that there are no excessive assessments. Consequently, the revenue officer will be serving a double purpose. In the first place, he will assist the ratepayer who will have to pay the balance of the rates, and he will also be protecting the taxpayer who will have to find the £20,000,000 to which I have alluded. For these reasons, I do not, think that any sort of objection can be raised to the presence of the revenue officer. I notice, from a report in the "Times" of the 5th instant, that a conference of valuers took place to discuss this Bill. It was a private conference of representatives of the auctioneers and estate agents, the Central Landowners' Association, the Association of Surveyors and the Surveyors' Institution, and they seemed to apprehend the presence of the revenue officer.

9.0 p.m.

They seemed to think that the revenue officer would have power to come in and revise the valuations in agricultural and transport hereditaments, and they stated that a Treat deal of work which they had already done might be upset by the proposals of the Bill. I think that is a wrong view to take. As I understand this Measure, the revenue officer will have no right to revise the valuations, and his sole right will he to take objection if he finds that there has been an over-assessment. As a matter of fact, he will have nothing to do with the preparation of the preliminary draft special lists. Of course, he can object, and he should have the right to object, if he is of the opinion that there has been an over-assessment. As regards further details of the Bill, I would like to ask the Minister of Health to deal with one or two points which seem to me to require a little elucidation or alteration. Take, for example, the First Schedule, paragraph 3, which provides that the rating authority has to supply the revenue officer with a copy of the preliminary draft special list prepared by them together with the forms of claims received in respect of the hereditaments compri3ed in the list. Surely, the revenue officer ought to be entitled to a copy of the returns and not merely a copy of the claims. I think that is a point which might be considered by the Minister. There is another important question raised in paragraph 4 of the First Schedule, which provides that the revenue officer may consult with the rating authority if he does not agree with the net annual value. I -do not think that is quite fair to the ratepayers. Under th3 present procedure, which is laid down by the Valuation (Metropolis) Act of 169—I notice that the Government have adopted the procedure of that Act—arrangements are made by which the rating authority prepares the list containing three columns and the rating authority's valuation is placed in the first column. The list is then sent to the surveyor of taxes—who is the revenue officer for the purposes of this Bill—and he can adopt the valuation fixed by the rating authority; or, if he objects to it, he can place his own valuation in the second column. Then the matter comes before the assessment committee, the ratepayer is notified, and he has an opportunity of stating the reason why he considers the figures are wrong.

Under this Bill, if there is to be a consultation between the parties as provided for in paragraph 4 of the First Schedule, the result will be that the ratepayer, when he comes before the assessment committee, will not know what figure was fixed in the first instance by the rating authority, and all he will have before him will be the compromise figure. I think that would be prejudicing the rate- payer, because it would not give him an opportunity of properly stating his argument. In London, under the Act of 1869, when a ratepayer comes before the assessment committee, and there is a difference of opinion between the rating authority and the surveyor of taxes, it frequently happens that the assessment committee does not decide in favour of the rating authority. If, however, there is this power of consultation, followed by the provision in the Subsection, the only result will be that the ratepayer will be prejudiced. I hope, therefore, that, when the Bill is in Committee, some Amendment will he made whereby this provision will be eliminated. Then a question arises, in my opinion, on paragraph 7, sub-paragraph (b), which provides as follows: In so far as the particulars entered in the draft special list with regard to any hereditaments are agreed between the rating authority and the revenue officer, or where a claim to have a hereditament inserted in the list has been rejected in pursuance of such an agreement, the assessment committee shall not have power to alter those particulars, or to insert the hereditament, otherwise than in determining an objection. There is power to-day, both under the Act of 1869 and under Sub-section (2) of Section 27 of the Rating and Valuation Act, 1925, enabling the assessment committee to make alterations in the figures in the list, and I think that, for the sake of uniformity, which, after all, is the great principle underlying these valuations, similar provision should be made, and sub-paragraph (b) should be eliminated. I hope that the Minister will consider that during the Committee stage. Perhaps I may be allowed to give an instance of how the point may arise. It may be that there are two exactly similar houses side by side, and that the rating authority has valued each of them at £100. It may be that the owner of one of them, whom I will call A, has taken objection, but the owner of the other house, whom I will call B, has accepted the valuation. A succeeds in his objection, and the assessment committee reduce his assessment to £80. It is only fair in that case, and it is often done in practice, that the committee should have the right to reduce B's assessment also to £80, in spite of the fact that there has been no objection in his case. That is another point which I hope will be taken into consideration.

There is one other question, which arises under sub-paragraph (d) of paragraph 7, which provides that The provisions as to the making of false returns shall apply to the making of false claims. That seems to go too far. What is a false claim as defined by this intended Act? The ratepayer puts forward a claim that a portion of his hereditament comes within the ambit of the Act for the purpose of relief. The rating authority decide that that is wrong, and that as a fact he is incorrect in his claim. Is that a false claim?? Is it to be said that, because he made a bone fide mistake, he is liable to all manner of penalties as prescribed by the Acts which apply to the making of false returns? I hope that in due course this, as well as the other points, will be considered. Speaking generally, I, in common with other Members on this side of the House, gladly welcome this assistance for those who are in dire need of such assistance. I shall hope that the Bill in clue course will be placed on the Statute Book, and shall confidently predict that it will do an immense amount of good to very many people in this country.


Mr. PethickLawrence.


On a point of Order. When the Minister of Health was addressing the House to-day, a promise was made that the Secretary of State for Scotland would state the case regarding Clause 9 of the Bill, which contains the provisions as to Scotland, so that we might being a position to-morrow to reply on that. We want to know when the Secretary of State for Scotland is going to make that statement. I think it is only fair to us.


That is not a point of Order. I have the power, in certain circumstances, to compel right hon. and hon. Members to sit down, but I have no power whatever to compel them to rise.


While I recognise that this is not really a point of Order, I would put it that an opportunity might be given to move the Adjournment of the Debate until we hear what are the Government's intentions on this matter. I should be very 10th to take that course. [Interruption.] I do not see the humour of the situation. I would point out to my hon. Friends that very often, if it were not for the Scottish Members, there would not be an audience.


That is not a point of Order. Apparently, the hon. Member now wishes to make a speech. Does he desire to put any question of Order to me?


I wish to ask, as a matter of courtesy, that the Parliamentary Secretary should tell us what the Government's intentions are on the matter.


The hon. Member for West Leicester (Mr. PethickLawrence) is in possession of the House, and perhaps he will use the opportunity to put that question.


I will put straight away to the Minister in charge the question as to when the Secretary of State for Scotland will reply to the points regarding Scotland, and whether it is proposed by the Government that he should speak to-night, because my hon. Friends behind me would like to know how the Debate will be continued. Perhaps I might ask the Parliamentary Secretary to answer that question now.


If I may say so by the leave of the House, it is the intention that the Secretary of State for Scotland shall speak early to-morrow.


May I ask the right hon. Gentleman one question? Would it not be to the advantage of the House, and was it not the intention as understood by every one of my colleagues to-day, that the speech of the Secretary of State for Scotland should be made to-night, and that the Scottish Members should have the opportunity of answering his statement?


No, Sir. It was a matter of arrangement, and our information as to the order of the speeches was given through the usual channels. It seemed to be desirable, seeing that there would be a long Debate to-day, that I should reply to such points as I could to-night, and that my right hon. Friend the Secretary of State for Scotland should speak to-morrow. That was the arrangement which was made, and which I think has been generally accepted.


On a point of Order. put it to you, Mr. Deputy-Speaker, that Scotland has been let down.


That is not a point of Order. No doubt Scotland will be duly uplifted to-morrow. In the meantime, I will ask the representative from the Midlands to state his case.

Mr. K R KWOOD rose


Really, I cannot hear any more on that point.


I am sorry to intervene between my Scottish colleagues who sit behind me and their legitimate prey, the Secretary of State for Scotland, but as you, Sir, bid me go on with my speech I obey your ruling. The hon. Member for Loughborough (Mr. Rye), who spoke last, took us into a very large number of small though important points, and he will hardly expect me to follow him into those, nor do I propose to go at any length into the question which he raised at the beginning of his speech; but, as he was allowed to say what he did on that matter, perhaps I may be permitted just to say that he knows quite well that the experiment that was made in the Budget of 1909 was not an experiment in the taxation of land values or anything of that kind, and any deduction that he draws from that is, therefore, entirely erroneous.


Perhaps the hon. Gentleman will tell me the difference between the taxation which was then sought to be levied, and was levied, and the taxation of land.


I fear I could not allow him to reply.


At the proper time I shall be quite pleased to answer the hon. Gentleman on that point, but, as I anticipated, to do so in any detail would be out of order on this occasion. After all, the main object of this machinery Bill is to erect a frontier between different kinds of hereditaments for purposes of rating. There has been a good deal of confusion to-night. The hon. Member for East Aberdeen (Mr. Boothby) attempted, to make a charge against my right hon. Friend the Member for Colne Valley (Mr. Snowden), and that has been pursued by a number of Members who have spoken since. The charge which they made, and which they levelled primarily against my right hon. Friend, but indirectly, I think, against the whole party of which I am a member, was that we were not really concerned about the condition of the rates at the present time. That is an entire mistake. My right hon. Friend is, of course, quite capable of defending himself when he is in the House, but, as he is not here, I think we ought to put it definitely on record that in his remarks he uttered half a sentence, then stopped for rhetorical purposes, and went on to explain what was really intended.

Sir K. WOOD indirated dissent.


It is no use the right hon. Gentleman shaking his head. It is true the right hon. Gentleman said it was fantastic to say rates were a burden on industry, but he went on to explain in the second half of the sentence, after a rhetorical pause, what he meant by that statement, and what he intended to convey was that some form of paying for services rendered was absolutely necessary but that the present system of the incidence of rates was entirely unsound. The Minister can look up the speech in the OFFICIAL. REPORT to morrow and he will find that that is what my right hon. Friend said.

In point of fact, it is the party opposite who are recent converts. I remember not very long ago the leader of the Opposition was speaking of the comparison between rates and taxes and saying we thought it was a great mistake to keep on putting additional burdens on the rates, because the taxes were levied on a much fairer basis than the rates and at that time Members who had not been told to take the opposite view jeered at this remark, presumably thinking rates were as good and as serviceable as taxes. Now, of course, father says "Turn," and they have all turned.

We have persistently argued that the whole rating system needs reform and we are prepared to take that up far more strongly than hon. Members opposite. We find the present rating system thoroughly unsound in every direction. In the first place it lumps together all local services. Some of these local services are services actually rendered to persons in the locality, for which they ought to pay, but it lumps in with them large numbers of services which are really national services, for which the people in the locality ought not to be called upon specially to bear the burden. In the second place it lumps all the ratepayers together and levies upon them a proportional contribution based on one consideration alone, that is the value of the hereditament in which they live or work. This system of rating people ou one basis alone is entirely unscientific and unfair. It measures neither the ability to pay nor the use which a particular payer derives from the services in question.

You have only to take, for instance, the example of different classes of ratepayers. Take the stockbroker, the manufacturer, the shopkeeper and the householder. Instead of placing the burden equitably on the shoulders of those people, either according to the benefit they get from the services or according to their ability to pay, you simply say, "What is the size of the house you occupy, either as householder or for the purpose of your business?" and on that single criterion you base a proportional charge. We have entirely reformed the taxes in recent years, because each year we have had to revise the whole taxing system of the country, and as the old forms get out of date we have to change them, because we are brought to close quarters with them. But the rating system is more remote. The persons who levy the rates are not legislators and they are not allowed to change the basis of their rates. We here are too far removed from the local authorities. We do not trouble to the extent we should do if we were the persons levying the charge, and we have not altered the system, so that this archaic basis of contribution has gone on unchanged almost from time immemorial. But that does not mean that it is a good system. On the contrary, in my view, it ought to be reformed out of all recognition.

In Vienna, they have very widely extended the basis of contribution. They have made their local levy not proportional, as ours is, but progressive, very much in the way our Income Tax is progressive. They have gone far further a field than merely putting it upon the size of the house a man occupies for his work or business, and they are developing an entirely new system of local revenue. If we were reforming the rating basis of the country I do not say we should copy exactly what they are doing, because their position is different from ours, but certainly we should look very carefully at their system to see whether there are certain aspects of it which we could not with advantage adopt. This Bill does nothing of the kind. What it does is to set up an arbitrary and highly complicated distinction between different kinds of hereditaments. It proposes to divide off premises into those that are occupied for productive industries and those occupied for all other kinds of purposes. I suggest, in words which the Chancellor would use if he were on this side of the House, that that is an entirely indefensible frontier to attempt to erect. It is unscientific and it is arbitrary, mainly because production is a continuous process from the growing or the mining of the raw material right up to delivery of the finished article into the hands of the consumer, and it is quite arbitrary to attempt at some point in that continuous process to cut it off and say, "All that has taken place up to that point is productive, and all that takes place after that point is distributive."

This Bill, in attempting to set up this arbitrary frontier, will necessarily create anomalies that are grave because their whole conception is complicated. Experts tell us that it will be most difficult to define and differentiate in practice, and I am quite sure that those of us who listened to the speech of the Minister of Health were satisfied that he also realises the very grave difficulties of effecting this differentiation. When it came to my hon. Friend the Member for East Ham North (Miss Lawrence), I am quite sure she proved conclusively that the difficulties of the Bill were even very much greater than many of us had proposed before her speech. It seemed to me, after listening to her, that after she had finished there was very little left of the Bill which could hold together.

But worse than it being complicated is the fact that it is most unfair. I am quite certain that the more this Bill comes to be understood in the country, the more serious will be the heart-buntings of the people who discover how very unfairly and inequitably they are being treated under its provisions. I foresee all the struggling traders who, for purely arbitrary reasons, are placed on one side of the line, and the poor house-holders with large families who have had to expand into a house which is just large enough to hold them—how they will feel terribly aggrieved when they learn that they are to gain nothing under the Bill, while the rich and prosperous trader in the next street is going to get tens of thousands, or even hundreds of thousands of pounds in consequence of it. This method of rating by households is not really very different from the old window tax, when a man found it necessary to have a house big enough to take his family in. He has to pay on that account this addition to the rates of the locality. He is, therefore, restricted in his house room very much in the same way as people in the days gone by were restricted, because they dare not have enough windows less they should have to pay too heavy a window tax.

Why, really, have we this frontier at all? What is the origin of this difficult and anomalous proposal of the Government that you should make this frontier between the productive and distributive trades? I will supply an answer which I do not think has been mentioned before in the course of this Debate. The real fact is that the Government w ere not out really to make a frontier between the distributive and productive trades. The real frontier they were looking out for was one between sheltered and unsheltered industries. Why were they looking for that? The answer is perfectly clear. It was owing to the monkeying with the currency system which has been going on for some years past. We have had the unsheltered industries bro4ght into a serious plight. I am, naturally, not going, on this Bill, into that question which we have discussed more than once in this House, but I think I should be quite in order in pointing out that what the Government are driving at is the relief of the unsheltered industries. Since the present Government came into office, the wholesale price of commodities has fallen, according to the Board of Trade Index, from 165 to 135. That is a fall of 18 per cent. It has fallen because of the raising of the value of the pound in terms of foreign currency. What has that meant? It has meant that a manufacturer of those commodities which sell on the international market has had to cut his price down in order to keep the international market by no less than 18 per cent. He might have been able to do that all right if all prices had fallen equally, but that has not been the case. The prices of other things have not fallen in that proportion. You have not had the interest on War Debt falling, or mortgages falling, or debenture interest or coal royalties falling. All these have been fixed in terms of pounds, shillings and pence and as a result retail prices have not fallen 18 per cent. but only 9 per cent. or one-half of the fall in wholesale prices. In consequence you have put the unsheltered industries in the position which they are at the present time.

That is why the Government are seeking to adopt this lop-sided method. What they want to do is to try and give a fillip to these trades which are subject to foreign competition, while not touching trades in sheltered positions which are not subject to foreign competition. So you have this lop-sided effort to try to put this thing right by a special form of relief. It is rather like a man who has got the gout, and who cuts a hole in his boot and puts a patch on it. That is what this proposal is like. The position is complicated by the fact that the frontier between the sheltered and unsheltered trades is not the same as the frontier which the Government are trying to erect between the productive and distributive industries. I could give a number of examples, but I will only give one or two. First of all, let us take the newspaper business. As I understand it, the newspaper will be a productive industry, and therefore it will be open to receive this benefit of de-rating which the Bill proposes; at the same time, it cannot be said to be an unsheltered industry, because it is not in competition with any foreign product. Therefore, it is at one and the same time on one side of the productive and distributive line, and on the oppo- site side of the sheltered and unsheltered line, because it is a sheltered industry.


Productive under this Bill.


Productive under the Bill, yet sheltered at the same time. Take another example in an opposite direction, that of farming produce. A great part of the cost of farming produce is the collection from the farm where it is grown—I am thinking of small holdings, market gardens and places of that sort—and distribution, at any rate, to the shops if not the further distribution to the individual customers. Not only does that distributive part come outside the benefit of this Bill, but it is subject to the special disabilities of the burden of the Petrol Duty which is the concomitant to the relief given under this Measure. Therefore, the delivery of farm produce is particularly hard hit in the proposals which we are discussing at present, and yet, as a matter of fact, those products are to a very large extent an unsheltered trade because they come into direct competition with produce from abroad, and which is delivered wholesale by the railways. So we have there in that case an industry which is on the non-productive side of the one line, and at the same time an unsheltered trade.

I will take only one more point as illustrating the difficulties under this fantastic Measure. I will take the case of bricks. It is the common practice to deliver bricks from the place where they are made to the builders or very often direct to the place where the houses or works are being erected by motor lorry, and generally that motor lorry is run by petrol. I am not going to suggest that there is any serious competition from, abroad, though in so far as there is competition from abroad in the case of bricks they come into this country by boat and by barge. Therefore, they escape this additional burden which is being put upon the road transport of bricks. It is perfectly clear that in the matter of bricks the delivery from the brickworks is a very large part of the productive industry of brick making. It is just one of those cases which illustrates the absurdity of trying to pretend that production ceases when the work is done on the spot when as a matter of fact it does not cease until the goods which have been made are carried to the destination where they are required.


The hon. Gentleman does not intend to say that the bricks that are brought in from abroad do not have to go by road transport. Most of them that come from abroad go to the ports, and, when they are moved, they also have to be moved by road transport.


I carefully stated that I was not using this as an illustration of sheltered and unsheltered goods, because I do not think that at the present time bricks are subject to foreign competition for practical purposes. For in so far as some foreign bricks are used in this country, they are mostly used at places which are waterside places and there is nothing like the road transport that there is for the homemade bricks. The home-made bricks perform their whole journey from the place where they are made right to their destination by road transport, whereas foreign bricks in so far as they are used perform a great part of their journey by water. They are not used in inland places but mostly used nearer ports where they are unloaded. I quoted it more as an illustration of the absurdity of trying to pretend that production ceases when the goods leave the factory in which they are made.

I have taken up really more time than I intended and I do not wish to travel into the wider ranges which the whole of this question of rating reform opens up. There is very good reason for that. Whenever we say that a certain thing is not being done, the Minister or the Parliamentary Secretary says, "Oh, but you do not know what is in the further Bill which we are going to have later on." Of course, we are entirely in the dark on these matters and therefore it is better for us not to suggest anything until we know a little more about it. I have confined myself to this Machinery Bill and the results which are definitely involved in it. I desire to say in conclusion two things. In the first place I want to repeat this Bill endeavours to erect an indefensible rating frontier, indefensible because it is complicated, and I do not believe can be made to work in practice. It is also indefensible because it is unfair and inequitable, and the more clearly it is understood the more certain will the people of this country realise how inequitable it is.

The reform of the rating system on an entirely different line would be a most valuable help not only to industry as a whole but in particular to depressed industry and to depressed areas. This Bill is not a legitimate form of assistance to industry. This Bill is nothing but a dole. It is the biggest dole that the present Government have given to their friends. It is not a dole given according to any scientific principle. It is not given according to any justifiable principle, and there are further evil effects of the proposal, the cost of providing the relief from the Petrol Duty. The Petrol Duty does not merely affect, as some hon. Members opposite seem to think, people who want to have joy-rides. Petrol is used very largely for commercial purposes and it is used for the journeys of quite poor people, and the present tax upon it will entail a great loss in their wages. The hon. Gentleman the Member for Newark (Marquess of Titchfield) shakes his head. As a matter of fact, I think he will probably know that up arid down the country they are charged in respect of every ride a person takes in a motor omnibus an extra ½d. on account of the Petrol Tax. If he will do a little sum he will find that in the course of a week a family will have to spend several pence and possibly over 1s. in consequence of this tax. This dole which is being given is not one which can be defended. The cost of it to the taxpayers and to the ratepayers of this country is not going to enable it to be of benefit to industry, and I for one, and the party with which I am connected, will offer to the whole of this Bill our most strenuous resistance.


I have listened with very great interest indeed to the speech of the hon. Gentleman the Member for West Leicester (Mr. Pethick Lawrence) and particularly to the latter part of it when he referred to the fact that certain omnibus companies were charging an extra ½d. fare and issuing special tickets to show to the people using the omnibuses that they were paying the Petrol Duty. This is being done quite extensively, and I hope that those responsible in the appropriate Government Department will see to it that a stop is put to this practice very quickly, if it is possible to do so. The ½1. represents far more than the cost of the tax to the omnibus companies. Moreover, they were charging exactly the same fares when petrol was 1s. a gallon mare than it is to-day. The hon. Member for West Leicester said that there was a great deal of heart-burning throughout the country about this question of giving preferential treatment to productive industries. It is a fact that if the speeches of the hon. Gentleman and those of many of his Friends have any effect at all they will cause heart-burning to people who do not really look into the whole of the scheme. They have proposed an Amendment to-day, and, at any rate, I can thank them for this. They have really thought of my particular case in drafting the Amendment, because they say here is preparatory to a scheme for subsidising certain industries without regard to the conditions of each industry or the special needs and circumstances of different areas—". and this is what I like— and is calculated to increase the burden upon householders and shopkeepers and upon road transport and the distributive trade generally. I am a householder. I happen to be a shopkeeper. I am interested in road transport both for my private and for my business purposes, and I am in the distributive trade generally, and I am not a manufacturer. Therefore, I ought to be very grateful to the right hon. and hon. Members who support this Amendment; but I am not at all grateful to them, and I will tell them why. We have a saying in my constituency—it being a fishing constituency we use illustrations from the fishing industry—that everything comes, in the long run, from the cod end. That is the part of the trawl net which contains the catch, when you get one. It is from the proceeds of the catch that you are able to pay your butcher and your baker and the wages of your friends. [Interruption.] I should say that there never was a finer bit of cod in this world than this Amendment. You do not bait your lines with cod; you use the smaller sort of fish if you want to catch the big ones. You are not going to catch much with this cod Amendment that has been put down.

Carrying that illustration a little further, I would say that all has to come out of productive industry that is obtained by those in the distributive industries and those who have to carry on the business of shopkeeping, and no one realises that more than the shopkeeper. I do not suppose that the Chancellor of the Exchequer or the Minister of Health have received many resolutions of protest from associations of shopkeepers on this matter, because they realise that if by this giving of preferential rates to productive industry it means, as we hope it will, that productive industry will begin to prosper and be able to employ more labour and pay better wages, the people who will benefit the most will be those in the distributive trades and the shopkeepers generally throughout the country. It is because we do realise that this is an earnest attempt to try to help productive industry, which really does require help, that I am sure the Government will not find a great deal of grumbling from the shopkeepers. Of course, there is a saying in Yorkshire: "If you do anything for nothing, do it for yourself." The right quotation is: "If tha wants to do owt for nowt, do it for thysen." That is not the principle of the Government which I support, and I hope and believe that it is not the principle of the people with whom I am so closely acquainted, namely, the shop-keeping community.

The statement has been made repeatedly that this scheme will add to the burdens of the shopkeeper. I cannot see anything of that in the Bill. It certainly will not mean that we shall get three-quarters of our rates allowed as a rebate, but if by allowing the productive industries this relief, you are going to increase trade in the country, and I am certain that we shall, then the shopkeepers will get the benefit. It is astounding how far-reaching is the result of putting productive industry in a position to compete with the foreigners especially where it will just make the difference between being able to compete successfully or not. It has been mentioned to-night that the difference of the relief is so small that it cannot help at all. As an illustration, let me state a case in regard to another matter affecting one particular industry which appears in the Budget. Of course, the people interested in that particular industry will get some relief under this Bill; I speak of the sugar refining industry. I am particularly interested in the fact that we are giving a little preferential treatment to home-refined sugar and that the refiners will get three-quarters of their rates allowed under this Bill. What has been the position as regards their particular commodity?

For some time, the English refiners have not been able to compete with the Czechoslovakian refiners of Continental beet sugar. There has not been a big difference, but it has been a difference just sufficient that the English refiners have lost orders and the foreign refiners have been getting them. In ray own port of Grimsby sugar has been delivered in 25 ton lots at a price which meant only a few coppers for hundredweight difference between the foreign article and the British refined article. The British refiners were using Empire grown sugar, while the foreign refiners were using beet sugar grown on the Continent. Already, owing to the effect of the preference, without reckoning the benefit that the English refiners will get from this particular scheme, the refiners are able to put into my own town refined beet sugar at 3½d. per cwt. cheaper than the foreigner. It may be said that 3½d. per cwt., according to certain hon. Members who have spoken to-night, is such a small matter that it does not count, but it is having this effect that the English refiners are getting the orders, and certainly the English refined sugar is of better quality. The agents of the Czechoslovakian firms are complaining bitterly that they cannot book orders even for small amounts.

I ask the House to take into consideration what the effect will be of this proposed relief in regard to rates on the refineries. I am told that already something like 3,000 more people are employed in the British refining industry owing to the operation of the small amount of relief they have received. Consider what the effect of this rating relief will be in other industries! There are many industries which I could quote where even the small amount of benefit that they will get by this allowance in regard to rates will make all the difference in the world between being able to compete successfully and not getting orders.

There is another matter which has been mentioned repeatedly, and that is the position of the householder. The payment of rates by many householders is a very difficult matter. In the old days when we had compounding of rates, at any rate on small property, there was not much difficulty experienced, because the rate was paid in a small sum weekly with the rent, but during the last few years, in the majority of towns, the compounding system has been abolished and people have been paying their rates direct and they are feeling the pinch to-day. It is to that class of people that the Opposition will be able to appear with far more effect than to the shop—keeping class. In what districts do we find that the people have great difficulty in paying their rates? It is in the districts where they are either unemployed or under-amployed—the casual worker at the docks, who is only getting work on two or three days a week; the man who is on short time employment in the cotton factories or the man on short time in the iron and steel smelting works and so on. They are the people who are finding the burden of rates so heavily pressing upon them. You do not have that difficulty in the districts where men are in regular employment.

Certain people, even some corporation committee, in letting their houses, say: "If this man is on the railway or in any occupation where he is getting a regular wage, we will let him have the house, but if he is only casually employed, we had better let him stay where he is, in hi; poorer house "; because they feel that the man who is not fully employed is not able to pay either rent or rates regularly. Therefore, if this concession to productive industry is going to mean more employment and I am certain of it—the simple illustration which I have given about the sugar refining industry is an indication of what will happen—you will not have that difficulty with the householder, because if the breadwinner of the family is earning good and regular wages, and regularity is probably of more importance almost than the size of the wages, provided they are sufficient to meet the needs of the household, you will not have the difficulty with the householder that is anticipated.

There are one or two other points which I should like to put to the Min- ister on a matter in regard to which I have had a good many communications. The question comes in under Clause 4 of the Bill and relates to trades that are partly productive and partly distributive. I am afraid we are going to have a little difficulty in this matter. Take, for instance, the trade of the baker, the tailor, the shoe maker and others that I could mention. I should like the Minister in reply to deal a little more fully with this point than has been done up to now, because I can assure him that it will not be time wasted. There is a strong feeling throughout the country that those who are producers even though they happen to be in the position of having a shop also should be given the benefit of this relief. If we could have a sound explanation of this point from the right hon. Gentleman it would be all to the good. I hope we shall receive such an explanation, because I have had very many communications on the matter and I have no doubt other hon. Members have also. An explanation as to the exact intentions of the Minister would allay some of the fears of the people. I myself am very hopeful indeed that this Bill is going to accomplish all that is expected of it by the Government. It has been said that the ideal system would he to make national services a charge on national taxation. There is a great deal to be said in favour of such a proposal, but the enormous cost bars it out as a practical proposition to-day. The next best thing is to try and relieve that portion of industry which is feeling the effect of competition and to lower the burden of the rates. As this Bill is a real attempt to deal with the problem we have to face to-day I am prepared to support it.

10.0 p.m.


This Bill is really the outcome of the continual agitation on behalf of necessitous areas which has been going on for the last four or five years from this side of the House, and perhaps the hon. Member who did more to keep this question before the notice of the country was the late Mr. Trevelyan Thomson, who had to deal with a particularly distressed area in the North of England. We have asked regularly and persistently for some relief for local authorities, but it is difficult to see where they come in under this Bill. I cannot see how the Measure is going to help South Wales to any great extent. South Wales coalowners tell us that they are losing about 2s. 6d. per ton, and the saving they are going to get under this Bill will only be about 4½d. a ton. It may run to 6d. In the area I represent some of the pits when working are rated at 5½d. per ton, and 75 per cent. of that will be about 4d. or 4½d. Add to that the slight relief which may came from lower railway charges and it does not put that area on anything like speaking terms so far as foreign competition is concerned. Mention has been made of the case which arises owing to unemployment, and the right hon. Member for Colne Valley (Mr. Snowden) put the point with considerable force. In most of the areas in South Wales the hardship arises because of the burden of poverty which rests upon the people, and consequently on the local authorities. I want to put this point of view to the Government, though probably they will not accept it. The Government should recognise the national character of the unemployed problem, should frankly recognise that much of it is due to national policies which are not connected with the sins of localities, the specific sins of trade unions or the specific sins of owners or workmen, but are closely connected indeed with policies for which this House has been responsible, however much they may talk about the dispute of 1926. It is because of the outcome of these policies that many of the areas in South Wales have been compelled to come to the Minister of Health for permission to raise loans. In my own constituency the municipal debt has mounted up to over £500,000, and the Government itself ought to face its responsibilities in this direction and give local authorities some relief. If they had taken over for a time the responsibility for the interest on loans which local authorities have been compelled to raise the Government would have given very material relief not only to the locality but to the works and pits in the area, and some relief also to the shopkeepers and individual ratepayers. If they had done this in the case of Merthyr it would have reduced the rates by about 3s. in the £; a very material reduction indeed.

It has been argued that if this had been done local authorities might have embarked on extravagant schemes of expenditure, but I do not think the Government would have allowed relief in one direction and taken off their control of expenditure in another. Local authorities have a right to look for some relief in that direction. My opinion is that the Bill begins in the wrong place. I have read some of the speeches of the Prime Minister recently. In Lancashire he indicated that some of the causes for the difficulties under which the cotton trade is suffering to-day could be found inside the cotton trade itself, and he advised Lancashire to put its back into things, to face the facts, and do something to rid itself of the disadvantages which rotten finance and bad management had brought about in the cotton trade. It would be a very courageous representative of Lancashire who would deny that many of the disadvantages from which the Lancashire cotton trade suffers to-day have not been the result of bad management and unwise speculation in the past. The same thing can he said of a good many other trades.

The hon. Member for the City of London (Mr. E. C. Grenfell) told us yesterday that many of the troubles of industry were due to bad management, to the continued control of great industries by gentlemen who probably have rendered great services in the past, but are now suffering in large measure from senility and from old-fashioned methods. It seems to me to be a remarkable thing that when you have the Prime Minister indicating certain aspects of industry which could be put right inside industry, and when he calls upon industry to cut out the dead wood, to put business upon a live basis, to cut losses and to make capital represent something like real assets, and when you have responsible men like the hon. Member for the City of London, who speaks with authority of the need for overhauling the supervising powers in modern industry—it seems to me remarkable that the Government should not have done something in that direction rather than have introduced this Bill, under which we are to have a kind of universal tax for the relief of rating when that relief is not required in many cases. Relief is certainly not required for prosperous industries, and for the unprosperous ones it is not enough and is not to be applied in a proper way.

The remarks of my right hon. Friend the Member for Colne Valley were thoroughly justified. To me it is a shameful thing that the representative of the Conservative party in this House should now plead for State intervention in the way that they do. There is an old adage to the effect that the altar-cloth of one generation is the door-mat of the next. We can reverse that to-day and say that the door-mat of the Labour party of 1920 has become the altar-cloth of the Conservative party. What is this Bill but an application of the suggestion of a pool for the coal trade that was rejected some years ago? The Bill is an adaptation of that principle. It is a recognition of the necessity for the prosperous section of industry to come to the rescue of the distressed section. I do not object to the application of that principle. One ought to compliment the Conservative party on the advance made, in its recognition of the need for bringing in the State in cases of distress. I hope, however, that Conservatives will cease from now to talk about the wonderful things that private enterprise can do. In this Bill we have a frank recognition that British industry is not now able to hold its own in competition with the foreigner, unless it is helped by the State.

The Bill is brought in for the purpose of rectifying the burden of rating. Before very long many Members of this House will recognise that even the capital levy had some virtue, and that, had it been applied, much of the capital lost in industry since that proposal was brought forward in 1919, might have been saved—more capital saved than the capital levy would have cost—and that in that case national taxation would have been lower, and it might not have been necessary to come here cap in hand and to beg that one industry should be taxed in order to relieve others. Mention has been made of the brick trade. I have here some details of that trade. Here is the case of a company, formed not long ago, which possesses large brick works near Peterborough. It paid a dividend of 20 per cent, in 1922; and of 40 per cent. in 1924, when the shareholders also received a share bonus of 40 per cent. The dividend was 20 per cent. in 1995; 10 per cent. in 1926, plus a capital honus of 275 per cent.: and 15 per cent. in 1927. Concerns like those are to get relief that poor South Wales cannot get try as it will. How will the scheme affect Middlesbrough or Bethnal Green? These brick-making concerns have made the task of the Ministry of Health, so far as housebuilding is concerned, more difficult than it would otherwise have been. I suggest that the Government should tackle that problem and deal with the profiteering that is going on, instead of coming along with thi3 Bill, which is to scatter largesse. There have been millions given to the Income Tax payer and the Super-tax payer by this Government, and now millions are to be given to prosperous brick companies and silk companies and cotton companies, and heaven knows what.


Where are these cotton millions? We are after them.


Coats's is cotton. That is what I meant. The millions that were made out of Lancashire cotton has been taken away and the Lancashire people have been left to hold the baby. I come back to the point that in my opinion the Bill will be of very little help so far as national industry is concerned. The point has been made that the £400,000 given to the brewers will find its way back to the consumer. £400,000 is a mere fleabite compared with the profits that the brewers make, and they can easily eat another £400,000 without feeling the effects of it. I do not believe for a. moment that the proposal will affect the price of beer. If it be true that the relief given under the Bill will be reflected in the prices of commodities, then competition is going to be destroyed so far as various firms are concerned. I do not think that the consumers will get much benefit. I do not think that the drinker of beer or the wearer of hoots will get much advantage. I do believe, however, that the landlord will get his share and his pickings out of this splendid present that the Government is making to British industry.

The Government have adopted the wrong policy. They ought to give relief to the authorities direct, and they could do so if they shouldered their responsibility for the unemployment and dire poverty which oppresses our people, particularly in areas like South Wales and Durham. The Government ought to take off the shoulders of the local authorities the burden of the huge interest on loans which those authorities have been compelled to raise in order to deal with poverty caused by national policies for which they were not responsible. By doing so, the Government would bring relief all round to the ratepayers who need it most, and that would be preferable to giving it in the ad hoc manner proposed in the Bill.


It may be convenient if I now offer a few observations on certain of the speeches which have been made and endeavour to reply to certain criticisms and points which have been put concerning this Bill. Those criticisms and points naturally divide themselves into two classes. There are those which deal in detail with the complicated matters arising out of the Bill, and it would be obviously impossible for me in the time given to me to reply to those in detail. They are, of course, more properly subjects for consideration during the Committee stage of the Bill. There are also those criticisms which strike at the root principles of the Measure, and with those I shall endeavour to deal. The speech of the hon. Member for Merthyr (Mr. Wallhead) illustrates one aspect of the criticisms which are advanced against the proposals in the Bill. My right hon. Friend the Minister of Health, in his opening speech, said that this was a machinery Measure. It is also to be remembered that this is an indispensable feature in the Government's plan for assisting productive industry, and we must not forget in this connection the proposals for the reform of local government which we are to consider later in the year. The hon. Member for Merthyr referred to the position of the necessitous areas, and questioned what particular relief would be given to them. He must not forget the other parts of the Government's plan, and the force of any criticism will have to be measured in that light. For instance, the wage-earners, particularly those living in the necessitous areas, will have no reason to complain of the relief that will be given when we present our new pro- posals. In fact, for the first time regard will be had to the needs of the area—


The right hon. Gentleman must not blame me. I criticised the proposals before us. I know nothing of any other proposals.


Then I would advise the hon. Gentleman to wait for those proposals before he offers any criticism.


When shall we see them? Are we going to have them soon?


I shall deal with that point in a moment. It has already been indicated by the Prime Minister and the Minister of Health that such a scheme will not only offer greater opportunities for meeting health conditions in those areas, but will also make for a fairer distribution of burdens, and for that relief which greater efficiency will bring with it. The hon. Member for Leith (Mr. E. Brown) asked when this particular plan of the Government, or some details of it, would be communicated to the local authorities. I can tell the House now that the Memorandum which we propose to issue in regard to local government reform will be issued to local authorities during this month, and it will also be published as a White Paper for the information of all Members of the House. It ought to be known that the proposals in the Memorandum will of course be of a provisional nature only. No doubt in the discussions with the local authorities which it is intended to hold immediately after publication of this Memorandum, it is quite possible that they may undergo considerable modification before they reach the form in which they will ultimately be presented to Parliament, bat our whole object in that particular scheme is as soon as possible to get into touch with the local authorities on the matter, and at the same time to inform every Member of the House, and then to hold conferences with the local authorities preparatory to presenting our Bill in the autumn. In a good many of the criticisms which have been offered to-clay regard has not been had to, and occasionally the issue has been confused with, the other parts of the Government's proposals, which are just as important and, in my judgment, will probably bring very considerable relief indeed to many of those areas which have been the subject of debate to-night.


There is one important point that I should like to put to the right hon. Gentleman. Will these new proposals in regard to local government and the distribution of money according to need involve any larger sum than the £32,000,000 mentioned in the original speech, or is that the total sum?


The hon. Gentleman is endeavouring to get me to anticipate the proposals which we are going to make, and I must ask him to await those proposals and the communication which will be made. Obviously, this is not the time or the occasion to discuss the terms of another Bill which is not yet before the House. Now I want to devote some observations to the very extraordinary and, to me, very surprising speech of the right hon. Member for Colne Valley (Mr. Snowden), the ex-Chancellor of the Exchequer, who opened the Debate from the Labour Benches this afternoon. I call that a very surprising speech, because, in the first place, he practically avoided, except for a few minutes, all the terms of the Bill which is before the House, and he even avoided most of the terms of his own Amendment. He certainly delivered such observations concerning the present rating burdens of the country and came to such remarkable conclusions that I think they will he read with surprise, not only by the great industries of the country, but also by very many Members of his own party. He made some very astonishing statements. He said that it was nonsense to talk about the burden of the rates; he said that the rates were not a material factor in trade depression; he said that if you compared the rates for varying areas, it was only an infinitesimal burden. I took those observations down. I suppose that no one will read those observations with more surprise than the right hon. Member for Aberavon (Mr. MacDonald) the Leader of the Opposition, because it was only a short time ago, namely, on the 16th November, 1927, that that right hon. Gentleman said in this House: I think it is a very open question—the Colwyn Committee came as near to the truth as any committee ever came—that direct taxation has a much less evil influence upon industry than a great many people imagine; but a higher rate has a direct, a specific, and an unescapable evil effect upon industry. He added: In the very worst places those big industrial concerns are crushed down by the evil effect of the bad trade through which we are passing." [OFFICIAL REPORT, 16th November, 1927; col. 1077, Vol. 210]. How it is possible to reconcile these two views of the two most important leaders of the Labour party, I do not know; still more, I do not know how it will be possible for the right hon. Gentleman, the Member for Colne Valley, to reconcile what he said to-day with what he has said previously with regard to the rating burdens of the country. It seems to me that, simply because the Government are bringing in a scheme to relieve industry, he is endeavouring to minimise the burdens which are undoubtedly heavily pressing on trade and industry. I hold in my hand a book entitled, "Labour and National Finance, by Philip Snowden," and in the chapter on Labour and National Finance, again and again references are made to the heavy burden of rates upon industry to-day. One of the paragraphs, which is particularly interesting in view of the right hon. Gentleman's speech to-day, is: The problem of local finance has been greatly aggravated by the effects of the War. Local rates are rising everywhere. In some districts they have already reached over twenty shillings in the pound, and it is no fantastic forecast to say that unless local rating be reformed we shall in the near future see some local authorities levying a rate of forty shillings in the pound. Whether any hon. Gentleman can get any satisfaction from that, I do not know, but the fact remains that we have been treated this afternoon to a speech which has endeavoured, all the way through, to minimise the burden of local rating, and I was wondering whether the right hon. Gentleman would be prepared to address any conference of industrialists, either capitalist or labour, and tell them the same thing as he told the House of Commons to-day. Then he said that this relief which the Government are going to give would be of very little value indeed to industry in this country. The fact remains—and I suppose that they are the best people to judge—that the industrialists of the country would be very glad and willing to receive this relief; secondly, as regards the measure of it, we know that it amounts, at any rate, to £26,000,000. As regards the other part of the right hon. Gentleman's suggestion, he of course made no constructive suggestions whatever, except that he harked back to the stale and outworn proposal of land values with which we dealt yesterday.

He made one suggestion, which was surprising from the point of view of a gentleman who had occupied the post of Chancellor of the Exchequer, and that was that he had some vague idea that industry can be relieved if all the expenses of Poor Law, the very heavy charges of Poor Law administration, were placed upon the national Exchequer. Whether he intended, as I rather suspect that he did, that when the national Exchequer bore all these charges, local authorities were still to go on administering Poor Law and making what demands they liked on the national Exchequer for Poor Law relief, I am not sure. That may have been his proposal. On the other hand, if he did not mean that, I suppose that lie meant that Poor Law administration was to be taken from local authorities, and be administered by some State office. In any event, I fail to see how that proposal could possibly help industry at the present time. The whole tendency of such a suggestion would be rather to increase the national burdens than otherwise, and I can well understand the hon. Member for Bow and Bromley (Mr. Lansbury) warmly supporting a proposal by which he could make what demands he desired on the national Exchequer for the kind of Poor Law relief which he desires to give in certain parts of the country.

As regards the actual terms of the Bill itself, the right hon. Member for Colne Valley ventured only upon one criticism. He said the Bill was full of absurdities and contradictions, and that it was an imposture, but he was most unfortunate in the illustration he chose to show the absurdity and contradiction he found in the Bill. He took, as an example, the definition of a cottage garden which appears in one of the early Clauses of the Bill, where a cottage garden is defined as exceeding one-quarter of an acre, and he drew some sort of distinction as to what would happen if the quarter acre were either exceeded or diminished. He had forgotten, apparently, that that definition has been on the Statute Book since 1896, when one-half relief of rates was given to agricultural land. He had forgotten that that definition was continued when the relief was increased to three-quarters; and he had forgotten, also, that the particular Measure which contains this definition which he criticised so severely was the very Measure which he, as a responsible Member of the Labour Government, included in the Expiring Laws Continuance Act. He has also forgotten that this particular Section has worked perfectly satisfactorily and without any difficulty, so far as I am aware. Then there is another objection which has been put forward by the Labour party and also, I believe, by the right hon. Gentleman the Member for Colne Valley, which surprised me. He said: This Bill is doing nothing for the necesssitous areas and, what is more, the relief of these heavily burdened places is being delayed for another 18 months. The last people who ought to complain of any delay in bringing forward this relief or that it is postponed for 16 months are the Labour party. When the Labour party sat on this side of the House I remember the late Mr. Trevelyan Thomson constantly pressed them for their plan for dealing with necessitous areas. What was their reply? Did they say "We have a plan but we only ask you to wait 18 months? This was the statement of Government policy on that occasion. It is true that many of us on this side of the House believe in some special treatment for necessitous areas. It is an open secret that there has not been a Minister of Health since the War who was not favourably disposed towards some special treatment of that kind, and who, having examined the problem, has not come to the conclusion that the practical difficulties in the way of any formula are almost insuperable. The right hon. Gentleman the Member for Central Sheffield (Mr. Hope) admitted the difficulties of discrimination and urged that it should be possible for the Government to agree upon a formula which, without laying local authorities open to the temptation of extravagance, would bring relief to areas which were really necessitous. It is not because this Government and previous Governments have not tried that this question has not been solved by a formula. I am convinced that it is quite impossible to devise a formula which would be in the best interests of the areas. I have seen more than one formula which, when worked out and applied to a particular place, yielded the most fantastic results in the way of special public assistance. It would seem, therefore, that this is not the way to deal with the problem."—[OFFICIAL REPORT, 4th August, 1924; col. 2601, Vol. 176.] In the result no suggestion was put forward from the Labour party in this House. Therefore I say that the criticisms which have been put forward from the benches opposite are rather of the nature of humbug—


That is the fourth time that speech has been quoted, and I should like to ask the right hon. Gentleman to read the remainder of the speech.


I will read another speech. The remainder of the speech alluded to ended in nothing being done. There was another speech made which does give the policy of the Labour party much more specifically, and it was delivered by another member of the Labour Government. It was as follows: A very interesting point was raised by the hon. Member for West Middlesbrough in relation to the grant made to necessitous areas, and I should like to give him a definite statement of our policy on that point. The hon. Member dealt with a deputation which went to the Minister of Health with a proposal that special assistance should be given to the necessitous areas by means of a grant based upon a complex formula. After careful consideration the Government has not been able to accept this. The formula if applied would give rise to the most grotesque differences in the grants to the various necessitous areas. It is very difficult to find a formula which would be fair. The general policy of the Government is to extend the unemployment programme, and in this way greatly to relieve the local authorities of some of their burdens. That is the definite policy of the Government on that point. I think it is only fair that I should read a question which was put by the late Mr. Trevelyan Thomson who was always very persistent on this question. In that question, Mr. Trevelyan Thomson asked: To what extent is the Government prepared to increase the grant to the local authorities in the necessitous areas with regard to unemployed workmen. The hon. Lady who was then Parliamentary Secretary to the Ministry of Labour said: I think T must stick to the reply I have given, that it is very difficult to find a formula which would be fair. I cannot go beyond that."—[OFFICIAL REPORT, 10th March, 1924, col. 2087, Vol. 170.] That has been the policy and the performance of the Labour party with reference to necessitous areas, and yet to-day they are complaining when a scheme has been found and when they were unable to find one themselves, that a few months have to pass before it can he put into operation. I repeat that I have some doubt as to the bona fides of the criticisms which have come from the Labour benches in face of these facts. The right hon. Gentleman the Member for Colne Valley made a very interesting statement which I think will be read with equal interest by the agricultural side of the community. On the question of the relief which is going to be given by this Measure to the agriculturist interests of the country the right hon. Gentleman said: He had come to the conclusion that the more you relieve agricultural rates under the Agricultural Rates Act the more difficulties the agricultural community would get into. If it is the belief of the right hon. Gentleman the Member for Colne Valley that the more relief we give by Act of Parliament to the agricultural interests the greater will be their difficulties, I think it is not unfair to ask if the right hon. Gentleman is prepared to propose the abolition of that relief entirely if he returns to power. I was rather surprised to hear that statement, because I had the privilege not long ago of introducing the Expiring Laws Continuance Act when the Agricultural Rates Act was continued by that particular Measure, and I invited hon. Gentlemen to go into the Division Lobby against including that particular Act under the Expiring Laws. I am sorry to say that no hon. Gentlemen opposite had the courage of their convictions on that occasion, and they did not challenge a Division. I would like to know whether any hon. Gentleman, speaking with authority from the Labour party during the remainder of the Debate to-morrow, will state specifically whether it is the policy of the Labour party to withdraw this present relief from agriculture or not, because it is one of those things which agriculturists up and down the country would naturally be very interested to know.

The fact of the matter is that, while opposition was undoubtedly very intense when this method of relief was first introduced—I think it was on that occasion that the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) was first suspended from the service of the House for disorderly conduct—I believe it is fair to say that since then the opposition to this method of agricultural relief has very largely diminished, and I think, speaking from observation of the attitude of Members on both the Liberal and the Labour benches, that the experience of the operation of the Act and the relief it has afforded has exploded many of the objections that were raised to it from the Liberal and Socialist benches. I should like specifically to know whether this particular part of the Government's programme is challenged by the Labour party or not.

Another objection to this proposal, which is of a more serious character and well deserving of the consideration of the House both now and in Committee, is as to the position of the shopkeeper and the workman in his cottage in relation to the relief to be given under this Bill. It has been very interesting to me to note that the shopkeeper has such very ardent advocates in the Socialist members who have recently allied themselves with the co-operative societies. To-day they have many tears in their eyes as to the effect on the small shopkeeper; their hearts are bleeding lest anything is going to happen to him as a result of these proposals; but I notice that at the recent Co-operative Congress a new policy was determined upon of starting a co-operative shop in, I think, almost every village in the country, I suppose in direct competition with those people to whom they desire to offer consolation to-day. I suppose that if in fact this Measure had provided—though there are many grave objections to it—for relief to the householder and the small shopkeeper, we should then have had the criticism from the Labour Benches that this was merely another device to put money in the landlord's pocket; but, inasmuch as it is not there, the Labour party now come forward and ask, what about the position of these poor men?

That is obviously a matter that we shall have to discuss when we reach the Committee stage of the Bill, but there are two or three considerations which the House should bear in mind in connection with it. It is a matter to which, I know, considerable attention has been given by Members in all parts of the House. In the first place, one wants to avoid as much as possible dissipating the relief in all directions having regard to the particular sum of money which is available. Secondly, I suppose no one would receive greater benefit from better times and more employment than the shopkeeper, or for that matter the man living in his own house, because, after all, all are interested in the successful results of industry, and, if you help industry you certainly help everyone as well, and the great object of the Government in these proposals is to help productive industry, which is exposed to world-wide competition and which cannot recoup itself from the consumer. I am very glad to bring in aid of the objects of the Government's scheme a statement by the right hon. Gentleman the Member for Aberavon reproduced in a journal which will not be challenged by hon. Members opposite. He said: The Government says productive industry wants help. I admit it does. We want to give such help as will secure the maximum benefit to the community, and our principal object is to increase employment by stimulating industry itself. If you take the case, for instance, of the shopkeeper or small householder living in a necessitous area, under the complete scheme of the Government, when it is finally developed and passed, there will be very considerable advantages to both those classes of the community. You will not only find in necessitous areas the great basic industries receiving considerable relief under the principal portion of the scheme, but there is also the relief which will come to that area from the relief from freight transport charges, and then there is the grant which will apply to the necessitous areas in which these people live. By that means, you will ensure more speedily and more effectively that reduction in rates which no doubt he desires, but at the same time you will have the advantage of the increased purchasing power of his customers.

I do not think it is necessary, after the speech of the Chancellor of the Exchequer, to debate at length the issue of whether the prosperous trades should be helped or not. It is true there is a division of opinion, but I certainly believe, since the statements which have been made up and down the country, the great majority of the people are satisfied that it would be very unwise and would retard, if not considerably nullify, the object we have in view if we endeavoured to do what I am afraid is impossible, to differentiate between prosperous and non-prosperous trades. Certainly one of the most effective ways of reducing unemployment, and one which we can achieve more quickly and more effectively, is by encouraging a successful concern capable of rapid expansion. Why should anyone be condemned to remain in unemployment a day longer simply because of some idea of hon. Members opposite that you must not assist a progressive and well-managed business? What is the evil which could come from assisting a well-managed business under this scheme? Suppose, for instance, that such a trade does become more prosperous and makes more profits, it means that more Income Tax will be paid, and that more employment will be provided I suppose that would be a catastrophe to hon. Members opposite. Not to admit successful industries would undoubtedly be to put a premium on inefficiency. What we want to do is to encourage production in all its forms, because it is the foundation of our national well-being.

Let me say this in conclusion. This Bill, although it is a machinery Bill, certainly raises very definite and decisive issues. It forms part of a scheme which, if adopted, will certainly revolutionise our ancient rating system, and will radically alter and reshape our local government administration. There are other alternatives, it is true, which have been put before the House from time to time. There is the Socialist plan of raising vast additional sums by way of a surtax. We believe that if that plan were adopted, it might well bring, at this critical time, many more struggling industries into bankruptcy. Then there is the Liberal plan of putting on the taxes the whole cost of relieving the able-bodied poor. We believe that that would dissipate the relief, distribute it blindfold, add to the officials, and largely destroy local government. Both these proposals miss the mark. The great need of our time is the urgent and vital interest of increasing production. Both the Liberal and Labour party proposals, instead of helping trade and commerce, would still further embarrass and cripple them.

Our new proposals certainly strike at the root of the evil. They are certainly not palliatives, but constitute a broad-based and wisely-conceived scheme, financed, I do not hesitate to say, by an easy and practically painless process. [Interruption.] I say this to the House, having had some little experience of the tactics of hon. Gentlemen opposite, who, in turn, have opposed all the great Measures of reform which have been introduced. [HON. MEMBERS: "Name one."] The Widows' Pension Act, the Housing Act, 1923, and the Trade Unions Act. All those Measures have in turn been opposed by hon. Gentlemen opposite. I venture to prophesy that when the history of our time comes to be written it will be said that one of the greatest contributions made to the restoration of industry and the renewed prosperity of our citizens will be found in this Bill and this scheme.


I beg to move, "That the Debate be now adjourned."


May I ask the right hon. Gentleman in the five minutes remaining to explain the Bill which is before us?


I am afraid that would be out of order on the Motion for the Adjournment of the Debate.


May I say a word on the Motion for the Adjournment of the Debate? What I wanted to say was, that before the Parliamentary Secretary sat down, he should have devoted five minutes of the three-quarters of an hour to explaining the provisions of the Bill which his right hon. Friend introduced. [Interruption]. With a scrupulous regard to the forms of order, I desire to confine my remarks entirely to the Bill, and not to the policy of the Government which has been announced in the Budget, or which has been adumbrated in the Bill. The Parliamentary Secretary has spoken about heaven and earth and the speeches of hon. Gentlemen—


The hon. Member has not observed that we have passed away from the Bill and are now on the Motion for the Adjournment of the Debate.


I am speaking on the Adjournment. May I protest against Ministers of the Crown transgressing in spirit the whole Orders of the House and confining their remarks to discussions about matters which are not before the House or which were before the House some time ago?


On another occasion, but not now.


On a point of Order. Is the hon. Lady not in order on the Motion for the Adjournment in complaining that the Minister has not explained the Bill, and therefore that the Debate should not be adjourned?


I wish to support the adjournment of the Debate at Eleven o'clock, as there are certain Bills which I hope will come on at that time. It is quite true that if we adjourn this Debate we shall have an opportunity tomorrow of hearing answers to questions which have been put to the Minister. I put some questions earlier in the evening and I was absent for about five minutes, having a little refreshment while the Parliamentary Secretary was speaking, but I was in the House during the greater part of his speech. When we resume this Debate I hope the Minister himself will deal with the little matters I have raised to-night. I hope to receive an answer which will be satisfactory to the people who requested me to put these matters before the House. I hope, too, that we shall hear the Secretary of State for Scotland, because so many of the Scottish Members have attended here especially to-night hoping they would bear a speech from him. However we shall, no doubt, be able to hear tomorrow a full chorus from the Clydeside and other parts of Scotland.

It being Eleven of the Clock, the Motion for the Adjournment of the Debate lapsed, without Question put.

Debate to be resumed To-morrow.

The remaining Orders were read, and postponed.

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