NEW CLAUSE.—(Assessment of agricultural property for the purposes of death and estate duties.)

HC Deb 09 July 1930 vol 241 cc501-45

(1) In assessing the value of agricultural property for the purposes of legacy, succession, or estate duties such value shall be deemed to be a sum not exceeding the net annual return therefrom multiplied by twenty.

(2) In this section the expression "agricultural property" bears the same meaning as in section twenty-three of the Finance Act, 1925, and the expression "net annual return" means the average net annual value under Schedule A for the preceding five years after deduction of any sums allowed for maintenance and repairs.—[Viscount Wolmer.]

Brought up, and read the First time.

Viscount WOLMER

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

This Clause raises a question which has been at the back of a good many of our discussions earlier in the Committee stage. I wish to snake it clear to the Financial Secretary that I am not wedded to the wording of this Clause and if there are any points of detail, on which the hon. Gentleman wishes to criticise the Clause as it appears on the Paper, those are points which could be dealt with at a subsequent stage or, if the hon. Gentleman has an alternative draft of his own which he would prefer, I will welcome it if it carries out the purpose which I have in view. It will be seen that the hon. and gallant Member for Oxford (Captain Bourne) has put down a proposed new Clause—(Assessment of agricultural property to estate duty)—which deals with practically the same point. That proposed new Clause is drafted in highly technical language and possibly we may be advised that it presents the right way of tackling this problem. I do not wish how ever to go into a discussion of the details of the drafting of this new Clause with the Financial Secretary. What I am raising here is an important point of principle, namely, that landowners should not be asked to pay Death Duties on more than the capitalised value of what they take out of their land.

This matter is one of primary importance to the agricultural industry as a whole and I commend the principle which I have just indicated to hon. Members opposite as one which is, in itself, fundamentally just. If a landowner reduces his rents, and employs a large estate staff to keep farms in a good state of repair; if he builds new farmhouses and new cowhouses to enable his tenants to comply with the requirements of the Ministry of Health in regard to the Milk and Dairies Order; if he improves the cottages of the labourers working on the farms without increasing the rents, then, under modern conditions, he makes very little, if anything, out, of his agricultural estate. Yet when he dies the State comes down on his son and says, "It is perfectly true that your father made little or nothing out of this estate, but the estate has been left in first-rate order and it is a valuable property and you will have to pay high Death Duties upon it." I maintain that that proceeding is fundamentally unjust. I ask hon. Members opposite if any of them read an extremely striking letter which appeared in the "Times" of 1st May last from Lord Lothian, in which he gave, in black and white, the facts in regard to the estate which he had just then inherited. Lord Lothian, I may remark, is not a member of the Conservative party. This estate was one of 30,000 acres which had been administered extremely well for 30 years. It covered, on the whole, good land, and, yet the net income throughout the whole of that period averaged less than £1,000 a year. When Lord Lothian succeeded he was required to pay Death Duties amounting to £200,000.

I maintain that that demand is not just, and that the landlord who is put into such a position—and this case is typical of the agricultural estates of this country as a whole—is not being fairly treated. I would put this point to hon. Members opposite who are convinced Socialists. One of their chief complaints against capitalism is that the capitalist as a rule takes a larger profit out of industry than his fair share. Whether that is right or wrong as a general rule, I cannot discuss here, but I submit that, of all classes of capitalists in this country, it is least true, and certainly not true at all, of the agricultural landowner. The Socialist should regard him as the model capitalist, a man who takes a very, very small share indeed out of the property over which he has charge. Therefore, I put it to hon. Members opposite that they should not discourage a capitalist of this nature, who is rendering a national service and by common consent is taking a very small share of the wealth produced by the land.

But apart from the question of justice, I would particularly ask the Government to consider the effect of these crushing Death Duties on the agricultural industry as a whole. Economic experts who have investigated agriculture are unanimously agreed on the necessity for credit facilities for farmers. The late Government did something to assist farmers in that way, and the present Government, in their election manifesto, promised further to increase those credit facilities. There is no division of opinion on either side about the absolute necessity of easy credit for farmers, but no State credit scheme can be anything like so easy to the farmer as the landlord who is able to give him a, helping hand when he requires it, and I would put this point particularly to hon. Gentlemen opposite, that credit is especially necessary in times of depression.

It is just in these times of severe depression that the farmer needs credit most, and of all the depressions through which agriculture has passed in the last 50 years, in one very important sense credit is especially necessary to-day, for this reason: Owing to the march of science, there is no chance of any farmer being able to weather the storm unless he is able to adopt scientific methods in his farming. That means more capital expenditure, buying new machinery, having new silos, new cow-houses, and the like; and, therefore, it is doubly necessary for the farmer to be able to have credit to enable them to equip their farms under modern conditions to meet the very severe economic strain which is at present falling upon the industry.

I wonder if hon. Members opposite realise what the landowners have done for the farmers in this respect in the past. In all the other great depressions through which the industry has passed—the depression of the eighties and the depression of the nineties—the landowner stood behind the farmers and in a great many eases, by giving them remissions of rent, by loans, and by other means, enabled them to tide over those terrible crises; and the sole reason why the present agricultural depression is so very much more serious than any of the previous depressions is because of the impaired capacity of the landlord to give that assistance which was so readily given in past times. I would like to read what was said on this subject in the Report of the Agricultural Policy Committee of the Ministry of Reconstruction in 1918. It was a very strong Committee, on which members of all parties were represented, and their Report at the time was received with a very large measure of general consent. This is what they said about the great agricultural depression of the nineties: The classes thus cruelly stricken met the crisis with indomitable pluck. The farmers stuck to their farms so long as any capital was left to them; the landowners were generous in their remissions of rent and, generally speaking, helped their tenants by every means in their power; where no one could be found to take the land, the landowners endeavoured to farm it themselves. Holdings were often thrown together as the only means of keeping the land in, cultivation. It is a fact that many farms in the country were kept in cultivation and the labourers in employment by the farmers and the landowners, at a steadily recurring annual loss to themselves.

Mr. McGOVERN

I beg to call your attention, Mr. Dunnico, to the fact that there are not 40 Members present.

The DEPUTY-CHAIRMAN (Mr. Dunnico)

There were far more than 40 Members present a few minutes ago.

Mr. McGOVERN

There are not 40 now.

Viscount WOLMER

I was reading—

Mr. McGOVERN

There are not 40 Members present, Mr. Dunnico!

The DEPUTY-CHAIRMAN

I have already said that there were far more than 40 Members in the House a few minutes ago.

Viscount WOLMER

I will resume my quotation: Many families would be permanently better off to-day if their fathers had at that time allowed the land to go out of cultivation; but the idea was abhorrent to them; and they sacrificed their capital rather than see this happen and the labourers lose their employment. That agriculture, when the tide turned and prices began once more to become remunerative, was in any degree in a position to take advantage of the change, was due to the sacrifices of the labourers and farmers and landowners of that generation. That is the unanimous verdict of a very authoritative committee, representative of all parties in the State, that inquired into this matter, and I ask the Government what they think will be the plight of the industry if they are going so to cripple the landowners that it will be impossible for them to render any assistance to the agricultural industry in the present very grave difficulties with which it is faced. Let me ask my hon. Friend opposite to consider the case of Lord Lothian's estate, the facts of which were published in the "Times" of the 1st May. There are only three alternatives before him, unless the heir, the man who succeeds to an estate like that, has very large private means of his own. He can either raise this £200,000 by mortgage, or he can sell the estate, or a portion of it, to a profiteer, a millionaire, if he can find him, who is prepared to buy the thing as a toy, or he can sell to the sitting tenants.

Let us see what happens in each of those eases. If the new landowner imposes a mortgage of that scale on the estate, he is crippling the equipment of that estate for a generation. It means that all the money will go to pay interest on the mortgage, that there will be no money to keep the fences and buildings in a proper state of repair, and that the whole estate will go to rack and ruin. If he sells the estate to some gentleman who has made a fortune in the City, he is bringing into the country a man who has not the same love for and interest in the labourers and farmers with whom he has grown up from, boyhood. He is bringing in a man Who probably only wants the estate for its social prestige or its sporting rights, and who has not the traditions—I say that advisedly—of the landowners who have been born and brad in the country and with whom it is second nature to stand by their tenants and employés in their difficulties. If you ask any countryman, you will find that the new profiteer is not as welcome to the tenants as the old squire, and I am sure hon. Members opposite will feel exactly in regard to that point as we do on these benches.

Then consider the third alternative, that the landowner should sell to the sitting tenants. That means that the farmer ties up the whole of his capital in buying his land, and for his lifetime he is short of capital, which he sorely needs to carry an his business. If the farmer is short of capital, not only does his equipment suffer, not only is he unable to farm properly, but, what is equally serious, he cannot market efficiently, he cannot buy and sell when the turn of prices makes it advantageous to do so. He has to buy and sell at his creditors dictation, and that is the road which has brought many a farmer to bankruptcy. So, if you take any one of the three alternatives that are forced upon the landowner by this crippling taxation, which hears no relation at all to the income which the owner draws from the land, you will find that in every case you are inflicting a most serious injury on agriculture and on the tenant and the labourer.

Then may I take a third point, and that is the question, which I am sure must concern the mind of the Financial Secretary very much, of tax evasion? We all know that there has been tax evasion through these private companies, and the Government in this Bill have endeavoured to stop it. Legal friends tell me that they will have no difficulty in driving a coach and four through most of the provisions that the Government have put into their Bill, and I sympathised very much with the Attorney-General the other night when he expiated on the extreme difficulty with which the Government are confronted in stopping this tax evasion. The Government have singled out the estate companies for special attention, and when I asked the Attorney-General why that was so, he said it was because the estate companies were the most numerous class of private company.

The FINANCIAL SECRETARY to the TREASURY (Mr. Pethick-Lawrence)

No.

Viscount WOLMER

If I misunderstood him, I withdraw, but I understood him to say that that was the justification for Clause 30, that the estate companies—that that type of company was one of the most numerous. But the point I would like to put to the hon. Gentleman is that the great majority of these estate companies are formed, not with the idea of evading tax on wealth that is inherited, but merely to avoid paying a tax on wealth that is not inherited. The landowners have asked why they should not pay tax only on what they take out of their property. If we cannot, they say, we will form a company and put ourselves in the same category as Mr. Selfridge, Sir William Morris and any other business man. I maintain that that is a perfectly legitimate standpoint, and I challenge the right hon. Gentleman opposite to say that such an attitude is in any way unpatriotic or lacking in the qualities of decent citizenship.

7.0 p.m.

If the Government would accept this Clause, or a Clause having the same effect, they would make three-quarters of those estate companies unnecessary, and they would disappear. The Government would be well advised not to confuse the tax-dodger, whom we all want to get at, with the landowner who is merely trying to put his estate on a business basis. If the Government can eliminate the honest man, they will find it a great deal easier to deal with the tax-dodger. As long as they persist in trying to tax men on a hypothetical sum which will never reach their pockets, which nobody desires should ever reach their pockets, so long they will get every device known to the law used to rescue landowners and their estates and all the people dependent upon them from such a crushing burden and such crushing damage. If the Government would only say that Death Duties should be paid on the capitalised value of what the landowner takes out of land, then they would not only be doing a simple measure of justice to the land-owner, but would remove from the land-owner all incentive to form companies which some people are admittedly using for tax-lodging. They would be doing much more than that; they would be doing something to help agriculture in the terrible crisis which at present threatens that industry.

After all, this principle of the net income is admitted for income Tax purposes. When a landowner pays his Schedule A Income Tax he is allowed to take the necessary outgoings from his rent, and only pays income Tax on the balance. That is a principle introduced first by the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George), a principle which has been accepted by the State and regarded as the just principle for Income Tax. If it is just for Income Tax, why is it not just for Death Duties? That is all we are asking in this Clause, that Death Duties shall be paid on the capitalised value of what the owner takes out of the property. I would say to hon. Members opposite that, if they are going to try to insist on getting the pound of flesh out of the landowner, they are going to do more to injure agriculture at this moment than they could by any other single legislative enactment. If they will consent to treat agriculture on the basis for which I have pleaded, they will have done something to help the industry to tide over the terrible crisis through which it is passing. Do not strike a blow at an industry already reeling under world depression.

Mr. PETHICK-LAWRENCE

The Noble Lord has put forward a very plausible case for this Clause. I am certainly not going to dispute that there are many difficulties confronting agriculture at present, but I cannot agree with his argument that the principle underlying this Clause is the right way of dealing with those difficulties. He made a number of statements, particularly towards the end, to which I take definite exception. I took down those assertions at the time. He said that the present law of the land involved a tax on wealth which is not inherited. Now, what actually are the facts? Let us take a different example. A man inherits a house, furniture, motor-cars, jewels and furs and for Death Duties all those articles which are not income-producing articles, are valued for the purpose of Death Duties. It would be quite incorrect to say that is wealth which is not inherited. It is precisely the same in the case of a landed estate. A man dies leaving landed property and the heir pays upon the estate which reaches him. There is nothing in the Noble Lord's proposal to prevent the heir selling the property a week later. The Noble Lord is proposing that, the value shall be a maximum of 20 times the Schedule A value, but there is nothing to prevent the heir selling it at far more than 20 times the value.

Viscount WOLMER

I will deal with that later.

Mr. PETHICK-LAWRENCE

I am taking the Clause as it stands. In those circumstances, it is quite improper that he should pay a very much smaller sum than the property inherited. Even if you were to leave that out, still a man inheriting the property inherits all the amenity values with it. Unless you take those at zero, you are bound to take them into account as you do with furs, motor cars and jewels, even though they he not sold by the heir but used for personal advantage and enjoyment. He says the net income is admitted for Income Tax purposes and asks why it should not be admitted for Death Duty purposes. The answer is that the two taxes are admittedly on a different basis. The Income Tax is based on income and the Estate Duty on actual value, and those two are entirely distinct. If you proceeded on the principle that Estate Duty was to be based on the capital value, in some cases it might work out to the advantage of the taxpayer but in many other cases seriously to his disadvantage. Let me go very briefly over the history of this question. When Estate Duty was originally introduced in 1894, there was a provision that agricultural property should be subject to a different method of assessment for value. It was taken at 25 times the Schedule A value. That special relief was removed in the Finance Act, 1909–10, and in that year agricultural estates were placed on the same footing as other property. The late Government, of which the Noble Lord was a member, were in office for five years but never made this change. What they did was to make a concession with regard to agricultural land that it should not be subject to increases in Death Duty which the right hon. Member for Epping (Mr. Churchill) imposed.

Viscount WOLMER

There is another thing they did. They did not interfere with the estate companies. There is a great deal to be said for landowners putting their estates on a business footing in the form of a company. As long as those companies were not interfered with, there was no particular ground for their doing so.

Mr. PETHICK-LAWRENCE

I am not going over all the controversies in Clauses 28 and 29. If the Noble Lord thinks that perfectly legitimate handling of estates is interfered with, he is entitled to raise that, and it can be raised again on those Clauses on Report. I am concerned with the basis of value, and I am pointing out that, though the right hon. Member for Epping was Chancellor of the Exchequer and had five opportunities, he did not alter the basis of valuation of these properties. What he did do was to make concessions to owners of agricultural land that, while he put up the Death Duties on other kinds of property, that should not apply to the agricultural value of agricultural land. Many Members do not realise that, though my right hon. Friend the present Chancellor of the Exchequer has further increased the Death Duties, the special exemption from increase, which was given by the right hon. Member for Epping, still remains and that, under my right hon. Friend's proposals, there is equally no increase on the rate of duty imposed on the agricultural value of agricultural land.

Let me point out one of the facts which will result from the Clause proposed by the Noble Lord. Schedule A is based on the present user of the land. Supposing, for the sake of argument, there is a piece of land on the outskirts of the town that is ripening for building purposes, but at present is still used for agricultural purposes. The effect of this Clause would be that, on the death of the owner, the maximum value for Estate Duty purposes would be only 20 times its annual value under Schedule A, under its present user as agricultural land. As a matter of fact, a few years after the death of one owner it might sufficiently ripe to be developed for building land—

Viscount WOLMER

On a point of Order. Are you, Mr. Dunnico, going to call the next new Clause on the Amendment Paper?

The DEPUTY-CHAIRMAN

The next. Clause is not selected, because it is very largely covered by, and in substance is the same as, the Clause we are now discussing.

Viscount WOLMER

I raised that point, because it specifically deals with the point to which the hon. Gentleman is now alluding, and I hope that you will allow us to refer to that Clause, which is also on the Order Paper and which we are quite prepared to put forward. All those points are dealt with in technical language in the following Clause.

Brigadier-General CLIFTON BROWN

On a point of Order. Could we not take the first Clause and the second Clause, and in that way discuss the point on the second Clause?

The DEPUTY-CHAIRMAN

It is difficult to allow the hon. Gentleman to discuss a subsequent new Clause while this one is before us, but he would be quite in order in discussing any matter referred to by the Parliamentary Secretary, even if it is raised in the Clause not selected.

Mr. PETHICK-LAWRENCE

I am prepared to admit that there are other proposed Clauses on the Paper which cover some of the points which I am making. At the same time, I am asked to discuss a certain definite new Clause, and I am limiting my arguments accordingly. I have already dealt with a number of general points which apply to all these proposed Clauses, and I am now making this point against this particular new Clause that Schedule A applies to the existing user. If, therefore, that is to be taken as the maximum basis for valuation at death under this particular new Clause, it would mean that property that might subsequently be put to much more remunerative use, would pay Death Duty only at the smaller rate. It may be that a course could be found to avoid that, but, as far as this new Clause is concerned, that is an additional reason against it.

I would also remind the Committee that the Colwyn Committee, in paragraph 512 of their report, deprecated the giving of special relief to agricultural land by means of tax remission. We have gone further than that, because the right hon. Gentleman the Member for Epping made a certain remission, and we have continued it, but it will take us a very long way from the whole principle of Estate Duty law if we were not merely to give remissions, but were to take an entirely different value, to neglect amenity value and all the points which make a property of a higher selling value than is recognised by comparison with Schedule A. It would not be possible, without undermining the whole principle of Estate Duty, to begin to tinker with value in that way. That agriculture has some claim for special consideration is already recognised by the particular remissions in rates, but to go to the extent proposed by this new Clause, even with the modifications suggested by later new Clauses, is, I am afraid, impossible.

Mr. CHURCHILL

The Financial Secretary to the Treasury is an apt imitator of his chief. He learns his lessons with sprightly ease, and he has not been long in presenting us with the proofs of his training. What have we at this moment? Another of those disagreeable legacies, and the Chancellor and the Financial Secretary continue to obstruct with a resistance which is sometimes backed by a wealth of argument, and at other times finds no stronger support than the kind of speech to which we have just listened from the hon. Gentleman. The hon. Gentleman says that in the five Budgets that I presented I did not alter the principles of valuation in regard to landed property. That is quite true, but if he will study the records of the Treasury, he will find that I made something like this proposal at the same time that I proposed to deal with the evasion of Death Duties. I thought that the evasion of Death Duties should be stopped, and we have assisted the Government to stop it in this Bill—[Interruption.] Well, the Government have accepted the Amendments which we have proposed. They got themselves into a hopeless muddle, and, in spite of all the assistance which they received from the permanent officials, their own brains were not so well addressed to the subject as to enable intelligible Clauses to be presented, and we therefore came to their aid.

At the time when the late Government proposed, in 1928, to prevent the evasion of Death Duties by Clauses which would have the same intention as those of the right hon. Gentleman, but which would have been more carefully drafted, I proposed to my colleagues in the Cabinet that we should relieve agricultural estates from what is undoubtedly a grossly unfair incidence of taxation. Why has there been this attempt to evade the Death Duties? It is because the taxation upon this class of property is grossly unfair. Here you get an immense capital drain or draft upon an estate, which might come at frequent intervals, and you calculate its value on a basis which in no way corresponds to the commercial value. What is all this talk about placing the burden upon the shoulders which can bear it? What is all this talk about the principle of the ability to pay? You have an estate which produces, we still say, £1,000 a year, and it is valued at twice or three times the capital value which would produce £1,000 a year. Why is this excessive and inflated value imposed on these estates? It is because from all parts of the world, and from all parts of the country, the new rich, the profiteering class, come and force up the price of these old homes of England, and exploit the amenity value because they are anxious to seat themselves in the baronial chairs, or to invite their friends to sit in the halls which have enshrined many generations of those who have played a recognisable part in the history of the country.

Why should you market that? Why should you make a son ransom his own home in these commercial times against the bid of all and sundry coming from all parts of the world? Let him pay on what he receives; let him pay to the full without evasion his share of the national expenses from the actual funds and revenue of which he has the enjoyment. To compel him to ransom the amenity value of his own home in the open market in this modern, confused, disorganised world, where so many true values have been destroyed, and where the power of money asserts itself with more naked force every year—why should we compel him to do that? It is a gross injustice. Of course, the Socialists, who wish to level everything, who regard the glorious history of the past as if it were merely a series of disgraceful chronicles of pillage and exploitation, who wish to cut themselves adrift from the continuity of our history and the traditions of British life, to start a new life, like the Soviet Government, on an entirely different basis of ethics, of politics, of economics and of history—from their point of view one can understand that they view with great satisfaction the installation in an English country home of some prosperous pork butcher from Chicago, or some gentleman who, instead of serving his country in the War, piled up a great fortune by the rapid inflation of capital, or by the successful promotion of enterprises of doubtful soundness. These are the heroes whom they wish to esconce in houses which undoubtedly are honourably interwoven with the history of our country.

I make this appeal on the broadest lines. Nothing is more remarkable than the rapidity with which the new democracy is squandering the treasure and the Empire created by generations of the aristocracy and oligarchy. It was said in the days of the great Lord Chatham that you had to get up very early in the morning to know when there was a new victory; but now you have to get up very early in the morning to know what promise has been given away, what great interest has been squandered, and what great security of the nation has been destroyed. From your own point of view, surely you should tax the money; you should not tax the non-material values. I am only suggesting that there should be applied to landed property the principles conceded by all parties to heirlooms, pictures, works of art and so forth. It is true that we have framed our new Clause to apply generally to all estates, whether passing by sale or succession. If the Government wish to meet us, and if they wish to limit it to estates passing by succession, we should regard that as a satisfactory settlement of this matter. If a man sells his home, he shows that he is regarding it upon a commercial basis, and he should be taxed upon that basis, amenity value as well. If, however, he only wishes to live where his family has lived for generations, it is monstrous that the actual benefit which he enjoys should be overloaded by an enormous super-added weight of amenity value, which is largely arbitrary in its estimate, and to the fixing of which an element of predatory snobbishness undoubtedly enters.

I have a word or two to say to the Financial Secretary and his friends about this. I have no doubt that they are all looking eagerly for their holidays, and will be very glad when the House of Commons, to the existence of which they owe their political positions, will have released them from its somewhat sharp talons; when they can have some breathing space before we begin our conflicts in the autumn. I, too, am anxious to have some rest, and so are my friends on this side, but we have not devoted all this time and attention to the Budget without the intention of obtaining some definite results. An hour or two ago we tried to obtain some results by the use of the weapon of a Parliamentary majority, but, unhappily, that, was not entirely at our disposal. The right hon. Gentleman has no particular reason to sleep soundly in his bed o' nights as a consequence of anything that may have occurred to-day. That issue hangs over the Chancellor of the Exchequer until the Report stage of this Measure has been passed. With regard to this Clause it is quite true that we have not at our disposal the weapon of a majority, nor the possibility of acquiring such a weapon. I quite agree that the Government can vote us down, can treat us as they have treated us on other remonstrances we have addressed to them, with lofty disdain.

Mr. MARCH

We had four years of it.

The UNDER-SECRETARY of STATE for SCOTLAND (Mr. Johnston)

Why did you not do this when you were in office?

Mr. CHURCHILL

I have explained that it was linked up with another proposal and as I could not put forward the one I left out the other—entirely because of the pressure of time and the amount of work there was upon We had very heavy Budgets in those days. We had great constructive schemes, like the Widows' Pensions scheme and the De-rating Bill. We did not send round for a Treasury Clerk and ask him, "How much do we get with 6d. on the Income Tax and is on the Super-tax?" and then take another £20,000,000 out of Death Duties. We did not make up our Budgets in half-an-hour and on a half-sheet of note-paper, as this botched and mis-shapen production was drawn up. We took trouble in those days, and that is why our Budgets were so heavy—loaded, densely packed with carefully thought-out well-intentioned, bene-ficial—

The DEPUTY-CHAIRMAN

The right hon. Gentleman is making a Third Reading speech.

Mr. CHURCHILL

I was only responding, perhaps at somewhat too great length, to a rather provocative and to me personally wounding interruption. However, I leave that point, mindful of your remarks, and say to the hon. Gentleman that if he gives us no consideration upon this Clause he will not accelerate the course of business. Of course I, like him, am entirely dependent upon the support of others, and with this hot weather, and holiday time approaching, I do not know whether I shall find the same active and ardent assistance as has hitherto been forthcoming on the Budget; but if we are to be treated with absolute scorn, then I will make it my business, if I can get anyone to stand by me, to examine in meticulous fashion the whole process of the Budget during the Report stage. The hon. Gentleman might just as well address himself to this proposition. I warned his chief a week ago that he would run grave risks, would lead his party into grave risks, if he did not attempt in some way or other to meet the wish of the House on the question of giving relief to industry from its present burdens. It is open to him to alter this Clause if he chooses, and to say that he will give the relief only when estates pass upon succession; and unless he does something of that kind he will pay in tears and beads of perspiration, in laborious days and protracted nights, for an obstinacy not founded on any real necessity of the State but arising largely from the temperamental manifestation of the none-too expansive nature of the Chancellor of the Exchequer.

Captain BOURNE

I much prefer the next Clause to the one which has been moved by my Noble Friend, but as that is not coming before the Committee I must make such remarks as I wish to on this Clause. I was disappointed with the reply of the Financial Secretary. He seemed to produce the stock Treasury reply and largely ignored the heart of the problem. The principle of the Death Duties—if there is such a; thing—was laid down in the Finance Act of 1894, and if the hon. Gentleman will consult that he will see that settled property paid Death Duties only on determination of the settlement, namely, when some owner came into it who could sell under the terms of the settlement. As far as agricultural land is concerned Death Duties are paid at rather long intervals. Before the War the return on agricultural property was very low indeed compared with the return which could be obtained on any other form of property, and consequently the valuation for Estate Duties was high even then, far higher than—n the case of an investment in a Government security or stocks and shares, but the infrequency of the incidence of the duty in the case of settled estates did a great deal to mitigate the way in which this duty fell upon agriculture.

The situation was altered by the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George), and I think this question would have arisen in an acute form at a much earlier date had it not been for the intervention of the War, which swept this and so many) other problems aside. There can be no doubt that the pressure of Death Duties on agricultural estates has been one of the contributory factors of the agricultural depression. The return which the owner of an agricultural estate gets upon his capital is very low—I doubt whether it exceeds 3 per cent.—but when he dies he is taxed on a value which is a very high one. When dealing with ordinary investments the market price represents about 20 times the annual return, taking that at 5 per cent., but in the case of agricultural land the value put upon it may be something like 40 years' valuation of the annual income from it. For Income Tax purposes the land is given an entirely imaginary value. Under Schedule A a valuation is put down, certain deductions are made, and then there is an arbitrary allowance for the amount which in the opinion of the Government should be spent on repairs, but anyone who has had any experience of estate management knows that the actual expenditure per year on repairs is vastly greater than the amount allowed under Schedule A.

I doubt whether there is a single decently managed estate in the United Kingdom which does not, year after year, submit to the Commissioners of Income Tax larger claims in respect of maintenance and repairs than are allowed under Schedule A, although permissible under the Income Tax law. What we claim is this Clause is that when agricultural land which has not been sold is being valued the value should be reckoned as so many years' purchase of the net annual income that the owner receives. Much of the money which he receives from the estate has to go back into the estate in payment for repairs, the fertilisation of the land and the maintenance of hedges, gates, and farm buildings, and we claim that after making allowance for this expenditure the actual return on capital is a very meagre reward for the services which are being given to the community. So long as he retains this land in hand he should be taxed merely on so many years' purchase of the net annual value, and not on some imaginary figure which somebody thinks the land might fetch if sold in the open market. Even where the sale value is taken the valuation is not always a good one. I believe it is the practice to value each farm separately, whereas if an estate is sold as a going concern the market value is very much less than if it be sold farm by farm.

The hon. Gentleman asked why the inheritor of agricultural land should not pay for the amenity value, but does he realise that the value of agricultural land is artificially enhanced because of the very sales which take place when portions of an estate have to be put on the market in order to meet the claims for Death Duties? To the tenant or occupier a farm has a value in excess of the market value of the land. He has farmed the land, he has got his stock on it, he has had experience of the farm, and he is ready to pay a higher price for it in order to avoid the disturbance which would follow if it were sold over his head with, perhaps, a forced sale of his stock and implements. He knows that if he goes to another farm he will have to spend two or three years in learning the best use to which each of his fields can be put, what are the best methods of cultivation and what are the best crops to grow. For a sitting tenant, therefore, a farm has a value in excess of what it possesses for anybody else, and in the case of a sale of the estate he is prepared to pay a higher price for that farm than anybody else—unless the other bidder who runs him up is some fool who has made money in other walks of life and thinks he would like to spend it in farming. There is, therefore, a good case for reconsidering the basis of the valuation of land for Death Duties. If the land is sold Death Duties should be charged, I agree, on the market price; if a man sells it in his lifetime we could treat the transaction as sales of timber or heirlooms, for example, are treated and charge him on the difference between the value at which he inherited it and the price at which he sold; but if we are to keep up the equipment of the agricultural land of England one of the essential things is to stop forced sales every time an estate changes hands.

At the best this form of duty is unequal between family and family. One family is long lived and marries late in life; there may be intervals of 40 years between deaths. In another family deaths follow in quick succession. A man who has stocks and shares can sell half of them and live on the rest, but the landowner knows that selling off a small or a large portion of his estate does not really tend to economy. There are still many fixed charges which bear heavily on the truncated estate remaining. To run an estate cheaply it is desirable that the landlord should employ his own people to do repairs, his own woodmen to look after the forests, and his own men to carry out drainage work and with a very small estate that cannot be done. If he has to import builders from a town he is charged a higher price because so much of the time of the workmen is occupied in moving to and from their work, which is not title case if estate workmen are employed. I feel that this policy of singling out the Death Duties for extra taxation has done much to add to the present agricultural depression about which we hear so much to-day, and I ask the Government for these reasons at least to reconsider the position.

Lord STANLEY

I rise for the purpose of supporting this new Clause. The most distressing feature of the agricultural position to-day is that the landlords are not in a position to farm their land as well as they would like to do. Most of them are losing money on their farms and, in consequence, they are obliged to sell their estates. That must be a very bad thing for agriculture, because they are the men who have been brought up on the land, and they possess the technical experience which is of such great value to agriculture. By this Budget you are deliberately helping to take away capital from agriculture. You cannot help the farmers having bad years, or receiving low prices, the result of which is loss of capital and the inevitable sale of their farms; but you can prevent the deliberate breaking up of big estates owing to the false values which are put upon them when they are assessed for Death Duties.

Why are you treating agriculture in a different way from any other industry? Why have the Government taken this vindictive action against landlords large and small? Surely the tendency in every other industry which has been helped and encouraged by the Government is to see that they become co-ordinated into larger units. The principle of the rationalisation of industry is that small businesses should be amalgamated into larger units so as to lower the cost of production and overhead charges, and in that way put them on a more satisfactory business footing. Why do the Government not adopt the same policy with regard to agriculture? At the present time with large estates the overhead charges in agriculture are as low as possible, and yet you are deliberately breaking up these estates into smaller units where the overhead charges and the cost of production will be higher. I cannot see why agriculture should be singled out for this exceptional treatment. I agree with what was said by the ex-Chancellor of the Exchequer that people ought to be taxed according to their ability to pay, but the Government ought to consider what advantage any particular tax is likely to be to the State. Who is going to get the advantage out of the heavy Death Duties on agricultural land? The State will reap no advantage, because all you are doing by this policy is mortgaging the future. The State may get a larger amount for a few years, but consider what the State is losing. Another point to be considered is that the owner of a large estate collects the rents, and he pays Income Tax and Super-tax, and in that way he is acting as a cheap tax collector for the Treasury. Another matter which I would like to point out is that when you get an estate in one man's hands collecting the rents from a large number of tenants, that man probably pays Super-tax, but when the estates are broken up the taxation which will be paid by the tenants will be so small that it will be scarcely worth the cost of collection.

I cannot see how a policy of that kind is going to be of any benefit to the Treasury, and obviously it cannot benefit the tenant. We have heard it stated that a tenant is better off farming under a landlord than farming his own land. The bad landlords are really more or less fictitious at the present time. Unless a landlord is a good landlord and farms his land well, he cannot make his estate pay. It is to his own advantage, as well as the advantage of his tenants, that landlords should keep their farms up to as high a state of perfection as possible. Under the system by which the tenants purchase their farms they will lose the advice of the first-class agent employed by the landowners, and those tenants may have to pay a considerable sum of money down in order to buy their own farms, whereas under the landlords they have to pay only a reasonable rent without raising any capital.

When estates are broken up and the farms are placed upon the market, the farmers have to pay a large capital sum which they cannot afford, and this cripples them considerably in the future conduct of their business. By imposing these heavy Death Duties you are not helping agriculture. One of the essentials of successful farming is the development of agricultural research and experimenting on scientific lines. No farmers on a small farm can afford to do research work, because they do not possess the necessary amount of land for the purpose, and they have not the necessary capital. Consequently you have to rely very largely on the activities and enterprise of the landowner to do a great deal of the research work which would otherwise have to be done at the expense of the State.

How is the community going to benefit by the abolition of landlords? I submit that landlords are a much abused class. It is very easy for speakers who wish to preach Socialism or Communism to abuse landlords. But when those people have been returned to Parliament the first people to whom they go for help are the landlords. We are doing a great disservice to the community by doing anything that will tend to abolish landlords, because they perform very useful services to the State in a purely voluntary capacity. Not only do they carry out useful research work, but they give their services on public bodies. Frequently they are elected as county councillors and members of other public bodies. The policy of the Chancellor of the Exchequer is driving these men from the countryside, and the effect will be to destroy English country life.

I know that it is like drawing blood out of a stone to expect a reasonable answer to these arguments from the Treasury. I ask the Government to deal with this question not merely from the necessity of getting money for the Treasury. We all realise the difficulties of raising revenue, but I would like to put it to the Government that they are losing, on balance, by raising this money out of agriculture, and they are doing harm which can never be undone. If the Chancellor of the Exchequer cannot give us a satisfactory answer, I hope he will be able to assure us—although I do not believe that there will be another opportunity for hon. Members opposite to put forward another Budget—that on some future occasion he will be able to show agriculturists a little more consideration than he has done in the past.

Sir ERNEST SHEPPERSON

I approach this matter almost entirely on behalf of British agriculture, because I want to keep in existence the old type of agricultural landlord in this country. I cross swords with the Noble Lord the Member for the Fylde Division of Lancaster (Lord Stanley) on one point in which he said that the tenant is better off under a good landlord than farming his own land. I suggest that the tenant would rather be under a good landlord than own the land himself, and it is because taxation is compelling the tenant to buy the land and become his own landlord that I wish to keep the tenant under the old-fashioned agricultural landlord, who has done so much for him in the past. I listened with some attention to the speech made by the Financial Secretary to the Treasury, who said that in this matter he was concerned more in regard to the basis of value. I am concerned more with the basis of taxation. The landlord is a partner in productive agriculture.

8.0 p.m.

Agriculture is an industry in which there are at least three partners—the agricultural labourer, the farmer, and the agricultural landlord. The agricultural labourer is entitled to as much consideration as any of the other partners, but he cannot efficiently perform his duty unless he is properly paid, clothed, and housed, and we must treat him well and give him opportunities of becoming a small farmer. It is essential for the farmer to carry on his agricultural functions in co-operation with the other two partners in the industry. The third partner is the agricultural landlord, and if he is unable to function properly as a landlord, undoubtedly agriculture suffers. It is the duty of the agricultural landlord to keep in repair the building on his land. It is also his duty to look after the ordinary drainage and the arterial drainage of his land. If the agricultural landlord is unable to perform those functions, the whole industry of agriculture suffers. We must bear in mind the fact that, in this self-contained industry of agriculture, the whole of what comes into the industry comes from the sale of agricultural produce. If, as at the present time, sales of agricultural produce are down, there is less money to meet the necessary costs of the practice of agriculture. The farmer is unable, therefore, to pay, as he ought to pay, the wages of his labourers, and at the same time he is unable in many cases to meet his landlord—

The DEPUTY-CHAIRMAN

This discussion is becoming very broad and general. The question before the Committee is the assessment of agricultural property for the purpose of Death and Estate Duties, but we are entering into a general discussion on agriculture.

Sir E. SHEPPERSON

I will confine myself to the third partner in the industry, namely, the agricultural landlord, who, by excessive taxation, is being prevented from functioning. The effect of Death Duties upon the agricultural landlord is to deprive him of using the money which is now paid in taxation for performing those duties which the agricultural landlord should perform, in repairing buildings, maintaining ditches and drainage, and so on. As was mentioned by my Noble Friend who moved this Clause, these Death Duties compel an agricultural landlord to do one of two things. He either has to insure against these Death Duties, in which case the insurance premiums themselves represent a withdrawal of money which otherwise would be used for improvements, or he has to sell portions of his estate.

The hon. Gentleman has mentioned that the value of an estate is the value which it might make in the open market, but I am anxious to preserve the original agricultural landlord. I hold no brief for, and have no sympathy with, the profiteer who comes in from a large industrial centre and buys an agricultural estate for amenity purposes. That man does not function as an agricultural landlord; he does not know his job, and does not do his job. I want to maintain in existence the old type of agricultural landlord, who acted as a partner in the agricultural industry. As I have said, the landlord, if he does not provide by insurance for these Death Duties, is obliged to sell his estate, or a part of it. If he sells a part of it, he compels a farmer to come into the market and buy the land. That is another direction in which a partner in the agricultural community is penalised, by being compelled to purchase his farm, often in competition with the profiteer at an excessive price. That farmer's money, which ought to be used as capital for his farming operations, is being used to capitalise the land, and the land, consequently, suffers from the want of capital for farming operations. We have seen this summer that many owners of agricultural estates have opened their gardens to people going there in motor charabancs, and those people from industrial areas have much appreciated that kindness. I want to preserve in this country these old landlords, and for that reason I heartily support the proposed new Clause.

Mr. PETHICK-LAWRENCE

I do not want to curtail the discussion, because I realise that hon. Members opposite feel very keenly on this matter, but the time is going on, and there was a sort of undertaking—I will not put it higher—that we should finish this part of our business within a reasonable time after half-past Seven, in order to make way for the other important business that we have to-night. Therefore, although I do not want to ask hon. Members unduly to limit the discussion, I hope that they will be as brief as they can, consistently with saying what it is necessary to say, in order that we may end this part of our discussion sufficiently early to give us plenty of time to take the other business to-night.

Lord EUSTACE PERCY

My understanding—I speak subject to correction—was that our arrangement was that we should come to an end of our business tonight on the Finance Bill somewhere about Nine o'Clock or half-past Nine.

Mr. PETHICK-LAWRENCE

Perhaps I might just explain. It was suggested that it should be concluded by 7.30, but my right hon. Friend pointed out that that would not allow sufficient time, and he suggested half an hour longer, or a little more. I will not say that that was definitely accepted; I do not want to put too high a point on it; but there was an understanding that at some time, not much after Eight o'clock, this part of the business should be concluded, with a view to our getting on to the other very important business. There was a quite definite understanding that the other business before the House should be finished to-night, and, if we carry on the present discussion too long, it may restrict the time available for the other business more than, perhaps, hon. Members who are interested in that part of the proceedings would like. Therefore, while I do not want to put it too high, I hope that we shall not be very much longer on this subject.

Lord E. PERCY

It is, perhaps, a little difficult to discuss what precisely was the understanding in the absence of both the original channels, but I think the hon. Gentleman may rest assured that it is our object to leave sufficient time for the settlement of the next business to-night, and we are only "spreading ourselves" on this particular Clause because it is one which interests us very much indeed, and we think that it would be a great help. I think the time that will be necessary for completing the rest of the Committee stage of the Finance Bill is very small indeed; I think that there is no other Amendment to come, and that this is practically all that we have to do.

I desire, in spite of what the Financial Secretary has said about not wishing to prolong the discussion, to appeal to him to give some better considered reply to the three very interesting speeches which have just been made than he did when he originally replied to my Noble Friend the Member for Aldershot (Viscount Wolmer). Really, if one could for a moment associate the Financial Secretary with flippancy or frivolity, one would be inclined to say that his arguments against this proposed new Clause were almost frivolous. What were the arguments that he advanced against the general principle of the Clause? One was that it would be a departure from the existing principles of Estate Duty legislation. Why is it necessary for a Labour Government, above all, to advance as an argument again and again that something would be a departure from the existing system, from the hallowed and time-honoured departmental principles which have been handed down from generation to generation? Surely, one would expect from this Government more than from any other a desire to look at things on their merits.

When the Financial Secretary talks about the principles of Estate Duty legislation, surely he recognises that there is no financial legislation in this or any other civilised country which is so exposed to fundamental attack on purely economic grounds as is Estate Duty legislation. It sins against almost every one of Adam Smith's principles of taxation. I do not think that the hon. Gentleman would be bold enough to attempt to reconcile the present Estate Duty system with any single one of Adam Smith's great principles of taxation, and, therefore, really, that argument is almost frivolous. How do Estate Duties affect agricultural land, which is, in fact, a great national business and a great national going concern? Surely, we ought to look at the problem in that way, and not to talk about departures from, the principles of Estate Duty legislation.

The second argument of the hon. Gentleman is far more significant, and far worse. He asks how does this valuation of agricultural land differ from the valuation of furs, or pearls, or diamonds, or expensive old furniture, which are valued on their market valuation, although they have only an amenity value, and the value upon which they are taxed is very much greater than, perhaps, their intrinsic value may be? They are valued in that way because they would fetch a certain price in the market if they were sold. Does the hon. Gentleman really think, however, that furs, and pearls, and diamonds, and old furniture are proper analogies with the ownership of agricultural land? It is that attitude towards the ownership of agricultural land which we are attacking, and which has done so much harm, to the whole industry of agriculture—the idea that a ploughed field is to be regarded for the sake of its luxury value, its sporting rights, or the nice views that can be had from the rich man's drawing room, and not as a business asset, not as a responsibility which the landlord holds, and for which he is answerable to the State. If we could go back to a rather more feudal conception it would be better.

The hon. Gentleman looks at the matter as so many other people do, merely from the point of view of agricultural land being valued in the market. Surely, if he does take that old Etonian view, he must see that the analogy which he has drawn is rendered entirely invalid by the process of reasoning. Diamonds, pearls, or old furniture are, after all, luxuries which a man can use, and to which he can attach value because he uses them in his daily life. The fact that they are assessed at their market value simply means that to take the market value is about the only convenient means of assessing the value of such luxuries to the man who can use them. But he cannot use agricultural land in the same way. It can, of course, be used for sporting purposes, or it can be used for the purpose of a nice view from a drawing room window, but the real purpose, the real, intrinsic raison d'être of agricultural land is not to be used in that way.

Push the reasoning a little further. Why do you apply this principle of levying Estate Duty only upon sale to works of art? They are luxuries, like diamonds and pearls, yet you deliberately exempt them from assessment. What is the reason? If the principle the hon. Member lays down is the real principle of the Estate Duty, that you should tax luxuries on an artificial value, why do you exempt works of art? Surely it is mainly because you do not wish the owner to regard them as saleable commodities. You want to encourage him by every means to keep them. Is not that precisely what you want to do with agricultural land? Do you not want, by every means in your power, to encourage the owner of land not to part with it as a luxury asset, but to keep it as a business asset, earning a very low rate of return for himself if any at all? If you hold the views of certain Members opposite, you may wish him to get rid of it and sell it to the farmer at a low price for agricultural purposes, but you do not wish him to sell it at an inflated price which the tenant could not afford to pay. If that is your policy, if you want the landlord to keep and hold the land until he is prepared to sell it at a low price that the tenant can afford to pay, surely you want to treat land precisely as you treat works of art. That is the true analogy.

We feel strongly about this, because I do not care one little bit whether the old social aristocratic structure goes on or not, but I am concerned with this, that when you have a great national industry like agriculture, your taxation should not be such as specifically and deliberately to make the continued conduct of that business more and more progressively difficult year after year. If it were not that the landlord belongs to quite a small class, against which there is a good deal of prejudice, no one would have dreamt of subjecting him to a form of taxation so uncertain and so unequal as between taxpayer and taxpayer—I will not run through all the other canons of Adam Smith's ideas of taxation—no one would have dreamt of maintaining so impossible a system of taxation, and when we are increasingly realising now that what we are taxing is not a small class of landlord but the industry of agriculture, surely the Financial Secretary ought to show that he has devoted serious attention to the problem of agriculture as an industry from the point of view of these taxes.

Mr. KIRKWOOD

I should not have intervened in the debate but for the fact that I have sat here for some time and have listened to an array of Lords in defence of their rights, and I admire the way they fight for their rights and for their class. But I hope the Financial Secretary is not going to be carried away by the appeal they have made on behalf of their class. They have made out the case of the nice old-fashioned, landlord. That is the language. How good they were to the tenants! In fact, the Noble Lord who has just sat down said he would not suggest that we should go back to feudalism, but he could recommend it. Another Lord said many tenants would rather have a landlord than no landlord. They would rather be slaves than free men. That is what it amounted to. You cannot have it two ways. But no one knows better than the Financial Secretary what is the actual position of these poor tenants, under the heel of the landlord, particularly in England where, when an election is on, they have not a soul to call their own. Every Labour Member who comes from an agricultural constituency knows that that is the fact. I can go back for 35 years to a Royal Commission on the agricultural situation in England and on it sat the grandfather of the present Prince of Wales. He was the Prince of Wales of that time, and Lord Methuen gave evidence before that Commission. This is your nice kind landlord. Fourteen shillings a week was the wages paid. The Prince of Wales said, "That is a starvation wage." Lord Methuen's rejoinder was that it was constant.

Mr. TURTON

I have not heard in the speech of the Financial Secretary, or in that of the hon. Member for Dumbarton Burghs (Mr. Kirkwood), any justification for the present basis of valuation for Estate Duty of agricultural land. It is the value that a commissioner puts on as being what it will fetch in the open market. The Financial Secretary talked a great deal about amenity value. It is not a question of amenity value. It is a question of the value that an urbanised official will put upon agricultural land as being in his estimation the value it would fetch in the open market. He must know that land cannot be sold at present in the open market. He must know that the Exchequer themselves refused last week to purchase Scottish land.

Mr. KIRKWOOD

Because of the price.

Mr. TURTON

The same price that the Exchequer will not pay it tries to force the inheritor to pay as Estate Duty. I am not asking for justification, I am asking for justice.

Mr. KIRKWOOD

The facts are these. We were quite prepared to buy Ben Lomond from the Duke of Montrose, who is a robber, on the distinct understanding that the purchase price was the price at which it was assessed, but he wanted 523 times more.

Mr. TURTON

The hon. Member has, naturally, tried to justify the Government in their bidding for a Scottish estate, but he cannot get away from the fact that the Exchequer would not pay the amenity value, and an amenity value cannot be got for that estate at present. The Government tried to buy at a price based on the real annual value. They are trying in this Bill, on the other hand, to charge the amenity value. As is usual, the hon. Member has made aspersions on certain Members outside the House. I am not going to follow him there. I want to take this Bill and this Clause and justify it on that alone. How can you justify a conjectural value for the valuation of land when the valuation of stocks and shares must be on the value they will actually fetch in the open market? If I have an estate in Consols or in War Loan and for the good fortune of the Chancellor of the Exchequer I die, my estate is valued at the amount those stocks and shares would fetch on the Stock Exchange at the very day. But if my estate is not in Consols or War Loan, or in some really marketable security, but is agricultural land, then I and my heirs have to submit to the conjectural value at what an urban official considers to be the open market value. The conjectural value which the Financial Secretary to the Treasury called the amenity value is to be comparable with furs and jewels. That is the case in justification for this Amendment and the case which the Front Bench opposite have not attempted to meet. It has been held that if stocks and shares which pass at death cannot be assessed at actual Stock Exchange prices you can put a conjectural value on them, but only to this extent, that if it can be proved afterwards that the conjectural value was wrong there must be a reassessment. You have no saving clause with regard to agricultural land. We are asking to-day that you shall redress this grievance of the agricultural community. It is not a grievance which is hitting one class; it is a grievance which hits every man who is earning his living on agricultural land.

The Government have introduced by Clause 29 a large army of people who will have to pay Estate Duty on agricultural land. The Chancellor of the Exchequer should remember that in Clause 29 he is including a man who turns his agricultural holding into a company He is including a farmer who, being unable to pay his way, turns his farm into a private company, and he is levying that farmer with Estate Duty. We have discussed the merits of the levy upon Clause 29, and now we turn to the Chancellor of the Exchequer and ask that that levy upon the farming business shall be on the actual value of that business in the business market, and not upon amenity value put on by an urban official and assessed on his conjecture, without any redress. I remember and no doubt other hon. Members in this House remember, a passage in the Bible which starts "Rehoboam's evil reign." The agricultural community, which has for a long time been beset by previous Governments, are now realising that you have here a second Rehoboam who is saying, "My predecessor chastised you with whips, but I am chastising you with scorpions." I ask that one scorpion shall take on a milder form. I hope that it will be turned into the form which the Noble Lord suggests in his Clause. I believe that by that means we shall get a little more redress for the agricultural community.

Viscount CRANBORNE

I rise with considerable diffidence because the hon. Member for Dumbarton Burghs (Mr. Kirkwood) has poured considerable scorn and criticism upon two classes in this country, and I belong to them both.

Mr. KIRKWOOD

That is impossible. You cannot belong to two classes. You have to choose whom you will serve—God or Mammon.

Viscount CRANBORNE

With due deference to the hon. Member, I do belong to both classes. At the same time, I will take my courage in both hands and say a few words in support of this Clause. This question of the basis of the tax on agricultural land for the purposes of Estate Duty has cropped up a, good many times during our various discussions on Finance Bills. Whenever it has been mentioned, hon. Members and right hon. Members opposite have always retorted that the Estate Duties were not an Income Tax but were a capital tax, that we must not confuse the two, and that there was really only one capital value for everything, and that was the market value. That is what I understand to be their contention. We all agree that it is a capital tax, but there are many of us who would not admit that in the case of land, the market value was the real and true capital value, but would maintain that in that respect it is different from other forms of wealth. It is very easy to assess stocks and shares on their market value, and to show that market value is their capital value. In stocks and shares, capital value depends upon, and is governed by, the income which those shares bring in. If a, company does well and its income has increased, the price of the shares goes up and the capital value of those shares is increased. If the company does badly, the capital value of the shares is decreased. Therefore, it is obvious that the market value is a far fairer standard to take.

When you come to land, things are completely different, for, as has often been said in these debates, there is frequently little or no connection between the capital value and the income of land. Land—and I speak principally of agricultural land, because it is that with which we are principally concerned in this Clause—has, in fact, two separate and distinct values. It has a present value, the agricultural value, which is dependent upon the actual income and is often very small indeed, and it has a future value, the selling value, which is only created when the land is sold. Until then, it has no value whatever. If the proposal of the Chancellor of the Exchequer and of the Government had been to assess agricultural land for the purposes of these duties at the present value, the agricultural value, and then when that land was sold, when the new value was created, that the Revenue should collect the remainder of the duty in the form of an increment tax, though I do not know whether all hon. Members on this side would agree, there are many who would think that it was a reasonable proposal. To take an entirely hypothetical value and one which does not yet exist and tax the land, surely is absolutely indefensible. The hon. Member for Dumbarton Burghs took great exception to the Duke of Montrose and said he was a robber—

Mr. KIRKWOOD

Worse. His father was a murderer.

Viscount CRANBORNE

Anyhow, we will leave it at a robber for this purpose—because he asked certain Members of the Government when he wanted them to buy his land, the price at which the Government assessed his land. He was only asking from them the price at which they themselves assessed the value of his land. So if he was a robber, they also attempted to rob him. If, as we believe, these Estate Duties are unsound in principle, they are also deplorable in results. Hon. Members opposite are perhaps a little too apt to think of the objects of the tax and too little of the results. A great deal has been said from these benches during this debate about the disastrous and deplorable results upon agriculture. Of course, that is the main contention which we have against the duty, but it has already been dealt with so fully that I do not propose to stress it any further.

I should like to say a few words on another aspect of the question, which has not been mentioned and which, although not so obviously important, is of considerable importance, and I think it may commend itself to certain hon. Members opposite. We hear a great deal in these days about ribbon development and the destruction of beauty spots. That is a matter of the gravest importance to the whole community, not only to those who live in the country but to those who live in the towns also, because the country is the playground of the town. I do not think that hon. Members opposite realise quite enough that this ribbon development is an inevitable and immediate result of the assessment of Estate Duty on the present basis. What happens is, that you tax a man on the hypothetical value of his land, a value which does not yet exist, and in order to pay the tax he has to make it of real value. He has immediately to sell land and, of course, he sells that portion of his estate which is the most easily realisable, which is the most valuable, but which very often from the point of view of the community it is not at all desirable should be built over or developed. You cannot blame the owner, because the community has forced him to do it. The object of this new Clause, as I understand it, is to correlate the tax to the actual value, and I hope that right hon. and hon. Members opposite will agree that it is desirable from the point of view of the community and not merely from the point of view of the landlord, that this should be done, rather than that we should perpetuate a basis of taxation which is really unsound in principle and disastrous in its results, such as the Chancellor of the Exchequer proposes in the present Finance Bill.

Mr. MACQUISTEN

I have listened with considerable interest to this debate but I have not got to what is at the bottom of the minds of all who have spoken. I believe that it is a great mistake to tax agricultural land, especially for Death Duties, because the burden does not fall on the landowner but upon the farmer and the ploughman, ultimately. They carry the burden on the land. There is really no such thing as a landowner of agricultural land; it is the land that owns the man. A man buys a bit of land and he goes there with a fortune made in trade or commerce, and in a very short time he finds himself spending his capital upon that land. There is no greater impulse to expenditure than landowning. The landowner is content with perhaps the barest possible return of any form of investment He has, of course, the spiritual return of an amenity investment. Land hunger is perhaps one of the deepest things in man's nature. Every man would like to own a bit of land, and perhaps the healthiest side of any country is where there are a great number of landowners owning land which they themselves cultivate. The late Lord Acton held that the downfall of Rome began when the latifundia or absorption of estates in few hands started. So long as the Italian peasant cultivated his own land, Rome was strong.

This new Clause is based on what one might call the commercial value, that is to say, 20 years purchase. That is a very fair price. With regard to the present basis of valuation, if the landowner was entitled to say to the Government, "You value my estate at so much, take the whole estate and give me the cash for it," that would be a real test as to whether the Government valuer agreed with the valuation that has been put upon the land. Would they do that? No fear. That is what the Duke of Montrose wished to do in connection with his estate. He was perfectly prepared to meet them if the Government would take the whole estate at their own valuation and pay the cash difference. He said: "'A' is the estate and 'B' is the figure of the taxation. If you give me the difference between them I will give you the whole estate." The Government valuers want to act on the principle of "Heads we win, tails you lose."

It is not so easy to deal with this matter, even with stocks and shares. A friend of mine died during a period of boom and his estate was valued for nearly £200,000. When they came to settle the Death Duties, six months later, the estate was not worth £20,000. The stocks and shares had slumped in the meantime, there was nothing with which to pay the Death Duties, and his family were ruined. That is what happens with these Treasury valuations. I could give a number of cases. A man died in the North of England leaving an estate valued at £2,000,000 by the Government valuer. His estate consisted of shipbuilding yards, coal mines, etc. A sum of £800,000 had to be raised in debentures to meet the Death Duties. When the slump came that man's two boys were looking for jobs, although they were supposed to be millionaires; the place was ruined. That is what one gets from a Government valuation.

Land has always been an utterly unprofitable asset. The landlords have been the bankers for the farmer and the farmer has been the provider for the ploughman and the agricultural worker. The landowners saw the farmers through the crisis in 1879. We feel this, matter of taxation very much in my constituency. We used to have piers built by landowners at a cost of thousands of pounds, but the landowners have been cleaned out by land taxation. Now, when I ask the Secretary of State for Scotland if the Scottish Office will do something of the work that the landowners used to do with respect to the piers, they will not do it or, at any rate, it takes time, and meanwhile the result is that my islanders are ruined.

Mr. KIRKWOOD

We cannot allow this to go unchallenged. Nobody knows better than the hon. and learned Member the reason why the Scottish Office is not going to repair these piers. The reason is that if we repair the piers they will belong to the landlords.

Mr. MACQUISTEN

If the hon. Member knew anything about piers he would know that a pier is a liability and not an asset. If you present a landowner with a pier you place upon him a big liability.

Mr. KIRKWOOD

A liability?

Mr. MACQUISTEN

Any landowner is prepared to make his pier over to the county council if they will put it in order. I know one landowner in one of the islands that I represent and it costs him £1,500 a year, over and above any income that he receives, for being the landowner of that island. You find a similar state of things all over Scotland. Landowning is a sheer liability.

Mr. KIRKWOOD

Scotland is a liability for the landlords! That will be produced in evidence against you at the General Election.

Mr. MACQUISTEN

You can use whatever evidence you like. Come down to Kintyre.

The DEPUTY-CHAIRMAN

I think hon. Members are getting rather too discursive on the subject of this new Clause.

Mr. MACQUISTEN

I went to the Duke of Montrose to get a harbour for the fishermen in my Division. He offered me a harbour for nothing, but I could not get the Scottish Office to dredge it. It was a splendid harbour, and the Duke was willing to give it and allow his own harbour-master to look after it. I am indignant at the attack which has been made upon the Duke of Montrose. He was out serving his country on the sea, doing his best for his country, when the hon. Member for Dumbarton Burghs was in gaol for sedition. The hon. Member must have been thinking of those lines: Wha will be a traitor knave? Wha can fill a coward's grave? Wha sae base as be a slave? Traitor! coward, turn and flee. The hon. Member makes this attack upon a better man than himself. When I was going through Argyll I came upon evidences as to the effect of the taxation on land. I saw an immense garden quarried out of the rock, a very costly undertaking. I said to the owner, "Your ancestor cannot have been very wise to have wasted all that money." He replied that 100 years ago there was terrible unemployment in the district, and that his ancestor employed every person in the district in order to provide them with something to do in order to justify the expense. It was wasteful, but it was better than the unemployment benefit with nothing to do. It maintained them in their self-respect and physical condition. That is what was done in the old days, when they were not taxed to death. These landowners were the bankers of the community. They did their duty by the people, and it is a great calamity that they are being lost to the country. In the same place I saw other evidences of the expenditure by the landowner to give his people employment in times of unemployment. The people were looked after in those old days by the landlords. The owners of the land knew that they had a duty to perform, and they did it.

The DEPUTY-CHAIRMAN

We are now dealing with a proposed alteration of the assessment upon people who now exist.

Mr. MACQUISTEN

I admit that, and I want to say that the present system of taxation is the thing which is preventing these people existing; it is exterminating them. I do not want to see them exterminated. I want to see these estates valued on a fair basis. They ought not to be assessed on a so-called amenity value. That is taxing them for their beautiful isles and land. They should be taxed on their income, on what they get out of their estates. It is not a good thing from a business point of view to own land. The landowner has to spend money on the estate, and provide pensions for his employés instead of cutting them off at a day's notice like industrialists. He also has to provide cottages for them, which he lets at 1s. or 2s. per week. Neither I nor the hon. Member for Dumbarton Burghs would do that. But these people do all these things. He says "Tax me on what I am getting, not upon something which I have not got." After all, it is human beings who pay taxes, not the land. Why should a man be fined for owning land? There is no real land owning in this country, the land belongs to the King. I think we ought to get back to the state when there is same person in the district who is content with a most moderate return; in some cases it is a liability.

We have had a long succession of wealthy gentlemen from all parts of the world who have made money suddenly, and who think that by acquiring laud they will also acquire a status. It takes three generations to make a landowner, and if you are going to tax them three times with Death Duties—they may amount to more than the estate is worth—there will not be time to make real landowners of them. New landlords, every one will agree, are the most unsatisfactory landlords. They need to be bred to the trade. They are something like beautiful old castles, very elegant monuments. They set a tone for manners and good conduct. They are not being fairly taxed, and I say that no Chancellor of the Exchequer, whether he is the right hon. Member for Epping (Mr. Churchill) or the present Chancellor of the Exchequer, has a right to tax a man on the fanciful value of an estate. He should be taxed on what he gets out of it. And let it be a fixed sum, not the random opinion of a Government valuer. Above all, when a valuation is put on the land the landowner should have the right to say "You have valued it at so much; I will accept your valuation, less the amount of assessment." This proposal is a step in that direction and I cordially support it.

Mr. C. WILLIAMS

I have listened to almost the entire debate this evening, and the most disappointing speech of all was the speech of the hon. Member for Dumbarton Burghs (Mr. Kirkwood). I can remember the time when he used to rage upon those back benches in a most many way, but to-day his speech was very mild, almost as pathetic as the speech of the Financial Secretary. He could only find one Duke to bring in, and he was a Scottish Duke. We have heard a great deal about a certain section of owners of land, but there is one section which has been entirely neglected, and that is the smaller owners. This new Clause will do something to increase expenditure in country districts, to increase the prosperity of the country districts, and enable the Government of the day to avoid having to pay those subsidies which we have paid during the last few years in connection with forestry and sugar beet. There is also a large section of the community which have bought their farms during the last 10 or 20 years, and many people who actually own small farms of 300 and 400 acres, who have been in existence as yeomen farmers for many generations. They are a small class compared with those who have bought land and taken it up in the last few years.

May I ask the Chancellor of the Exchequer to consider one point of view? There may be other attractions at the moment, but it is usual even for a Chancellor of the Exchequer to give attention to what is being said. Has he considered the position of the tenant farmer who has paid £4,000 or £5,000 for his farm? Such a man will be valued on the full value of the farm as laid down in the Bill; he will have to pay not only a tax on the capital of his land, but also a tax on his implements and his cattle and the rest of his capita] value. It is conceivable that a man of that kind will be called upon to pay what to him is an enormous amount of capital, which will depreciate his capacity for carrying on the farm. Farmers have already been badly hit by a series of had years. I again ask the Chancellor of the Exchequer whether he has given the smallest consideration to the case of the man with a very limited amount of capital. Even if the right hon. Gentleman cannot meet the case of the big man, will he not, between now and Report, give some consideration to the

position of the small owner-occupier, who is more hit than any other section of the agricultural community to-day?

Question put, "That the Clause be read a Second time,"

The Committee divided: Ayes, 155; Noes, 297.

Division No. 425.]	AYES.	[9.0 p.m.
Acland-Troyte, Lieut.-Colonel	England, Colonel A.	Ormsby-Gore, Rt. Hon. William
Albery, Irving James	Ferguson, Sir John	Peake, Capt. Osbert
Allen, Lt.-Col. Sir William (Armagh)	Fielden, E. B.	Percy, Lord Eustace (Hastings)
Allen, W. E. D. (Belfast, W.)	Fison, F. G. Clavering	Peto, Sir Basil E. (Devon, Barnstaple)
Atholl, Duchess of	Ford, Sir P. J.	Pilditch, Sir Philip
Atkinson, C.	Forestier-Walker, Sir L.	Pownall, Sir Assheton
Baldwin, Rt. Hon. Stanley (Bewdley)	Galbraith, J. F. W.	Ramsbotham, H.
Balfour, Captain H. H. (I. of Tbanet)	Ganzoni, Sir John	Rawson, Sir Cooper
Balniel, Lord	Glyn, Major R. G. C.	Reynolds, Col. Sir James
Beamish, Rear-Admiral T. P. H.	Gower, Sir Robert	Richardson, Sir P. W. (Sur'y, Ch'ts'y)
Beaumont, M. W.	Graham, Fergus (Cumberland, N.)	Roberts, Sir Samuel (Ecclesall)
Berry, Sir George	Greene, W. P. Crawford	Rodd, Rt. Hon. Sir James Rennell
Bevan, S. J. (Holborn)	Gritten, W. G. Howard	Ross, Major Ronald D.
Birchall, Major Sir John Dearman	Hacking, Rt. Hon. Douglas H.	Russell, Alexander West (Tynemouth)
Bird, Ernest Roy	Hammersley, S. S.	Salmon, Major I.
Bourne, Captain Robert Croft	Harvey, Major S. E. (Devon, Totnes)	Samuel, A. M. (Surrey, Farnham)
Bowater, Col. Sir T. Vansittart	Haslam, Henry C.	Samuel, Samuel (W'dsworth, Putney)
Bowyer, Captain Sir George E. W.	Henderson, Capt. R. R. (Oxf'd, Henley)	Sandeman, Sir N. Stewart
Boyce, H. L.	Heneage, Lieut.-Colonel Arthur P.	Shepperson, Sir Ernest Whittome
Brass, Captain Sir William	Herbert, Sir Dennis (Hertford)	Skelton, A. N.
Briscoe, Richard George	Hills, Major Rt. Hon. John Waller	Smith, Louis W. (Sheffield, Hallam)
Brown, Col. D. C. (N'th'l'd., Hexham)	Hope, Sir Harry (Forfar)	Smith-Carington, Neville W.
Brown, Brig.-Gen. H. C. (Berks, Newb'y)	Howard-Bury, Colonel C. K.	Smithers, Waldron
Buchan, John	Hudson, Capt. A. U. M. (Hackney, N.)	Somerset, Thomas
Bullock, Captain Malcolm	Hurd, Percy A.	Somerville, A. A. (Windsor)
Butler, R. A.	Hurst, Sir Gerald B.	Somerville, D. G. (Willesden, East)
Butt, Sir Alfred	Iveagh, Countess of	Southby, Commander A. R. J.
Carver, Major W. H.	Jones, Sir G. W. H. (Stoke New'gton)	Spender-Clay, Colonel H.
Cautley, Sir Henry S.	Kindersley, Major G. M.	Sueter, Rear-Admiral M. F.
Cayzer, Maj. Sir Herbt. R. (Prtsmth. S.)	King, Commodore Rt. Hon. Henry D.	Thomas, Major L. B. (King's Norton)
Chadwick, Capt. Sir Robert Burton	Knox, Sir Alfred	Thomson, Sir F.
Chapman, Sir S.	Lamb, Sir J. Q.	Titchfield, Major the Marquess of
Christie, J. A.	Lane Fox, Col. Rt. Hon. George R.	Todd, Capt. A. J.
Cobb, Sir Cyril	Law, Sir Alfred (Derby, High Peak)	Train, J.
Colfox, Major William Philip	Leighton, Major B. E. P.	Tryon, Rt. Hon. George Clement
Colville, Major D. J.	Lewis, Oswald (Colchester)	Turton, Robert Hugh
Courtauld, Major J. S.	Llewellin, Major J. J.	Vaughan-Morgan, Sir Kenyon
Cranborne, Viscount	Macdonald, Sir M. (Inverness)	Wallace, Capt. D. E. (Hornsey)
Croft, Brigadier-General Sir H.	Macdonald, Capt. P. D. (I. of W.)	Ward, Lieut.-Col. Sir A. Lambert
Crookshank, Capt. H. C.	Macquisten, F. A.	Wardlaw-Milne, J. S.
Croom-Johnson, R. P.	MacRobert, Rt. Hon. Alexander M.	Wayland, Sir William A.
Culverwell, C. T. (Bristol, West)	Makins, Brigadier-General E.	Williams, Charles (Devon, Torquay)
Cunliffe-Lister. Rt. Hon. Sir Philip	Margesson, Captain H. D.	Wilson, G. H. A. (Cambridge U.)
Dalkeith, Earl of	Meller, R. J.	Windsor-Clive, Lieut.-Colonel George
Davidson, Rt. Hon. J. (Hertford)	Merriman, Sir F. Boyd	Withers, Sir John James
Davies, Dr. Varnon	Mitchell, Sir W. Lane (Streatham)	Wolmer, Rt. Hon. Viscount
Davies, Maj. Geo. F. (Somerset, Yeovil)	Mitchell-Thomson, Rt. Hon Sir W.	Womersley, W. J.
Davison, Sir W. H. (Kensington, S.)	Monsell, Eyres, Com. Rt. Hon. Sir B.	Wood, Rt. Hon. Sir Kingsley
Dawson, Sir Philip	Morden, Col. W. Grant	Worthington-Evans, Rt. Hon. Sir L.
Duckworth, G. A. V.	Morrison, W. S. (Glos., Cirencester)
Dugdale, Capt. T. L.	Muirhead, A. J.	TELLERS FOR THE AYES.—
Eden, Captain Anthony	Nicholson, O. (Westminster)	Sir George Penny and Sir Victor
Edmondson, Major A. J.	Nicholson, Col. Rt. Hn. W. G. (Ptrsf'ld)	Warrender.
NOES.
Adamson, Rt. Hon. W. (Fife, West)	Barnes, Alfred John	Broad, Francis Alfred
Adamson, W. M. (Staff., Cannock)	Barr, James	Brockway, A. Fenner
Addison, Rt. Hon. Dr. Christopher	Batey, Joseph	Bromfield, William
Aitchison, Rt. Hon. Craigie M.	Beckett, John (Camberwell, Peckham)	Brooke, W.
Alexander, Rt. Hon. A. V. (Hillsbro')	Bellamy, Albert	Brothers, M.
Alpass, J. H.	Bennett, William (Battersea, South)	Brown, C. W. E. (Notts. Mansfield)
Ammon, Charles George	Benson, G.	Brown, Ernest (Leith)
Angell, Norman	Bentham, Dr. Ethel	Brown, Rt. Hon. J. (South Ayrshire)
Arnott, John	Bevan, Aneurin (Ebbw Vale)	Brown, W. J. (Wolverhampton, West)
Attlee, Clement Richard	Blindell, James	Buchanan, G.
Ayles, Walter	Bondfield, Rt. Hon. Margaret	Burgess, F. G.
Baker, John (Wotverhampton, Bilston)	Bowen, J. W.	Burgin, Dr. E. L.
Baldwin, Oliver (Dudley)	Bowerman, Rt. Hon. Charles W.	Buxton, C. R. (Yorks, W. R. Elland)
Caine, Derwent Hall-	Jowett, Rt. Hon. F. W.	Ramsay, T. B. Wilson
Cameron, A. G.	Jowitt, Sir W. A. (Preston)	Rathbone, Eleanor
Cape, Thomas	Kelly, W. T.	Raynes, W. R.
Carter, W. (St. Pancras, S. W.)	Kennedy, Thomas	Richards, R.
Charleton, H. C.	Kenworthy, Lt.-Com. Hon. Joseph M.	Richardson, R. (Houghton-le-Spring)
Chater, Daniel	Kinley, J.	Riley, Ben (Dewsbury)
Clarke, J. S.	Kirkwood, D.	Riley, F. F. (Stockton-on-Tees)
Cluse, W. S.	Knight, Holford	Ritson, J.
Clynes, Rt. Hon. John R.	Lang, Gordon	Roberts, Rt. Hon. F. O. (W. Bromwich)
Cocks, Frederick Seymour	Lansbury, Rt. Hon. George	Romeril, H. G.
Compton, Joseph	Lathan, G.	Rosbotham, D. S. T.
Cove, William G.	Law, Albert (Bolton)	Rowson, Guy
Cowan, D. M.	Law, A. (Rosendale)	Russell, Richard John (Eddisbury)
Daggar, George	Lawrence, Susan	Salter, Dr. Alfred
Dallas, George	Lawrie, Hugh Hartley (Stalybridge)	Samuel, Rt. Hon. Sir H. (Darwen)
Dalton, Hugh	Lawther, W. (Barnard Castle)	Samuel, H. Walter (Swansea, West)
Davies, E. C. (Montgomery)	Leach, W.	Sanders, W. S.
Davies, Rhys John (Westhoughton)	Lee, Frank (Derby, N. E.)	Sandham, E.
Day, Harry	Lee, Jennie (Lanark, Northern)	Sawyer, G. F.
Denman, Hon. R. D.	Lewis, T. (Southampton)	Scott, James
Dickson, T.	Lindley, Fred W.	Scrymgeour, E.
Dudgeon, Major C. R.	Lloyd, C. Ellis	Scurr, John
Dukes, C.	Logan, David Gilbert	Sexton, James
Duncan, Charles	Long bottom, A. W.	Shaw, Rt. Hon. Thomas (Preston)
Ede, James Chuter	Longden, F.	Shepherd, Arthur Lewis
Edge, Sir William	Lowth, Thomas	Sherwood, G. H.
Edmunds, J. E.	Lunn, William	Shield, George William
Edwards, C. (Monmouth, Bedwellty)	Macdonald, Gordon (Ince)	Shiels, Dr. Drummond
Edwards, E. (Morpeth)	MacDonald, Malcolm (Bassetlaw)	Shinwell, E.
Egan, W. H.	McElwee, A.	Short, Alfred (Wednesbury)
Evans, Capt. Ernest (Welsh Univer.)	McEntee, V. L.	Simmons, C. J.
Foot, Isaac	McGovern, J. (Glasgow, Shettleston)	Simon, E. D. (Manch'ter, Withington)
Forgan, Dr. Robert	McKinlay, A.	Sinkinson, George
Freeman, Peter	MacLaren, Andrew	Sitch, Charles H.
Gardner, B. W. (West Ham, Upton)	Maclean, Neil (Glasgow, Govan)	Smith, Ben (Bermondsey, Rotherhithe)
Gardner, J. P. (Hammersmith, N.)	McShane, John James	Smith, Frank (Nuneaton)
Gibbins, Joseph	Malone, C. L'Estrange (N'thampton)	Smith, H. B. Lees- (Keighley)
Gibson, H. M. (Lancs. Mossley)	Mander, Geoffrey le M.	Smith, Rennie (Penistone)
Gill, T. H.	Mansfield, W.	Smith, Tom (Pontefract)
Gillett, George M.	March, S.	Smith, W. R. (Norwich)
Glassey, A. E.	Marcus, M.	Snell, Harry
Gossling, A. G.	Markham, S. F.	Snowden, Rt. Hon. Philip
Gould, F.	Marley, J.	Snowden, Thomas (Accrington)
Graham, D. M. (Lanark, Hamilton)	Marshall, Fred	Sorensen, R.
Graham, Rt. Hon. Wm. (Edin., Cent.)	Mathers, George	Stamford, Thomas W.
Granville, E.	Matters, L. W.	Stephen, Campbell
Gray, Milner	Maxton, James	Stewart, J. (St. Rollox)
Greenwood, Rt. Hon. A. (Colne)	Messer, Fred	Strachey, E. J. St. Loe
Grenfell, D. R. (Glamorgan)	Middleton, G.	Strauss, G. R.
Griffith, F. Kingsley (Middlesbro' W.)	Mills, J. E.	Sullivan, J.
Griffiths, T. (Monmouth, Pontypool)	Milner, Major J.	Sutton, J. E.
Grundy, Thomas W.	Montague, Frederick	Taylor, R. A. (Lincoln)
Hall, F. (York, W. R., Normanton)	Morgan, Dr. H. B.	Taylor, W. B. (Norfolk, S. W.)
Hall, G. H. (Merthyr Tydvil)	Morley, Ralph	Thomas, Rt. Hon. J. H. (Derby)
Hall, Capt. W. G. (Portsmouth, C.)	Morris-Jones, Dr. J. H. (Denbigh)	Thurtle, Ernest
Hamilton, Mary Agnes (Blackburn)	Morrison, Herbert (Hackney, South)	Tinker, John Joseph
Harbord, A.	Morrison, Robert C. (Tottenham, N.)	Toole, Joseph
Hardie, George D.	Mort, D. L.	Tout, W. J.
Hartshorn, Rt. Hon. Vernon	Moses, J. J. H.	Townend, A. E.
Hastings, Dr. Somerville	Mosley, Lady C. (Stoke-on-Trent)	Trevelyan, Rt. Hon. Sir Charles
Haycoek, A. W.	Mosley, Sir Oswald (Smethwick)	Turner, B.
Hayes, John Henry	Muff, G.	Vaughan, D. J.
Henderson, Arthur, Junr. (Cardiff, S.)	Muggeridge, H. T.	Viant, S. P.
Henderson, Thomas (Glasgow)	Murnin, Hugh	Walkden, A. G.
Henderson, W. W. (Middx., Enfield)	Nathan, Major H. L.	Walker, J.
Herriotts, J.	Naylor, T. E.	Wallace, H. W.
Hirst, G. H. (York W. R. Wentworth)	Noel Baker, P. J.	Wallhead, Richard C.
Hirst, W. (Bradford, South)	Oldfield, J. R.	Watkins, F. C.
Hoffman, P. C.	Oliver, George Harold (Ilkeston)	Watson, W. M. (Dunfermline)
Hollins, A.	Oliver, P. M. (Man., Blackley)	Watts-Morgan, Lt.-Col. D. (Rhondda)
Hopkin, Daniel	Owen, Major G. (Carnarvon)	Wedgwood, Rt. Hon. Josiah
Horrabin, J. F.	Owen, H. F. (Hereford)	Wellock, Wilfred
Hudson, James H. (Huddersfield)	Palin, John Henry	Welsh, James (Paisley)
Hunter, Dr. Joseph	Paling, Wilfrid	Welsh, James C. (Coatbridge)
Isaacs, George	Palmer, E. T.	West, F. R.
Jenkins, W. (Glamorgan, Neath)	Perry, S. F.	Westwood, Joseph
John, William (Rhondda, West)	Pethick-Lawrence, F. W.	White, H. G.
Johnston, Thomas	Phillips, Dr. Marion	Whiteley, Wilfrid (Birm., Ladywood)
Jones, F. Llewellyn- (Flint)	Picton-Turbervill, Edith	Wilkinson, Ellen C.
Jones, Henry Haydn (Merioneth)	Pole, Major D. G.	Williams, David (Swansea, East)
Jones, J. J. (West Ham, Silvertown)	Potts, John S.	Williams, Dr. J. H. (Llanelly)
Jones, Rt. Hon. Leif (Camborne)	Price, M. P.	Williams, T. (York, Don Valley)
Jones, Morgan (Caerphilly)	Pybus, Percy John	Wilson, C. H. (Sheffield, Attercliffe)
Jones, T. I. Mardy (Pontypridd)	Quibell, D. J. K.	Wilson, J. (Oldham)

Wilson, R. J. (Jarrow)	Wood, Major McKenzie (Banff)	TELLERS FOR THE NOES.—
Winterton, G. E. (Leicester, Loughb'gh)	Wright, W. (Rutherglen)	Mr. Allen Parkinson and Mr.
Wise, E. F.	Young, R. S. (Islington, North)	William Whiteley.

Question put, and agreed to.