§ In all cases where a new holder has acquired or shall acquire a pecuniary interest in buildings or other permanent im- 2342 provements in his holding by means of a loan from the Board of Agriculture or the Department of Agriculture, and the loan shall have been made at a sum greater than a sum representing the value of such improvements to the holding as determined by the Land Court, the new holder or his statutory successors shall be entitled to make application to the Land Court to value such improvements at their value to an incoming tenant to the holding, and the Land Court, after hearing parties and inspecting the holding, shall value the improvements accordingly, excluding from the valuation such improvements, if any, as shall have been provided or paid for by the holder otherwise than by means of such loan, and notwithstanding any agreement, bond, or obligation to the contrary, the amount of such valuation shall be deemed to be the liability of the holder at the date of the valuation in respect of the loan made to him by the department, and, in lieu of the bond granted for the payment of such loan, the holder shall grant in favour of the department a, bond for repayment of a sum representing the amount of such valuation by means of annual instalments of principal and interest within a period not exceeding fifty years, and such bond shall supersede any bond or other obligation previously granted in respect of the original loan.—[Mr. Scott.]
§ Brought up, and read the First time.
§ Mr. SCOTTI beg to move, "That the Clause be read a Second time."
The reason for this New Clause is this. New holders after the war were saddled by the Department of Agriculture with the total expense which the Department had incurred in forming and establishing the holdings and, accordingly, the rents the men were asked to pay were so heavy that a storm of protest arose, particularly from ex-service men who were most hardly hit, the men declaring that they could not continue the holdings upon the basis arranged by the Department. The Department, with the consent of the Treasury, made an arrangement under which certain of the holdings were revalued, and the holdings which were selected for revaluation were those established between Michaelmas, 1918, and Michaelmas, 1922. The principle for which I am contending in this Amendment was therefore conceded by the Department in regard to holdings established between these two dates, and there is no reason why revaluation should not be made in regard to holdings established prior to 1918 or subsequent to 1922. The necessity for revaluation is this. When a man enters upon his holding he has to sign a bond for an amount which 2343 will cover the expenses to which the Department has been put in forming the holding, and when the buildings have been completed he finds that their value is nothing like the amount stated in the bond.
Some of the bondholders in my constituency went to the Land Court for revaluation and the result in one case, which is typical of many others, was that where a man had signed a bond to the Department for£1,250 the value of the buildings as ascertained by the Land Court was something like£600. The result was that he found himself in a debt due to the Department of Agriculture of over£600, for which the Department say they have no power to give him a discharge. That is not the worst of it. In ascertaining this sum of£600 as the value of the buildings on the holding now the Land Court have estimated the value of improvements at£70. This is a state of matters which cannot continue, and the Department should take power to have all holdings revalued and new bonds taken from the holders for amounts which are really due from them and not for purely fictitious amounts. In Committee the Under-Secretary of State suggested that Departmental administration would meet the difficulty, but with the utmost respect for the Department I say that the smallholders are somewhat sceptical of the Department's generosity, and, indeed, they do not wish to be treated generously but justly. It is upon justice that this new Clause is founded.
§ Mr. MACPHERSONI beg to second the Motion.
§ Mr. JOHNSTONI am very sorry that the hon. Member has moved this new Clause. By Clause 12 of the Bill this difficulty is provided for, so far as the future is concerned, as the Department takes power, so far as dwelling houses or other buildings are concerned to provide assistance by way of gift. As for the past, it has been found exceedingly difficult to deal with this matter by legislation. Circumstances vary in every case. We have had this rather long new Clause very carefully examined and we are advised that it would end in an enormous amount of legal trouble. The first sentence is:
In all cases where a new holder has acquired or shall acquire a pecuniary interest in buildings.2344 Those words open up the prospect of much legal trouble. While it is very difficult to find words which will deal satisfactorily with the position and enable the Department to proceed on the best lines I assure the hon. Member that we will deal with the matter administratively. I gather that hon. Members opposite take the view that cases such as those mentioned by the hon. Member for Kincardine (Mr. Scott) have to be met and that all parties are agreed that these loans have to be scaled down to present realities. It is possible for the Department to meet the difficulty caused by these old swollen loans administratively, and the Treasury have agreed to this policy. I understood that hon. Members below the gangway took the view that this was a matter which could be dealt with most easily by administrative action, and as I gave a pledge to that effect in Committee I regret that the hon. Member has put down a new Clause which we cannot possibly accept and which will only make confusion worse confounded.
§ Major ELLIOTThe Under-Secretary of State is undoubtedly right in his recollection. We on this side considered that administrative action is the only way by which the situation can be tackled. It is true that smallholders have found themselves burdened with an amount of debt which does not correspond to any real estate, and, therefore, the book asset has to be written down to correspond with the real asset. I think that administrative action, together with Clause 12, is the best way of dealing with the matter, as it gives the Department full power to carry out the process of scaling down or writing off these book debts. I feel a little uneasy about any new Clauses brought forward by the hon. Member for Aberdeen and Kincardine (Mr. Scott), not because they are of evil intent, but because owing to my lack of legal knowledge I am unable to discover that they have any intent whatever. I trust the hon. Member personally, but it seems to me that he considers this Bill the appropriate opportunity for inserting in the Statute Book of Scotland every minority report which was ever drawn up, and for all I know this new Clause may be one of them. We must leave the responsibility with the Department. There is a grievance 2345 in regard to a man who has this huge debt hanging over his head, which it is impossible for him to pay off. The Department has, after all, to consider the matter from a commercial point of view, and it is not in the Department's interest to saddle a man permanently with a load of debt which breaks his heart at the outset. It is clear that the writing off of about 50 per cent. of the values of these smallholdings is not enough, and that we shall have to write off even more than 50 per cent.
§ Mr. JOHNSTONThe hon. and gallant Gentleman knows that this writing off is due to War values. After the War many men were hurriedly placed on land which was bought at very high value. It is hardly fair to suggest that the extraordinary burdens which the small holdings have had to bear because of the War, are any normal criticism of the small holding system.
§ Major ELLIOTI wish I could be sure that the fall of capital value, compared with the time immediately after the War, was not being repeated now. The index figure for wholesale prices has fallen as much as 10 per cent. in the last few months. I should be glad if I could feel that there was no likelihood of any repetition of that huge shrinkage of values. I quite agree that administrative discretion must be given to the Department. We have an indication here that many of the calculations upon which these things are based are not tenable, in view of the drop in the value of primary products that is going on.
Mr. R. W. SMITHThe Under-Secretary of State mentioned that many of these holdings had been unsuccessful because just after the War it was necessary to place ex-soldiers on the land. Many of them were so placed against the advice of people on our side. I hope the Under-Secretary will remember what he has said when he comes to deal with the Agricultural Land (Utilisation) Bill, on which it seems likely that we shall have the same cases occurring again.
§ Mr. MACPHERSONI should not have intervened at this moment had it not been that I thought the Under-Secretary of State was rather ungenerous to my hon. Friend who moved the Second Reading of this Clause. My hon. Friend takes a very deep interest in this Bill 2346 and knows it inside out. He has to-day been generous in agreeing to accept Clause after Clause which has been moved by the Government—Clauses which embody principles upon which we feel very deeply. What is it that the Under-Secretary said? He said he was exceedingly sorry that my hon. Friend had moved this new Clause. But my hon. Friend never gave any pledge in the Standing Committee that he would not move the Clause on Report. On the contrary he made it plain that on Report he would raise this matter again. What are the facts? The Under-Secretary's only justification is that the Department has made a sort of confession to deal administratively with this problem. Admittedly the problem is a difficult one. That is admitted by the Under-Secretary and by the hon. and gallant Member for Kelvingrove (Major Elliot). But can the Secretary of State deal with the problem administratively? I have in my hand a letter from his Department, dated 11th December, 1930. It deals with this very point, and one sentence is as follows:
The Department have at present no authority to make a settlement with your clients other than that stated above.If the Department had no authority in December last, how can they have authority without a Statute in March, 1931? Unless they accept this Clause they will be in the same difficulty when this Bill is passed as they were in last year. The Under-Secretary mentioned Clause 12. I am astonished that at this time the Government should ride off on Clause 12, which has no bearing upon the subject. Clause 12 deals with future tenants and future loans; it has no retrospective influence at any time. The gravamen of the charge made against the Government in connection with this particular Clause was that it did not deal with the very hard cases which were brought into existence by high values and high prices immediately after the War, when, as the Under-Secretary stated, ex-service men without any knowledge of agriculture, were placed upon the land. They may or may not have had much knowledge of agriculture. Some of them had a great deal of knowledge. The fact is that they were placed on the land at a time when prices were excessively high, when the price of land, of stock and of implements was high, and it became exceedingly difficult for 2347 these ex-service men to make a living in after years when values decreased. That was the point made by the hon. and gallant Member for Kelvingrove (Major Elliot), and it is a point which we are making now. The real difficulty is with those who were placed on the land under conditions of that kind, and Clause 12 has nothing to do with those cases.
§ Mr. JOHNSTONI said as clearly as possible that Clause 12 dealt with future cases, but I also said that the Department, after consultation with the Treasury, would be able to deal administratively with the point that has been raised on this new Clause.
§ Mr. MACPHERSONHas the Department authority from the Treasury to deal with cases retrospectively?
§ Mr. JOHNSTONI said as clearly as words permit, that if both Houses of Parliament approve of the principle of Clause 12, we will deal with past cases administratively.
§ Mr. MACPHERSONI understand that if Clause 12, which deals with future cases, becomes law, the Department of State will, with the sanction of the Treasury, be in a position to deal with hard cases retrospectively? If that is so, I say frankly that an attempt has been made to meet us.
§ Mr. JOHNSTONI did most distinctly say that in the Committee.
§ Mr. MACPHERSONI accept that statement, but it is not my recollection of what was said in Committee. However, I am glad to hear on the Floor of the House that the decision now is quite clearly that, with the sanction of the Treasury, the Secretary of State has power to deal with hard cases retrospectively. That being so, I will ask my hon. Friend to withdraw his proposed Clause.
§ Mr. C. WILLIAMSI think we have a most monstrous position here in reference to this proposal. Here we have a small group of 20 Members from Scotland agreeing to a most extraordinary proposal. We have been told by the Under Secretary both here and in the Committee—and I can bear him out in that respect—that he has been able to persuade the Treasury, if a Clause is passed in this Bill for the purpose of dealing with cer- 2348 tain future cases, to allow him to deal administratively with past cases and to reduce the amounts of the loans. I am not discussing at the moment whether it is right or wrong that this should be done, but the fact remains that these people went into these holdings on stated terms which were considered fair and just at the time. The change in conditions which has come about is one which affects every section of the British community, but now it is proposed to take this action in regard to these particular cases, by an administrative order which cannot be checked in Parliament and under which we shall have no means of knowing how much is being given away in this respect.
I am not denying that there are hard cases, but, from a purely constitutional point of view, having entered into an agreement, having passed certain legislation, we ought not to seek to change the whole course of that legislation by administration. At a time like the present, when Parliament passes a law, that law ought to be carried out, and we ought not to seek to alter it in this way. I am not in any way impugning the present Secretary of State for Scotland or his predecessors, but it is not right or just, nor is it in the best interests of the House of Commons, to adopt this course. It is not right that the Department should have power granted to it by the Treasury to override an Act of Parliament. As far as I am concerned, I am quite willing that these cases should be examined individually on their merits, but where Government money is being used it is not right to go behind legislation which this House has passed, and by means of what is, simply, collusion between the Secretary of State and the Treasury, to try to override the provisions of an Act of Parliament.
I and some of my hon. Friends have for a long time been very suspicious about these matters. A great many things of this kind have been going on, and there has been very lax administration, and I am glad of the opportunity to point out to the House what is going on, and to indicate the necessity for watching these matters very carefully. I do not for a moment suggest that I would not deal with these cases, but I would do so in an entirely different way. I do not say that these people have not suffered by the fall in prices, but that 2349 matter has affected every section of the community. If this matter was being dealt with by legislation, I would be prepared to give it fair consideration, but I resent the way in which it is proposed to deal with it.
§ Mr. JOHNSTONIf I may, with the leave of the House, speak again, I should like to remove from the mind of the hon. Member for Torquay (Mr. C. Williams) the impression which he seems to have gathered as to what the position is. First, may I say that I did give a very definite assurance on this matter in Committee, and it will be found in the OFFICIAL REPORT of the Standing Committee on Scottish Bills, 17th February, 1931, col. 418. As regards the point of the hon. Member for Torquay (Mr. C. Williams), it has always been within the power of the Treasury to scale down values on property which had become bogus values. Indeed, it is their duty to do so. All we are saying is that once Parliament approves of the principle that we should ensure that these loans have some basis in actuality, then the Department should have power to deal, administratively, with some of the gross cases indicated by hon. Members who have spoken. I am certain that the hon. Member for Torquay could find no other way of dealing with these extraordinary cases of ex-service men—as almost all of them are—whose holdings were created immediately after the War when prices were sky-high. I am sure that he would be the first to agree that the only way of dealing with those cases is to scale down these bogus values.
§ Mr. WILLIAMSHow is it that this kind of arrangement can be carried out in Scotland, but never in any circumstances can we get such a thing done in the case, for instance, of a fishing harbour in England.
§ Mr. JOHNSTONIf the hon. Gentleman makes the point that what is good in Scotland is necessarily and inevitably good in England—
§ Mr. WILLIAMSNo.
§ Mr. JOHNSTONI am sure the hon. Member realises that it is inevitable that we must deal with these ex-service men's cases in the way which I have indicated, and if he says that the principle that we are adopting in this matter ought to 2350 be adopted in other Departments of the State, then I shall be very glad indeed to assent.
§ Question, "That the Clause be read a Second time," put, and negatived.