HC Deb 04 May 1931 vol 252 cc47-169
The CHANCELLOR of the EX-CHEQUER (Mr. Philip Snowden)

I beg to move, That there shall be charged for the financial year ending the thirty-first day of March, nineteen hundred and thirty-four, and for every subsequent financial year, a tax at the rate of one penny for each pound of the land value of every unit of land in Great Britain. Under the terms of this Resolution, if it be accepted, the Government will be authorised to introduce in the Finance Bill provisions for a valuation of the land of the country and for the imposition of a penny in the pound annual tax upon the ascertained capital value. The Resolution has been drawn in wide terms in order not to restrict the Committee on the Finance Bill from moving Amendments which might be out of order if the terms of the Ways and Means Resolution were more restricted. The proposals which we shall submit and which I shall describe this afternoon propose certain limitations on the wide terms of this Resolution and certain exemptions from the operation of the tax which will make the Measure more simple and more practical without in the least impairing its effects.

Before I proceed to give the details of our proposals, I want to spend a few minutes in stating the case for the taxation of land values. The right hon. Gentleman the Member for Darwen (Sir H. Samuel) pointed out the other day that this proposal had been in the programme of the Liberal party for about 40 years. It has been in the programme of the Labour party ever since the inception of that party. The underlying principle of this Resolution has often found support. Measures embodying it in Conservative Parliaments have on six occasions passed a Second Reading; 600 municipalities in the country, mainly Conservative, have petitioned Parliament to deal with the matter; and conferences of local authorities are regularly held in order to impress upon Parliament its importance. Eminent economists have given support to the proposal; Select Committees and Royal Commissions have been appointed by Parliament to inquire into this question. Indeed, so widespread is the demand for legislation of this description, that it might almost be said that it is a question which transcends all political differences.

I see that the widely-circulated newspapers of Lord Beaverbrook and Lord Rothermere are giving support to proposals for dealing with this subject. The views of these men, I have no doubt, will receive proper respect and consideration. I do not believe, in view of the general opinions on this question, that any party in this House will have the temerity to oppose the proposals, although it is quite within the rights of any hon. Members, a" they may desire, to endeavour to amend them in certain details and particulars. We have set our hands to this task and we are going to see it through. [Interruption.] By this Measure we assert the right of a community to the ownership of land. If private individuals continue to possess a nominal claim to the land, they must pay a rent to the community for the enjoyment of it, and they cannot be permitted to enjoy that privilege to the detriment of the welfare of the community.

Land differs from all other commodities in several respects. The land was given by the Creator, not for the use of dukes but for the equal use of all His people. A restriction in the freedom to use land is a restriction on human liberty and freedom. Land, I said, is unlike other commodities in several respects. To restrict the use of land by the arbitrary will of its owner, enhances its price, raises rents, hampers industry, and prevents municipal development and the promotion of social amenities. Every increase in population, every expansion of industry, every scientific development, every improvement in transport, all expenditure of public money, indeed, every child born, adds to the rent of land. Rent enters into the price of every article produced, and into every public service. The instances of this, proving the truth of this statement, are so obvious that illustrations are hardly necessary. On the principle, however, that an ounce of fact is worth a pound of theory, I will give a few illustrations.

Forty years ago, Mr. Goschen, standing at this Box and replying be a charge that the wages of Government workmen were too low, said: "I know they are. I have raised them, but I find that every time I raise the wages, the landlords raise the rents." Public attention has been mainly directed to this matter because of the obvious effects, before everybody's eyes in these days, of the rapid growth of new suburban districts, but the problem is not confined to that. Land values are rising in all built-up cities, and fabulous prices are being demanded and paid for every public improvement, or when land is sold by public auction for other purposes. A striking instance of that is to be found in Liverpool. The Lordship of Liverpool was sold in 1635 for£450. Quite recently, sites have been sold in the centre of Liverpool at the rate of more than one million pounds per acre. Comparable cases are to be found in every one of our large towns and cities.

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Public attention has been, in the main, called to this evil because of the rise of new districts and the extension of towns in suburban areas. Never in history have land values been rising in rural areas and on the outskirts of our towns at the rate at which they are rising to-day. Motor transport has effected a revolution. It has practically destroyed the distinction between the rural and urban parts of the population. We go on, at the public expense, spending millions of pounds of public money on the making of roads, in order to make agricultural land into land eligible for building purposes. May I give the House a few instances which were given in a widely-circulated Conservative newspaper a short time ago? This appeared in Lord Beaverbrook's "Sunday Express" and it dealt with the rise of land values in certain London suburbs. It says: Owners of derelict estates, farmers on the verge of ruin, business men with unimposing country seats, middle class speculators, even butchers with grazing lands—all have silently profited by the building boom. Their profits run into tens of millions. Already£120,000,000 have changed hands, according to the estimate of a leading estate agent who is familiar with every important development in the boom. Every one is familiar with the development caused by the expenditure of large sums in constructing great roads in the Morden area. More than£1,200,000 was involved. There was a man there running a poorish farm at a loss. Then came local development schemes, and he sold his few acres for£50,000. Roughly that means that he will have an assured life income of£2,500. In North Middlesex there was a comparatively poor man who borrowed money to buy hundreds of acres of land. Then bit by bit he sold out to the invading builders. Now he is reputed to be worth£500,000. So I might go on. These facts are familiar to every one. Lord Ashfield has pointed to the fact that the building of the Underground Railway to the outer districts has vastly increased the price of land. He said at one shareholders' meeting: Land speculation at the Edgware terminus had forced the price to a level which restricted purchases, and he suggested that something should be done to secure the increment value due to the making of the railway. I have here a summary of 14 cases, taken at random, where local authorities have bought land for housing purposes. Altogether these cases comprise 3,000 acres. The price paid was£582,509. When we refer to the rating assessment to see what the estimated value of this land was for rating purposes, we find that it was£120,000. Let me give one particular instance, a very modern one—the London County Council Becontree housing scheme. The London County Council bought just over 2,000 acres. According to the assessment for local rating it was valued at£7,000. The owners received for it£295,000. They left the taxpayers to provide the subsidies on the houses that were built on this land, and they left the ratepayers to make streets and roads, schools and playing fields and the other work of the amenities of a town of that sort. I ask this question; Why should there be one value for rating and five times that value when land is required for building?

De-rating has added to the urgency of this question. We have had to provide, in this time of national crisis, about£35,000,000 a year to subsidise the local rates. I might add that de-rating, which costs the Exchequer so much, certainly accrues to the benefit of landowners sooner or later. The taxation of land values will obtain revenue, and in that way help to meet the cost of the de-rating subsidy. De-rating has also, in another respect, made this question more urgent. A great deal of agricultural land has a ripening or ripened building value, yet so long as it is unbuilt on, the landlord altogether escapes payment of tax upon his land. Well may Henry Broad-hurst have said, "The landlord sleeps, but grows fat." The taxation of land values may be described as a rent paid to the community for the use of the land, a contribution to the needs of the community by whose existence the value of the land has been so largely created. That is our case for the proposals I shall now describe. In a sentence we are asking the landowner to "render unto Caesar the things that are Caesar's."

As Members are aware, the first task in the taxation of land values is the valuing of the sites. This we propose to do, and when the valuation is complete we propose to tax at a penny in the£ upon the ascertained capital value. I may here interpolate a few remarks on some observations which were made by the hon. Member for Mid Bedford (Mr. Gray) in the course of the discussion a few days ago, in which he expressed his regret that the valuation would not take place so that it would be possible to impose the tax within the next 12 months. My Friends behind me have already expressed to me a similar regret. I must say that they show considerable lack of comprehension of the magnitude of this question. There will be from 10,000,000 to 12,000,000 of separate hereditaments to value. A large staff will have to be engaged. But they will not be able effectively to begin the work until about next October. But I will point out this to my hon. Friends: The revenue from the taxation of land values is not by any means the only advantage that we hope to attain. There is, in my opinion, a more important advantage. It will cheapen land; it will throw open land for use. I would also point out that these advantages will begin to accrue as soon as the Bill becomes law.

As regards ray actual proposals, hon. Members will not expect an exhaustive account before the Finance Bill is published; but it is, of course, due to the Committee that I should here and now give an outline of the scheme. I am sure that as I go forward hon. Members will be bursting with the desire to ask questions but must ask them to restrain themselves. There will be ample opportunities for them to put questions, and there will be ample opportunities for answering them. My hon. Friend the Financial Secretary to the Treasury and the Solicitor-General (who will be in charge of the legal points of the Bill) will, in the course of the Debate which follows, give all the information they reasonably can.

However, before I proceed to give an outline of this scheme, let me indicate our intentions in regard to agricultural land. I do not propose that the tax should apply to agricultural land as long as it has no higher value than its value for agricultural purposes. Why? an hon. Member opposite asks. Because it is not worth while, because it would probably cost more than the effort is worth. Of course if during the Committee stage of the Finance Bill hon. Members opposite who appear to be disappointed that agricultural land is not to be taxed, propose such an Amendment, I shall be very sympathetic to it. Where agricultural land has a higher value than its agricultural value, its cultivation value, it will be subject to the tax, but only on the excess of the value over its agricultural value. In short, purely agricultural value of agricultural land will be exempt from the new charge. That applies to allotments and market gardens, except in so far as they may have a ripening or a ripened building value.

I now turn to the general scheme of the Bill, and I will deal with it under three heads: first, the process of valuation; second, the appeals: and then the taxation. It is proposed that a valuation shall be made as from 1st August next of all the land in the country which is not specifically exempt from taxation. The values so ascertained will remain in force for five years. A revaluation will take place as from 1st August, 1936, and so on at intervals of five years. The unit of valuation, generally speaking, will be every piece of land which is in separate occupation at the valuation date. As regards the basis of valuation, I have endeavoured to follow the very sound advice that was given to me in the Budget Debate of last year by the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George), that the basis of valuation should be simple and direct and should avoid the complexities of the Measure with which he was associated.

In view of the magnitude of the task of valuation involved in any proposal of this character, I find myself in complete agreement with the right hon. Gentleman in this respect, and the definition of land value in the Finance Bill will be framed with full regard to the practical business of making the valuation complete in two years, while keeping in mind the general principles underlying a proper conception of land value. Speaking broadly, the land value, as it is proposed to be defined in the Bill, will be represented by the price which a purchaser would pay for a piece of land at the date to which the valuation is directed, if, firstly, the existing buildings and works, with certain exceptions, thereon were not there, and secondly, all other pieces of land were in their existing condition with all buildings and improvements thereon. On this basis the piece of land to be valued will, I consider, be substantially in the state in which land does in fact form the subject of purchase and sale in the market. In other words, what is contemplated in the Bill is a piece of land in the state in which it is so frequently found to be offered for sale in the ordinary way, namely., as a vacant plot, unbuilt on, ready for use for building or agricultural purposes as the case may be in rural areas, or as a plot for building or some other industrial purpose in urban areas. In addition, in order to give effect to my proposals in regard to agricultural land, a further value will be ascertained in cases where the land has a higher value than its value for purely agricultural purposes; the value which is termed cultivation value is ascertained on the basis I have described, but on the assumption that the use of the land is permanently and solely restricted to agricultural purposes.

The Labour party have always attached great importance to publicity in relation to land valuation, and I propose that the values ascertained under the Finance Bill shall be made public. For this purpose the Bill provides for the deposit in the offices of the local authorities of a register showing the value of every unit of land within its area, and the register will be open to inspection. On the occasion of the first valuation, a copy of the valuation of each unit will be served upon the owner of the unit, and deposit of the valuation will take place at a later stage when the whole valuation has been substantially completed. On subsequent re-valuations service upon the owner will be dispensed with. The valuations will be deposited, and owners will be entitled to ascertain from the deposited list the valuations placed upon their units of land. This valuation will, I hope, form the basis in arriving at the purchase price of land for public purposes, and I hope also that it may and before long, form the basis of transferring local rating from houses, buildings and improvements to site values.

As I have said, the valuation, once settled, remains in force for five years. Of course, it is certain that in the quinquennium there will be changes in the ownership of land, and when a plot of land is divided between different owners we do not propose a new valuation; until the next general valuation the total value will be apportioned between the additional owners and the original owner if he still retains a share of the ownership of land. The Bill will confer power to require returns from the owners where necessary, and I propose also to reintroduce the provision under which information as to land sales and lettings shall be furnished to the Board of Inland Revenue as was the case up till eight years ago. That provision was abolished in circumstances with which some Members of the Committee will be familiar. It is necessary that this should be done in order that the Department of Inland Revenue shall be able to carry on their work effectively. They must keep a record of changes not only of ownership, but of changes in the value of land.

As to the cost of the valuation, there will be from 10,000,000 to 12,000,000 separate hereditaments to value, and the process is expected to take two years to complete. I wish that it could be done in a shorter period. The cost of the valuation will depend on the form in which the Bill emerges from Parliament, and also on the degree of co-operation or opposition that we get from landowners. I am naturally not in a position to give an exact figure as to the cost of this valuation, but I estimate that the cost will be between£1,000,000 and£1,500,000, spread over three financial years; perhaps£300,000 or£400,000 of that will fall in the current financial year. With regard to the provisions for appeal against the valuation, objection to the amount of the valuation may be made by the owner of the land unit. Any objection that is overruled will be referred to one of the panel of referees which is appointed under Part I of the Finance (1909–10) Act, 1910. His decision will be final, except of course on a point of law, which can be taken on appeal to the law courts.

Turning to my proposals in so far as they provide for the imposition of a tax on land value, the tax will be a general tax on land value levied annually at a rate of one penny in the pound from 1933–4 onwards. The taxation proposals are consequently both more simple and more general than those in the Budget of 1909–10, and any criticism of these proposals based upon that scheme will not only be very foolish, but quite irrelevant. Until considerable progress has been made with the valuation, it will be quite impossible to give even an approximate estimate of the yield, and I do not propose to lay myself open to a future accusation of having been proved a very false prophet because any estimate I might give might be absurdly low or fantastically high. Of course, revenue considerations, though very important, do not afford the only reason for the institution of a scheme of land values taxation.

So far as the individual who has to bear the tax is concerned, where land is owned and occupied by the same person, the tax will, of course, fall upon him, but where it is not held by one individual, but by a number of persons holding various interests, such as leases and subleases, and so on, the tax will be charged upon the lessee who holds under a term, as originally granted, exceeding 50 years, or, if there is no term of such length, by the freeholder. Where the tax is to be paid by a lessee, however, provision will be made to -enable him to pass it back in certain circumstances.


What are the circumstances?


They will be explained later. Certain exemptions from taxation will be contained in the Bill. In the first place, certain classes of land will be exempted, the exemption being dependent on the ownership or use of the land. Such lands include the sites of churches and other buildings used for public worship, churchyards and burial grounds, land owned by the National Trust, land owned by local authorities, sites of hospitals and almshouses, land owned by railways and other public utility concerns working under statutory limitations where the land cannot be alienated for other purposes. In regard to minerals, the practical difficulties in the way of dealing with these are, we find, almost insuperable. It would in any case greatly delay the completion of the valuation, and it must be borne in mind that coal and some other minerals are already subject to the Mineral Rights Duty, and coal to the Miners' Welfare Levy. Moreover, I may say that it is the programme of the Government to nationalise minerals in due course.

It is obvious that there will be an enormous number of assessments where the amount involved is negligible, and where the amount of tax will probably be no more than a few coppers, and, obviously, it will not be worth while to collect these small taxes; so I propose that individual taxpayers shall be relieved of tax for any year for which he proves that the total amount payable by him does not exceed 10s., a sum equal to tax on a capital value of£120. [Interruption.] As hon. Members opposite appear to be much interested in the matter, I will add the further information that this relief will relieve practically the whole of the dwellings owned by the working classes. [HON. MEMBERS: "Bribery."] That is, in brief outline, the scheme of land values taxation which I wish to bring forward. My exposition of it has naturally left much of the detail unexplained, but the full scheme will be available when the Finance Bill is published.

Before I sit down I should like to make one more general observation. In preparing a complicated scheme of taxation of this nature innumerable occasions arise when there is some degree of conflict between abstract theory and administrative practicability. Whenever, in the course of my long preparation of this scheme, this conflict has arisen, I have striven to get as near logicality as was consistent with the simplicity and effectiveness of the scheme. If some of my hon. Friends regard this scheme which I have outlined as failing in some detail to comply with the requirements of strict logic, let me assure them that I have departed from abstract theory in no case except for overwhelming reasons. Let them remember that the one scheme of land values taxation which has been tried in this country broke down largely because of its complexity. A second administrative failure would be a disaster. It would certainly discourage the advocates of this reform, for which they have been fighting for so long. I cannot hope that my scheme will be regarded as perfect in all quarters. The first attempt at a scheme of this sort must reveal complications and difficulties, and it cannot be expected to be perfect in detail, but administrative experience will undoubtedly discover the ways in which the difficulties can be met. In Committee on the Finance Bill I shall be prepared to give favourable consideration to all Amendments which will improve the Bill, but I can and do claim that the scheme as it will be introduced is a practicable and beneficial Measure, that it will deal effectively with a great social wrong, and it is in that belief that I confidently submit this Resolution to the House.


The Chancellor of the Exchequer has this year adopted an unusual course in more than one respect, and I cannot say that it is a convenient one. He has, in the first place, complicated the finance of the year by proposals which are not intended to take effect in this year, or next year, or until the year after that. In the second place, he has divided his Budget statement into two. He has reserved for the second statement, which has to be followed by an immediate discussion, that part of his Budget which he himself described as the most important part and which all of us would be agreed in describing as by far the most difficult part to understand. The right hon. Gentleman has shown himself a master of lucid exposition when he wants to be understood, but no one will pretend, not even he himself, that he has given such a picture of his proposals to the Committee this afternoon as will enable them to understand the tax which he now proposes. The right hon. Gentleman deprecated any interruptions as he spoke. I ventured on a single question, and the right hon. Gentleman refused me any reply. The Committee will realise, I think, that I speak under great difficulties, not perhaps shared in every quarter of the House, and that what I have to say on the subject at this moment can be only of a most provisional and of a most sketchy kind.

The first point which troubles me, and I expect it will have troubled other Members of the Committee, is how to relate the tax which the right hon. Gentleman proposes with the objects which he announces that it is going to achieve. The right hon. Gentleman says that the land is the property of the community. Henceforth, if anybody wishes to have what is still to be called the ownership of it, he is to pay a rent to the community. The first observation I would make upon that, if you assume that the land is the property of the community, is that the laws of this country have authorised, permitted and encouraged private dealings in it, that the land has not remained in the same hands ever since it was created, nor is it confined to the dukes, whom the Chancellor is pleased to consider as typical landowners.


He never said so.


I am alluding to the animus displayed by the Chancellor and the revelation of motives which he has given. He assumed that the land is the property of the community, but when the community has encouraged the people to deal in it, to buy and to sell it, are you to treat the value which has been created and paid for as something which is now to be taxed as if it had never been paid for? The justice of your tax from that point of view depends upon the length of time the land has been in the same occupation, and upon whether the value accrued since the present owner came into occupation or whether it is the value for which he has already paid somebody else. You make no distinction. You tax the owner on a value for which he has already paid in full, and not merely upon fresh values which might accrue. If you want to do this thing with any degree of fairness, surely you must start with the present values and you must lay your tax on the increment value of the future. You cannot with fairness tax a man out of the property which you have not merely allowed but encouraged him to purchase and to pay for.

If you overlook the injustice, and if you impose your tax on all these properties, what is the justification for assuming that the present site value of the land is all the creation of the community, and no part of it the creation of the individual owner or his predecessor's? I take a famous case in agriculture. What was the value of the Bedford Level before it was drained? I take a case of urban development. What was the value of Bourneville before the Cadbury family developed it? There, it is not the community which has made the value for the Cadbury family, it is the Cadbury family who have created a great employment and industry occupying a great number of individuals. The value was not created by the community, but by the individual, and but for the enterprise, exertion and foresight of the individual the value would never have existed. The right hon. Gentleman justifies his proposals on the statement that land is different from all other commodities. Why?


It was never made by man.


I have just been showing that a large part of the value is made by man.


What I said was that the land was never made by man.


Possibly the hon. Gentleman will show me the same courtesy as was shown to the Chancellor of the Exchequer, and allow me to proceed. I have shown that in many cases the value has been created by man. The land itself has been created by man in some cases. You ignore that, [Interruption.] I said that I found it difficult to relate the right hon. Gentleman's tax to the purpose which he wishes to serve. The instances which he gave were of land which, owing to the spread of population, or to the development of communications or other similar causes, had suddenly or rapidly increased enormously in value. He says that the public is entitled to a share of the increment. Let us grant that the public is entitled to a share of that increment—for the purposes of argument let us grant that the public is entitled to the whole of the increment. What connection has a penny tax on the capital value of land, whether it is increasing or not, whether it has increased or not, to do with the obtaining for the public of increment value produced by public exertion or public money? The right hon. Gentleman makes a case against private ownership of land and produces a tax upon it. I am unable at any point to see how his tax will produce the result which he anticipates. How is it going to prevent the holding up of land, and what is in the mind of the right hon. Gentleman? If land is a monopoly, one thing is certain, that any additional charge upon it will be passed on. If it is not a monopoly, the case for special taxation fails.

The right hon. Gentleman wants to encourage the development of land. He warns us against drawing conclusions from the experiences when the tax was imposed by the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George). Some of those results we are still experiencing, and we ought to be wary before we try experiments of the same kind again. What were the results? An immense cost to the State side by side with an immense cost imposed upon individual owners of the land in order to see that the valuation of their land was fairly made and in accordance with the law; and the revenue in the nine years when the tax was in force failed to pay more than between one-fourth and one-fifth part of the cost of the valuation. Besides this the result was that there was a complete check on the building of working-class houses, and it is this shortage, aggravated by the War, from which, 10 years after the War, we are still suffering, and it has cost the country, both ratepayers and taxpayers, millions more than the tax produced.

The same results may follow from the fresh attempt of the right hon. Gentleman. Much depends upon the method of the valuation, and that is left extremely obscure. Much depends upon the extent of the exemptions, and these, again, are very uncertain. Some things the right hon. Gentleman has made clear, and the first is that every parcel of land in the country will have to be valued, of whatever character- it is. The right hon. Gentleman exempts agricultural land if it has no higher value than its value for agricultural uses, but in order to find out whether it has that higher value or not, every bit of agricultural land must be valued. I ask the right hon. Gentleman, does the exemption of agricultural land include the exemption of woodlands? The right hon. Gentleman will not answer. Does it include exemption of moorlands? We know that it does not exclude allotments. Wherever allotments or market gardens have a value in excess of their purely agricultural value, they are to be taxed upon that excess at least. From what the right hon. Gentleman said, it is not quite clear that they cannot be taxed on more than that, if I rightly understand him. At any rate, they are to be taxed to that extent. What is the prospect of maintaining allotments in, or in the neighbourhood of any of our large towns? Unless the right hon. Gentleman alters his proposal in Committee, this is the death warrant of all allotments.


I said that if these allotments belong to the local authorities—and most of them do—they would not be taxed upon any excess value. But may I say that the right hon. Gentleman is really taking a line that is very exceptional in our Parliamentary Debates. Our Parliamentary Debates are not carried on by putting catch questions to Ministers.


I am willing to leave that observation to the judgment of the Committee. The right hon. Gentleman invited us not to put any questions while he was speaking, and to put our questions afterwards, and now that I am beginning, in circumstances of very considerable difficulty, to put a few questions which occur to me, the right hon. Gentleman resents it in a manner that is scarcely polite when I am innocently seeking information. From the right hon. Gentleman's reply, he appears to convey that if an allotment holder has the good fortune to hold under a local authority, his land will be exempt from the tax, and he may hope to continue in his holding, but there are numberless cases of private owners who have parted with their property for allotments, and those allotments are subject to the tax, and the owners may be penalised for not applying their land to another purpose.

There are other anomalies and difficulties about which I should have thought that the right hon. Gentleman would have said something. What is the relation of this new proposal to town planning? Under the town planning proposals, if a public improvement creates a betterment, the local authority is to be entitled to the whole of that betterment. Is the right, hon. Gentleman's tax on the landowner going to be on that increased value irrespective of the fact that the increased value has already been taken by the local authority? Is that a catch question, and one which is not to be put to a person of such lamb-like innocence as the right hon. Gentleman?

Take the case of land valued as on 1st July next, and on 1st January next the town planning scheme comes in. What happens? At the present time if you value it, you will value it naturally, on the basis of the most profitable use to which it could be put. The moment town planning comes in you may find that the most profitable use is prohibited because you are not allowed to place the number of houses upon it that you expected, or you may not be allowed to use it for the purpose for which it was thought suitable and for which it was valued. Again, other restrictions are imposed upon you which destroy the valuation. Is the valuation to take account of any existing restriction on the use of land? What is to be done if, after the valuation is made, new restrictions are applied? I am not allowed to ask these questions of the Chancellor of the Exchequer, but, perhaps, the Solicitor-General will give the answers.

Take another case. I understand that the valuation is to be on each unit in separate occupation. How is that to form a fair basis for a tax of this kind? you have a building block. If you treat it as a whole it has one value, but if you treat it as a series of separate plots of which you have control of only one at a time, it has a completely different value. I come to another obstacle. How is this going to be affected by the Rent Restrictions Acts? Take a block of land. It may be in a single occupation, but the profitable development of that block may be held up because the greater part of it may have been cleared with, a view to devoting it to another and a more profitable use, and yet there may be certain houses standing on it which the owner is unable to pull down because of the Rent Restrictions Acts, which prevent him from taking advantage of the opportunity of turning the whole block to a more profitable use. What is the value you would place upon it in that case, and do you tax the man on the value he would have received if he could use his property without regard to the Rent Restrictions Acts, or do you assess it on the value it has subject to that restriction?

5.0 p.m.

These are very elementary questions which must have occurred to the Chancellor of the Exchequer, and he must have made careful preparations for dealing with them. He could have told us what solutions he found, but he has refrained from doing so, and he does not like to be asked what his solution is. We really must have from the Solicitor-General some information which the Chancellor of the Exchequer has omitted and which he now declines to give. It is impossible to be satisfied with a loose and general statement of the kind made by the Chancellor of the Exchequer. That land should not be held up against the interests of the community is a principle to which all of us can subscribe. That land should be available to the community at a fair price for any public purpose is, again, a principle to which every one of us can subscribe. But that you can single out land for a special and penal taxation is quite a different thing, and has no connection with the introductory observations made by the Chancellor of the Exchequer. The profits derived from land pay Income Tax, and the capital value of the land is subject to Death Duties, and the effect of your tax, in whatever way it is imposed, is merely to put an additional burden of Income Tax on a class of property which already pays its full contribution. It is impossible to relate a tax of a penny in the pound on capital value to the principle that you should not hold up the land against the community, or that you should not put it to a use deleterious to the community, which the Chancellor offers as his justification. What I foresee from this tax is, in the first place, a process of valua- tion which I think the Chancellor is sanguine in expecting to see finished in two years. I see an immense burden of cost put upon the State in order to obtain this valuation, and I think the Chancellor is sanguine when he estimates that cost at from£1,000,000 to£1,500,000 spread over the three years. I see a cost, almost as great, if not as great, as that borne by the State, which will have to be borne by the unhappy owners of land in checking the valuations made by the State; and I see a prospect of litigation which will keep both the Law Officers and their learned brethren in the Courts of this country fully occupied for many years to come. It is very easy to make general charges against land; it is very easy to sneer about duty; but that does not prove that the proposal of the Chancellor of the Exchequer is either just or prudent; it does not show that his tax will be remunerative, or that it can be levied without grave injustice to the people who are affected.

The Chancellor of the Exchequer has told us of some exemptions, and I have asked about one or two others. May I add to the list? Will the Solicitor-General tell us what is proposed in the cases of schools and colleges? Are they to be exempt or are they not? Are the colleges, for instance, of Oxford or Cambridge to have their sites valued as if the colleges were removed and their gardens thrown open for building? Are the schools and educational institutions of the country, in respect of the sites of their buildings, their playing fields, and so forth, to be subject to the tax, or are they to be exempt? What is to be the position? Not one word was said by the Chancellor of the Exchequer on this subject of open spaces and playing fields. Are they all to be subject to a site value tax on their building value? [Interruption.] The right hon. Gentleman spoke of churches, hospitals, churchyards, property belonging to local authorities, property in the hands of the National Trust, and the property of statutory companies. I think I have enumerated the whole of the exemptions. If so, he said nothing about playing fields or sports grounds, whether immediately attached to schools or in other occupation. Is no account to be taken of the amenities of life? Is it really the object to force the owner of land to cover his land as quickly as possible with the kind of buildings that will yield him the greatest return?


They will not be houses in many eases.


I know what the right hon. and gallant Gentleman desires. Perhaps that is also what the Chancellor of the Exchequer desires. The right hon. and gallant Gentleman welcomed the Chancellor's first announcement with a wild shriek of joy. This tax, he said, would depress values, and that was why he welcomed it. You value as things are, and, according to the right hon. and gallant Gentleman, you at once, by your tax, destroy the value upon which it is assessed. [Interruption.] I thought, when I rose, that although the Chancellor, very naturally, did not desire to be interrupted, he might be willing to supply me with a little information as I went along; but he has been adamant, and I am, therefore, only able to make certain suggestions and to ask for certain information, which must be given at another time. One thing is quite certain, and that is that the proposals which the Chancellor makes depend for their effect upon the exact form which he gives them in the Bill, and that they will require, when they are put in the form of a Bill, the most careful and anxious study by this House. It is impossible to do more than indicate some of their difficulties, and some of the reasons we have to doubt their producing the results that the Chancellor of the Exchequer anticipates, and to fear that they will produce others far more injurious. It is impossible to do more than this immediately after so scanty an outline of the proposals as the Chancellor has given.


I congratulate the Chancellor of the Exchequer upon what I might describe as his modest and moderate proposal for the carrying out of a reform which is long overdue. The right hon. Gentleman the Member for West Birmingham (Sir A. Chamberlain) suggested that this is a proposal for the taxation of landowners and their property, but apparently he discovered, towards the end of his speech, that it is not a single tax. No doubt my right hon. and gallant Friend the Member for New-castle-under-Lyme (Colonel Wedgwood) would like it to be a eingle tax. It is not, however, a single tax, but a very moderate proposal for a penny tax on the capital site value of the land. As I understand it, so far as the value has been created by the owner or the occupier, that value will be exempt. That dismisses the whole argument of the right hon. Gentleman the Member for West Birmingham with reference to Port Sunlight and the Cadbury Estate, as the value there is due to improvements in building, roads and development, and such improvements will not be subject to the penny tax, because the valuation will distinguish between improvements and the site value.

The right hon. Gentleman spoke as if this were a very novel proposal, but it has been in practice for a long time. I am surprised that the right hon. Gentleman, who stands for the Empire, and whose name is closely associated with the Empire, should not, before he made his speech, have made some inquiries as to the practice in the Dominions. In New Zealand, in Australia, and in parts of Canada, we can see a similar proposal to this actually in practice, and all the right hon. Gentleman's alarmist prophecies to-day have not been fulfilled in our Dominions. Far from this tax, in the great cities of Sydney, Wellington, Melbourne, and so on, leading to amenities being destroyed, parks being overbuilt, and the beauty of the cities being destroyed, the exact opposite effect has been brought about; a system of this kind has prevented what I understand it is the object of the Chancellor of the Exchequer to prevent, namely, the holding up of land and the crowding together of buildings in comparatively small spaces, and has allowed of free and open development and proper allocation of gardens and open spaces. So far from handicapping town planning, this is the right way to bring it about, because, instead of the land speculator having full play, if he tries to hold up the land in future he will have to make his contribution to the State through this modest proposal of a penny tax on the capital value. I hope I am interpreting the Chancellor of the Exchequer aright, but, at any rate, I understand that to be his object.

These are no new proposals. On the contrary, they are almost as old as the hills, but the trouble has been that the vested interest has been so strong, and the power of the other House so great, that this long overdue reform has been postponed year after year. I quite agree that in bringing forward a new proposal of this kind you may inflict hardship in individual cases, but you have to take the problem as a whole, and to look at the interest of society as the primary purpose. I happened the other day to be looking up John Stuart Mill, an ancient author whose works are now kept on the top shelves as out of date, and I find that, in a paragraph in Chapter I I of Book V, he points this out: The ordinary progress of a society which increases in wealth is at all times tending to augment the incomes of landlords; to give them both a greater amount and a greater proportion of the wealth of the community, independently of any trouble or outlay incurred by themselves. They grow richer, as it were, in their sleep, without working, risking or economising. What claim have they, on the general principle of social justice, to the accession of riches? Then he goes on, after pointing out the real difficulties, to say: The first step should be a valuation of all the land of the country. Unfortunately, however, nothing was done in that direction; it has had to wait 70 years—or, to be more correct, 73 years—for the necessary impetus. I happen to be associated with the great City of London, and the other day I was looking up the figures for rateable value, going back as far as 1870. The rateable value of the land then was£18,500,000. By 1880 it had increased to£25,000,000; by 1890 to£31,500,000; by 1900 to£37,500,000; by 1910 to£44,500,000; by 1920 to£45,500,000; and the last available figure was£57,500,000. Those figures represent only the annual value. The capital increase we do not know, but all that increase, as regards capital value, has gone into the pockets of the fortunate owners of the land.

We see exactly the same sort of thing going on at the present time. We are going through a great industrial crisis; trade is depressed; hundreds of factories are nearly bankrupt; many companies cannot pay dividends; most businesses are depressed, and their values are going down. But, while other businesses are depressed, while there is a slump in trade, the owners of land find their values steadily going up because of the steady increase in the population. Land is limited, the demands of the country are expanding, and, even though we may be going through a great trade depression, the one industry that is prosperous is the business of owning land. To-day I happened to be present at the County Hall at a deputation representing all parties, with reference to what is known as the Foundling Site. Those nine acres of land are badly wanted. They are wanted as a playground for children, and they could very easily be utilised to advantage for dealing with the slum question. But the price asked by the proprietors is no less than£450,000. It occurred to me, as I listened to that deputation, that a penny tax on the capital value would have had a very healthy effect in bringing down the price. The owners would not have been so anxious to hold it up for the last penny and the public might have been able to buy it at a more reasonable figure.


What is it rated at?


That I cannot say, but I am glad of the interruption, because I am interested in this problem not merely from the point of view of the Chancellor of the Exchequer as a tax collector, but from the point of view of the rate collector. I am not sure that the greater part of this money ought not properly to go to the relief of rates. The value has largely been created by the activity of the community acting through its local authorities. But be that as it may. It is really rather immaterial, considering the Bill brought in by the Minister of Health in the last Government dealing with the whole rating question. He used a very clumsy weapon to try to bring about total justice. He followed the line of what he called de-rating, and in due course the De-rating Bill became an Act of Parliament. We have seen it m practice. We have seen its result. It distributed its favours where they were least required and, instead of stimulating industry, it brought help to the most prosperous and the least in need.

At any rate we can say, after two years of practice, that industry has not prospered. This is the most practical way of doing what the last Government tried to do, to bring help to industry and to distribute the help in the right way. If we can use the valuation that is now going to be carried out, put through, I hope, as speedily as possible, not only, as the Chancellor suggested, for the purpose of helping taxes, but also of assisting the system of levying rates, we shall do more to help industry and, what is perhaps not lees important, to stimulate the building of houses, than by probably any other reform. As soon as we put up a factory, as soon as a house is improved, as soon as a new cottage is put up, along comes the rate collector and levies a rate. On the other hand, if the land is kept idle, if it is utilised to put up an advertisement board, or for some unprofitable purpose, it is only subject to a rate as agricultural land. In fact, under the later scheme of the late Government, the de-rating Act, it was not subject even to a rate at all, but was treated as agricultural land.

I want to ask a very simple question. How long is agricultural land agricultural land? When does it become urban land? I think I can answer my own question. It becomes urban land only when a buyer is about. When the rate collector comes along, it is always purely agricultural land. I want that land to be treated on the same basis for the purpose of rating as when it is to be sold to a buyer who wants it for building purposes. Of course, we cannot criticise these proposals till we actually see them in the form of a Bill, but I believe they are on the right lines. I hope the Government will not lose courage and will not whittle them down as the result of pressure. I hope, if the proposals are to be amended that they will be amended on the lines of making them more available for rating purposes. I can promise the Government my whole-hearted support, and I hope in due course this much-needed, overdue reform will become an Act of Parliament.


The sparse condition of the Committee is no doubt accounted for by the fact that the Committee must find it extremely difficult to take this Debate seriously. A Measure which is to come into force, backed by the power of the present moribund Government, in 1934 seems to belong to the region of pure theory and not to the region of facts, unfortunately, it possesses a certain gravity in that it occupies time of the Committee which ought to be spent on matters which are the duty of the Government, to help the country, and not on matters which are not the duty of the Government, to hinder the country. It is true, as my right hon. Friend has pointed out, that information to criticise these proposals in detail we have not got. Nevertheless, there are characteristics of this proposal which enable one to criticise it. In the first place, I oppose it because it is a measure of fresh taxation at a time when what the country needs is not more taxes but less taxes. That is an adequate ground for opposing any such proposal at the present time. Our complaint of the Government for the last two years has been that it shows no apprehension whatever of the present state of the country and of the needs of the country. They show no apprehension as to what the country needs in order to enable it to take its place in the keen competition of the modern world, with foreign rivals who are free from the terrible handicap of taxation and particularly direct taxation, which overburdens our industries. I think no circumstances could show more clearly the blindness of the Government to our present condition than that it should occupy the time of the National Legislature at present with a proposal for the theoretical raising of fresh revenue.

The second reason why I oppose it is because it would raise, if it came into force at some future time, fresh revenue, and I do not think the Government is to be trusted with fresh revenue. We know how it would use it. It would squander it. It would be a crime to enable the present Government to command fresh sources of revenue, a crime as great as it would be to introduce bottles of whisky into an inebriate's home. As to the particular manner in which this Measure was introduced, criticism is to be made. I can imagine a scheme for the taxation of land values being introduced in such a manner as to commend it to a body of well-informed opinion as a measure of rather highly theoretical scientific taxation. That is not the spirit in which the Chancellor has introduced it. The spirit in which he has introduced it is a spirit of antagonism against a particular class of property, and also of the partisan vindication of his own political interests. Neither of those methods of approach is going to commend this proposal to the country. As one who has taken some interest in this matter in past years, I should like to have seen it given a better chance by a more temperate and fair introduction at the right hon. Gentleman's hands.

Let us notice the difference between the present occasion and previous occasions on which this scheme has been introduced. In the past there has perhaps been a grievance on the part of the community in that it has not been able to obtain land required for public purposes at fair prices. While that grievance continued, such measures as this were a method, though a somewhat indirect method, of remedying it. Nevertheless, as long as there was that grievance to be remedied, they were not wholly misjudged and misapplied. If I judge the circumstances at all correctly, since this Measure was last discussed in the House new Measures have been passed which, to a large extent, remedy that grievance. The Assessment of Compensation Act is now imported into every relevant Statute, and that enables the public to obtain all the land it requires at a fair market value. That has wiped out the principal grievance. It has blunted the sharpest edge of the arguments of the right hon. Gentleman. But, of course, we shall hear nothing of that Measure in this Debate from the benches opposite. In the second place, no doubt, there are local particular cases where there is unearned increment of value, the result of action by the community which, in order to achieve the purpose of the community in such a matter as town planning, should be taken into the hands of the community. But we have just been discussing, with a very large measure of agreement on both sides of the House, the Town Planning Bill, which will enable the community to possess itself in all these obvious cases of, not a penny in the£ of the capital value of that, but of 100 percent, of the increment. That will remedy the second grievance which should be remedied. As my right hon. Friend has pointed out, the Chancellor, in introducing this scheme without telling us how it is going to be co-ordinated with the scheme for the recovery of betterment under the Town Planning Bill, is introducing a scheme which it is per- fectly impossible for the House or the country to understand, and which makes at present complete nonsense.

A word on the wide principle that underlies this scheme. I speak for myself I am quite conscious that there is a body of opinion which does not share this point of view with me; but it has always seemed to me that there are cases in which there may be a special value attaching to the land which is due to community action and which is, therefore, more specially a proper subject of taxation, when the community needs revenue. But I should say that that principle to be valid was subject to two absolute conditions. The theory is, as we see—and it is a beautiful theory—that in these special cases there is a special value possessed by a private individual and created by the community which should be the property of the community. The first condition is that when you recover the unearned value you should recover it from the man who is enjoying it. You should recover it from the right person. When you tax someone on the ground that he is enjoying this value which is the result of the community's action, you should be quite sure that you are taxing the person who actually enjoys that value. This scheme does nothing of the sort. It has no more to do with the scientific theory of the taxation of unearned increment than it has to do with the man in the moon. Take the case of a recent purchase of a freehold site in a city. Supposing I bought a freehold site in London yesterday and paid£10,000 for it. What should I get for that? Suppose I got it on a 4 percent, basis. In that£10,000 there may be an unearned increment of value, but do I enjoy that increment when I get 4 percent, for my£10,000 for the land? I enjoy none of it. We know that someone is enjoying it, but he has gone off and invested the money perhaps in War Loan.

In putting on this tax you will be taxing someone who is not enjoying a single penny of the unearned increment on the land. There is only one possible way of scientific application of this tax, and that is you should fix your value at a definite time, say, the present, and tax only future sales on which there is a future increment, after the present valuation. Any other form of taxation such as that which is proposed to-day makes complete nonsense of the whole theory.

Another condition is this. In order to make your practical scheme in accordance with the scientific theory of the taxation of site values you should tax only the unearned increment itself, that is the actual increase in value which is due to community action, and not any value due to any investment of capital upon the land. There, I believe, we come down actually to the bedrock of the whole matter. When this tax was first proposed and carried through we still believed in the assurances of the valuers that it was possible to make a clear distinction in valuation between the improved value and the unimproved value of land. It was in that belief, and basing that belief upon the assurances of the valuers, that this tax attracted so many minds and was put into force in 1910.

I ask the Committee whether the experience of valuation in the previous tax—which we were asked, and I think unnecessarily asked to dismiss from consideration, for it is of great value in this respect—has not made it perfectly clear that the professions of the valuers are worth nothing and that it is practically impossible to make any true distinction, any accurate and valid difference in the valuation between the improved and unimproved value of the land. I believe that the whole experience of the previous tax shows that the theoretical basis upon which this scheme is founded is one which is un-realisable in practice. It is quite impossible in the imperfect world of hard facts in which we live to make a valid practical distinction between the improved and unimproved value of land.

The Chancellor of the Exchequer tells us he proposes a tax on the value of land as a site, clear of buildings, for a purchaser in the open market. There comes in the first and chief difficulty in valuing. For what purchaser? It may be wanted for hundreds of different purposes. Whether it is sold for this or for that purpose depends upon the chance and luck of the moment. One might be able to sell it at one moment for X pounds for one purpose, and then by the mere eddy in the currents of the life of the city one might be able to sell it at another moment for double or treble the amount for a totally different purpose. This is an instance of the practical difficulty which falsifies the theory of site value taxation. The fact is that the valuers were wrong; they cannot make a scientific and practical distinction between improved and unimproved value of land.

That deduction from experience is proved. It is proved by the history of the previous taxes. Let me call the attention of the Committee to one figure which is, I think, the most eloquent which can possibly be conceived in this connection. It is the figure of the actual effect of the previous taxes upon the building of houses before and after they were brought into force. If anybody in this Committee still cherishes the illusion that a site value tax is possible which will enable the investment of capital upon land wholly to escape from taxation, to him let me state these figures. In the years 1904–09, before the introduction of the last site value taxes the average number of houses built in a year was 104,823, and in the years 1910–14, after the introduction of the taxes, until the War closed all down, the average annual number of houses built in the year was 60,648, little more than a half. That tax came down like the blow of a sledgehammer upon the investment of capital in land for building and the use of land in industry. What does that show? If the theory was valid that you can distinguish in valuation between the site value and the improved value, then it follows from the theory that there should have been no hindrance at all in the investment of capital upon the land. But there was obviously a very great hindrance to the investment of capital upon the land. That proves that you cannot distinguish in valuation between the site value of the land and the improved value of the land. In fact that single fact appears to me to have proved that the beautiful theory of the taxation of site values is totally inapplicable in this imperfect, practical world in which we live.

There is another fact which has completely altered the conditions under which it is proposed to impose this tax, since the tax was first adopted 20 years ago, and that is the enormous increase of the burden of the Income Tax. When this tax was first proposed the Income Tax did not bulk so large as it does now in the economic scheme of the country. It was possible to contend that these values enjoyed in property and land were not rendering their full share to the community. It is impossible to contend that that is so at the present time. Now under Schedule A of the Income Tax every single value that it is proposed to tax by this scheme which has been put forward to-day is already bearing an overwhelming burden of taxation. I could wish out of my regard for the Chancellor of the Exchequer that he had produced a scheme which at any rate superficially held water from the point of view of logic; and so I should have liked to have heard him say to-day that any tax paid under this scheme will be deducted and considered as a rebate in the payment to be made under Schedule A of the Income Tax, in order that there should not be a double taxation of the unimproved value, both in this tax and under Schedule A of the Income Tax. There is no such proposal in the scheme. That is but another example of the vindictive spirit in which the tax is imposed, that he is proposing to double this burden upon the land.

To me, the final argument against this tax in the form in which it is proposed is this: Surely it is an essential condition of every tax that is to be reasonable, fair, and tolerable to the taxpayer, that it should be imposed upon one who has funds out of which to pay it. Let me quote as example the Income Tax. One reason which commends the Income Tax to the sense of equity of mankind is that when a man is taxed upon his income he has income out of which to pay the tax. There is money with which to pay. For another instance one may quote a Customs duty such as the duty upon tobacco. That is a perfectly sound tax from this point of view because the party who bears the tax has got the funds out of which he can pay it. He sells the tobacco and he pays the taxation out of the price which he receives for the tobacco. But the taxation which is now proposed has this bad characteristic, that it is a tax upon a theoretical value, and the unfortunate bearer of the tax has no funds at all out of which he can pay the tax. It is a tax upon a theoretical value which he has no means of paying. It is possible in the framing of such a scheme to overcome that difficulty. It was overcome in one of the original taxes. No tax was imposed except upon the actual sale of the land. But that is not so in this scheme. Thus the tax as at present proposed possesses one of the most inequitable of all the characteristics of taxation. It is imposed upon one who has no means out of which to pay it, and it means depression in some other form of property which has to be realised in order to pay the tax.

In dealing with this matter in the form in which it is advanced by the Chancellor of the Exchequer one would like to present him with a dilemma. He has told us that he is bitterly opposed to all forms of import duties upon goods imported into this country because a tax upon those goods which are necessary as raw materials for borne production, or for home consumption as foodstuffs, will raise their cost. He is now proposing a tax upon another form of goods essential to all production, and that is the land. Is that not so? Land enters into all forms of production either in factories or in houses. In what does this differ from any other form of raw material? In all those other cases, we are told, a tax upon the article puts up the price but in this particular case the tax will put down the price I believe that it would not be so. I believe that£as night follows day that in imposing this tax upon the ownership of land you will not only make it more troublesome and difficult to own that form of property—that may be a minor consideration—but you will also be making it less lucrative and profitable, and by doing that you will be hindering all kinds of enterprises which are concerned with the land, and by impeding the investment of capital you will be raising the cost of industrial production. That is demonstrated by the previous history of the tax. It is the result of the impossibility of effectively distinguishing between improved and unimproved value. Hon. Members opposite have not shown any elasticity in appreciating the position of the country. There has been no case so clear as this. They have failed to learn obvious lessons of experience. They have failed to take advantage of that most valuable of all assets which a country can have, the asset of knowledge which comes of having tried an experiment and found it to have failed. It is disastrous that, at a time when our need is freedom from the burden of fresh taxation, and increase of confidence, we should have imposed upon us this fresh blow at confidence and this fresh burden of taxation.


The right hon. Gentleman the Member for Sevenoaks (Sir H. Young), unfortunately, was not in this House when the Budget of 1909 was introduced. But I remember him well as a very vigorous Liberal candidate addressing audiences on this question, and I am naturally a little surprised that he did not learn more about it on that occasion, for certainly this afternoon he seems to have completely missed the idea of the taxation which is proposed by the Chancellor of the Exchequer. The right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George), when speaking the other day, issued a particular warning to the House not to assume that the tax which was to be levied now was the same as was levied in 1909. He warned unsuspecting Members such as the right hon. Gentleman the Member for Sevenoaks that arguments which were pertinent then were not likely to be pertinent now. The first thing that we must get into our heads in this Committee is the complete and radical difference between the old tax on the unearned increment of land and the tax proposed to-day of 1d. in the£ every year on the capital selling value of the land. The two taxes are poles apart. I would ask the right hon. Gentleman to consider the natural effect of the old tax on the unearned increment value of land. That proposal, as passed in the Budget of 1909–10, was a tax on the increment value of the land; there was a valuation and whenever that land was sold, subsequently, the State was to take three-quarters of any increase in the value and the owner of the land only one-quarter. What was the economic effect of that tax? It was a tax on sale only. For the purpose of my argument I will confine myself to sale and leave the question of Duties at Death. Under that tax, the owner had less incentive to sell, because he could make less profit out of the sale. Consequently, the sales of land decreased and, as the right hon. Gentleman has shown, the building of houses decreased likewise. A tax levied on the increased value of land, on the sale of the land, necessarily checked sale. Such a tax is passed on to the purchaser and adds to the cost of production.

Economically, there is nothing to be said for a tax on the unearned increment value of land. The only thing to be said for it is that it is a form of elementary justice that the increased value due to the community should, to a certain extent, come back to the community. That was our previous experience and it was dearly bought. The tax was repealed and the money collected was refunded. In 1931, we are not repeating that tax. The present proposal is completely different. It is not a tax to be levied only on sale, but it is a tax to be levied every year on the market value of the land. What must be the effect of that? The ordinary owner of land, faced year by year with this tax upon the selling value of his land, will have a greater incentive to sell that land than he has at the present time. He will be more anxious to sell. Speaking as one landlord to another, I can assure hon. Members that that is the effect upon all of us.

The very fact that you own ripening building land near a town and have to pay on that land the trifling contribution under Schedule A, based upon its letting value at the present time, is one thing, but the more substantial tax based upon its selling value will induce me and many other suburban landlords to hunt out a possible purchaser. Instead of the building trade coming on their bended knees to me and begging me to sell them a bit of my land for the purpose of putting up houses, I shall go on my knees to the building trade and beg them to relieve me of part of my land, and they will get it in these circumstances at a much more reasonable price. A tax upon the capital value of land, levied year by year, is not passed on to the consumer, the user of the land, but falls directly upon the owner of that land and is, in fact, a reduction in the selling value of that land by the capitalised value of the tax paid upon the land. Let me make that point clear. If you are lucky enough to own a piece of land worth£1,000, the very fact of the passing of this Act will reduce its value from £1,000 to£900. It means the transference of the economic rent from the private pocket of the landlord into the public pocket of the State. It makes no difference to the user of that land, but it does make a difference to the amount of rent going into private pockets.

Let me put it another way. The right hon. Gentleman said that the tax would be a burden on industry and that it would be passed on. He and I know perfectly well that the vast bulk of taxation imposed in this country is always passed on. Take the contributions paid by the employers to health insurance and pensions. They make their contributions week by week by the putting on of stamps. In the course of a year they may be spending in what is, in effect, a tax, although it is not called a tax, anything up to£1,000 in respect of a small factory. That is not a tax that is really paid by the man who signs the cheque. Not a bit of it. It is added as an overhead charge of the industry concerned. Every article produced in that factory has to be sold at a bigger price by reason of that charge. The whole of that tax is passed on to the community. I should be prepared to argue, and I think I should have the right hon. Gentleman's support, that the Income Tax itself is passed on to the community, that it increases the cost of capital and therefore of the article that the manufacturer makes and that, therefore, the community pays. Tax after tax is nominally paid by the manufacturer but is in fact transferred to the consumer in the long run.

My chief support of a tax on land values, or a tax on any monopoly, is that such tax is not passed on. The owner of the land or the owner of the monopoly is already getting all that the consumer can pay. Whether we tax him or not, he will not alter his price. The landlord gets all that the tenants are willing to pay him, and if he is taxed he cannot get any more rent than he is getting to-day. Therefore, he cannot pass the tax on to the tenant, the consumer. The landlord pays the tax in this case. We have in the taxation of land values one of the few taxes that can-not be passed on. That is the reason why the Chancellor of the Exchequer prefers in 1931 to put a tax not upon unearned increment, which falls upon a man when he gets his money, on sale, which means that such a tax on unearned increment must be and has been passed on, but a tax paid year by year on the selling value of the land, which means a diversion of rent from private pockets into public pockets and which cannot be passed on as a tax on the consumer.


What about the case where the factory is not owned by the ground landlord, but by the concern itself? Will it not in that case be passed on to the consumer?


No, and for a very simple reason. If the factory and the land are owned by the same person, then so far as he is the landlord he will pay the rent to the State, or such portion of the rent as is represented by the tax. That -will not be passed on to the consumer, because he will be competing with other factory owners who are not also landlords. The price of the article is fixed by competition between the factory owners who own their factories and the factory owners who rent their factories; between the factory owners who are situated on the margin of cultivation outside the towns and between the factory owners inside the towns. That price is fixed by competition. Rates, contributions towards pensions and so on fall equally upon the factory owners whatever the value of their site may be. They are passed on.


The right hon. Gentleman's answer, in so far as it is an answer, is an answer to the argument that he has been putting forward in regard to other things being passed on to the consumer.


Rent cannot be passed on. If the hon. Member will study the economists who have written on this question—I have not them here but I could provide them on a future occasion—he will find that they all state that rent cannot be passed on, and that a tax on land values cannot be passed on. The reason is this, that rent is the difference between one site and another site. A factory paying no rent outside a town, or a very low rent, suffers certain disadvantages which the factory in the middle of a town avoids. The town factory can get their raw material more easily and can get their labour more easily, but the factory in the town pays rent on the higher value of the site as compared with the marginal site. The price of the article is fixed the cost of production of the article in the factory on the marginal site. In the long run rent and a tax or rate on land values do not make any difference in the price of the article.

Let me deal with another point raised by the right hon. Gentleman. He said that our previous experience in 1909 had shown that it was impossible to get a valuation of the unimproved value of land. I think he exaggerates the position. If he had been in the House in those days he would have known why it became excessively difficult to get a valuation under that particular Act. The lesson that we learned then can be applied now. In those days the opposition against any form of attack on landlordism was much greater than it is today. [HON MEMBERS: "Wait and see."] I am judging from the Conservative Press, also from the fact that we have had a revolution in transport, that people have put up their houses in the country and that there has been ribbon development all along the roads. We see the evil much more now than we did before, and we see much more clearly the evil of unemployment. In those days, the efforts of the Opposition were devoted towards making the Finance Bill and the valuation impossible. Every Amendment, admirably argued from the Opposition side, was designed with that object in view. I am glad to see the right hon. Member for South Croydon (Sir William Mitchell-Thomson) in his place, because no one knows more than he the fight that was put up in those days. Every argument and Amendment from the Opposition was intended to make the valuation impossible.

Moreover, in those days the Liberal party, which was proposing the Measure, enjoyed support from a large number of gentlemen of great property, who formed a very efficient and effective cave and put the screw upon the right hon. Member for Carnarvon Boroughs and forced him to accept a great number of the Amendments put forward by the Opposition, Amendments which were intended to wreck the valuation, and succeeded in wrecking it. I would point out to occupants of the Government bench that it was the unfortunate willingness of the Chancellor of the Exchequer of that day to accept at their face value the proposals of hon. Members opposite, which spoilt his Bill. I trust that we shall have less willingness to accept apparently innocent Amendments, when the fact is firmly realised that every one of them is drafted by the Land Union.


As one who was a member of the Parliament of 1909, I should be glad if the right hon. Member would say which Amendment he ha" in mind which wrecked the valuation.


I could give the Noble Lord a great many, but there was one which exempted agricultural land from valuation on the unimproved value of the land. That was accepted, largely I admit, at the instance of the "cave," and it was proposed I believe by the Honourable Frederick Guest.


You are exempting it now.

6.0 p.m.


Yes, in part, from tax but not from valuation. The right hon. Member as a true Briton believes that what is happening outside England is a matter of no importance. In this question of land valuation we must look outside the narrow bounds of England and look at the Empire. I dare not say much about Australia just now, but they have been doing it for 30 years. In Johannesburg, populated by true Britons and Jews, every penny of local taxation is levied upon the unimproved value of the land and nothing whatever on houses and buildings. Take the case of America. In New York you find year after year the valuation of the land and the valuation of the buildings stated quite clearly side by side. You can compare them over a series of years, and you can watch how the value of the land increases. There is no difficulty in valuing a site clear of the buildings.


That is what the valuers said, and they turned out to be wrong.


If they are provided with a valuation which is ruined by the House of Commons before it gets on to the Statute Book the poor valuers are not to blame. The valuation was completely upset by a decision of the Court of Appeal which made one of the special taxes levied by that Budget absolutely illegal altogether. It is not only in our Dominions that this is being done. Go to Denmark, the most progressive of European countries. There you have not only local taxation levied upon land values but also this particular tax. In no case, in no country on earth, in no British Dominions, have they ever attempted on elaborate tax upon the unearned increment of land. Wherever it has been done it has been a tax upon the capital value of the land, and not a tax, unscientific and uneconomic in its effect, such as was introduced in the 1909 Budget. The weight of experience abroad is in favour of this direct tax and proves also that it is perfectly possible to distinguish between site and buildings so that the valuer can make good his word as between the value of the site and the value of the buildings.

The object of every landlord in this country instinctively must be to get the better of this valuation. That is really quite unavoidable; human nature being what it is, every one of us will say: How can we drive a coach and four through this valuation in our own interests? Naturally the Bill is going to be looked at from the point of view of the possibility of saving ourselves. If I were speaking as a thoroughly bad and immoral landlord I say quite confidently that I can drive several coaches and fours through the Bill, and hon. Members opposite need not complain that the Chancellor was too reticent in his details of the scheme. If they turn up the Land Valuation Bill of last year they will see what he is proposing now. It was then proposed to exempt agricultural land and minerals and, therefore, I am justified in taking that Bill as the basis of what is going to be proposed when the Finance Bill comes along. Perhaps we shall hear later on whether I am right or wrong in that assumption, but I think that Bill is the basis of the Government's proposals. In that Bill there are some advantages; for instance there is the single valuation, the exemption of agricultural land, the exemption of minerals, and certain clauses connected with restrictive covenants which are to be exempted, which make it perfectly possible for a person like myself to avoid the payment of any tax under that Bill.

Let me give an illustration of how easy it is to knock that Bill endwise—and I hope I shall be substantially rewarded by the Land Union. Look under the definition Clause, which is generally one of the most important clauses in a Bill—minerals are exempt from valuation, you have to value the land as if there were no minerals there. Now minerals include all minerals and substances in or under land, obtainable by underground or by surface working. That sounds a really clear and genuine definition; but work it out. What is a mineral? Minerals include clay, stone, gravel, sand and earth and all kinds of earth. If you exclude from the value of the land the value of the earth, what is the value of the land? I put this forward to hon. Members opposite as a way out. They need not worry; although I hope the Government will worry. Let me give another illustration—I want to show that there is still some hope for the landlord. Land is to be valued as though all restrictive covenants are in force, or any restrictive covenant made hereafter. I am going to make a restrictive covenant. There is a lovely house with about 10 acres fronting on a road with ribbon houses of the best type along the other side of the road. The owner of that house does not want to build on the land in front of it as it would spoil the house, and he also wants to avoid the tax. He makes a restrictive covenant to prevent that land being built upon as long as the restrictive covenant is in force. Directly he does that the value of that land for taxation purposes comes down to its agricultural value and there is no tax to be paid. Every owner of a nice park outside a town has only to make a restrictive covenant not to use the land for building and he will pay no tax, and the value of that land will always stand at an artificially low figure on the books. I can see lawyers doing quite good business in restrictive covenants because it will always be possible to cancel a restrictive covenant when the land is wanted for building—and there you are.

Those are some of the defects in that Bill as it was drafted, and I use these illustrations to emphasise the importance of watching every Amendment proposed by hon. Members opposite with the greatest possible circumspection before accepting them. The hon. and learned Member the Solicitor-General, who is in charge of the Bill, is a new Member to this House, and it will be possible for hon. Members opposite to get all over him; if they only say nice things about the house of Parmoor they may get any concession they want. I urge the hon. Member to beware of the awful fate of the last Bill which we tried to carry by compromise and ended by cancelling altogether. It is only by making the valuation watertight that we shall get a real and satisfactory valuation. Believe me, I am not in the least interested in the financial side of the question; it is not a question of the money this will bring in. I want the valuation in order that the State and municipalities may get land at a decent price instead of the extortionate amounts they have to pay now, in order that we may get a change in the basis of rating, so that buildings and factories may be exempted and the tax put upon the land, and, above all, in order that the public may get land cheaper; that everyone who wants to use land, allotment holders and farmers and those who require land for building, may be able to get it cheaper than they can to-day.

Land is entirely different from goods. It is not an article produced by man. A tax upon an article produced by man adds to the cost of production and increases the price to the consumer. Land is not the product of men. It is there. You cannot increase or diminish the amount of land by putting a tax upon it. If you tax boots there are fewer boots, and they cost more. If you tax wheat it costs more to the consumer in bread. But if you tax land there is not less land available for use but more land, and it comes into the market cheaper; and people would be able to get the land they require by paying a smaller price for it.


I am sure that hon. Members are all very glad indeed to see the right hon. and gallant Gentleman the Member for Newcastle-under-Lyme (Colonel Wedgwood) back in his place making his usual amusing speeches. For many years he has been a great advocate of this form of taxation, and, though I was not in the House at the time, I believe that he was a great advocate of the proposals which were put forward in 1909. He showed at that time a great enthusiasm for these taxes and he lived to see them fail. I have no doubt that he will live to see the failure of the taxes which are now being proposed. Although the right hon. Gentleman is such a violent advocate of these taxes, and although he is absolutely sincere, and thoroughly believes in all that he says, nevertheless I think the theories which he has uttered to-day will in the due course of time prove to be the same kind of economic heresy as those remarks about rare and refreshing fruit which were uttered by the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) in 1909.

I wish, in the first place, to add my protest to those which have already been made from this side of the Committee as to the way in which the Opposition have been treated in this matter. In any ordinary year this matter would have been included in the Budget statement; it would have been outlined by the Chancellor of the Exchequer, and, after the usual complimentary speeches, the House would have adjourned giving us an opportunity to consider the proposal submitted by the Chancellor of the Exchequer. But on this occasion an entirely different procedure has been followed. To-day, we have had a statement from the Chancellor of the Exchequer which the right hon. Gentleman himself admitted was not very full, and which my right hon. Friend the Member for West Birmingham (Sir A. Chamberlain) said was difficult to answer on the spur of the moment. I suggest that in this matter we have not been treated as fairly as other Oppositions have been treated in the past, and we have to make our speeches upon this subject to-day only knowing the vague propositions put forward by the Chancellor of the Exchequer and not knowing the details of his scheme.

I challenge the statement of the Chancellor of the Exchequer that this valuation will only cost little over£1,000,000. That was not the experience in 1909. I understand that an answer was given in the House of Commons, when the taxes then imposed were repealed, showing that the valuation had cost between£4,000,000 and£5,000,000, and the circumstances are very different to-day. At that time, there were more large landowners in the country, but now, as we have been told by the Chancellor of the Exchequer himself, there will probably be 12,000,000 separate hereditaments to be valued, and the right hon. Gentleman is very sanguine if he thinks that the comparatively small charge which he mentioned is going to cover the cost of that valuation. We were also told that in this financial year the charge would be about£300,000 to£400,000. I wish to ask if any provision at all has been made for that sum in the Estimates for this year, and whether anything has been provided for in the Budget under that head. When the original Budget statement was made, we were given no guidance on that point. We do not even know now whether that sum is included in the Budget or not.

I wish to refer to the effect of these proposals upon industry, and I fear that in my remarks I shall not agree with the right hon. and gallant Gentleman the Member for Newcastle-under-Lyme. I hold a totally different view from him, but I am sure he will not mind if I am not so lucid as he was, because I am a newcomer to this form of controversy and he has been engaged in it for a generation. Personally, when any new tax is proposed, or any new scheme brought forward, I always look to its effect upon my own constituency. I happen to represent a constituency which is almost entirely made up of small owners, and many of these small owners up to the present have voted Liberal. Socialism does not really count there. I deal with Liberalism, and, up to now, there has been a solid block in that constituency of some 13,000 Liberal votes. Most of those voters own shops, houses, and smallholdings, all of which will have a building value, upon all of which they will be valued, and upon all of which they will be taxed, and I assure hon. Members below the Gangway that those 13,000 votes are no longer theirs. [HON. MEMBERS: "You are all right!"] Yes, I am all right, but, all over the country, the owners of shops in the main streets of towns will come within the scope of these proposals, and it is bound to be the case that, when those shops are taxed in certain towns, the owners will add the amount of tax to the price of the commodities which they sell. Thus, you will get a rise in prices all over the country as a result of this taxation.

Then I desire to put before the Committee the point of view of the factory owner. In the last Parliament we were engaged in removing rates from productive industry. The present proposal is to put the burden back again on industry in a worse form—in the form of a land tax. There are many factories all over the country occupying sites which may be very valuable and those sites are owned by the owners of the factories. I do not at all agree with the argument which has been put forward that prices will not rise in consequence of this taxation. I am sure that the effect of putting any direct tax whether upon income, upon capital, or upon land means that the population as a whole will pay for it through a rise in prices, and I believe that this tax on land values, and, particularly on land already built upon, is going to raise prices generally.

Then as regards housing, it has been said, very truly, that the previous land taxes checked house building. I think there is general agreement upon that point. The Liberal party had a commission dealing with this subject before the War, and I think the conclusion reached was that the taxes had affected the provision of housing. I can give the Committee a case in point which I know well, namely the case of an estate at Alloa in Scotland. Up to 1909 a certain amount of land on that estate was feud every year for housing, but, between 1909 and the War, there was not one single feu—entirely owing to the operation of those land taxes. The same thing happened in a great many other cases throughout the country. Hon. Members opposite airily say "Oh, yes, that particular form of taxation may have stopped house-building but the tax which is now proposed will not have that effect." I believe that the present proposals are going to have that effect, and the housing record of the Government, as it is, is not so very good. In a Debate which we had a short time ago the fact emerged—shall we say—that whereas in 1927 there were 67,000 operatives out of work in the building trade, there are now some 207,000 out of work. The fact also emerged that last year one-third fewer houses were built in this country than were built in 1927. I wonder, indeed, if the very threat of these taxes which has been hanging over the country ever since the present Government came into ofi5ce has not had some effect on the outlook in regard to housing. I think it has had an effect, and, if the Government are going to proceed with this valuation, and, if nobody knows what he may be called upon to pay in respect of certain parcels of land, it will have the effect of holding up house-building for some time and of causing more unemployment among building operatives.

I turn to the question of agricultural land. Agricultural land as such is apparently—I say, apparently—exempted from this form of taxation but here we come to the old conundrum "What is agricultural land?" Some agricultural land of course has no building value whatever. Other agricultural land may have a certain building value. Agricultural land alongside main roads may have or may not have a building value. Some people would say that it had and others would say that it had not. Yet under this proposal a Government valuer is to put a purely arbitrary value on the land and it will be within his discretion to say whether or not land has a building value or not. Farmers who own their own land, of whom there are many all over the country, and especially in Somerset, if they read that their land is going to be exempted as agricultural land and if they believe that statement, will have a shock when the valuation takes place. I feel sure that a great deal of land which everybody considers to be agricultural land, and which is at present not ripe for building, but in regard to which there is the possibility of some building being put upon it within five years, may be valued as building land. In my view that procedure may act very unfairly. What is land which is ripe for building? I can take the right hon. and gallant Gentleman the Member for New-castle-under-Lyme, to the town of Alloa, and, there, he will find between two factories and close to streets of houses fields which are now under wheat and are let for£1 per acre. I do not deny that these fields in the future may have some potential building value. They may have a potential building value now, but nobody wants to buy them nobody wants to build houses on them.


If nobody wants to buy them then they will not be valuable.


I agree that if nobody wants to buy them they will not have any building value but the valuer may say that they have a building value, and that is the whole point, if land is ripe for building then of course it is valuable. If it is not ripe for building, it is not valuable, but land for which the owner is only getting the agricultural value of£1 an acre, may be held to have a building value. The owner may be told "Although at present you are only getting£1 an acre, this land is going to be valued at£200 or£300 and we will make you pay in taxation more than you are receiving in agricultural rent, although we know that at the present time that is all you can get out of it." That is not taxation, it is confiscation, and that is what the Chancellor of the Exchequer was driving at when he said that the land did not, or should not belong to the individual but to the State. This is a method, not of imposing an equitable tax, but of confiscating the land, making it worth nothing and then nationalising it.


Hear, hear!


Then why not say so?


I do say so.


It is true that the hon. Member for Burslem (Mr. MacLaren) has never said anything else, but the Government have not said so. They come forward with a tax which they say is equitable, and they advocate it as a means of cheapening land, when, as a matter of fact, the real object is not to get taxation at all, but to enable them to say that the land is worth nothing in order that they may later on nationalise it at no cost at all. I would remind hon. Members opposite of what Gladstone said, that if you took the land without paying for it it would be robbery, and if you compensated the landowners it would be foolishness. Hon. Members below the Gangway in this matter are flying in the face of their old teacher. They are proposing to help to fruition a system under which they will rob the landowner. I do not think that anybody, in any part of the Committee, desires to see land which is required for public purposes being held up by anybody, but there is a great delusion in this respect. There may be, there probably are, certain cases of land speculators who buy up pieces of an old estate and hold them up in order to get increased prices. Nobody will defend that sort of system. Everybody would like to get at that, but we say that in order to get at the few sharks, you are imposing a costly valuation on the whole country, and a duty which is quite inequitable, and a tax which, as a matter of fact, will have the same effect as the Land Taxes of 1909 and will be found to be unworkable once they come into operation.

I wonder how popular this valuation will be. I remember the valuation which occurred lately in regard to the Rating Valuation Act. I remember having to defend it very strenuously in my con-stituency, and I know a good many other hon. Members who had to defend it too. I realise that that valuation acted to our detriment at the last election but that valuation was nothing as compared with what this will be. Whether you tax a man or you do not, you are going to value 12,000,000 hereditaments or more in this country, and I do not think that that will be very popular. I am sure that the limit of£120 which the Chancellor put on will not affect such an enormous number of hereditaments. It is not going to be very much good in my division, where they are all small owners, where the land in most cases will be worth more than£120 an acre, where shops, institutes, working men's clubs, smallholdings, allotments, bungalows, etc., will all be valued and taxed.

I quite realise that in my Division this proposal will get me votes, and I am equally of the opinion that in a great many other parts of the country this proposal, when it is understood, as we shall see that it is understood, will not meet with the delight that hon. Members opposite believe. I would remind them that when they are going to have this valuation and make it unpopular, and impose an inequitable tax on factories, on houses, and various other things, they are going to find that it will not be so easy to explain to people who think that it applies merely to undeveloped land which the dukes are holding up. That is what the population think and what hon. Members opposite have tried to make them think. But this is quite a different proposition. I would ask them to remember an old Latin tag which I think occurs in the Aeneid, which says, being translated: Those whom the gods wish to destroy they first drive mad.


I think the Noble Lord the Member for Weston-super-Mare (Lord Erskine) showed a complete ignorance of the fundamental laws of rent, profit, and interest when he referred to the capacity of people to transfer a tax upon rents to the price of a commodity, and as he only repeated what earlier speakers have assumed, I will add my humble word to what has already been said by the right hon. and gallant Member for Newcastle-under-Lyme (Colonel Wedgwood) in answer to what I consider to be the central weakness of the case of hon. and right hon. Members opposite.

First, however, I would like to ask a question as to what really is the attitude that the Tory party have made up their mind to take on this proposal. The Chancellor of the Exchequer reminded us of the fact, when he introduced this Motion, that the organs of Lord Beaverbrook are suggesting a sympathetic consideration of the proposal—[An HON. MEMBER: "And Lord Rothermere!"]—and not only the organs of those two Noble Lords, but also the "Times" this morning, and other organs even closer to the Conservative party, are taking a very different attitude from the one of complete opposition that was taken by them on other occasions. What is the attitude that the Tory party are going to take up?

I can well understand that the last speaker, and another Noble Lord opposite who has been making movements indicating that he wishes to take part in this Debate, mean to fight to the death on this question, but it is not yet dear that the Conservative party are going to take that line. What is it then that we are really struggling against? I am not sure that it is just the landlords who are organising themselves to put up a fight on this occasion. What seems to me to be the attitude of the Conservatives is that they realise that there is so much inherent justice in this proposal, and it is so well understood by the people of this country, in spite of what happened with the land taxes on a former occasion, that they will have the utmost difficulty to retain the support of the people for the general policy which they are putting forward if once they are found opposing this thoroughly just proposal.

Let me return to what I suggested was the main reason why we opposed the contention of hon. Members opposite that rent enters into prices and that therefore a tax upon rents is ultimately shifted by the taxpayer to the price of the article. The Noble Lord who has just sat down said that the small shopkeepers, on whose behalf he said he was speaking, in Weston-super-Mare and elsewhere, will pay the tax to such an extent that they will seek the first opportunity to transfer it to the price of the commodities which they sell in their shops. But why is a rent paid on any particular shop on the site value of that shop? It is paid because the owner of the shop possesses an advantage greater than that possessed by other shops with whom he may be competing. It seems strange that I should endeavour to talk simple economics of this kind to a House of Commons consisting of Members who have been educated in universities and who have read Ricardo and the other economists who made this issue perfectly clear years and years ago, but apparently it is necessary to reply to the fallacies of hon. Members opposite.

When the rent is paid on any particular shop, it is paid because of an advantage possessed by the shop most conveniently situated in a world of competition. It is paid for that advantage, and whether you tax its payment or not, the advantage still remains, and the owner of the advantage, therefore, will have no capacity to shift that tax on to the price of the article sold. In my constituency, there are certain owners of shops in the centre of the town who pay rents for their shops because they are in a position to catch more custom than those shop-owners whose premises are less advantageously situated. If a tax is placed upon their rent and the ultimate owner of the rent, the one who ultimately receives it, endeavours to place it additional to the rent, those who are in the position of having those shops in the centre of the town will get an added obstacle put in their way that in the long run will drive them out of business, and therefore the only person who would feel the disadvantage of that action would be the person to whom ultimately the rent was paid. The man who receives rent to-day takes as much rent as the advantage of the situation enables him to take, and when you put on a tax in addition to the rent that he pays, he is not in a position to extract anything further, from the persons who are in possession of the shops, than that which he has already extracted.


Suppose the shopkeeper owns the premises?


If he owns the premises, he is receiving for his ownership of the premises a payment for an advantage that he has not created.


He bought it.


He is receiving a payment for an advantage that he has created out of the needs of the community. It is the presence of a large number of customers in the centre of the town that enables that owner-shopkeeper to collect his rent, and I admit that he does not shift it upon anybody else. He pays it as the owner of the land on which the shop is built, but our contention is that he ought to pay it, because he is in possession of an advantage that he has not created, but that the community has created.

My view is that the Chancellor of the Exchequer, in these proposals, has gone a long way towards the imposition of a tax system which in years to come will enable the community to go forward very much more easily in the work of reconstruction that we desire to carry out. I do not believe by any means that we have got all that can be taken in other forms of taxation. I do not think we are yet at the limit either of Income Taxation or of Super-taxation, but I know that in a community based, as ours is, on modern capitalism and under the processes of competition, it gets harder and harder to secure the returns from taxation in those forms; and it is to the advantage of a Chancellor of the Exchequer and of a community to alter its processes of taxation so that they may rest upon those economic foundations from which it is impossible to shift the tax.

I am willing to agree that in the past certain Income-taxation and certain Super-taxation has been shifted by those upon whom it has been placed, but I am certain that when once we have thoroughly valued the land—we may have to put up with a great deal of opposition from hon. Members opposite, and we may get their sympathetic co-operation with the Land Union and the other forces which will practise again that sabotage that they practised 15 and 20 years ago—when once this patient work has been carried out, when once the various exceptions that experience will reveal to us have been made and we have really got the value of the land, and understood it for what it is, we shall have a basis for future taxation infinitely firmer and better for our purposes than the basis that we now possess. It is because the Chancellor of the Exchequer, looking forward to the future and seeing the possibilities of the great extensions which we have yet to make in public expenditure, is altering the tax system to the one that he is now proposing, that I give this proposal my heartiest support.

Marquess of HARTINGTON

The hon. Member for Huddersfield (Mr. Hudson) seems to have been falling into the delusion that because once, many years ago, he read something in the interesting works of Ricardo and Henry George, that thing is so. I can assure him that that is very far from being the case. I am sorry that the right hon. and gallant Member for Newcastle - under - Lyme (Colonel Wedgwood) has left the House, because there were one or two questions that I should like to put to him. He sustained the proposition that the shopkeeper or the owner of an industrial concern could and would pass the Income Tax and Supertax on to the consumer, and that they could not and would not pass on to the consumer this added burden imposed on them in the form of a tax upon their site values. The hon. Member for Huddersfield supported this contention by a quotation from Ricardo and from Henry George. The hon. Gentleman did not really begin to deal with the actual facts of the matter. It still needs to be explained to the Committee how a firm, which has to pay a cheque to the Government of so many pounds, shillings and pence, can pass that burden on to its consumers when the demand comes in the form of Income Tax, but will not be able to do so when it comes in the form of the new land tax.

It is, in point of fact, quite untrue to say that the proposed new tax will not impose a heavy burden upon industry and upon costs in every department of the national life. The Chancellor of the Exchequer, in introducing his proposal, said that an ounce of fact was worth a ton of theory and then, by way of the ounce of fact, produced a statement which Mr. Goschen made 40 years ago and a small extract from an article in the "Sunday Express." On that ounce of fact he raised the super-structure which we are now discussing. His quotation from Mr. Goschen was utterly irrelevant. What Mr. Goschen referred to, when he said that any increase in wages which the Government employés received would be passed on to the landlord, was to house rent and not to the ground rent is utterly irrelevant to the position, but it is on that pitifully small foundation that the right hon. Gentleman justifies proposals which he has made this afternoon.

I confess that my principal feelings as I listened to the Debate were not those of apprehension, which the hon. Member for Huddersfield seemed to think I should feel, but of pity. I felt a very deep pity for the Chancellor of the Exchequer, that a man who occupies the great position that he does should make the kind of speech which we heard this afternoon, and should he compelled to fill his shop-window with such miserable stuff, because of political exigencies. I also felt a great pity for those amiable fanatics upon this subject, the hon. Member for Burslem (Mr. MacLaren) and the right hon. and gallant Member for Newcastle-under-Lyme. I did feel a sincere pity for them. It is said that a woman robbed of her illusions becomes like a tigress robbed of her cubs. A monomaniac robbed of his illusions is merely a tragedy. That disillusionment is certainly coming to them, and coming before very long. I also felt a pity for the poor beasts of burden below the Gangway for whom this political carrot dangled in front of their noses is sufficient inducement to go on with their degrading task of drawing that ram-shackle applecart opposite down the road to ruin. The disillusionment is quite inevitable. It must come.

There are very many factors which entirely destroy the basis on which the Chancellor of the Exchequer has built his calculations. The time factor is bound to destroy that basis. I do not know to what extent the old valuation of the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) was ever completed, but however much the Chancellor of the Exchequer may say that this new land tax resembles in no way the old tax of 1909–10, it must resemble it in one respect. The valuation must ascertain the agricultural value of the land and the site value, and the assessors will have to ascertain, before they make an estimate for the taxation or before the Chancellor can levy the tax, the difference between the agricultural value of the land and the site value, or any other value that it may have. In that respect it must exactly resemble the old tax. It has that common factor, and because of the necessity of that ascertainment it seems to me that the cost of valuation must enormously exceed what the right hon. Gentleman has stated this afternoon. It seems quite incredible that the valuation can be carried on for£10,000,000 or£12,000,000 hereditaments at a cost of from 2s. to 2s. 6d. a piece. What possible hope has he to carry out the valuation at that figure? I do not think he can possibly hope to complete it within two years. The old Form 4 was never completed, as regards the estate of which I have most knowledge. The valuation was begun in 1910, and, in spite of the most tremendous efforts made by everyone concerned it was never actually completed when the tax was taken off in 1919.

I think the right hon. Gentleman will find very much the same in the ease of this new tax. He is living in a fool's paradise if ho supposes that he will get anything like a complete valuation in two or even in three years. In attempting to collect this tax he must fall between two stools. Either he must impose so colossal and staggering a burden upon the community that it will be impossible for him to proceed with it, or he will begin to make exceptions and then, as has been pointed out to him, he will not realise his costs of collection. If he tries to go straight ahead and make no exceptions, apart from those which he has detailed this afternoon, then there would be, if the public could pay, some revenue, but I do not believe he can proceed on those, lines. I do not believe he can impose that 1d. in the£. What it amounts to is this: It is an addition to the Income Tax on Schedule A of 1s. 8d. in the£ and it will fall not only on the Schedule A Income Tax payers, but it will bring in a very large number of individuals who are at present below the Income Tax limit. The right hon. Gentleman has made provision for the freeholder of a site worth less than£120, who is to pay no tax. That will keep a large number of small freeholders out of account, hut it will still leave in the account a very large number of working men, and practically all the shopkeepers in the country, and impose a very heavy burden on a great mass of people who so far, have not paid any direct taxation and who are not finding things too easy as the present time.

I cannot believe that the right hon. Gentleman is going ahead with a proposal which will mean that every freeholder will have to pay his portion of the new tax, every shopkeeper throughout the country will be saddled with a burden of a few pounds, and every factory in the country will have to pay a tax which in some cases may amount to many hundreds or possibly thousands of pounds, based on a potential and problematic value which they have never realised and could never realise without closing their works. The right hon. Gentleman cannot possibly proceed on that basis. The shock and the blow to industry, and the upheaval which will be caused if he attempted to tax every business in, for example, the City of London, will be too great. If he attempted to extract from the City of London the perfectly colossal sum which this tax would realise, on the system suggested this afternoon, the valuation of a clear-site basis and on the assumption that the other existing buildings are in their place, that is to say, a basis of pretending that things are nothing like what they are, the City of London would migrate. You would create a desert. [Interruption.] Yes. It would be an extremely difficult task to collect what the sum would certainly amount to. It would be a sum of many millions of pounds per year.

On the other hand, if the Chancellor begins to make the exceptions which logic, consistency and justice will demand, he will find that he will have the same experience as his predecessor in this experiment, that the tax will not pay the colossal costs of collection. He will not find it possible to collect this tax. There are an enormous number of individuals who will be affected on the suggested basis. If the Chancellor of the Exchequer is merely going to try to tax the dukes and other landowners who, he still believes, are possessed of vast wealth, I believe a very great disappointment awaits him. The right hon. Gentleman devoted a part of his speech to showing how the large increment created by the efforts of the people have flowed into the hands of the landowners. If that was so, and if that theory had any substantial foundation, we should be presented with the phenomenon that, while the country generally is going downhill, unemployment is increasing and things on the whole are pretty bad, there was one section of the people, and one only, which is continually advancing in wealth and prosperity. It is a matter almost of common knowledge that the prosperity of landowners is substantially less than it was two or three years ago. What used to be called the landed interest is suffering to-day far more, in proportion to the rest of the community, and far more severely than any other class. It is not the case that the landowners are more prosperous than other classes, but rather the other way about. The landed interest is substantially poorer than it was a few years ago. That has been admitted a great many times by the right hon. Gentleman the Member for Carnarvon Boroughs, who, in one of his numerous books, gave it as his reason why large sums of Government money should be spent, that the landowners were no longer in a position to spend it.


Agricultural landowners.

7.0 p.m.

Marquess of HARTINGTON

He admitted that the landowning interest had suffered, and he said that vast sums of Government money should be spent. Perhaps he forgets exactly what he did say. There remains the class of speculators. There has been no disagreement on all sides of the House that, if speculation is going on and large profits are being made by land speculation, it is only right that the speculator should be got at. I do not know a great deal about speculation in land, as I have not taken part in it myself. I am inclined to be doubtful whether these great profits are being made. It is my experience that it is a great deal harder than it seems at first sight to get something for nothing. I should require rather more evidence than we have had before I am convinced that these great profits are being actually made, and that there is this particular section of people who are doing extremely well. If they are, the Chancellor of the Exchequer will find a common measure of agreement in attacking an unjustifiable measure of profit in speculative transactions in land. What is quite certain, however, is that these taxes will do nothing whatever to check speculation m land. It is obvious that, once the land changes hands, the tax is discounted and, once that tax is discounted, it is perfectly possible for the land to be held up and for speculation to go on as in the past. America enjoys this system of taxation, but there land speculation goes on on a vastly greater scale than anything we have here. The system of land taxation there relieves none of the evils which it is said will be cured here by adopting this system. You have there land in particular areas reaching values which seem fantastic to us, you have development of the most hideous kind, and you have speculation in land on an enormous and an anti-social scale. Land taxation in America, while it has passed a heavy burden on to the community, has dealt with none of the abuses which hon. Members opposite think they will relieve by adopting this system.

Again, there are the immense technical difficulties of valuation. Land values are not a fixed thing. Your valuation made during one quinquennium may easily not last for more than a small proportion of the next. Countless other activities besides the movement of the community may easily affect land values. A change of Government is a very common cause, and I could quote one or two cases in which land values have been changed in a very short time. The news, for instance, that a considerable building estate is to change hands, or that the death of a head of a family and the subsequent death duties may make a sale necessary, and that the restrictive covenants may go—news of that kind may alter values in the course of a few hours. I have known cases where a murder in a district or an utterly unfounded report on the health of the district—an alleged outbreak of smallpox—has substantially checked and delayed the development of a whole district for many months. I would remind the Committee, who have had their eyes fixed this afternoon on inflated and growing values, that there is no quicker way of dropping money than by developing in advance of the demand. Land development is a very expensive operation; you have to make your roads, footpaths and sewers and a great deal of money is necessary. Once the money is sunk, it cannot be got back, and one acre of unsuccessful development will easily devour the profits of many successful acres. There is no easier way of swallowing up money. This Measure is going to have an adverse effect on the private developer, and much more land will go to waste under this system than in the past.

Then, again, the moment this tax is imposed, the whole basis of land values is altered. It will be found quite impossible to maintain for five years any valuation which will be arrived at It will take at least five years and enormously more money than the right hon. Gentleman has contemplated to arrive at the valuation and, when you have got it, it will be worthless for all practical purposes. Once you depart from the solid basis of taxing expenditure, about which there can be no argument, or of taxing the income that is actually received, you are in very deep water. There is not the slightest hope that this form of taxation will ever operate in anything like the form in which it is being put forward by the Front Bench opposite (his afternoon. The old school of land taxers, of the right hon. Member for Newcastle-under-Lyme affects not to care so much about the revenue which will be produced by this system of taxation as about its effect on prices and on the availability of land for the community. The right hon. Gentleman this afternoon raised the old cry about breaking up the land monopoly and making the land available. I have tried to show how that theory is wrong anyhow and how, once the land has changed hands, the tax is discounted. In any case, if he ever were right, he is now 20 years out of date. Every local authority has got power to acquire whatever land it needs at a price agreed by the Government Valuer. As it is now, public authorities can acquire property a great deal cheaper than they should. [Interruption.]

I should like hon. Members who interrupt to consider whether this particular case is just. A new by-pass road is to be constructed through part of my own constituency and one of the houses, which will have to be destroyed for this road, is a cottage which would to-day cost at least£700 to build. The county council proposes to pay only 20 years' purchase of the rent. The rent has never been put up since the old days, and the price they propose to pay for the cottage, and the price which they are allowed to pay, amounts, therefore, to only£300, a price at which it would be impossible to give the unfortunate tenant of that cottage, a workman in a quarry close by, accommodation anything like as good. This case occurred close to the town of Bakewell in Derbyshire, and has been brought to my notice by one of my leading opponents in the constituency.


Do the quarries in your area build for their workmen houses costing£700.

Marquess of HARTINGTON

I said that this particular cottage would cost£700 to replace. The man does not work for us, but he has lived in a cottage on our estate and is fortunate enough, as many people are, to live in cottages built in days when rents were much cheaper. He has not had his rent put up and the family have gone on enjoying that cottage for years. The cottage would cost£700 to replace and the compensation is£300. That is an example as to how property can be acquired by public authorities at prices which are certainly "reasonable." There is no difficulty about public authorities obtaining land.

As to the fear that the public cannot obtain access to the land, and that land cannot be developed, the Minister of Health is at the moment piloting a Bill through Committee to prevent people de- veloping the land. On the one hand, you have a Member of the Government saying that the people cannot get the land, and, on the other hand, you have another Minister saying, "Look at the way the country is being defiled by these horrible houses. We must stop it. Why should people live near a road where they spoil the view for the motorists?" These proposals will be calamitous. I should like to give some sincere advice to the Chancellor of the Exchequer. I have a great admiration for him, for his pluck and courage and for the tenacity with which he clings to dogmas and doctrines which have been dead 50 years. In spite of his remarkable balance sheet this year, which would have sent any mere speculator to gaol, he has still a very considerable financial reputation in this country. I would like to give him a piece of advice. If he wishes to retain his reputation, he should drop these proposals. He is backing a cock that will not fight, and it will let him down "as sure as eggs is eggs."


I am not surprised that the Noble Lord opposite should have expressed his strong personal distaste for the proposal now before the Committee. I should have been, indeed, surprised if he had given his approval to it. For myself, I regard the introduction of these proposals to secure for the community the value which has been created by the community with a great deal of personal pleasure. I am certain that the vast majority of the citizens of the city from which I come, and especially the greater proportion of my own constituents, will hail the introduction of this much-neded reform with-great satisfaction. The exploitation by the landowners and land speculators of this increment value is an evil which has for a long time been crying out for redress. The power to expropriate the value created by the expenditure of public money, by the development of transport, and by the growing needs of the community, has been a very serious hindrance to social progress. It has handicapped the work of local authorities in developing their areas and in addition, as the Chancellor of the Exchequer rightly said in introducing his Budget, has imposed a crushing burden upon industry and particularly upon the section of business people, to whom the Noble Lord referred sympathetically just now, the large shopkeeping community of the country.

The Noble Lord rather questioned the authenticity of the facts which have been submitted in proof of the need for a reform of this character. If the Committee will bear with me for a few minutes, I will endeavour to furnish them with information given to me from a thoroughly authoritative source, which will I think astound a good many Members. We know that glaring instances abound throughout the country of the extent and amount of these exactions, and of the exorbitant prices charged in various parts of the country for land which has been needed for building and development. I have some figures which were given to me showing the almost incredible increase in the value of land in the city of Bristol. If the Noble Lord doubts the authority for this information, I can tell him that it is from official sources. In the centre of the division which I represent land has recently changed hands at prices ranging from£200,000 an acre to the almost incredible sum of£1,650,000 an acre.

Marquess of HARTINGTON

How many acres?


That does not affect the argument or the principle. The Noble Lord doubted whether the facts submitted from this side of the Committee can be corroborated.


Was it bare land?


Yes, it was the amount paid for the site after the buildings had been demolished; it is the site value. I have been asked not to divulge the name of the owner of the land because that would be hardly fair, but I can give the name to any hon. Member who cares to see me afterwards. I quote from the information supplied to me: The pries per acre was£1,650,000, excluding buildings. That will be astonishing information to the Committee. We have heard of figures somewhat similar being paid for land in London, in the centre of the Metropolis, which is the centre of the world, but this is in the centre of Bristol.


Was it an acre, or a portion of an acre?


I do not think that that affects the argument. Land has been bought in the city of Bristol within very recent times at the tremendously exorbitant price of£350 per square yard. Such figures prove the enormous increase that has taken place in the value of land, not only in the City of London but in the provincial cities of our land, and they are strong proof of the urgency of a measure such as has been submitted by the Chancellor of the Exchequer. I have other information respecting the large increase of land values in my city. A site was bought about two years ago at£19 per square yard. This was a considerable area. Five years ago£10 per square yard was considered an excessive price. There is a concrete case of the value of land being practically doubled within five years.

I want to refer to the effect of this upon the rents which people have to pay for their houses. I have a long table of figures giving the prices paid by my own town council for land on which to erect working-class dwellings. They go up to as much as£539 per acre. Agricultural land contiguous to these sites on the outskirts of the city of Bristol is valued at from£100 to£125 an acre, and any hon. Member who is fair-minded and not biased by tradition is bound to agree that there is something radically wrong in a system which allows either landowners or speculators to exploit the needs of the public in this unjustifiable fashion. I can speak feelingly on this point. I happen to be living on part of an estate which was acquired a few years ago by two speculators. The gravamen of our charge against the existing system is that the people who get away with the result of the exploitation have not contributed a farthing towards creating the increased value. That has all been created by the expenditure of the public authority and by the growing population. Near the estate to which I refer the city council widened and extended the road, and spent a lot of money in developing that part of the city. The hon. Member for Bridgwater (Mr. Croom-Johnson) will recognise the part to which I refer. These two speculators did not hold the land very long, and the builder who erected the house in which I reside told me that they took£2,500 clean profit out of the transaction-


Not clean profit, but unclean profit.


I will call it legal profit. I have further facts with regard to the working of this system. I prefer to speak of things that have been brought to my own knowledge and which are happening in my own city. Other Members will speak of what they know in other parts of the country, and they will seriously add to the tale. Land is now being sold within three miles of the city of Bristol, which a few years ago was valued at from£200 to£300 an acre; I should seriously question whether, when this land was entered in the rate book, the owner did not designate it as agricultural land; at any rate, it was not rated at a very high figure. Within the last few years that land has increased in value by 10 times the original value, and to-day it is being sold at the rate of£2,500 an acre. It is not only in the cities where this exploitation and expropriation are being carried on. Within 20 miles of this House, there is heath land in the county of Surrey; I say this with full authority, and I can supply hon. Members with the full facts if they wish. I have information that this land was offered to a certain department within the last 10 years at£4 an acre. The owners, I am informed, have spent nothing on its development, and to-day that land is being sold at£200 an acre. The Noble Lord the Member for West Derbyshire (Marquess of Hartington) spoke about the difficulty of getting the value of the property when public improvements are to be carried out. My experience is the opposite to his. We have rarely found the owners of property inclined to make us a generous gesture, and we have nearly always had to fall back on to the offices of the district land valuer. I have rarely heard them putting the property that is to be acquired at any less value than the owners have regarded as a fair price.

There is another aspect to which I should like to refer in connection with this important reform, that is, the effect of the present system upon the shop-keeping community of the large cities. The very inflated prices which are being charged for sites in the centre of cities have had an appreciable effect on increasing the rents which other shopkeepers in the vicinity have been asked to pay. The high ground rents which have been exacted have, to a large extent, influenced the rents. I have large numbers of shopkeepers in my constituency who are finding it very difficult to make ends meet, and who have been burdened as the result of the working of this unjust system. Many of them complained bitterly a few years ago that they not only had to pay these exhorbitantly inflated rents but, owing to the operation of the Local Government Act, they had had their assessments increased. Some have had them trebled, and to-day the amount of money which these people are paying in rent and rates combined is, in some instances, three or four times what it was five or six years ago.

How will this proposal assist them? We believe that eventually it will be found that£his will open up such a potential source of revenue as to astonish those of us who have the pleasure of discussing it to-day. Hon. Members opposite sometimes tell us that the limits of taxation have practically been reached. Here is a source of revenue which will not be subject to the operation of the law of diminishing returns. Exactly the reverse will take place. As the country develops, as the public authorities spend more and more money on their roads, as the population increases, so the site value of land will be bound to rise, and the revenue which will be derived from this tax will be an ever-increasing and ever-expanding one. It is said by hon. Members opposite that drastic reductions in expenditure are necessary because of the limitations of taxation, and if they do not directly say so, they desire by inference to imply that the social services is the item in our expenditure which is to be reduced. I am keenly anxious for much larger amounts of public money being spent in developing our social services. I have large numbers of people in my division who could hardly keep their bodies and souls together if it were not for the assistance received from social services.

When this tax begins to operate, I hope that there will be a definite allocation of a certain proportion of the proceeds for local purposes. When that result is realised, it will be possible for local authorities to develop their social services in the direction in which some of us are extremely anxious to see them developed. In my city we want a largely increased supply of houses. We have one of the best housing committees in the country, but they are hampered by the lack of financial resources. When we begin to receive the results of the operation of this tax we shall be tapping a source which will enable local authorities to develop social services, to go ahead with housing, to spend more money on what I believe more money can be wisely spent upon, that is education, providing greater educational opportunities, and also developing what I think—

The CHAIRMAN (Sir Robert Young)

The hon. Member is spreading himself over a very wide area. We are not now discussing the purposes for which the tax will be used.


With all respect, I was endeavouring to show the possibilities—


The possibilities might widen and widen until we should not know where we were getting to in the discussion.


Then I will leave that part of the subject to the imagination of hon. Members opposite, and will conclude my remarks by saying that I believe that when the results of the valuation are tabulated they will be astonishingly surprising. [Laughter.] Hon. Members opposite may laugh, but the people who have to face the burdens of the present system do not think it any laughing matter. I believe I say the results of the valuation will be astonishingly surprising, and, if I may reassure the Noble Lord opposite, I do not think there will be any insuperable difficulty in making the valuation. He will find that the Chancellor of the Exchequer has embarked on this subject with determination, and that means will be found for overcoming any of the minor difficulties which seem to have been present in the Noble Lord's mind when he was speaking. I have the greatest possible pleasure in supporting the proposal before the Committee, I hope the valuation will be proceeded with as speedily as possible, and I am confident that the result of the imposition of a charge which, to my mind, is only a fractional part of the increment value, will be such as to lead our Chancellor of the Exchequer, whom we have reason to believe will be found in that position for a long time to come, to see the necessity and wisdom of increasing the amount in the pound which is to be levied.

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

I understand that it will be for the convenience of the Committee if I intervene now to answer some of the points which have been put forward in the Debate, though it was my original intention, which I think would have been more convenient to the Committee, to speak a little later, and for the Debate then to be adjourned until Wednesday, leaving my hon. and learned Friend the Solicitor-General to wind up on that day. However, I am very glad to fall in with what I understand to be the wishes of the Committee. Some comment has been made, in particular by the Noble Lord the Member for Weston-super-Mare (Lord Erskine), on the procedure we have adopted in regard to this Resolution, and I may say at once that I fully sympathise with the right hon. Gentleman the Member for West Birmingham (Sir A. Chamberlain) in the position in which he found himself of having to answer a speech without having been aware beforehand of the principal points of the proposal which was outlined in that speech. But beyond that difficulty, which I fully appreciate, I cannot say that I feel that the Opposition have any grounds of complaint. Suppose it had been possible to deal with this subject in the Budget in the ordinary way. It would have been outlined by the Chancellor in his speech, and the Opposition would then have had an evening and a morning in which to ponder what the Chancellor had said before they came to criticise his speech. The Debate would have gone on during the two following days on which the Budget Resolutions are discussed in Committee of Ways and Means, and that discussion would have come to an end with the passing of the Omnibus Resolution. Subsequently, they would have been discussed again on Report stage, and finally they would have been embodied in the Finance Bill. That is the normal procedure. The right hon. Gentleman shakes his head.


Surely it is not the normal procedure in a case like this. My mind goes back, and I think the hon. Gentleman's does, to 1909–10, when we had not merely the ordinary omnibus Resolution but we had a particular Resolution dealing with the taxes which was the subject of one or more day's Debate, quite apart from the other Resolutions.


One of the hon. Members who sits behind the right hon. Gentleman did not take the point which the right hon. Gentleman is taking, and, personally, I still cannot see the difficulty in which the Opposition are placed. They have had to-day for the discussion of the subject, which has been placed before them in general outline, and they will have next Wednesday to discuss it in Committee, to which day this particular Debate will be adjourned. Subsequently, the matter will come up on Report stage, and finally there will be the discussion of the Finance Bill in all its stages. Taking all that into account I think that, broadly speaking, they have all, and I am not sure that they have not a little more than, the usual facilities for appreciating the intricacies of the subject. Of course, I am prepared to admit that the full, minute, meticulous details of the scheme are not yet before the Committee, but that is always the case with new proposals which are brought in with the Budget. Full details will be before Parliament when the Finance Bill is brought in, and the opportunity is given of reading the precise words of the various Clauses of the Bill. What is usual, and what has been done in the present case is to present in Committee of Ways and Means, a general broad outline giving the major points of the proposals. I think the Chancellor of the Exchequer has done that and has provided ample means for a reasonable Debate. He promised that I and my hon. and learned Friend the Solicitor-General would deal further with the major points, and we shall do our best to comply with that promise, but, on the other hand, we cannot pretend to cover all the ground which will properly be left for the Committee stage of the Bill.

Several points have been put to me this afternoon. The right hon. Member for West Birmingham, who grasped very quickly, I think, the major points which the Chancellor outlined, put a certain number of matters for further elucidation, and, in particular, asked several questions relating to agricultural land. He wanted to know whether woodlands, moorlands, allotments and a number of other classes of land were included in agricultural land. I think the best answer I can give him is to tell him that, speaking broadly, the definition of agricultural land which will be put into the Clauses of the Finance Bill dealing with this subject will be the definition which appears in the De-rating Act. If he will study that Measure he will find, in broad outline, the definition which will enable him to judge how far the various classes of land he mentioned will be included or excluded. The only difference, I think—it is a very small one—relates to land on which farm buildings are situated.

Then he further asked whether the valuation would be extended to agricultural land even when it was found that that land was exempt from taxation owing to the fact that it was held to have no site value other than its use for agricultural purposes. He assumed, quite naturally, but incorrectly, that it would be necessary to value all land, including all agricultural land, on the off-chance that there might be found some site value in excess of purely agricultural value. I am advised that that will not be the case. It will not be necessary to value all agricultural land. There may be cases, as it were, on the margin, where the valuers may be uncertain whether there should be a site value attached to the land in addition to the agricultural value or not, and there may be some cases where valuation will take place and it will be decided afterwards that that particular parcel of land is to be exempt from taxation; but in a very large number of cases that valuation will not be necessary. Those who are charged with carrying through this valuation will be able prima facie to dismiss certain tracts of land as being wholly agricultural in value, and in those cases no valuation will be required. It will be a matter for the judgment of those charged with the valuation and I am quite sure that in consequence in a great number of cases there will be a saving of a very large amount of expense both to the State and to the landowners by the decision that the valuation will be unnecessary.

He asked me a number of further question regarding possible exemptions. My answer to that is this: The Chancellor of the Exchequer outlined in his speech the main exemptions he intended to provide and hon. and right hon. Gentlemen in all parts of the House can take it that the exemptions which he has specified will be the exemptions contained in the provisions of the Bill, but when the text of the Measure is published they will be able to see whether in their opinion there are other properties which ought also to be exempted.


Would the hon. Gentleman mind answering two specific questions I put? Are colleges and educational institutions included or exempted; and are playing fields and sports grounds included or exempted, in cases where they are not in the possession of public authorities?


The answer to both those questions I have already given when I said the Chancellor of the Exchequer has already specified the kind of land that would be exempt. The particular cases which have been referred to were not mentioned by the Chancellor of the Exchequer, and, therefore, hon. Members must take it that it is not proposed in the Bill to exempt them. The House will have an opportunity of raising all those matters in Committee on the Bill, and if there are any special lands for which hon. Members desire to claim exemption, of course all those cases will be carefully considered by my right hon. Friend.

The right hon. Gentleman the Member for West Birmingham referred to the restrictions imposed by the Town Planning Act and other schemes, and asked how they would be affected by this proposal. The answer to that question is that restrictions imposed under the Town Planning Act are restrictions which the landowner will be allowed to take into account when the valuation is put forward. The other points raised by the right hon. Gentleman the Member for West Birmingham are matters of detail which can be discussed during the Committee stage of the Bill. The Noble Lord the Member for West Derbyshire (Mar- quess of Hartington) said that this tax would operate merely as an additional 1s. 8d. in the£ on the existing Income Tax under Schedule A. That statement is very wide of the mark and the Noble Lord seems to have misunderstood the incidence of the proposed new tax.

In the first place, the tax is on land and not on the land and buildings. It is a tax on the capital value of the land, and not on the annual value of the property. I will give two examples. In the first place, I will take the case of developed land inside a town. I will take the case of a house in the suburbs or a factory in an industrial area. It often happens that the value of the building is four or five times that of the site value, and then the tax which, according to the Noble Lord, approximates to 1s. id. in the£ on the annual value, is really only equal to a rate of something like 3d. or 4d. in the£ additional on the whole value of the property. Hon. Members opposite who have spoken about the paralysing effect of these proposals on industry and the way in which factories where the proprietors are the owners of the land will be burdened by these proposals, and will not be able to recoup themselves, forget that the whole of these proposals will only be equivalent to an additional rate of 3d. or 4d. in the£.


The hon. Gentleman has entirely misunderstood or misrepresented what my Noble Friend said. A penny in the£ on the capital Value, assuming a value of£100, is 8s. 4d., but that£100 will earn 5 percent, interest, that is to say£5, and 8s. 4d. on£5 is 1s. 8d. in the£ Income Tax on the rent.


The hon. Gentleman the Member for Farnham (Mr. A. M. Samuel) has not added anything to the argument, and I am not trying to get away from the facts of the case. The Noble Lord the Member for West Derbyshire said that the new proposals of 1d. in the£ on the capital value would be equal to 1s. 8d. in the£ on the annual value, assuming the annual value to be deduced from the capital on a 5 percent, basis, but he did not take into account the fact that the Income Tax is paid on the buildings as well as on the site. What I have been trying to impress upon the Committee is that the total effect of the tax upon the site will be only equivalent to a rate of about 4d. in the£. Considering that rates are generally round about 10s., 12s. or 15s. in the£, I think it is absurd to contend that the additional burden under these proposals is going to have a shattering effect upon the owners of factories.

I will give another example of an opposite kind. Take the case of a piece of undeveloped land on the fringe of a town. The land may have a very high capital value, and the tax will be more burdensome; but it is just the sort of case where land is ripening and where the existing owner is making a large profit from the increasing value of the land. I suggest that it is reasonable in those cases that the taxpayer should bear a larger amount. The Noble Lord the Member for Weston-super-Mare (Lord Erskine) and the right hon. Gentleman the Member for West Birmingham referred to the question of the cost of the valuation and asked whether it was included in the Estimates. In reply to that question, I can only say that it would have been improper to have placed it in the Estimates before the House had sanctioned the proposal. If it is said that the balance provided by the Chancellor of the Exchequer in his Budget is less than£200,000 I would remind the Committee of what the Chancellor of the Exchequer said in his Budget speech with regard to the need for economy to provide the means to meet such Supplementary Estimates as may be inevitable.

The right hon. Gentleman the Member for Newcastle-under-Lyme (Colonel Wedgwood) pointed out that the rating of land value was of as much importance as the taxation of land value. The valuation of land is just as necessary for that purpose as for the purposes of the taxation of land value, and by bringing forward this Resolution we are taking the first step which is necessary for obtaining a valuation of the land, and Parliament at some future date may be asked to deal with this question. Reference was also made by him to the Valuation Bill which came before the House last Session, but although it is true that the proposals we are now putting forward follow somewhat on the lines of this Bill, it must not be taken that they will follow the Bill in all details.

8.0 p.m.

Some of the speeches from the Opposition side have been directed to showing that what we are doing by these proposals is not to take the increment in the value of the land as it arises. May I point out that the proposals we are discussing are not a repetition of the Increment Value Duty, and they are not a re-imposition of the Undeveloped Land Duty, but something entirely distinct from either. From the way hon. Members opposite have spoken of those schemes, those who did not remember would have thought that such schemes were the darlings of the Opposition which they would have desired to keep on the Statute Book. As a matter of fact, they disliked those schemes from the beginning, and they secured their withdrawal. The proposals which the Government are now putting forward are a more scientific method of taxation, and they do not lend themselves to the criticism which was directed against the other proposals to which I have referred. In particular, they are not subject to the fluctuating value of money, which was one of the difficulties of the proposals of an earlier time. By a change in the value of money which affected the whole price of land, the measure of real incremental value was, of course, thrown out of proportion. If the whole level of prices were raised by 50 per cent., a man appeared to have made an enormous profit when he had bought land before the rise; while, on the other hand, when all prices, of land and other commodities, were falling, he appeared to have made a loss. That was one of the difficulties of the other method of taxation, and it is a difficulty which has been avoided in the present proposals. Another point which has already been mentioned is that the present proposals do not have the effect of stopping dealing in land, which, it was alleged, with perhaps some show of reason, was the result of the proposals that were carried in a previous Parliament. The present proposition is free from the difficulties which, undoubtedly, seriously reduced the value of the proposals that were previously carried. The proposals which we are now putting forward will, we are confident, command the assent of the majority of the House of Commons, and will be of lasting benefit to the community of this country.


I desire to keep the Committee for a few minutes only, but, as the hon. Gentleman was good enough to give place to me—a privilege that I would not dream of claiming—I should like to thank him for his courtesy in speaking, and to tell him that he himself affords a proof of the wisdom of some advice which was given to me by a very wise civil servant when I first became Financial Secretary. He said to me, "Do not ever sit on the bench unless it is your duty to be there, or someone else will say, 'I see the Financial Secretary, and I should like to know what he thinks about these things.'" It was our desire to know what the hon. Gentleman thought that made us feel that we must hear what he had to say. I am grateful to him for having acceded to our request. I must acknowledge that he has shed a little light amid the encircling gloom, and he will doubtless remember that the poet who wrote those words did not expect that light to illuminate more than each step that he was taking.

The hon. Gentleman's speech, although he answered one or two questions that were put, only shows the entire futility of a discussion like this until we have seen the Bill, and I think it would be a far wiser course for the Government to-night to curtail these discussions on the Resolution, and let us have the Bill and get to work on the Bill with all the speed that is possible. It is not only Members on this side who are in difficulties, but Members on the other side as well. There is no more difficult and complicated subject than any subject connected with the taxation of a land value. On this side we have been confined to asking questions—not catch questions, as the Chancellor of the Exchequer said, but pertinent questions, and questions that will have to be answered and will have to be settled unless the whole effect of this legislation is to be lost by appeals to the courts. We ask questions and hon. Members on the other side are at present living in an atmosphere of rosy dreams.

The hon. Member for Central Bristol (Mr. Alpass), who made an excellent speech, if I may say so, spoke about increment, on which the Financial Secre- tary said something. He spoke about the enormous rise in the prices of land in Bristol. Of course, we want to know how the Bill, when it comes, is going to affect those values, and we want also to know this: The hon. Member said that this sort of thing will be illegal. Will it be illegal in future? I cannot imagine any legislation that will make it illegal. I noticed the fervour and enthusiasm and sincerity of the hon. Member in giving expression to these beautiful dreams. I do not think he ought to be allowed to hold them and to ventilate them for one minute longer than is absolutely necessary; it is not fair to him. The whole question which he was so anxious to discuss, of securing the increment for the benefit of the public, is a subject in which many men of all parties have been interested for many years, but it is a subject which, so far, in practice, has proved to be absolutely insolvable, and I cannot conceive that anything in the Bill is going to make it solvable. But we cannot tell until we have seen the Bill, and we are talking in the air all the time until we have seen the Bill.

The hon. Member for Central Bristol—I refer to him once more because his speech was very typical—said that he supported warmly the proposals that we are discussing to-night. We are discussing no proposals at all; we are discussing a proposal in two years' time to put a tax of one penny for each pound of land value on every unit of land in Great Britain; but we know very little about the properties on which that duty will be charged, and how it will be charged. I am very shy of making any allusion to a mathematical subject in the presence of the Financial Secretary, but I remember that we were told once by a mathematician that there are beautiful realms of mathematics built up entirely on the conception of the root of minus one. I remember my tutor at Cambridge telling me that those realms were pure poetry. They are realms in which I have never trodden, but, if any hon. Member has tried to extract the root of minus one, he will know that no such thing exists. This tax is x, and how the equation is going to be solved, how x is going to be put into figures, is the whole crux of what we are discussing; and we cannot discuss it until we get the Bill. I would conclude the few words that I have put before the Committee, in acknowledging the courtesy of the Financial Secretary, by repeating what I said at the beginning. Such a discussion as this is a discussion in the air. It is perfectly futile for all practical purposes, and the sooner the Government come to business and we get the Bill, which can be examined and dealt with as a Bill of that nature must be, owing to the difficulties and complications inherent in the subject, the better it will be for the reputation of the House of Commons.


The Financial Secretary may have shed a little light amid the encircling gloom, but I think he only showed how very gloomy the whole of these proposals are. He confirmed our worst fears. He told the Committee that whether valuation should be taken in the country at all depended upon the whim, or caprice, or judgment of permanent officials. He told us that schools and college and such like were not to be exempt from the provisions of the Bill, and altogether he confirmed the very worst impressions that we formed as to the proposals at the start. He pointed out that this was not a question of an increment tax, but a tax on value. That makes it far worse, because, as was pointed out by my right hon. Friend the Member for Sevenoaks (Sir H. Young), at any rate a tax upon increment was paid for out of the increment. This, however, is a far more radically unjust tax, and will weigh far more heavily on the community than any increment tax could do. I am glad to see the hon. Member for Burslem (Mr. MacLaren) in his place even at this hour, because I think he really should be singing the Nunc dimittis, for he has seen the darling theory of his dreams come to light once more, and brought to light by the party to which he belongs. But let him not be too hopeful. I might advise him, perhaps, to pass out before he sees how the country passes judgment on this matter; or, at any rate, if the country does not pass an adverse verdict upon these proposals, he should wait and see what possibly can be done with them, because all experience has shown that these taxes are unworkable, and cannot bring about the results which he, as an enthusiast and a fanatic for the taxation of land values, hopes will come from them.

The Chancellor of the Exchequer is a man of principle. He is well known as a man of principle, and he has adhered even now to his one principle, namely, the principle of Free Trade. He surrendered most of his other principles in the present Budget, but we at any rate acknowledge that he is a man of principle, and, as a man of principle, we are entitled to ask him a question. What does he mean by this ambitious scheme of land taxes? Is he out for nationalisation of the land as a whole, or is he following the purer doctrine of Henry George, who was not for nationalisation of the land, but of land values? I think we are perfectly entitled to ask him that question. We know what said in July, 1910, in this House, because it is a matter of record. At that time he was out for nationalisation, and was entirely opposed to such a proposal as he is now bringing forward. He said: We should endeavour to secure revenue, not by increment on land or taxing land values or monopoly value of licenced premises, but in a much more effective way, and in a way that would not inflict as much hardship upon the individual as is contemplated by means of taxation. I would give the present landowners every penny of the present value of the land. The Financial Secretary will observe that the Chancellor of the Exchequer was then a fool, according to Gladstone's definition, and he is now becoming a knave according to the same definition. He continued: The State would then resume the ownership, and you would have settled for all time the question of future increment. It would all accrue to the community—not 20 percent, of it, but 100 percent, of it,


What is the date of that?


The 4th July, 1910. That was the opinion of the Chancellor of the Exchequer at that time, and I shrewdly suspect that deep down in his own convictions he contemplates such a proposal to-day—confiscation of land, not taxation of land. If that is his plan, all I can say is that it is a singularly cold-blooded and dishonest way of nationalising the land. He is going, really, to the door of the taxpayer of this country—the owner of land in this country—and is really going to rob the premises of their most valuable part, namely, the value of the land. He is going to appear in the uniform of a tax collector, or, at any rate, with the buff forms in his pocket, but he is going with the wings of a saviour of society on his back. The true upholders of the taxation of land always think that they are the saviours of society. A more difficult triple role than that of a robber, a tax collector and an angelic saviour of society is very hard to imagine, but that is what the right hon. Gentleman is proposing to do if he is going to nationalise the land by means of taxation. We have heard a great many references to the experiments that have been made in other parts of the Empire and I would like to refer the right hon. Gentleman to the experience of the Manitoba Committee in Canada, which was set up to investigate the chaos which arose in that province as the result of this very kind of taxation. The Committee reported: It amounts to a process of fairly rapid confiscation of property in the guise of taxation. As a method of confiscating land, this is, no doubt, a very useful method, but I would remind the hon. Gentleman and the Chancellor of the Exchequer that this very act of confiscation destroys the value upon which the tax is based. The State has then to deal with the property, and it has no such value as was assessed by the tax collector. I suppose we have to presume that the Chancellor of the Exchequer is honest in these proposals, and that he is not coming out as a nationaliser of the land, but that, under the pleasant persuasion of the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George), he is now a real believer in the taxation of land values as taxation, and not as nationalisation. If that is so—and I think that at any rate that is his present pose—we have to investigate very simply the principles of the philosophy of Henry George, as he wrote in California in 1879. That great Californian thinker in 1879 was a flower of his period. His philosophy is not a flower which will grow in any but his native land. He lived in a time and in a place where a new country was being exploited and developed and where he saw every day vast fortunes made out of the development of land. He saw land being held up unjustly and so he presumed, as so many of us presume who live in a very small area, that by a single idea which is applicable in our own locality the whole world would be saved because we think that the whole of the world is exactly like the place in which we live.

He was a man of one idea, like Karl Marx, but in his one idea he was preferable to Karl Marx. He was not a mere observer of the materialist view of history. He did not merely promote the idea of class war nor wish to see the inevitable end of economic history in the domination of one class at the expense of all others. He was an intensely human man. That is the attraction of Henry George as opposed to the attraction of Karl Marx, and that is why he has appealed for so long to the hon. Member for Burslem (Mr. MacLaren) for whom I have a great respect. He saw the problem of progress and poverty. He saw, in the place where he lived, great wealth increasing by the side of great poverty, and he presumed that the cause of the whole of this tragic situation was that the landlord took an exorbitant rent. In his book he talked about the few thousand owners of land in England. That was the first misconception under which he laboured in 1879. What was called the new Domesday Book has already been published which showed nearly a million owners of land. Nowadays, when the public have been encouraged by legislation to acquire their own interest in land, and with the operations of building societies all over the country, I suppose there must be many millions of owners of land, so the first argument of Henry George does not apply to this country or to this time.

He had another theory that is reflected in the speeches of hon. Members to-night, that the landlord gets the major profit out of the land. I suppose, the profits of industry being made up of rent, wages and interest, he assumed throughout that wages and interest remained constant whereas, if an industry increased, the rent would go up. Of course, as we now know, nothing could be more false. At present, of course, it is wages that last the longest and keep highest the longest. Wages go on being paid, while interest completely disappears as we see every day. Owing to a competition which Henry George allowed the rent of many landowners is extremely low and in any housing scheme the cost of the rent is almost infinitesimal in the development of an estate. Anyone who knows anything about modern building schemes could inform the followers of Henry George of that. So another argument of Henry George is found quite inapplicable to the present time. The landlord gets out of industry a very small part of the profits as a whole.

Another argument can easily be disposed of. He said there was no access to land. Investigation disposes of the statement that no one who wants land can get it. As a matter of fact, the difficulty is now to get rid of it, and there would be an even greater difficulty if these proposals were to be passed in the form of a Bill. Henry George and his followers ignore the effect of the Land Clauses Act and the Acquisition of Land (Assessment of Compensation) Act which, together, entitle a public body or a local authority to take what land they will at a price which cannot be greater than that at which it is assessed for Estate Duty. Henry George entirely ignored the phenomena of modern English legislation and tenure of land and presumed to talk about a few thousands of owners of land. Another fundamental fallacy of Henry George's philosophy, which is really so false that it only needs to be stated to be shown to be false, is that land was the only form of property that was affected by the presence, the increase or the diminution of the community. Of course, this principle applies, I suppose, to every commodity, and yet this strange doctrine has been swallowed whole by all his followers including, I am afraid, the hon. Member for Burslem. It is, of course, an absurd position. The land taxers had one wonderful justification for this proposal then, and it is at the present time most extraordinarily tempting. They are single taxers. The hon. Member for Burslem is a single taxer. He does not believe in any other tax except the land tax. When, his great prophet was alive in 1879, there was some possible excuse for that theory. In 1897 the total revenue of the country was£113,000,000. Now it is at least£900,000,000. If I thought we were going to get oft with the annual rental value of real property as taxation, very likely I should support the hon. Member for Burelem, hut, as assessed in 1926, the total value of real property was something like£239,000,000—barely a quarter of what would be necessary to pay our revenue. The single taxer might have been able to get all his tax in 1897, but he certainly cannot get it in 1931.

The whole of this proposition, of course, ignores the tremendous change in the number of possessors of property since the days when Henry George wrote. I do not know whether I heard the Chancellor aright, but I thought I heard him say he was going to exempt from the effect of these taxes the whole, or most, of the working classes. Apart from the nausea which that kind of class statement induces in any honest politician, I should very much like to refer to a speech made by the same right hon. Gentleman, the man of principle, the man of honesty, the man of strong will, made in 1913 in this House: The land taxes were recommended to us because it was intended that they should tax something that was not the creation of any individual but the creation of the community and, for the time being, the Chancellor of the Exchequer said he was content to take 20 percent, of that for the State. Now he proposes to abandon that principle altogether, and he practically says that it is wrong for a rich man to take something which is the creation of the community but it is not wrong for the poor man to do so."—[OFFICIAL REPORT, 1st August, 1913; col. 1008, Vol. 56.] That is exactly what the Chancellor of the Exchequer said in his bitter way this afternoon. I hope when he reads the OFFICIAL HEPORT he will have the unpleasant experience of digesting those words of 1913. It is impossible, after the experience we have had of land taxes, to think this can ever be a profitable tax. It will involve grave injustice and it will involve the ignoring of all improvements made by the landlords themselves. To say it could ever be collected would be laughable in the face of the experience that we have had. Indeed, we have the statement of the right hon. Gentleman the Member for Carnarvon Boroughs himself that this cannot be useful for Revenue purposes. He has again and again tried to prove that he did not murder his own infant. He has resorted to the common defence of the murderer, that he was not there when the right hon. Gentleman the Member for West Bir- mingham (Sir A. Chamberlain) withdrew the taxes. He has said, I think, he was at San Remo and could not possibly have had anything to do with it. When the late Lord Melchett taxed him with having discussed the matter in the Cabinet room, the right hon. Gentleman again pleaded an alibi; he said he was not there. [Interruption.] I can produce the evidence that he said this. The right hon. Gentleman said that when this part of the Budget was discussed he was away. I will, if necessary, show it to the hon. Gentleman afterwards.

But the right hon. Gentleman the Member for Carnarvon Boroughs has produced irrefutable evidence that he was a party to the murder of this rare, refreshing and fruitful infant. There was a publication, not perhaps remembered by all hon. Members of the present day but which in its time had its vogue. It was called, "The Lloyd George Liberal Magazine." I doubt whether it ever paid the right hon. Gentleman to produce it. In an interview which he gave to that illustrious paper in October, 1920, he said: It was useless to keep up those taxes any longer for revenue purposes. It is clear that the right hon. Gentleman the Member for Carnarvon Boroughs thought the proposal at any rate was useless for revenue purposes. We go back to those days and we see the most convincing figures of all. We find that those taxes raised£1,300,000 and that they cost£5,000,000 to collect. I hope that the Financial Secretary is taking note of the last-named figure, so that if he is asked a question again he will be able to give the figure correctly. The right hon. Gentleman the Chancellor of the Exchequer said that no argument which applied against the old land taxes would apply to the new. We wonder why the hon. Gentleman the Financial Secretary concealed deliberately from the right hon. Gentleman the fact that the collection of the taxes cost£5,000,000. He said that the figure was not available, but he had only to look up the OFFICIAL REPORT when he would have found that the right hon. Gentleman the Member for West Birmingham had given the figure in 1920.


The hon. Member has made an accusation against me which I very much resent. The hon. Member has no right whatever to say that I could have given the figures and that I refused to give them; and I think he went on to say that I deliberately withheld the figure in my possession. He is entirely incorrect. If the hon. Member will study exactly what the right hon. Gentleman the Member for West Birmingham (Sir A. Chamberlain) did say in the year to which he referred and the answer that I gave, he will find that my statement is perfectly correct, and I ask him to withdraw the imputation of dishonesty which he has made.


The hon. Gentleman has perhaps assumed that I was-accusing him of personal bad faith. I was bringing to his notice the fact that the right hon. Gentleman the Member for West Birmingham (Sir A. Chamberlain) did ask him how much this tax cost to collect, and I read very carefully the speech of the right hon. Gentleman the Member for West Birmingham when the tax was withdrawn, and he said that the collection amounted to£5,000,000, and I think he went on to say that we had paid all this money for a tax which was useless for the purposes of revenue. If the hon. Gentleman sees any reason why I should apologise for making that statement I am perfectly willing to withdraw any accusation of personal bad faith. But I do say that when those figures were available in that speech, at least he could have answered a supplementary question when he was pressed. He remained completely quiet. If the matter had not been probed further and had not been on record in the OFFICIAL REPORT we should not have known until the present time what it cost.


The hon. Gentleman is referring to the statement which I made. The statement which I made was perfectly correct. The question which the right hon. Gentleman asked me was a different one from the one he answered when he made the statement in this House.


The fact remains that the right hon. Gentleman said that the cost of collecting these taxes was£5,000,000, and the hon. Gentleman was asked that question.


No, that is not true.


Then may I ask the hon. Gentleman what was the question he was asked [An HON. MEMBER: "You made the charge!"] He had every opportunity to acquaint himself at any rate with the statement of the right hon. Gentleman the Member for West Birmingham (Sir A. Chamberlain), and I cannot see at the present moment why I should withdraw on a question which seems to me to be a plain matter.


The hon. Member has made a charge against my hon. Friend of deliberately avoiding the issue and declining to give the information. My hon. Friend has denied that, and surely the hon. Member will see the advisability of withdrawing that very definite statement.


I have spoken to my right hon. Friend and I understand that the position is that my right hon. Friend asked the cost of valuation, whereas I was referring to figures of collection and valuation. I quite understand the distinction, and I think that in that particular matter the collection and valuation might easily have been understood to mean exactly the same thing.


That was the figure for which I was asking, and that was what I intended my words to convey to the hon. Gentleman. I am sorry that I worded my question so that he misunderstood me.


I did not complain of what the right hon. Gentleman the Member for West Birmingham did. The right hon. Gentleman the Member for West Birmingham (Sir A. Chamberlain) intended to ask me a slightly different question from that which he actually put. In consequence I did not and could not give him the information for which he asked. He thought he had given the information himself some time ago. If he has refreshed his memory he has no doubt realised by now that the question he asked was substantially different from the question he thought he asked me. The hon. Member for Eastbourne (Mr. Marjoribanks) has now charged me with deliberately withholding from this House information which was in my possession. I have told him that that is incorrect and the right hon. Gentleman the Member for West Birmingham, I think, will agree with me in regard to the difference between the questions. I think it is unusual for Members in this House to make charges of bad faith. The charge is incorrect, and I think that it ought to be withdrawn.


Now that the whole matter has been thrashed out and any misconception which I had has now been understood by me, and, I hope by the Committee, I have no hesitation in withdrawing any accusation of bad faith if I was so understood. I may have thought at the beginning that it was policy on behalf of the Government not to disclose official figures, and I might have thought that the right hon. Gentleman the Member for West Birmingham (Sir A. Chamberlain) had merely made an estimate in his speech in 1920, and that this was the explanation, but I now see that the Bon. Gentleman the Financial Secretary was strictly entitled to make the reply he did in answer to the question put to him. Therefore, being strictly entitled to do it, he did only what was within his nights, and, therefore, any accusation which I make against him must be of a far more general and less specific character.

Before we involved ourselves in this controversy, I was dealing with the general discussion as to how expensive those taxes have proved in the past. We have been given no opportunity of discussing what it is actually going to cost. We have been given no proper estimate of what it is going to cost. It seems to be a very inopportune time to bring forward expensive taxes of this kind-May it never be forgotten, and it is our business to see that the country never forgets, that the rare and refreshing fruit of the right hon. Gentleman the Member for Carnarvon Boroughs cost£5,000,000 to collect when we are called upon to raise once more taxes of this kind.


May I May a few words on what has passed between my hon. Friend and the Financial Secretary? The question that I asked the other day was as to the yield of the taxes from the date of their imposition to the period when they were repealed, and the cost of collection in the same time. The figures that I had an mind were the figures that I gave to the House at the time of the repeal, namely, a yield of£1,300,000 and a cost of£5,000,000. The Financial Secretary understood the term "collection' to exclude the cost of the valuation, which was really a part of the cost of collection. I understood the cost of collection to include the cost of the valuation. I think the Financial Secretary might, in courtesy to me at the time, have made plain why he was unable to answer my question and why he thought that the figure he had before him was not the answer to it.


I do not propose to follow the hon. Member for Eastbourne (Mr. Marjoribanks) in his argument. I wish cordially to support the proposal of the Chancellor of the Exchequer in the imposition of land values taxation. In doing so, I hope that I shall not be considered either a fanatic, to use the term of the Noble Lord, or a beast of burden for the Labour party. Neither of these epithets applies to anyone on these benches. I am speaking as a supporter of the taxation of land values of many years standing, and I support them more as a practical matter because of the baneful effects that I have seen from the want of such taxation. I have a particular interest in the proposal now before the Committee, because in November, 1929, I introduced, by leave of the House, a Bill proposing the taxation of land values in the towns and burghs of Scotland for the purpose of local rating. That was the first skirmish we had in this House and, although the Government did not give facilities for proceeding with the Bill, it performed the rather useful service that the Bill was allowed to be introduced by a majority of 116, and it showed that a proposal for taxation of the kind had 221 Members in favour of it.

The proposal for the taxation of land values suffers from its name. It might be called just rating, equitable rating, or a proposal for the relief of improvements. We ought to combat strenuously the idea that I find current in the country that this proposal is, somehow or other, to increase taxation upon the unfortunate citizens. The contrary will be the result. The revenue from the tax in its early years will provide welcome relief in Income Tax. I am not permitted to say how the proceeds will be applied, because that would be irrelevant to this Debate, but I am entitled to say that those who assert that the imposition of this tax on land values will mean added taxation, are inaccurate, and that the proceeds of the tax may be used for the relief of taxation. May I suggest that there ought to be transferred from local rating the cost of the police, education, poor relief, and roads. These ought to be paid for by the National Exchequer, and the tax on land values will provide funds for that purpose. In that way this Bill will give welcome relief to local rating.

In spite of what has been said about the cost of making the valuation and the collection, I say that it is unfair to reckon the total cost against the yield in the first year, the second year, or any of the earlier years. No one does that with regard to the preliminary expenses of a company. The preliminary expenses of a company are spread over a period of years. That is the fair way of regarding the question of cost. The first valuation will be the most expensive one. After the valuers have determined the value of the units, the subsequent determination will be a comparatively easy matter. All that they will have to do is to take the information which has come into their hands in the intervening period and to apply it more or less by rule of thumb. Therefore, it is in the initial valuation that the expense will be incurred. It is not fair to use the cost as an argument against the tax. A good deal of ridicule has been sought to be cast upon this proposal from the benches above the Gangway. I take a different view. All the experience I have had among my constituents and elsewhere is that the man in the street approves of the proposal. I would also say that the man in the bungalow approves of it, because he is the man upon whom this question is being thrust. It comes to him on the first occasion that he receives his notice to pay his ground rent. He then begins to consider the sort of place the site of his bungalow was before any house was erected on it. Ho remembers it as a piece of waste land, and when he considers that he will have to go on paying for all time a certain amount of money to the ground landlord he asks himself what contribution the ground landlord has made to the State in respect of the demand which he makes upon the owner of the bungalow.

Seeing that there have been no instances given from Scotland, I hope the Committee will allow me to give three short references to cases in Scotland which bear hardly upon the community, and where the ground landlord has escaped his fair share of contribution. I am using the term "contribution" because we on these benches do not believe in nationalisation of land. We believe that if we had nationalisation of land the land of the country would be a dead asset in the hands of the Government, and there would be no land upon which this tax would operate. Accordingly, if the tax is to operate it can only be upon the assumption of private property in land. We say that those who are benefiting by unearned increment from the presence and the activities of the community ought to make their contribution to the State. In Dunfermline district recently, three large reservoirs were acquired, and a heavy price was laid for the land for that public enterprise. The assessable rental of the parish went up considerably, but the person who received the purchase price of the land escaped without making any contribution whatever.

Those who have visited Gleneagles will remember the site upon which the hotel had been planted in the middle of the moors. There, again, the assessable rental went up, but no contribution was asked from the owner who received feu duty from the proprietors of the hotel. In the city of Edinburgh there is a piece or land, which I know quite well, which was entered in the valuation roll as agricultural land at£5, and the feudor, or, as you would call him., the ground landlord in England, gave a feu of the land to a builder and charged him the round sum of£70 for about one and three-quarters acres. The builder erected his houses, and no doubt took a handsome profit on each house when he sold it, but ho was not content with that. He proceeded to perform an operation in Scotland which is known as "contract of ground annual," by which he secured for the same piece of land an additional sum of£38. I happened to meet the builder and bluntly asked him why he had imposed this additional burden on a piece of land which was already burdened to the amount of£70 by the ground landlord. His answer was, "Oh, I was laying something by for my old age." [An HON. MEMBER: "How much did he spend on the roads? "] Whatever he spent on the roads he got back from the people who bought houses from him.

Without imputing motives of greed to the builder, consider the effect of this upon the unfortunate people who had to buy and occupy these houses. It means that land which previously had paid rates on a rental of£5 is now on the valuation roll for the full amount, that is,£70 paid to the landowner and£38 to the builder. The people in these houses have to bear an additional cost of£108 for ground rent, which is a permanent burden upon these houses and will maintain the rents at a figure higher than they ought to be. We say that the method of assessment at present in vogue is entirely wrong; it is looking at the matter through the wrong end of the telescope. Instead of assessing on the rent, we should transfer gradually the burden to the capital value of the land.

It has been said that it is an impossible task to value land. I do not believe that for a moment; and I say so from my own experience. Form IV is constantly used in Scotland to this day. Whenever a man dies who possesses hereditable property, his executors look at his titles to see whether there is a Form IV valuation and, if there is, they give that reference to the chief valuer, who turns up his books, compares the figures in 1909–10 with present values, and without much difficulty is able to give a correct value of the hereditable property. These men are expert valuers who know their business, and I anticipate no trouble in making the valuation. They take all the data available to them from sales of similar' property in the neighbourhood and all the facts they can get, and then make up their minds from the facts so collected.

My chief regret is that the 1909 valuation was not completed. One can appreciate how thankful the Chancellor of the Exchequer would be to-day had he had this complete valuation and been able to impose his tax straight away. We shall have to wait two years for the valuation to be made, and in that interval vast sums of money will be spent by local authorities and the State on improvements of a productive character, roads and bridges and docks, which will have the effect of raising the value of land in the neighbourhood. The result of making the great trunk roads and the extension of the tubes beyond London has resulted in an increase in the value of land in the neighbourhood; and it must all pass into the pockets of the landowners. That is one reason we should endeavour to hasten the completion of the valuation. I place great emphasis upon the necessity for the publication of the figures. The nation is entitled to know the amount of every unit of land and its real capital value. If local authorities have this information and are given the power they can impose a tax upon the owner upon the real capital value of the land; an act of common justice. I should like to say to the Solicitor-General, by way of caution, that when he comes to deal with Scotland he should consider who the owner is upon whom this tax is to fall, that he should take the greatest care to see that he gets the right owner and also that he gets all the owners; there may be a number. I would also suggest that he must see that he secures a tax upon the value of rights in land—that is what I understand the Chancellor of the Exchequer is aiming at—whether these rights are what we call in Scotland superiorities, feu duties, ground annuals, servitude or real burdens or leases.


What is servitude?


In Edinburgh, Princes Street on one side is lined with buildings; on the other side, there are no buildings at all. The owners of buildings upon the north side of Princes Street have easements or servitudes on the land on the opposite side, to prevent buildings being erected opposite, but surely the Committee will agree that the result is to increase the value of the property on the north side. Accordingly I am suggesting that these easements should be taken into account as well as all rights in the land.


Does the hon. Member suggest that Princes Street should be built on both sides?


Certainly not. That is a quite irrelevant interruption because the hon. Member understands perfectly well the object of my suggestion. I should like to give an excerpt from the report of the Select Committee of the House of Commons on the Land Values Taxation (Scotland) Bill of 1906—with which I am sure the Solicitor-General is already familiar—on this question of whether or not, in Scotland, we ought to bring feu duty within the scope of the tax now proposed. As far as I know the matter of rent charge in England will also arise in the same connection. Those who have enthusiastically supported the idea of the taxation of land values have always maintained that feu duties in Scotland ought to be made subject to this tax and I refer to the report of this Select Committee for support of that contention. The report says with regard to the proposal to exempt superiors and owners of feu duties: It is impossible, in the opinion of your Committee to accede to the claim. The legal relation between superior and vassal and their relative rights in the land are familiar and well ascertained in the law of Scotland. When a superior feus land he is not truly divested of the lands contained in the grant. If it be true that the ground-rent owner retains a right in the feu of the land, he is, therefore, part-owner of the capital value of the land and therefore ought not to escape the taxation. These may be regarded as committee points, but I think they are points which ought to be stated at a very early stage of these Debates for the consideration of the Government.

9.0 p.m.


I rise to support those proposals. I may say, straight away, that I have advocated this reform for many years and I am pleased to see, at last, some Measure of this kind proposed. I would have liked to have seen something done with the object of restoring to the people of this country their natural rights in the land. We cannot but remember how the land of this country was given away to certain individuals in the Middle Ages by kings and Parliaments, for services to be rendered in return—and hon. Gentlemen opposite who make claims on behalf of a certain class ought to bear these facts in mind. In the course of time, as the result of laws made in Parliament these people, to whom land was given in the way I have described, have been able to get rid of their obligations. Now they enjoy huge revenues without rendering any useful service to the State in return. A speaker earlier in this Debate has reminded us of what Gladstone said in eighteen eighty something, but I would like to remind the Committee of what Mr. Joseph Chamberlain said: Every child born into the world has by birth a just claim to a share of a portion of the land but through the apathy of our forefathers and the apathy of ourselves we have allowed the land to be taken from us, and those who have taken the land from us have so made the laws that by law we cannot get it back again. But a day of reckoning is at hand; the cup is nearly full. Some have come by the land honestly no doubt, but others have come by it through knights doing homage to kings. When we hear hon. Members opposite speak about the injustice of these proposals, we ought to bear in mind the statement of Mr. Joseph Chamberlain. This afternoon a great deal has been said by bon. Members opposite about the valuation, but the expenditure of£1,000,000 or£2,000,000 of the taxpayers' money on valuing the land, is not what is worrying hon. Members opposite. What is worrying them is the tax which will come along afterwards. Let us realise what is behind this proposal. In Birmingham the rent paid for land totals£5,000,000 a year. That sum is paid to those who own the soil of that city by the people of the city for permission to live and work in the city. I ask the Committee to imagine a fleet of motor-cars loaded with goods and manufactures to the value of£100,000, rolling out of that city every week. That represents what is being handed over to landowners for permission to live and work in the city and all we ask under this proposal is that one penny in the pound of that money should be returned to the people. In that city there is a small estate. Every member of the family owning that estate who has died for the last 40 years has died a millionaire, and every member of it who dies in the next 100 years will die a millionaire unless something is done in the manner indicated by these proposals. I welcome the Chancellor's statement that this valuation will be used for rating purposes. That is a great reform and one which is long overdue. We rate the man who builds, and we rate the struggling tradesman, but the man who prevents people from building gets off without paying anything at all.

I may give another illustration from the city, a division of which I have the honour to represent. This Parliament passes laws compelling municipalities to carry out various duties. They have to employ staffs and provide office accommodation for those staffs. The municipal council wanted to extend their premises, and a piece of idle land was available, and the landowner said to them "You can have it for 999 years, provided you pay a ground rent of£5,000 a year and put up a building value£50,000." Imagine a man getting£5,000 a year and not paying a cent. When I hear hon. Members opposite making an outcry about these proposals I am inclined to smile. I am not thinking on the same lines as them at all. I am thinking of the "boom" which this proposal will bring to other people besides landowners. But I listened with a certain interest to the right hon. Gentleman the Member for West Birmingham (Sir A. Chamberlain). I have already quoted what the right hon. Gentleman's father said. The father was in a different category from the son—I mean politically—and while the late Mr. Joseph Chamberlain referred to the price which we had to pay for the land as ransom, the right hon. Gentleman to-day has been describing this proposal as penal taxation.

The right hon. Gentleman also said that the landowner would be able to pass it on. If the landowner were able to pass it on there would be no outcry from the other side. It is because he will not be able to pass it on that they are squealing. If the landowner cannot get somebody to occupy his land who will pay the tax? He will have to pay it himself. I went to speak in an old-fashioned market town a short time ago in South Worcestershire, and it was put to me that the Worcestershire County Council and the Evesham Town Council between them had opened up a new road and built a bridge, and had got the land for£200 an acre. That was reasonable, but after the road was built the county council suddenly wanted a couple more acres of land to build a Secondary school, and when they approached the landowner he raised the price from£200 an acre to£700 an acre. Yet the Chancellor of the Exchequer is only asking for a penny in the pound! I wish he was asking for the lot. On my ramble round that day I went into the cathedral, and I looked at a tombstone and read the writing on it. It said: "Here lies the body of" So-and-so, who, for services rendered to William the Conqueror, was given land in four counties. Right down to to-day that family has been able to live a life of ease and luxury without labour and has been able to levy a tribute on other people, yet when we ask for a portion of that tribute to be diverted into other channels, hon. Members opposite call it confiscation and penal taxation.

The Noble Lord the Member for Western Derbyshire (Marquess of Hartington) said that land was cheap enough already and that you could get it cheap through the district valuers. We have not been able to get any land through the district valuer cheap. We wanted some land for a playing field. It was simply lying there, with a few sheep grazing on it, but we had to pay£400 an acre for four acres. We also require houses. I am glad the right hon. Member for West Woolwich (Sir K. Wood) is here, because he is interested in housing. His party gave us one or two Acts, and there are one or two Acts from our side and others too numerous to mention, but none of them has given us the houses we would like, because we have not got the key. The key is here. We have to give subsidies to build houses, but when we compel those who own the land to put it to the fullest possible use, then we shall not have to subsidise the building of houses.

I am interested in this matter from another standpoint, and I cannot for the life of me understand why agricultural land is to be left out. We have a migration of 20,000 young people from the country to the town every year. They came in my younger days and competed with me outside the factory gates and, railway stations, bringing down high wages, but they would not come away from those districts if they could get a plot of God's earth on which to earn their livelihood. Why agricultural land is to be left out of this tax, I do not understand, but possibly it is because almost every day at Question Time, and at other times as well, hon. Members opposite are crying out about the relief of agriculture. We have been spoon-feeding agriculture too long already, and the more we feed it the larger the spoon it wants. If we want to restore agriculture, we must clear those people out of the industry who are battening on it without doing any useful service at all—that is, the landowners. It is said that they improve the land, but if they take£1,000 a year from the land, they only spend about£50 on it.

There is a great deal of unemployment, but there are so many unemployed because we are foolish enough to allow a few people to own the land of the country. Perhaps it would not be out of place if I told a little story that I read the other day. I believe that Shakespeare said, "He who owns the land owns the people," and it is perfectly true. You will remember that Robinson Crusoe got shipwrecked and sailed about on the high seas for three or four days, and then got on to a lonely island. The first thing that he said when he got on the land was, "I have a shilling in my pocket, and I will have a scour round and see where I can buy something to eat, as I have had nothing to eat for days." He found nobody on the island, and so he had to eke out a livelihood as best he could. One day he met Friday coming along with a bundle of fish in his hand, and he said, "What are you going to do with that fish?" Friday replied, "Massa, I am going to have something to eat." Crusoe said, "I have a shilling, and I will give you a shilling for the fish," but Friday replied, "What shall I do with the shilling?" Robinson Crusoe said, "You can buy a ring with it, or do what you like with it." Robinson Crusoe had the fish and ate it as best he could, and when Friday came again he said, "Massa, I cannot find anywhere to spend the shilling and I want something to eat, so what shall I do with it?" Robinson Crusoe replied, "If that is all that troubles you, seeing that I was on the island before you, I will charge you 9d. for permission to live on the island, and you can pick these few fishbones with the other 3d.!" Inside the City of Birmingham we have built upwards of 30,000 houses, and we are getting too far away. We are getting seven miles from the centre of the city, so that the people cannot get home to dinner, as the tram fares make it too expensive. Inside the City, right in the heart of it, we have what is called the Edgbaston Estate. There we have land in the best ward of the City, with the lowest death-rate, with trams running through, with gas, electricity, and sewers; everything has been done there by our city, but we cannot build there because of the cost of the land. The party opposite in the last Parliament made it still more difficult for us, because the poor people who live in slums in the city have to pay the rates on that valuable land, which has a few sheep grazing over it. I welcome this proposal of the Chancellor of the Exchequer. In conclusion, I would point out that no man or woman will go to work to-morrow morning unless they work material drawn by labour from the land. Therefore the first step is to free the land, and I am out for the time when we shall take not merely a penny in the pound but up to 20s. in the pound, the full value of the land, and then it will belong to the people and not to a few people only, as it does to-day.


I will not follow the hon. Member at any length, beyond thanking him for his candour in saying that a penny in the£ is merely a start, and that he hoped in the near future to take 20s. in the£. There are one or two simple fallacies in which he believes, in regard to which I am sure he will be very much disillusioned if ever this proposal becomes law. The number of individuals who actually hold land, and whose ancestry can be traced back to 1066, the time of William the Conqueror, is relatively few. The hon. Member appears to be under the impression that land is held by large numbers of individuals, the majority of whom, judged by the way in which he was speaking, are included among about 200 Members of Parliament. If so, he is under a false impression. Most of us this evening are in the position of having to administer a string of interrogatories to the learned Solicitor-General, who is sitting opposite. We have been given very little to go upon as regards facts, and we shall obviously have few facts until we see this Bill in print. For the time being, all that we can legitimately do is to ask for a little more information and to hope that the Bill will include it.

I have a few simple questions, and I hope the learned Solicitor-General will make a note of them and reply to them among others on Wednesday afternoon. First, I want information with regard to the staff that is to be employed. We were told that the cost was to be£1,500,000 for the staff. I happen to have heard a good deal about the Civil Service in recent months, as I was a member of the Royal Commission on the Civil Service. I want to know a bit more about the civil servants who are being taken on for the purpose of this valuation. On what terms are they being engaged? Are they to be established civil servants, and if so I want to know whether the question of pension arises? In view of the fact that it may require two or three thousand of them to deal with this immense matter, may I ask what is being done with regard to recruitment of men with the very exceptional knowledge that will be required for handling the millions of assessments up and down the country? Very few people realise that there will be 11,000,000 or 12,000,000 assessments, and that fact is a curious commentary on what the hon. Member who has just spoken said about the land being in the hands of very few people.


Those are holders and not owners.


There will be 11,000,000 or 12,000,000 holdings to be assessed. That gives one some idea of the immensity of the task, and of the big branch of the Civil Service which will have to be set up for this purpose. What will happen afterwards? Will those civil servants be kept in a state of suspended animation in the intervening period, and be remobilised every five years? Will they be put on half-pay in the interval? That is the reductio ad absurdum. I would like to know whether any provision for this large staff was included in the Civil Service Estimates which were submitted a month or so ago. I am a member of the Public Accounts Committee, and it is my job to go through those accounts every year. I confess that I did not notice the inclusion of 1,500 or 2,000 additional civil servants, whether temporary or permanent. I do not know, who are to be put on in the near future. According to the Chancellor of the Exchequer, these civil servants are to have a little tuition course between now and, I think he said, the 1st of October. They are to have four or five months' intensive training, and they are to get on with their job on the 1st April, 1933, only a year and a half hence. Then they are to be let loose upon an astonished nation.

I rather think that by the 1st April, 1933, the political situation may have changed, and those servants may not be necessary. I propose to write them off, as we have already written off the£5,000,000 which was expended by the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George), and which brought in, roughly speaking, a third or a quarter of a million pounds in the form of taxation. So much with regard to the civil servants. Another question or two, if I may throw them across the House to the hon. and learned Gentleman. What is the position with regard to co-operative societies? They are very large holders of land and of buildings, and I imagine that they may have something further to say in regard to the dissatisfaction they are already showing with the Government's point of view.


Would the hon. Gentleman allow me to say that the co-operative political association has been demanding that a section of us should take up a rebellious attitude in demanding powers to tax land?


I am indeed glad to hear it. My experience is that people very often agree to things in principle but, when it is found that those things involve tens of thousands of pounds, they may begin to think a little differently. The question was raised the other day of the big London stores. They would have to pay perhaps£2,000 or£3,000 a year in extra taxation. That is a very serious matter, and obviously makes things difficult for big trading concerns. I am also very much interested with regard to the Ecclesiastical Commissioners. I do not think they were mentioned among those who were not to be taxed. I understand that it is not the wicked dukes who are the biggest landowners in this country, but the Ecclesiastical Commissioners. In the last few days I was talking to one of these Ecclesiastical Commissioners, and he was frankly very much worried as to the position of the Ecclesiastical Commissioners under any proposal for the taxation of site values. Such a tax in their case must amount to tens of thousands of pounds if not to hundreds of thousands. We all know what happens to the money that they receive in rent. It goes to backing up the salaries of the hardest-hit class, the country clergy, men of extremely small means who have a position to keep up. If the Ecclesiastical Commissioners are taxed, the money will come directly out of the pockets of these country clergy. I shall be very much interested to hear whether the proposal applies to the Ecclesiastical Commissioners, and to hear also the views of the hon. Gentlemen who represent the Ecclesiastical Commissioners in this House.

Next, with regard to debentures, Many big debenture issues are made on the security of the land. The first charge for the security of the debenture holders is upon land. [Interruption.] An hon. Gentleman says "Hear, hear!" do not think those who are fortunate enough to hold gilt-edged investments will be of quite the same mind as he, when they find that the first charge is going to be a tax on the site value of their land. Next in regard to the yield. I have been into the figures, as far as one can on the very slight facts which have been given to us. As I understand it, the whole of the land which comes into this proposal is, at the very most, valued in round figures at£1,000,000,000. One penny in the£ on that sum is£4,000,000, and that will not go very far towards elaborate schemes for social welfare run by the municipalities and the State, for which the hon. Member for Central Bristol (Mr. Alpass) was hoping. Relatively, it is an absurd bagatelle, and is only one penny in the£ on the Income Tax. Four million pounds is only half what the Chancellor is getting by antedating the date when he gets his Income Tax on Schedules B, D and E next year. It is not£5,000,000. That sum will be surely a first charge on income. Those who pay Income Tax will be allowed to deduct something, and that brings the sum down to about£4,000,000. Those who are Super-tax payers will presumably also be allowed to make a deduction, and that brings the sum down at the most to a little over£3,000,000. We are to have about 12,000,000 forms sent out, with all the litigation which the tax will involve, and we are to submit hundreds of thousands of people, or perhaps a million or two, to an infinity of trouble and bother, in order to get a sum which wall be between£3,000,000 and£4,000,000 a year.

I quite admit that hon. Members opposite hope that this is the thin end of the wedge. They hope to get more from it in the years to come. In fiscal matters, it is always understood that your tax should be easily levied, should be one that does not lead to great complications to those from whom the money comes and should be a tax in which the cost of collection is small. We have here a tax which does not fulfil any of these particulars. The cost is going to be very large, and it will cause an infinity of trouble, and, in all probability be a very short-lived tax. It is pretty safe to say, even if hon. Members opposite stay in office, that they will find, as did the Liberal party, that they have been very much misled in regard to the yield, and if there is a change in party between now and 1933 there is not much chance of these taxes staying. At a time when other things are badly wanted in regard to legislation, this House should not be spending many days in talking about an extinct volcano of 20 years ago. It was tried 20 years ago, when the Chancellor of the Exchequer was a Member of this House from 1906 to 1908. The present Prime Minister was himself a Member of the House, and he has seen the fallacy of getting these immense sums, as they think, from a tax on land values of any sort or kind.

I have never inherited land myself, and the only piece of land I ever bought was about 10 years ago for the purpose of my business. I sold it at a considerable loss, but could not get any decrement in connection with it. There are not these large sums available, and the Socialist party is really pursuing a red herring. It may be a political red herring. I think it is quite on the cards that this is being done not at all for Budget purposes, but for political propaganda. We shall no doubt hear more of that as the Debate goes on. But this proposal will not help in the least bit any of the great problems which are before the country. The Government are making a very great mistake, and it is a misuse of Parliamentary time to spend days and weeks discussing this question now. I earnestly hope that in the Committee stage these proposals will be so riddled that the Government will think better of it and will take the line that the right hon. Gentleman the Member for Carnarvon Boroughs took not many years ago, when he withdrew his proposal and apologised publicly for it.


It is inevitable in this discussion that we should hear some reverberation of the previous experiment of the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George). The only regret I have is that, owing to the rather malevolent influences with which he found himself faced at the time, he withdrew and killed a very promising infant at a time when it was likely to grow into a fruitful source of national income. My criticism about this particular proposal is that it has come so late. I am not at all alarmed by the rather doleful prophecies of Members on the opposite benches that this will prove an unfruitful tax, expensive to collect, disappointing, and one which will not realise the hopes of those who have supported it for many years. All those arguments have been advanced against practically every measure of taxation of this character which has ever been proposed. I need only mention Death Duties. There are few Members upon the opposite benches who would have the temerity to suggest that the Death Duties should be removed as an instrument of raising national revenue. My only regret is that this proposal could not have been made retrospective. If it could, I imagine that some of the criticisms we have heard would disappear.

There are those who have been complaining that this proposal does not collect increment duty. Some hon. Members opposite have developed a quite remarkable enthusiasm for increment duty. Will they be prepared to support a suggestion that it should be made retrospective and that all the people who have got away with the increased value of land in the past should now be subjected to that doctrine of ransom which we heard from the right hon. Gentleman's father many years ago when he talked about the necessity of a more effective instrument for preventing this robbery of public property for private purposes? I happened to be in the House when a speech was made by the Noble Lord the Member for West Derby (Marquess of Hartington). As usual, when hands are laid on the sacred Ark of the Covenant, the land system of the country, we heard a terrible story of how business premises were going to be closed and how the City of London was going to be removed—I do not know quite where. We heard how shopkeepers were going to suffer, and other terrible stories to which the House has become accustomed whenever vested interests are touched by the Government of the country. Take, for instance, the last point made by the Noble Lord. He is deeply disturbed about the condition of the shopkeepers, and he commiserates with them. Who has suffered more than the shopkeepers of this country from the fact that this legislation has not been on the Statute Book? They, indeed, are compelled, in carrying on their retail business, to charge exorbitant profits to the consumer in the prices they charge for goods because of the taxation to which they themselves are subjected from the ground landlords, from whom there is no escape. If the Noble Lord desires to commiserate with the shopkeepers, he has chosen a singularly unhappy case.

There are few of us in the community who do not suffer from the existing system which this proposal is designed to correct. I remember some years ago the agricultural labourers in the county which I represent were informed that their wages would be decreased by one shilling per week. The landlords immediately sent a notice to the farmers that their rents would be raised because they would not have to find that one shilling per week for their labourers. I believe one of the effects of this Measure will be largely to reduce the rent exactions which are taking place in the country. It is a lamentable sign of the times that so much of the income of the working classes is absorbed in paying rent for tie houses in which they live. It is altogether disproportionate in many cases to the income of the normal average working family, and if this Bill does something to reduce that charge, it will have justified completely the proposition which has been made. I am not, like my right hon. Friend the Member for Newcastle-under-Lyme (Colonel Wedgwood)—who has reason to rejoice in this Debate, because of his long activity and propaganda for this particular reform—a bad and immoral landowner, as he facetiously described himself.

Three and a half years ago I did want to buy a piece of land. I went to the people who owned the land and was told that they would be glad to sell it for 35s. per foot frontage. The need for buying it passed, and I did not clinch the bargain. I regret very much that I did not. A year ago I went again to make an inquiry, and was asked£4 10s. for this same piece of land. I said, "You offered it for 35s. a foot only three years ago." "Oh," was the reply, "since then they have widened the road, electric light has been brought here, the gas mains are in, and a good deal of money has been spent on improving the district." I naturally asked myself what the owners had done in this provision of public amenities to justify their asking the difference between 35s. and£4 10s. in so short a space of time. I only regret that that kind of thing has not been stopped in the past.

It will probably be made a great point by the Opposition that you cannot get absolute justice now in regard to all the past robberies, and that you will not be able to get the full restitution to which the public are entitled; but because people have been bled in the past, it is no reason why we should not stop them from being bled in the future, and this Measure will prevent the kind of thing that has been happening in the past. The community has some rights in the matter of the ownership of land. The case was reported in "Time and Tide" of a certain philanthropic individual living in a seaside town who offered a great portion of his land to the local authority for a public park. It was practically worthless land from the building and development point of view until the community went to the expense of providing a park. Immediately that was done, the donor was able to sell the remaining portion of the land at a greatly enhanced price. He was a benevolent philanthropist reaping where he had not sown. It is this kind of thing which, whatever may have happened in the past, will be checked by the Chancellor's scheme.

When the matter comes to Committee, I hope that consideration will be given to some of the points that have been raised in the Debate. I was sorry to hear that, on ground of economy, apparently, it is not proposed to make a complete valuation of land, and that large tracts of agricultural land are to be left. [Interruption.] The Financial Secretary to the Treasury indicated that at the discretion of the valuers there would be large tracts of agricultural land which would not be valued. It is unfortunate that that declaration has been made. I hope that it will be amended in Committee, for who is to decide how soon what is purely agricultural land may not very shortly become suitable for building land or land which it is desired to develop for other purposes? If we are to have a Doomsday Book, let us have a complete Doomsday Book, even if it means a little more expenditure at the beginning. We would not have thought of leaving out of the Census some sections of the population because they were regarded as less important than others, and I suggest that the Government should consider again the advisability of valuing all land so that we may know once and for all what is the fixed value of land in this present year.

I hope also that some consideration may be given to the suggestion that playing-fields may have exemption. As long as this land is not used for private profit, it presents a case for favourable consideration. I hope that in this respect the Government will keep an open mind, as the Chancellor said he would in regard to the details of the Measure. Let not hon. Members think that there is any kind of wavering on this side of the House as to the inherent justice of the Measure now proposed. I am puzzled as to the attitude of the Opposition. It seems to me that in some respects they favour the propositions of the Government. There have been some echoes of the old feuds and the old fight, but I am not sure whether the crusaders who are coming into this Campaign are coming into it with the perfervid enthusiasm of the days that are gone and as has been expressed by my right hon. and gallant Friend the Member for Newcastle-under-Lyme, a great many people are recognising that in these days of rapid development of the countryside, of making by-pass roads, and of considerable increase in transit, great and enormous revenues are being taken by somebody. These revenues are not created by the people who take them, and it is an act of common justice that the community whose enterprise has made these values should begin to share at long last in the wealth which its energies have created.


When a proposal for the taxation of a particular kind of property is made, one naturally turns first to see what sort of justification is made for the proposal. It has been said to-night by the hon. Member for Kincardine (Mr. Scott) that the man-in-the-street is in favour of this proposal. I do not know how he can know that, because we did not know until to-night how far the proposal would go. The justification which was advanced for the taxation of some limited form of land value was that it would prevent land being held up from being used for some useful purpose. That, as a justification for this proposal, simply does not exist. We were asked what was our attitude. As far as I am concerned, taxation limited to land which was being kept out of the market for some purpose or another would not have met with any strenuous opposition from me, but this proposal goes far beyond that, and includes the taxation of all land, whether it is being held up or whether it is being developed—every unit of land except agricultural land.

Further, the proposal goes right in the teeth of the suggested justification. If we were levying the tax on the undeveloped land merely, there would be some inducement to owners to put that land on to the market, but the effect of levying it on all land operates in the opposite direction. Ex hypothesi, undeveloped land has not the same value as developed land, and the man who is keeping his land off the market will pay a smaller sum in taxation than the man who has developed his land, attracting industries to the neighbourhood and making his land of greater value. Such a man will have to pay still more, and therefore it cannot be suggested that this proposal will tend to bring more land into the market. What is the next justification suggested? We had it to-night from the hon. Member for Central Bristol (Mr. Alpass). He based his case on the necessity of taxing what he called the value created by the community, in other words, the increased value due to the efforts of the community, but that desire does not justify the proposals in this Resolution. Here, all land is to be taxed, whether the community or the private owner has added to its value. In the example he gave he cited somebody who had paid£200,000 for land a few years ago and had sold it for£1,650,000. This proposal does not apply to the man who got that huge profit out of the growth and the development of Bristol. It leaves him to go away with all his profit, but to the man who has had to pay that large sum of money we are going to say, "You have paid that, and so we are going to tax you at the rate of£7,000 a year." It will be a capital addition of£140,000 to the price he had to pay. There is no taxation of increased value due to the expenditure of the community there.

If bon. Members really wanted to carry out that idea they ought to get at the man who has made a profit at somebody else's expense. To let off the man who has made a profit and levy the tax on the man who has paid the increased price is not carrying out that idea, and, of course, no one understands that better than the Chancellor of the Exchequer. He felt he had to give some justification, but he is too logically minded to advance either of the two grounds which I have mentioned. What he was driven to was this. He said, "We are going to do it because this land was given by the Creator to the people." That may do for the street corner and for people who do not understand what they are listening to, but may I ask the Solicitor-General a few questions about it? In what form was the land given by the Creator to the people? Of what value was it when it was given by the Creator to the people? It was uncleared ground, I suppose, inaccessible, worth very little, if anything. To what people was the land of England given? To the early Britons, to those who came before them, to the Anglo-Saxons, the Romans, the Normans, or to whom? When we talk about the land being given by the Creator to the people we ought to be a little more exact.

When was it given to the people? If we accept the principle that it was given, the value that was given to the people was something very trifling, because the real value of the land to-day depends upon the work which has been put into it by private enterprise, and because private enterprise has made that which, to all intents and purposes, had no value whatever, into something of very, very great value, is no excuse for the People, with a big P, coming along and saying, "We have let you make this into something of tremendous value and we are going to appropriate it to ourselves." There never was a more futile excuse for legislation of this sort than this parrot cry of the land having been given by the Creator to the people.


To whom did He give it?


I do not think He gave it to anybody. It was there for the people to make the most of and to develop, and that was done by private enterprise, from beginning to end. Hon. Members talk about what the community put into the land, about the money spent by local authorities, but who has found that money? The owners. [Interruption.] Yes, the great bulk of it has been found by the people who built the properties, and put their money and effort into the development of the land. To be quite frank about it, we are going to take money out of the land owner; and it cannot be supposed that there is any justification for the absurd contentions which have been put forward.

Something has been said about the cost of this valuation, and I think a figure was given. We could all have worked it out for ourselves. Does anybody suppose that we can value a separate unit of land for two shillings? The thing is an absurdity, because expert opinions have to be obtained as to the value of the land. The estimate works out at a figure of somewhere between two shillings and two shillings and sixpence a unit. But what about the cost to the land- owner? There will be a great deal of litigation, because values will be contested. Up to now the burden of the cost of the valuation has nearly always been thrown on the person seeking to become the compulsory purchaser, unless the owner has been grossly unreasonable in some way or another. I do not know whether it is proposed to saddle the cost on to the landowner, but no one who has had anything to do with the valuation of land can be misled by this absurd suggestion that it can be valued at the rate of two shillings to two shillings and sixpence a unit.

Then there is the question of the time, of how long it will take to value 10,000,000 or 12,000,000 units. The House knows that Government Departments take years to decide some simple question relating to Income Tax which is raised by way of appeal, and I have very little faith in their proceeding with any great speed in the valuation of the land. I can quote a personal example of what happens. A claim was made for an allowance in respect of some comparatively small sum, about£50, as expenses of management, and that claim is still being considered by the Department and has been under discussion for 18 months. If we take all that time to decide a paltry question regarding the paltry sum of£50, how long will it take to value 12,000,000 different properties? It will take much longer than two years!

My great objection to this tax is that it will inevitably be a tax on industry, and a very great tax at that. It is absurd to suppose that the money will come from anywhere except from industry. One day last week I was viewing an area in the City of London where building was going on, and the site was bought for£266,000. In this instance it was pointed out to me that this tax will mean an annual additional taxation of£1,100 a year. That is a very serious sum, and that is the kind of thing which will go on throughout London. The City of London will be subjected to taxation in this way amounting to an enormous sum, and where will the money come from except from the industries carried on in London?

Take an industry like the hotels. The site value of hotels in London amount to a very large sum, and in some cases a tax of 5 percent, will mean several thousand pounds a year additional taxation in the case of some of the hotel companies. The same thing will happen in regard to clubs, and a great many of them will shut up if this tax is applied to them. Take as another example the case of church schools and provided schools. Is there going to be another discrimination between the provided and the non-provided schools? The provided schools will not bear this tax, but what about the other schools? Are they to be taxed? May I point out to hon. Members below the Gangway that Income Tax is paid out of ground rent. In the case of well-to-do people who pay Super-tax, very nearly half of those ground rents goes to the State, and these people get no benefit from the increased value of the land. In such cases the rent does not increase and the advantage of in-creased value goes to the purchaser who takes the long lease. The man who takes such a lease is often a man who is unable to purchase the land right out. He buys it subject to a rent on the capital value. The site value of the land might be£400, and a man might say, "I would rather pay£20 a year as a rent." Why should the owner in that case be specially singled out for an extra levy because, instead of selling the land for£400, he sells for a small sum quarterly?

10.0 p.m.

In the north and in Cheshire land is not held on long lease, but it is subject to a permanent rent charge. However much the land may increase in value, the person who owns the rents gets nothing out of it, because the increment goes to the person who pays the rent, and not to the person who receives it. I dissent from the view which has been put forward by an hon. Member opposite that the tax which is now proposed would send rents down. How can that happen? If the man who owns the land is going to have this additional annual charge placed upon him, he will require a higher rent to recoup himself. [HON. MEMBERS: "No!") I cannot see how a man, in those circumstances, can do anything but put his rents up, because he must get it back in that way. Whichever way hon. Members look at this proposal, it is a tax on industry which must, in the end, fall upon the consumer. I am opposed to this picking out of one particular class of property for special treatment because it is not fair, and it will not lead to any good. If the Government were proposing to tax land which is being kept out of the market, and if they were proposing simply to take the un earned increment, there might be something to be said for that, and, at any rate, it could be defended on paper; but the proposal which we are now considering cannot be defended on any principle of justice, and I shall oppose this Resolution.


I rise to welcome this Resolution, and my only regret is that it was not passed 50 years ago. Many new by-pass roads have been made in our rural and urban districts which have considerably increased the value of the land, and those who own the land have done absolutely nothing towards making that increased value. I welcome the proposal we are discussing for another reason. On Saturday last I heard from one part of the Division which I have the honour to represent a case where there was a piece of land of a very sandy nature worth about£25 an acre, and the owner of that land is about to receive£500 or£600 an acre for this very poor sandy land because it is required for building purposes. One can quite understand, when an increased value like that is charged for land used for building purposes, especially for building houses under the Wheatley Act or the 1930 Housing Act, that the rents of the occupiers of those houses will be greatly increased on account of the enhanced price charged for the land.

I was pleased to hear from the Chancellor of the Exchequer that his intention is to exempt agricultural land from this tax, and I know that the agricultural community throughout the country have been waiting with anxiety for that announcement. The reason for that anxiety was that a section of the Press had stated that agricultural land was going to be taxed, and that announcement caused considerable anxiety in my Division. We are pleased to hear that agricultural land, including smallholdings, cottage holders, and allotments will be exempt from this tax. [HON. MEMBERS: "No!"] I think that is so. I know that the Tory Press has been telling us that that is not the case, but I noticed that a certain amount of sadness came across the faces of hon. Members opposite when the Chancellor of the Exchequer made the declaration that agricultural land would be exempted from the tax.

We are all agreed that everything that is possible should be done to relieve agricultural land of taxation at the present time. We recognise that the land of this country offers great opportunities for getting a large number of our unemployed back to the land. Many of them have come from the land and they are anxious to get back, and it is the object of the legislation of the present Government to get men back to the land. We are all aware how legislation of this kind has been opposed by hon. Members opposite both in Committee and in the House. The Government are extremely anxious to get this Resolution on the Statute Book in order to relieve unemployment.

There is one question on which I would like the Solicitor-General to give us some information. I am in favour of the valuation of all land, including agricultural land. There is a large quantity of land which has never been under any crop since the time of Adam, namely, that in the flooded areas. But the flooded areas are going to be improved by the operation of the Land Drainage Act, and I should like to hear from the Solicitor-General if he can give us some information as to who will benefit from the improvement due to the operation of the Land Drainage Act in those flooded areas. That question has been put to me by many of my constituents, and I trust that I shall be able to give them an answer which will afford them some satisfaction. It is surprising how the owners of land seem inclined to stick to it, and how anxious they are that no legislation should be passed that will take it from their grasp. If this burden is going to be so heavy on the owners of land, why are they so strenuous in their opposition to the passing of this Resolution? I welcome the Resolution, and I trust that in due course we shall see it embodied in an Act of Parliament.


; The Chancellor of the Exchequer raised what I may call two tag misrepresentations. The first was that, when a farmer raises wages, the landlord raises the rent. That has been adequately answered by an hon. Member opposite, who quoted an instance in which a farmer lowered his wages, and, on account of that, the landlord raised the rent. Apparently, whatever happens, the landlord raises the rent, but that is untrue. The other argument which is often repeated is that sooner or later anything that is done to the land gets into the pockets of the landlord. You can prove practically any argument on the "sooner or later" basis, but, taking what has happened in the last eight years—I do not know whether that is sooner or later—there have been two great removals of burdens from agricultural land during that period, and the result on my land, which is typical agricultural land, has been that the rents have gone down; and I think it would be found that that is the case practically all over England with regard to agricultural rents. Those are practical instances in which two things have been done to the land, and, I do not say entirely on account of that, but certainly along with it, there has been a reduction and not an increase of rent.

What is the object of the Government in bringing forward this proposal? I have listened to practically the whole of the Debate, and the argument from the other side has been a mixture of arguments for an increment duty, arguments for an undeveloped land duty, and the argument, which has been produced now and again, that this is something which is quite new. The whole of the arguments are so mingled that any stranger coming in and listening to the Debate would be at a loss to know what the object of the Government is. Do they propose to take the landlord who has not done something, and produce a Bill in order to force him to do it? Or do they, on the other hand, propose to penalise him because he does it? Those are two quite different things, and I am at a loss to know whether the Government propose to treat the landlord more as a knave or more as a fool.

I want to say a word on the subject of agricultural land, because that happens to be the particular form of land in which I am interested—[An HON. MEMBER: "And to which this Resolution does not apply!"] It does apply to agricultural land, as the hon. Member, if he had listened to the whole of the Debate, would know very well. The Chancellor of the Exchequer has said that the main reason why it was not proposed to extend this valuation to agricultural land was that it would not be worth the cost, and then, a moment or two afterwards, he said that if hon. Members on this side liked to propose an Amendment to include all agricultural land, he would give it sympathetic consideration. That is typical of the attitude of the present Government—to give sympathetic consideration to uneconomic expenditure. I want to consider the question of agricultural land Valuation with the question of town and country planning, for the two are inextricably bound up.

My estate is typical of agricultural land in Oxfordshire. It is about 10 miles from Oxford—just close enough to the industrial development of Oxford for there to be a certain demand for industrial workers' houses in the villages, but not near enough to come under the immediate pressure of the city's development. Through my estate there run a variety of roads, some of them first-class roads, and some second-class roads. It is quite patent that the land, say, 100 yards on either side of those roads, has a potential building value larger than the value of ordinary agricultural land, and I think, personally, that any valuer who valued it would be entitled to say that those strips on either side of these roads on my estate were potential building land, and, therefore, ought to be subject to the tax under this proposal. Under this proposal, if I keep that land without building on it, I pay the tax. If, under the Town and Country Planning Bill, I sell the land, I pay on any increment that I may happen to get.

Taking the case of this Resolution, here is the tax imposed on that laud, and I am entitled to look upon it as a direct incitement to build houses. I might accept that challenge, and build houses all along the strips of land on either side of my roads, and I think that in my particular locality, although, as I have said, the pressure is not very great, I might, to a certain, extent, make it a commercial proposition. The effect of this tax would then be to incite me to turn perfectly decent agricultural land into one of the very worst forms of build- ing development. It is quite obvious, however, that that could not be done with every bit of land that was valued in that way, because there would then be more houses than there was a demand for. I might be able to get away with it, but everyone could not possibly do so. Therefore, this tax would be levied on certain bits of land where, even if the landlord wanted to build houses and develop the land in conformity with the tax, it would be, for practical purposes, impossible for him to do so, because there would not be a sufficient demand for houses of that kind. One has, therefore, to consider the person who wants to build and cannot do so, because there would not be a sufficient demand.

You might as well take everyone in this House and say that he has a potential speaking value, and impose a tax upon him in respect of it. It might be said, as regards those who spoke, that they had made their speeches and had paid their tax, and, therefore, had nothing to grumble about; but there would be a large number left over at the end upon whom the tax had been imposed but who were not able to make speeches, for the simple reason that there was not room for them, and they would have a grievance. They might say that they had been subjected to an undelivered speech duty, and I think they would have a genuine grievance.

Now I want to take the question which was alluded to by the right hon. Gentleman the Member for West Birmingham (Sir A. Chamberlain), and, in a rather different frame of mind, by an hon. Member who spoke from below the Gangway opposite. That is the question of how people originally got the land, and what has happened in subsequent years by the passage of the land from one person to another in the course of commercial transactions. The right hon. Gentleman said that for generations the handling of the land as a commercial transaction had received the sanction, and even the encouragement, of successive Governments. That is true. It is no earthly good going back to the days of William the Conqueror. I do not agree that a wrong was done in those days, but let us assume it for the purpose of argument. Hon. Members say that, because in those dim and distant days a wrong was done, therefore it is just and fair, although centuries have passed and numberless transactions have taken place, to visit the sum total of the punishment on the present generation. That is grossly unfair. The argument is completely out of court. Let us apply it to something which hon. Members opposite will, perhaps, understand better. Why apply it simply to land? Why not apply it to clothes? Some hon. Members opposite are quite nicely clothed. They walk out at night, when the proceedings of the House have finished, they walk across Parliament Square and perhaps see a more unfortunate member of society asleep on one of the benches badly clothed. It is possible that the same set of circumstances several generations ago actually contributed to the decent clothing of hon. Members opposite and to the unfortunate circumstances of the gentleman on the seat, but would that be an argument for my stepping in and stripping the clothes from the backs of hon. Members opposite and clothing that particular gentleman? If hon. Members look at it in that light, they will see that it is impossible to rule out the passage of time, and say that because a wrong was committed the whole thing should be visited on this generation.

My quarrel with the party opposite, and the reason I have never joined them, is that, as a party, they are always hopelessly out-of-date. They fix upon some grievance. It may be a real grievance. They say it must be cured, and they frame a policy to cure it. Time goes by and circumstances alter entirely. The whole trend of things has become different. But decade after decade they go on grinding out the same old theories and proposing the same old remedies, regardless of the fact that long ago the whole condition of things has altered, and they do not realise that their proposed remedies are hopelessly out-of-date. Ours may be a less flashy party, we may progress by apparently slower steps, but we keep up with the situation a little closer. I do not think there could be any better example as to that appallingly out-of-date attitude which has prevented me from joining the party opposite than this persistent question of land taxation in some form or another. I am interested to see that the Notice of Motion for this Resolution covers in all six lines. That

figure happens to be rather significant for me, for this morning, as I was leaving the country to come up and hear the statement of the Chancellor of the Exchequer, I experienced one of those delights to which any landlord who is rash enough to farm his own land is subject. A Tamworth sow from which I had great expectations produced six pigs, all of which died. In my misfortune, I called superstition to my aid and I comforted myself by the thought that, after all, my calamity might be treated as an omen for the absolute and inevitable fate of this Resolution.


We have just listened to a most interesting speech from the hon. and gallant Gentleman the Member for Wells (Major -Muir-head), and I hope that his undeserved increment in the case of the Tamworth sow will not prevent him from getting an increment in the future. I have listened to most of the speeches from the opposite side, and nearly all of them have had one family characteristic. I did not notice it in the speech of the right hon. and gallant Member for Newcastle-under-Lyme (Colonel Wedgwood), but nearly all the other speeches to which I have listened have borne the same burden. They have lamented or denounced the inequity of landholders holding up the community and preventing them from obtaining pieces of land which it would have been well for the benefit of the community to have developed, or they have lamented or denounced the enormous profits, undeserved and unearned, which have been received by landowners for land to which they have done nothing but to which the activities of the community have given an enormously added value. All that we have heard, and with the principle of it most Members on this side of the Committee will agree. On the other hand, we have not heard from any of the speeches, except from the Front Bench on that side, a syllable to connect the statements they have made with the proposal before us. We have not heard a single item of vindication or proof to show how the proposals which the Chancellor of the Exchequer has outlined this afternoon will be likely to achieve those objects which they have stated are so desirable.

We have had some information from the Financial Secretary to the Treasury. My right hon. Friend has already referred to his courtesy in giving information. He is always exceedingly courteous. He possesses an admirable bedside manner in dealing with these situations. There were one or two points upon which he threw some light, but there were other points upon which he did not throw any light. I will refer to some of the points which have arisen in the Debate, and put-before him one or two points upon which we ought to have more elucidation. With regard to valuation, I wish to refer to a remark which was made by the Financial Secretary to the Treasury. A question was put as to whether or not the expense which was likely to be incurred in the next financial year was included in the Estimate for the financial year which has just begun, and he replied, "Certainly not." I think he said that it would not have been proper to do so. On the contrary, I think it would have been proper, as this is part of the Budget, to provide for part of the expenditure which is contemplated under the Budget if the proposal is passed into law in the shape in which it is produced. From that point of view it would have been perfectly proper. On the other hand, I can well understand that he might say that as this was kept a secret during the period preliminary to the Budget. Obviously if this part of the Estimates had been unduly swollen by£300,000 or£400,000, that might have disclosed a Budget secret which it was natural they wanted to keep private and confidential.

Is that really any defence from the point of view of the Budget? We have a margin of income over expenditure which is ridiculously small. It is very little over£100,000. A normal margin would be at least£500,000 or£600,000. Even that would have been on the small side, but that would have been sufficient on his own showing to cover the extra expenditure which he anticipates will be incurred in the present year. He told us that the Supplementary Estimates were nearly always incurred before the end of the financial year. I have never yet heard of a Chancellor of the Exchequer who budgeted for Supplementary Estimates in his Budget. It is a new precedent that you should consciously, when framing the Budget, contemplate expenditure which you know the Budget will not meet, and then produce a nominal surplus of£130,000, when you have all this extra expenditure to provide for.

I would like to ask for a little more information either from the Financial Secretary or from the Solicitor-General. Can they give any real reason for believing that the expenditure on the valuation will only amount to£1,500,000? Let me put one or two facts which make us doubt that estimate. In the first place, the previous valuation in the unfortunate experiment of 20 years ago is enough to make us cautious. We have been told that there are 10,000,000 to 12,000,000 hereditaments or units which are to be valued. Is the expense of that valuation to be only£1,500,000? Is each valuation to cost 2s. 6d., and no more? Is the valuation of 12,000,000 hereditaments to cost only£1,500,000, having regard to all the officials to which reference has been made by the Chancellor of the Exchequer or the Financial Secretary? Under the original scheme there were about 2,000 officials. I do not know how many there will be under the present scheme.




Will that number have to go through a course of training? Does anyone say that all this is going to be done for the sum of 2s. 6d. per hereditament? I would further ask the Financial Secretary whether the total hereditaments to be valued will be only 10,000,000 or 12,000,000. The figure was something like that, if I remember aright, although I do not bind myself to it, in the experiment of 20 years ago. On what is the number based now? What line is to he followed? During the Debate this afternoon there has been continued difference of opinion. Is agricultural land to be brought into valuation or not? Are all the plots of agricultural land, some of them perhaps near a road, to be valued, or not? We have had some strange information vouchsafed to us. The first is that the valuer is to have discretion. It will be rather strange to put so much power into the hands of these people.


Who are they going to be?


Yes. Who will they be? This power of discretion opens up a strange vista of possibilities, and we should like to have a little more information upon the matter before the Debate concludes on Wednesday. We were told by the Financial Secretary that agricultural holdings were not going to be valued, and that that possibility could be dismissed. That is entirely incompatible with what the Chancellor of the Exchequer said a little earlier. He laid particular stress on the change that had come over the country since the War. The motor omnibus and motor car had spread the population out. All these parcels of land throughout the country districts had acquired a building value which they did not possess years ago and obviously would have to be brought into the valuation. The Chancellor of the Exchequer went so far as to say that the difference between town and country had become almost obliterated. If that is the view of the Chancellor of the Exchequer, how is it that the Financial Secretary said that we need not trouble about agricultural land, that we need have no apprehension about it? Perhaps we may have some of our doubts on this matter resolved before we come to a decision upon this question.

It is interesting to notice that for the first time we are to have a tax of this kind, to be imposed two years hence, without the Chancellor of the Exchequer having the slightest idea of the amount it will bring in. What are we going to get in return for the cost of valuation? We have had no answer from the Chancellor of the Exchequer or the Financial Secretary on that point. The Chancellor of the Exchequer has said that it is not only the revenue but other indirect objects which the Government hope to obtain. It is rather strange for a Chancellor of the Exchequer to impose a tax as part of his Budget when he has no notion of what it is going to produce. He ought to have some idea of its effect upon Death Duties. If he is going to change the values of building land, it will doubtless have an effect upon Death Duties. That is another item upon which we should like some information. The Chancellor of the Exchequer, who has no idea of the amount this tax is going to bring in, says that it is only a penny in the£ on capital value.


As a start.


Yes. Why does not the Chancellor wait until he knows what the result is going to be? What is the real reason for this ambiguity? It has occurred to me that, after all, there might be a good reason; and it may be this. Is this tax going to the Exchequer or in aid of local rates? I think there is a deliberate ambiguity on this point, and that the Chancellor of the Exchequer hopes to excite the support of municipalities if the effect of it will be an increment to the rates, and the Financial Secretary gave some colour to that idea when he talked about 3d. or 4d. on the rates. Is this money intended for the rates? Clearly, the Government must know what they intend. Even if they have no actual estimate of the amount it is going to produce we may at least hope to hear whether it is going straight to the Exchequer, or whether it is to be an addition to the rates. These are some of the points on which information would be desirable.

I now turn to some of the principles involved in this scheme. The Financial Secretary told us that, going very much on the lines of the Rating Acts, the land value would be practically the price which a purchaser would pay for a piece of land if it were denuded of all buildings other than agricultural buildings, while at the same time—and this point is worth consideration—all other pieces of land round it would be considered as continuing in their existing condition. In other words, if you have a stretch of houses along a street, you assess one of them as though the site was a cleared site, while at the same time all the other buildings in the street are, for the purposes of that particular valuation, taken as continuing in their present condition. I presume that this tax is intended to be fair and reasonable. How then does that proposal square with the facts of the situation? The Chancellor of the Exchequer used the phrase "an ounce of fact is worth a ton of theory." Take a classic case. Take the case of one of the universities. We Have been told, quite distinctly, that the colleges of a university are to be subject to this tax. Therefore, in valuing one of these colleges you assume that the site of the college is cleared while all the other colleges, and all the shops in the vicinity remain as they were. You base your valuation for that cleared site on the hypothesis of the highest value obtainable, possibly for shop fronts, in the surrounding area. I ask the Committee to realise not only the absurdity, but the extraordinary unfairness of that proposition. It means, on the actual data—and it is very exiguous—already supplied to us, that in arriving at the valuation to be put upon that land you have to consider the highest value obtainable, in the circumstances I have described and the highest value, if you re-built, would probably be its value as a shop-front. Yet, as a matter of fact-, if all the colleges were cleared away none of the shop-fronts would have any value. The whole thing is an absurdity and an absurdity which, from the point of view of these educational establishments, would be disastrously unfair. But that is a situation which clearly would arise according to the information which the Government have given us.

Let me put another consideration—again recalling the Chancellor's phrase that an ounce of fact is worth a ton of theory. We all know that in the outskirts of great towns there is a certain amount of building each year. That building may proceed faster or slower according to circumstances, but there is a limited amount which goes on each year. There may be a thousand acres of land, any one acre of which may conceivably be built upon in any year. We know that probably only about 40 or 60 acres will actually be built upon. Are all the thousand acres to be valued? It is clear that any one of them may be built upon, that unearned increment may be received in respect of any one of them, but not in respect of all of them for quite a long time. How, in fairness, is the valuation to be made? I can well imagine that if you had an Increment Duty, and if you had some form of betterment, you could fit the situation fairly, and that is the sort of fairness which many of us on this side would not resist for a moment, but it is difficult to see how these proposals can possibly fit a situation of that kind with the least degree of fairness to all the people concerned.

I take only one further case, because it leads to an important consideration. Suppose you get an estate developing on the outskirts of a provincial town, and the owner has already built a road through it, which has not yet been opened for general use, and at that moment this tax is imposed. If the precedent of the Bill of last year is followed, the whole of the value of that estate is taken. The owner is doing the thing which everybody opposite wishes to be done; he has gone forward; he has started developing his estate; he has put it to use for housing; he has put his own resources into the building of a road through it. Yet under these proposals, if this tax comes into force, that owner will have increased the land value, but you can only deduct from it the bare agricultural value, and you are making him pay for his enterprise and penalising him for bringing land into use for precisely the uses which hon. Members opposite desire.

How do the speeches of hon. Members opposite square with this Motion? We are willing to have betterment taken. We are willing, and we have shown it, not to have the community held up, but valuations made in this way would quite clearly deter people from going forward with enterprises of that kind. The Chancellor of the Exchequer said that we were not to take 1910 as a model, but everything that has been told us to-day, whether by the Chancellor of the Exchequer or by the Financial Secretary to the Treasury, goes to show that it will be a deterrent to building enterprise just as much and just as surely as anything that happened under the Budget of 1910. Lastly, I would ask. Is there to an an allowance for existing values other than agricultural values? The hon. Member for Central Bristol (Mr. Alpass) referred to a plot of land about which there was some little difference of opinion in the Committee, which he said—


I gave the facts.


I will take the facts as the hon. Member gave them.


He would not give the facts.


He would not give the whole of the facts, but he gave enough, as he said, for his argument. His argument was that the plot of land was sold at a rate of over£1,500,000 per acre. Mark what happens, on his own showing. Somebody buys that plot of land at that very high price. It is a bonâ fide purchase, into which the buyer has put his own, his friend's or his company's finances. He has paid a high value for the land which he has bought for an enterprise, and if he is successful, he will be taxed again on the valuation that is put upon it The Chancellor of the Exchequer is letting off the poorer people whose annual bill will not exceed 10s., people whose land is not more than£120 in capital value. Whatever case may be made out for them, is it in accordance with justice to tax the man who has paid a high price for land of which the capital value is considerable, while you are letting off the others? From the point of view of justice, there is no justification whatsoever for not making allowance for the values that have already accrued, whatever you do with regard to the value which accrues in the future.

I would ask the Committee to consider for a moment what are the real objects of these two proposals. The first object I have mentioned once, but I would like to emphasise it again. None of us wants the community to be held up and to pay too high a price. That is one object, and proof that on this side we are just as anxious for the sake of the community has been shown in recent legislation passed by the last Government. We do not want people to have an undue share of the unearned value of the land. If they were the objects—and the quite legitimate objects—of the proposals, then there is no real difference between us in principle.


What about in practice?


Our practice is shown, as I have just said, by the legislation we have passed. Those objects are being carried out at the present moment. Provision has been made against the holding up of the community. The Government have themselves brought in other Bills for dealing with these questions on those lines. What on earth is the need for bringing in a Measure to deal with precisely the same two objects in a different way, pretending to get them both at once? Nobody knows whether the price of land will be sent up or sent down.

The only thing that can be done, by passing legislation of a new kind in order to achieve, as has been stated, objects which are already obtained in another way, is to cut across existing lines of attaining them and to introduce a confusion which would be almost impossible to clear up. My right hon. Friend the Member for West Birmingham (Sir A. Chamberlain) put a question to the Financial Secretary as to the effect of valuation in the case of land which was affected by town-planning schemes. The Financial Secretary said that, of course, if town planning came in and affected the value of land that would be taken account of in the valuation. That does not answer my right hon. Friend's question. He asked, supposing you had a land valuation next July and the town planning scheme comes in later, what is going to happen with regard to the extent to which the owner has been mulcted in the meanwhile? What is going to happen about the difficulties with regard to rent restriction? Perhaps we may hear from the Solicitor-General. Have they considered the question of the mortgagee who has lent money? What is the position of building societies and their claims over property of more than£120 in capital value?

Further, supposing you have got an owner of a long lease of more than 50 years, and he has still five years himself as an owner, what is going to happen in his case? Supposing the land is valued, and a high value is put upon it? We are told he is going to pass it back to the owner by some means. He has not the power of dealing with the land himself. The owner has not got it as long as he is in possession and a tax is going to be levied, and he is to pass it back to the ground landlord or the owner, we are told. How is that kind if situation going to be dealt with? These are some of the puzzles, which arise. They are not fancy puzzles, but puzzles which would actually arise under the scheme.

We ask ourselves whether the attainment of those two objects, of which we have heard so much, are the real purpose of the Government in introducing this Measure? According to the Financial Secretary it was going to be a small tax, but according to other speakers it is a tax which may grow until you get 20s. a year out of every£ of capital value. That shows the different view-taken about it. I suggest that if the two objects of which we have heard so much- from the other side were the only objects, they would have left them to be achieved by the normal means, and the other legislation they have brought forward. What they really think is that they can exploit prejudice against the landlord at a time that is convenient, and that the country as a whole think that landowners may be a rich class. The figures for Schedule A show that land is the only class of property which, if allowance is made for the increase of prices, has decreased in value as compared with before the War. This decrease in Schedule A, after allowance for the increase in prices, compares with a large increase in the value of businesses, a larger increase still in income from those Schedules which the Chancellor is not going to touch in the little arrangement he has made, and a still greater increase in the Schedules dealing with incomes from officials.

The one class which has not really increased in riches are the landowners. It is easy to create prejudice and for the Government to choose this as a suitable means for trying to get the support of the party which usually sits on the benches below the Gangway, but which have so few occupants at this moment. When I listened to the Chancellor's speech, I realised that he was seeking the support of the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George), trusting that this at least would gain his support during the next two difficult years. It was so convenient at this moment, but so very different from the sentiments which used to be uttered by the present Minister of Agriculture who used the words: The right hon. Gentleman the Member for Carnarvon Boroughs is more responsible for the stoppage of these efforts (in housing and slum clearance) than any other man, and in the light of these facts, I say deliberately that anyone who relies upon him to be steadfast to give effect to such undertakings is a fool. We hear a very different song sung to-day. Again, it is such a convenient cry, especially after the result of a recent by-election, with which to deal with the troubles among their own followers. We have heard the exordium of the Chancellor of the Exchequer how he was really going to "see it through." The Government were going to see unemployment through; they gave that unequivocal pledge and held out that theirs was a record which would show that it would be kept. They were going to make farming pay, and the Prime Minister said they had a scheme, but only waited for the election to be over to call all those interested in farming together in order to expound to them the scheme and show how they would make farming pay. Now, in order to hearten the party again, they are going to bring forward this scheme and to "see it through." I wonder whether any of their supporters really trust them to see it through any more than they saw unemployment or agriculture through.

In order to do this, they are bringing in the very thing that prevented building and put housing back. It disturbed the country and disturbed trade before, and it is just as likely to do the same now. They are doing it at the moment which of all moments is the worst in which to do anything to disturb trade or employment. Two months after the slump began the present Secretary of State for the Dominions said that a real improvement in trade had at last set in. A few months after, the Chancellor of the Exchequer in his first Budget said that before he brought in another a great improvement would most certainly have happened. Six months passed, and the Chancellor once again said that there were signs of a great improvement in trade, and that when it came it would come very rapidly. To-day he has budgeted for another improvement, and he has done it without the least shadow of justification of any sort or kind, and he is trying to buttress up his position with a proposal that contains all the absurdities of its predecessors, so far as we yet can make out. We only wait to hear what it contains so that we may pass a proper judgment on it.

Resolved, "That the Chairman do report Progress, and ask leave to sit again."—[Mr. T. Kennedy.]

Committee report Progress; to sit again To-morrow.

The remaining Orders were read, and postponed.