Question again proposed,
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 rats of one penny for each pound of the land value of every unit of land in Great Britain."—[Mr. P. Snowden.]
§ Sir WILLIAM MITCHELL-THOMSON
We have had 48 hours to consider the scanty information which is embodied in this Resolution, and I remain of the opinion winch I farmed while I was listening to the Chancellor of the Exchequer when he introduced the Budget. The most remarkable thing is that these proposals should have been proposed at all. Only a few weeks have passed since the Chancellor of the Exchequer addressed to the country the gravest warning which probably the country has ever received. The right hon. Gentleman told us that, in his opinion, our one chance of escaping from the troubles which face us lay in the avoidance of further burdens on industry, in the practice of the most rigid economy and in the promotion by every means in our power of a return of confidence. Within a few weeks of making that statement, the right hon. Gentleman comes down to the House and propounds a scheme which imposes fresh burden" on every trade and industry in the country, which involves a large immediate expenditure without the prospect of any immediate return, which unsettles everyone to whom it will apply, and which, except for the employment of fresh tax-gatherers, will not put into employment one man, woman or child in the country. This is not taxation; it is tactics, and the country is really tired of the Government and their tactics. In our view, the country has already lost confidence in His Majesty's present advisers, and the people are only too anxious to have an opportunity of expressing their opinion in favour of a change.
406 I regard these proposals as a face-saving and time-wasting device; in other words, a red herring produced by the Government in order to distract the attention of the electors from the shortcomings of the Government. We regret that in this great crisis in national affairs the Government should now be proposing to waste 1931 as they have wasted 1929 and 1930, by proposing to occupy the time of Parliament with proposals which, on the confession of their authors, can produce no revenue for two years; which are, as I will try to show, unnecessary; which are ill-adapted for their professed purpose, and which are undoubtedly unsettling the trade and commerce of the country. In a word, the Government are "fiddling while Rome is burning."
As the proposals have been tabled, I will examine them and endeavour to elucidate one or two points and make one or two general comments. Mr. Gladstone, the most illustrious of the predecessors of the Chancellor of the Exchequer used to lay down that there were certain canons of taxation to which every Chancellor should conform, and one was that the subject taxed should be clearly defined, that it should be certain in its incidence and that it should be accompanied by the definite statement of the results which are likely to accrue from its imposition. All those canons are violated by the proposals of the Chancellor of the Exchequer. They are imposed upon an imaginary abstraction and we do not know even now, and we shall not know until the Finance Bill is produced, exactly what are the imaginative proposals which we have to consider in order to arrive at this abstraction. Is it not putting the cart before the horse to ask us to agree in principle to a tax before we have been told how that tax is to be applied?
We have not had the slightest forecast of the amount of revenue which the Chancellor of the Exchequer expects from these proposals. We can form some opinion, however, from our former experience. The Chancellor of the Exchequer was rather anxious—too anxious—to dissuade us from making any reference to the experience of 1909 and 1910. An hon. Member opposite, the other night said, with great truth and sincerity, that he hoped in the discussion 407 of these proposals we should get away from the bias and prejudice which might attach to the old struggles of 1909. But the Chancellor of the Exchequer in his opening remarks, so far from doing that, introduced bias and prejudice. We are dealing with an economic question, and in regard to all these questions we ought to approach the examination of them with new eyes, and having regard to the new conditions. Things have changed since 1909. That has always been the appeal in regard to a tariff policy made to Liberal and Labour Members; we are always trying to persuade right hon. and hon. Gentlemen that things have changed. And they have changed in regard to land just as in regard to everything else. There have been great changes in regard to the land since 1909, changes in urban and rural housing, changes in urban and rural development, changes in urban and rural rating and taxation, changes in transport, and, perhaps most noteworthy of all, changes in ownership. I am told, and I have no reason to doubt the truth of the estimate, that half the land in the country has changed hands in the last 13 years. I doubt very much whether it is an over-estimate to say that the number of landowners in the country to-day has increased by 60 per cent. over the number in 1909. In these circumstances one has to approach everything with a fresh outlook. But at the same time it would be folly on our part to ignore previous experience, just as it would be folly to ignore what are the declared objects of those who are putting forward these proposals.
I am not going to say anything at length as to the result of our last experience, but I do say that the three land duties, the Undeveloped Land Duty, the Increment Value Duty, and the Reversion Duty, which, in the words of their distinguished author, were commended to the country as fertile taxes, as taxes that "would bring forth fruit," in fact brought forth so little fruit that they were grubbed up and thrown on the rubbish heap in 1920, with the assent of their distinguished planter. In the course of their growth they produced £1,300,000 to the Exchequer, at a cost in valuation and collection of £5,000,000 to 408 the Government. What it cost the taxpayer Heaven only knows.
So much for the results. A few words now about the valuation. The Chancellor of the Exchequer said that what he called "the comparative failure" of the scheme of the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George)—that is a mild word—was due to the fact that the right hon. Gentleman attempted to tax at the same time as he was valuing. The Chancellor of the Exchequer said, "I am not going to make this mistake; I am going to complete the valuation before I start my tax." He estimates that the valuation, beginning in October, 1931, will be completed by March, 1933, a space of 18 months. I believe the right hon. Gentleman to be wholly wrong, and I say that because of the experience of the last valuation. If hon. Members who are interested will look at the report of the committee which inquired into the working of these land taxes in 1919—it was called the Land Valuation Committee—they will find evidence given by those who ought to know the facts, that is, by the Chief Valuer of the Board of Inland Revenue and by his immediate deputy. They pointed out that the valuation started in August, 1910. By the time of the outbreak of War on 31st July, 1914, only 79 per cent. of the first provisional valuations had got back into the office, and of that 79 per cent. a very large proportion, something over a quarter, had not taken their next step in the process of getting into touch with the taxpayer, that is, had not been served on the taxpayer. After July, 1914, everything slowed down, and it is not fair to make any comparison with that period.
While the task of valuation had proceeded thus slowly the staff had multiplied like rabbits. The Valuation Department began in August, 1910, with a staff of 61. By 31st March, 1911, 10 months later, it had grown to 1,428. By 31st March, 1912, it had grown to 2,829, and at the moment when its activities were cut short on 31st July, 1914, the hierarchy consisted as follows: One chief valuer, one deputy-chief valuer, one chief valuer in Scotland, one assistant chief valuer in Scotland, 13 superinintendent valuers, one acting superintendent valuer, 120 valuers of the first class, 120 valuers of the second class, 200 valuers of the third class, and 123 clerks. 409 That was a total of permanent staff of 581. But of temporary staff there were 753 valuers, 1,581 valuation Assistants, 138 draughtsmen, and 2,171 clerks, making a total of temporary assistants of 4,623, or a total in all of 5,204. But that is not the end of the story. I have referred only to the headquarters' staff. In the provinces there was a large number of officers. I do not know what was the number for Scotland, as it is not stated, but in England, in addition to the 5,204, there was a number which is stated at 7,000. No wonder the valuation was costly!
§ Sir W. MITCHELL-THOMSON
Sixty million acres. In these circumstances I suggest that the Committee can draw their own conclusions as to whether the Chancellor of the Exchequer's estimate that the valuation is likely to be completed in 18 months and is to cost from £1,000,000 to £1,500,000, is likely to be accurate. The Chancellor speaks of the general support which his proposals have received. But he rather muddles up his proposals with land values. It is quite true that in the past there has been a good deal of general support given to what is broadly known as the taxation of land values, but that is by no means identical with the Chancellor's proposals. Let us examine that aspect of the question. I think that there are a great many hon. Gentlemen in the Committee who have always felt that they supported the taxation of land values in a general way because they felt that there were two great classes of grievance from which people were suffering. The first grievance is that where the State or the local authority has spent large sums of money in making a public improvement, such as an arterial road, it is unfair that the adjacent landowners should reap the benefit of the enhanced values towards which they have contributed little or nothing.
The second grievance is that round our large cities there are large tracts of suburban land, ripe or ripening for development, which are being held up by the owners for higher appreciation, at a time when the local authority wants them for public purposes and cannot get them except at a ransom price. These 410 grievances have been the motive of many in their general support of the principle of taxation of land values. If these grievances were real they would indeed be substantial grievances. But the first is only partially true, as I shall show, and the second has very little, if any, basis in fact. But for neither of these grievances is this proposal of the Chancellor an effective or appropriate remedy.
Let me take the grievances separately. Take, first of all, the question of betterment. As a matter of fact the arterial road case is by no means the strongest case, because the Road Board has always had the power to schedule and acquire compulsorily at its then value land lying alongside the line of a proposed road for a depth of 220 yards on each side of the road. It is true that the board has not often exercised that power; I do not know whether it has exercised it at all. But the power is there, and that is an effective cure for a great part of the grievance regarding ribbon development. As regards the general principle of betterment, there is a very great deal to be said for it where you can definitely isolate the betterment and date it to a particular act by the State or a local authority. Recognition of that principle was enshrined for the first time in a general Act of Parliament by a Conservative Government in 1925. It is in the Town Planning Act.
It is true that there is an Amendment to the Town Planning Act before a Standing Committee at the present time. The proposal to take away 100 per cent. of the enhanced value seem" to me to be rather doubtful wisdom. If you take away the whole of the enhancement in value, you will completely discourage the efforts of the speculative builder, and, whatever else may be said about him, the speculative builder has been a very good friend to the community. He has delivered the goods; he has provided the houses. He has chanced his arm. He does not always win; he does not always back the right horse. There are occasions when the speculative builder buys land and instead of betterment gets worsement.
I do not think it is always safe to generalise too much about this question of betterment, because it is patent that there are some cases where the betterment is due not to any act of the State or of a local authority, but solely to the 411 enterprise of an individual. Take a case like that of Letchworth Garden City, or the case of Port Sunlight. Take even, in large part, the case of Eastbourne. In all those cases the undoubted rise in values was due, not to any act of the State or of a local authority, but to the enterprise of an individual owner. Indeed it may be a third party altogether. I remember a time when the land round part of Oxford could have been bought at agricultural value, and that land to-day commands a comparatively high price. Why? Not because of the action of the State or of the local authority, but because Sir William Morris invented the Morris-Cowley and the Morris-Oxford cars. The Chancellor says with great sententiousness, "Let us render unto Caesar the things that are Caesar's," but what in effect he is suggesting is that we should render unto Caesar the things that are Pompey's.
Nor is it always safe to say that the increase in values is of that large and, as hon. Members opposite would say, reprehensible magnitude which may be supposed. Apart from any sudden change in the value of money, which promptly produces large changes in value, there are quite a number of cases where what is called unearned increment is not really unearned increment at all, but is only deferred interest. Take the case of a man who 30 years ago bought land at £50 an acre and sells it to-day at £175 an acre. At first sight that appears to be a very large increase, the sort of increase that hon. Gentlemen opposite would say deserves a tax. But it may very well happen, and in hundreds of cases it does happen, that during all those years that man has been content to accept a very low rate of interest on his money—1 or 1½ per cent.—when he might have been getting 5 or 5½ per cent. in industrial or Colonial securities. If the case is looked at from that point of view, it will be seen that, although he gets £175 an acre for what he bought for £50 an acre, he is in the end getting, over all the period since his original investment, less than a normal rate of interest.
Let me give another instance, a very up-to-date one. Last night I saw in the papers particulars of a case in which the Grocers' Company had got leave 412 from the court to draw from the court the last portion of the purchase price of an estate which they had bought with a legacy of £150 which was left to them in 1599, and the total price which they had received for the estate, including the last instalment, was £24,250. I saw a large headline: "£150 becomes £24,250," and I have no doubt that some hon. Gentlemen who saw it thought that that was a thing that they might make a note of for use in connection with these discussions. Observe, however, that if the Grocers' Company in 1599, instead of using old Peter Bloundell's £150 to buy a house and four gardens in Bishops-gate, had put it out at interest, not at 5 per cent., or 4 per cent., or even 3 per cent., but at 2 per cent., they would have had to-day more than three times £24,250.
These are some of the points—only a few of them—which have to be remembered as general points in regard to this question of betterment, and again I repeat that this proposal of the Chancellor of the Exchequer, whatever else it may be, is not an increment value duty and does not deal with these increments, and a great deal of the discussion during the Debate the other night was really wholly irrelevant to the tax proposed by the Chancellor of the Exchequer. What is the use of talking about these high values in the centre of Liverpool, or London, or elsewhere? They are only relevant in so far as they are the measure of the injustice which the Chancellor of the Exchequer is proposing to inflict. The hon. Member for Central Bristol (Mr. Alpass) quoted a case where what I took to be a portion of a small frontage in Bristol had changed hands at an enormous figure, which he said was the equivalent of £350 a yard. I do not know the rights and wrongs of that particular case; I do not know how long the man who sold that property had held it, or what profit he made on the transaction; but all of that is irrelevant, because, whatever happened to him, the Chancellor's proposals are not going to affect him, but only the man who has paid full value for the property, and he is going to be told, "We will take Income Tax from you under Schedule A on the basis that you bought this property at £350 a yard; when you are dead we will take Estate Duty from your heirs on the 413 basis that you bought this property at £360 a yard; and, in addition to that, because you paid this high price, which is the full market value of the property, we will now put upon you a special tax over and above that." That is the measure of the injustice.
If this were a proposal to tax future increments, it would at least be logical, however much it might be said to be contrary to public policy or, as past experience shows, to be difficult in practice. At any rate, it would then be logical, and everyone who bought would buy with fair notice. Under the present circumstances, however, to penalise the bona fide holder for value in the way that the Chancellor of the Exchequer proposes to do is both arbitrary and unjust. Nor can it be said that this proposal is really necessary in order to force undeveloped land on the market, because here again there have been the greatest of changes since 1909. In 1909 there were no powers under which local authorities could acquire land except the extremely cumbrous machinery which then existed. The price was always a matter of long negotiation and long legal wrangle. Ever since 1919, however, the Acquisition of Land Act and the provisions for compensation which have been imported into many other Acts have been available to local authorities, and they are available to them to-day; and I do not believe that in the course of these discussions one case will be brought forward in which it can truly be said that a local authority which rightfully desires to get land for public purposes is unable to do so at a fair market price. Even if there be such a case, all that the local authority has to do is to invoke the operation of these Acts, which are available on the Statute Book. If they cannot invoke the operation of these Acts, it must be because they cannot comply with the conditions of the Acts.
I will go further, and point out to the Committee, although I do not wish to develop it now, that, so far as I can follow the operation of these proposals, they will, so far from encouraging the development of undeveloped land, actually induce a man rather to refrain from developing his land; for a man whose land is in a purely agricultural condition will retain it in that condition as long as he can, because he 414 knows that the minute he starts to put a road through it, the minute he starts to develop it or to do anything to make it more fit for building use, round will come the valuer, with the tax-gatherer in his train, and say to him, "Now your land has an element of building value, and we are going to tax you." If ever there was a case of proposing to tax a man on his own improvements, it is this proposal of the right hon. Gentleman. The proposal, as I have said, is neither an increment value duty nor an undeveloped land duty; it is a tax on all the land to which it applies, whether built on or not, whether developed or not, whether in the centre of the City of London or elsewhere, and its basis is that hypothetical figure which is called the land value.
The land value is to be arrived at by taking the cultivation value away from what I may call the prairie value, and the prairie value is to be arrived at by imagining that the plot of land is stripped of everything except hedges, trees, grass and public works—not a difficult feat of imagination for the valuer. He is to come along and say, "Here is a plot of land. I have to imagine that some great cataclysm has overtaken this land, and has swept it bare of everything except the things put there by God and Nature and the county council." Having performed that operation, he has then to say, "This catastrophe has only occurred to this one single plot in Great Britain; everything else remains as it was." And not only that, but he has then to say, "This having occurred, this is the only plot of land in these conditions which is in the market in Great Britain at the moment." A whole valuation based upon assumptions like that bristles with fallacies. Let me point out only one, which arises out of the last point I have made.
Take the case of a holding of 1,500 acres on the edge of a small town. The small town is growing at a modest rate, say 10 acres a year. That is as fast as it can grow. There is no question of holding up; the landowner is only too anxious to sell, but that is all that can be absorbed. Any competent valuer will no doubt put a selling value on these 1,500 acres, and, if he is an intelligent and imaginative valuer, he may be able to go through the process that the Government desire and arrive at the prairie 415 value, and so, ultimately, at the land value; but here let me pause for a moment to say that I do not think the Government have fully appreciated the fact that even the cultivation value is not going to be fixed, but that this also is going to slide from time to time. The more dumped Russian wheat that the Government let into this country, the lower the cultivation value will be, while when a saner agricultural policy is pursued the cultivation value will rise. Let us, however, imagine that the valuer can, perhaps, perform this operation. He may be able to do that, but no valuer can possibly tell you precisely which 50 acres are going to be absorbed in the next five years.
Take another illustration. Any competent insurance accountant, by reference to his books of tables, will tell you in five minutes how many men of the age of 30 are going to be alive 20 years from now; but not all the accountants in the world can tell you whether Tom, Dick or Harry is going to be alive tomorrow. The essential fallacy is that you are valuing the whole of the remaining 1,450 acres at the same rate at which the first 50 acres are valued. A valuation based upon these assumptions is based upon a most unsound and insecure foundation. I might have added that you are valuing the other 1,450 acres on that estate, although in fact, at that rate, the last of those acres will not ripen for 150 years, and may never ripen at all. The truth is that it is now proposed to send out valuers to make at very great expense a cadastral survey of all the holdings in Great Britain, and they are to be told that they are to do this under hypothetical conditions which will only apply to one holding at a time. Any proposal for a tax which is based upon assumptions of this sort is purely arbitrary.
When we come to the question of exemptions, even the exemptions themselves are somewhat arbitrary. I say nothing about the statutory exemptions, such as the limit of £120 of site value which the Chancellor of the Exchequer proposes to impose, because everything that I could say about that has already been much better said by the Chancellor of the Exchequer himself. If hon. Members will refer to the Chancellor's observations 416 in 1913, which they will see alluded to in the "Times" newspaper this morning, which are reported at length in the OFFICIAL REPORT, and which, I daresay, will be referred to in the Debates that are going to take place, they will see that he stated succinctly and clearly the reasons why, if you believe in the principle itself, it is difficult to draw the line at exceptions and to make exemptions.
It is not to the statutory exemptions that I desire to draw the attention of the Committee, but to something that was said by the Financial Secretary to the Treasury. Apparently, in addition to statutory exemptions, there are to be permissive exemptions from valuation depending upon what the hon. Gentleman called the good judgment of those charged with the valuation. To give a discretion to the tax gatherer as to whether or not he shall proceed to start the machinery for taxation, appears to be a most remarkable principle for a Socialist Government. Three hundred years ago we were fighting the Crown in order to establish that this House alone should say what subjects were to be taxed, and how much they were to be taxed; but, at a moment when the Government are trying to get up an agitation against another place on the ground of invasion of the privileges of this House, they come down with a proposal that the question whether a subject is to be assessed to tax or not, and, indeed the question whether information is to be available upon which he may be taxed, is to be left in the discretion of His Majesty's servants. That is an entirely new proposal and if the Liberal party, who always tell us that they are the lineal successors of Pym and Hampden, will stand for that, they will stand for anything.
May I say a word to hon. Members opposite. Some of them, no doubt, support this proposal because they really believe "Labour and the Nation" meant what it said when it declared:The Labour party hold that private ownership is not in the best interests of the nation, and intend to extend the area of public ownership with the utmost rapidity.Or, as was much better said a good many years before by Henry George:Private property in land is a bold, bare, enormous wrong.417 That, apparently, is also, to some extent, the view of the Government, because the Chancellor of the Exchequer produced that remarkable phrase about asserting the right of the community to the ownership of land and went on to explain that, if they followed his proposal, it would make the ownership of land uncomfortable, and all through the Debate on Monday we had speech after speech hailing this as the first step, and urging the Government to go on taking succeeding steps up to 2d., 3d. and so on till you reach 1s. or 1s. 3d., at which point you take the whole value. May I draw attention to a very interesting dialogue that took place between my Noble Friend the Member for Weston-super-Mare (Lord Erskine) and the hon. Member for Burslem (Mr. MacLaren)? Unfortunately, it took place when the Committee was rather sparsely attended, but it deserves a wider publicity than it has had. This is what was said:This is a method, not of imposing an equitable tax, but of confiscating the land, making it worth nothing and then national-ising it.
§ Mr. MACLAREN
I do say so."—[OFFICIAL REPORT, 4th May, 1931; col. 90, Vol. 252.]
The hon. Member says so, and many of his hon. Friends say so. As far a" I can gather, the Government 6ay so. What do the Liberal party say? Here is a proposal which is recommended and welcomed because it is declared to be the first step towards nationalisation, and a long step. The Liberal party have to make up their mind when they go into the Lobby, and I invite the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) especially to reply on this point when he speaks. There is no doubt either that a penny in the £ will make landowners, great and small, very uncomfortable, because, although a penny in the £ sounds a bagatelle—only a copper, as the right hon. Gentleman used to say—it is an annual charge and, if you take it at 5 per cent., it represents 1s. 8d. in the £ on the annual increment, or, if you take it free of Income Tax, as you ought to do, at 4 per cent., it represents 2s. 1d. in the £.
Let me point to another aspect of these proposals. For a generation it has been the aim of housing reformers to extend 418 light and air, to get the people away from congested areas in the cities out to the suburbs, and to encourage in the suburbs the garden type of house. Are you going to encourage the garden type of house by these proposals? Many of them you are going to tax and some you will tax out of existence. It is not only gardens but golf courses, bowling greens, tennis courts, playing fields, allotments if they are owned privately, almost every factory in the country, a large number of shops and offices, banks, warehouses, even builders' yards and yards used for stacking timber for seasoning to build houses. Do you think you are going to stimulate housing by these proposals? The experience of the last experiment ought to let the House know what the effect on housing is likely to be. You had inquiry after inquiry. You had Commission after Commission, including the right hon. Gentleman's own inquiry and his own Commission, which all arrived at the same conclusion, that is was largely the operation of these duties which killed housing by private enterprise stone dead. When the Chancellor of the Exchequer speaks about the general support which his proposals have received from municipalities in the past, I reply that a large part of this support was given when these proposals were still in the air and before they had ever had any practical experience of the operation of any of the land taxes.
But what have the municipalities to say about the operation of the right hon. Gentleman's land taxes? On the 28th July, 1917, the Local Government Board sent a circular round to local authorities to know what their opinion was as to the effect on housing of the land value duties. There was not a single local authority that had a good word to say for the proposal. A large number condemned them, and a large number of municipal corporations, including Epsom, Carmarthen, Chester, Crewe, Hull, Lewisham, Wandsworth, Wallsend, York, and 48 rural and urban district councils, passed an identical Resolution asking the Government to repeal Part I of the 1910 Act at the earliest possible moment. In these circumstances, so far as the effect on housing is concerned, I believe the effect of the present proposals is likely to be damaging, and that if they were ever put into operation they would 419 be catastrophic. The truth is that this is not a genuine attempt to tackle the problem of betterment. It is not a genuine attempt to deal with the development of undeveloped land. It is a fresh direct tax upon hundreds of thousands of small people. It is a fresh addition to the cost of housing.
It may have been designed—very probably it was—with the idea that it would harass one particular class, but it will oppress and harass every class in the community. The Chancellor may have aimed at the leading bird. What he has done is to brown the whole covey. The Government are deluding hon. Members behind them—I have given my reasons for thinking so—when they tell them that the valuation can be easily, quickly and cheaply accomplished in 18 months. If they get it done in four years, they will have done more than twice as well as the right hon. Gentleman the Member for Carnarvon Boroughs. There may have been some hon. Members opposite who thought they were setting out to redress the grievances of which I have spoken. There have been other hon. Members who thought they were setting out "to do the dukes down." The Government have let their followers down. They have sold them a pup. They have tabled a scheme which will impose a new direct fresh tax upon every factory, every shop, every trade and industry, and upon hundreds of thousands of small houses, and it will be directly reflected in almost every rent that is paid. Let the Government go on with their proposals. Let them see them through. You will get what is coming to you from the electorate. If after two years of the most profound cogitation you can only produce this as an alternative to a tariff against a foreigner, you can go right now and buy your mourning bands for the corpse of Free Trade.
§ Mr. MacLAREN
I am sure the right hon. Baronet has been very thoroughly enjoying himself. Let me take his final note, which was that this was an alternative to taxing the foreigner and keeping him out. My reply to that—and it will be the reply of my colleagues on these benches—is that, if an election takes place at any time, we will ask the voters whether they are in favour of taxing food or taxing land values. It is 420 interesting to note that the right hon. Baronet allowed the truth to escape occasionally. He said that, if foreign food came in, the price of agricultural land would fall but, if you had a tariff to keep it out, the value would go up. But who is getting it? Now you will understand why there is an alliance between Protection and land monopoly, and why there is a close connection in the reasoning which leads me to believe that there are two substantial pillars upon which any State must stand. The first is Free Trade and the other free production, free exchange between nations; no barriers between labour and the right to use the land. Another interesting thing is this: The right hon. Baronet tried to draw the harrow over our nerves about the poor man who might have invested money with a view to obtaining an annual return, and another who put his money into land and did not exact from the community high interest.
That is an interesting psychological feature of the Conservative way of reasoning. They will persist in mixing money invested in the production of wealth—money put into industry to produce wealth—and money spent to buy the right to keep your fellow man from using a piece of land. A man buys a good site and keeps it until the community wants the land, and then he takes the whole value of his patience. I cannot imagine how any man can stand in the House at this time of day, address an intelligent audience and mix up the two things, the investment of money in the production of wealth and buying a right of control over the land and the right to exact from his fellow man a full toll if he wants to use it. How he thinks he is going to capture votes by that reasoning and put the Labour party out of office, I do not know. He says that things have changed since 1909. They have. I remember those days, because as long as I can remember I have been a single-taxer. Many men in this House have wandered through various phases of political ideas and theories, but I am still the same. Land values taxation was then, and still is, my chief interest. I can well remember 1909, when you had only to mention the taxation of land values to arouse a thousand devils of opposition against you. Who would have thought that hon. Members opposite, in fairness to themselves to-day, cannot 421 argue against the hard facts facing them in everyday life? Who would have thought that the Leader of the Conservative party in the House of Commons would have said that the same fact is facing them in the development of the arterial roads, and that they notice that corporations who want to extend and make their towns better are up against the gentlemen who have been "investing" in land and looking well ahead? These gentlemen are not investing money in an industry, but are levying their toll upon local authorities. These things are not arguable. They are self-evident to any hon. Member, it matters not to which party he belongs. I would rather the change had taken place as the result of a process of reasoning, and of deduction from unchallengeable premises. Would to God men would reason, and not be driven into acceptance of principle by the force of hard economic circumstances! Those who are opposed to us have had to wait till they were driven by sheer experience.
Let me come to what the proposition is that the Government are trying to put forward. What is behind the idea outlined in the speech of the Chancellor of the Exchequer? Constantly throughout the speeches that have been made in this Committee one hears reiterated the statement that these are to be taxes upon land. Will the Committee forgive me if I say that that is not so? The whole idea behind the taxation of land value is that we are anxious to remove taxation from off industry and off the food of the people, and that we are anxious to remove rates from off the houses of the people—rates that are making housing impossible. We are anxious to take the brake off industry, and to call upon ground rent to pay its toll. This is not taxation upon industry, but it is taxation upon rent or land values.
Who creates the land value? We have heard to-day that sometimes private individuals create it. We lay it down as an unchallengeable proposition—for we challenge anyone to take it up and meet it—that the value of land is created not by any individuals, but by the action and requirements of the community at large. It is a value that you cannot say belongs to A or B. You cannot cut it into pieces and parcel it out and say: "This piece of land value belongs to A 422 and that to B." It is an indivisible entity. Land value is the economic expression of the demand of the community to use certain pieces of land. With regard to the idea that any private individual can create land values, we are told to look at Letchworth, at what Sir William Morris is doing at Oxford, and to look at Bournville. The reply to that is easy, very easy indeed. If any private individual believes that he can create, by his own individual effort, communal value in land, then why does he not go to the Sahara Desert? Why does he not go to the top of Ben Nevis?
I will put it this way. The value of any improvement created by an individual is determined by the value of the site in which he places it. No man would be mad enough to go to the Sahara Desert, and I knew that hon. Gentlemen opposite would resent my proposition. On the face of it, it is laughable. The reason why Sir William Morris goes to Oxford, or someone goes to Bournville or Letchworth, is that there is a communal demand for the use of that site for certain purposes. [HON. MEMBERS: "No!"] I am speaking entirely of land values. At the outset we are anxious to segregate and keep apart the value produced by labour, organisation and brains, from that value which is indivisible, and which is caused by and due to the presence of the demand of a community round about a given area. Go to the centre of any large city. Is it not a fact that business men prefer to invest a considerable amount of capital in rearing great improvements in the heart of your cities? Why? Because the value of the site requires such an improvement. The value of the improvement is an expression of the value of the site upon which it stands. To say that individuals create a land value by going here or there or elsewhere, is not true to facts. The value of the land will determine the operations of industry on that particular site, and the land value belongs by right to the community.
The whole process of modern taxation has to be challenged, either to-day or at some future date. We listen to Debates upon Budget after Budget and to hon. Members objecting to new imposts because they will hinder the development of industry. At the present moment there are currents of thought 423 running throughout the country, one of which says that direct taxation has come to the point of diminishing returns. What is the alternative? If you will not have any more direct taxation, under the present canons of taxation, it can only mean that you are asking for more indirect taxation, which means reducing the wages of the working class, and means an attack upon the standard of living of the people. All the canons of our modern system of taxation stand condemned.
The Chancellor of the Exchequer the other day, rose in his place to give a warning speech to the nation. It was interesting to watch the faces of hon. Members on the other side. They know that taxation is inevitable. More taxation is required. If they will not listen to those of us who say, "Stop putting this dead-weight upon the industry of the nation and indirectly upon the necessaries of the people," they must traverse the suicidal road of continuing to tax industry. There is no escape from it. I am sure that the more the public of this country, I mean the working people, become conscious of the ways of this House, the more they will come to see the devilry of indirect taxation and how it operates against them. If, as the result of a strike or a lock-out, they get one farthing more an hour, they may claim a great trade union victory. But a Chancellor of the Exchequer, on a quiet night, standing at that Box, may increase indirect taxation and take their advantage from them. When the working-class people know that there is a dead set being made for no more direct taxation but for more indirect taxation, I can assure hon. Gentlemen opposite that we shall not fear at any moment going to the country on the taxation of land values. There are only two ways: Either that you shall turn the weapon of taxation upon the value of the land, or that you shall continue on the ruinous road from which you cannot turn unless you have an alternative basis on which to levy your taxation.
Take local rating for a moment—because it is correlated with national taxation. We heard the right hon. Gentleman the Member for South Croydon (Sir W. Mitchell-Thomson) say that the present taxation system has 424 ruined housing. It would not be fair if I were to reiterate the story often told in this House of how our present system of housing in the local areas is directly attributable to the suicidal form of rating in those areas. I cannot illustrate the point better than with a parable that used to be told in 1913 by the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George). He said in a memorable speech in Middlesbrough:You can imagine for a moment that I am an assessor "—No doubt the town would quake at that—operating under the modern rating system and that when I go outside Leeds, to the moors, I come across the owner of the moors. I say to him 'What are you doing with this land?' 'Oh,' he says, 'I am just holding it up for so many years' purchase, because the Leeds Corporation want it for a reservoir for the Corporation.' And I, as assessor, say, 'Give me your hand. I suppose you want that money for that land because it is disturbing your pheasants.'
§ Mr. MacLAREN
Oh, grouse is it? You see, I am not accustomed to shooting. Make it "disturbing your 'pheasants,'" or your "grouse," whichever you like. I would rather that hon. Members paid attention to the point of the story than to the details. The assessor was saying:Such men as you make the country rich.Coming down the road I then meet a certain manufacturer in the town who has improved his factory. He has made it more spacious and more comfortable for the workers. I go along and I say: 'Have you improved this factory? '—That was before the De-rating Act!When he says he has, I make a new valuation, and levy an increased rate on the man because he has improved his factory.Then I meet a man who has put a bathroom into his house. I say: 'Have you put a bathroom into your house?' 'Yes,' he replies, 'Well,' I say, 'there is another couple of pounds on your rate for daring to do so. Do not let me hear of your doing it again!'Then I go down to the slums, and when I meet the owner of the slums I say to him: 'Have you improved the property since I was here five years ago? 'He replies, 'No, Sir!' So I say: 'Well done, thou good and faithful servant. Go down to the rating office, and ask them to reduce your rates 12s. 6d. in the £.'425 The right hon. Member for Carnarvon Boroughs, after giving that parable in 1913, said:Do you think I am caricaturing? That is the rating system.If you build houses, you are rated and penalised for doing so. Leave the land vacant, and under the administration of the late Government you pay no rates at all. Then you wonder why we have a housing problem.
So much for the viciousness of local rates. [Interruption.] I would say this directly to the Noble Lady the hon. Member for the Sutton Division of Plymouth (Viscountess Astor). She is extremely anxious, and I recognise that, within the ambit of her reasoning on these matters, she has done extremely able work. She devotes much time to hospital work, and to the sort of casualty work which mankind stands in need of. I would say to her, and to those who are opposed to us on this matter: "How much of the disease which you are trying, in your humanitarian way, to remove, is directly attributable to the bad results of housing due to the rating system of this country? "
§ 5.0 p.m.
I do no hospital work at all. The things in which I am personally interested are open-air nursery schools, housing, temperance and education. I do not believe in dealing with things after they are done. I want to go to the roots.
§ Mr. MacLAREN
I would not misrepresent the Noble Lady. I noticed once or twice while I was speaking that she seemed to resent my saying what I said.
§ Mr. MacLAREN
I thought that she was particularly interested in those enterprises. I have noticed in this House how extremely anxious and enthusiastic she always is in getting the Ministry of Health to support such enterprises.
§ Mr. MacLAREN
I would ask the Noble Lady to notice what I have said, that millions of public money are spent and millions of taxation levied upon the industries of this country in order to try to cure diseases which are constantly perpetuated 426 by the housing system of this country, and directly attributable to the vicious local rating system. I will take Stoke-on-Trent, which I represent in this House. There we can build a house of three rooms, a kitchen and a bathroom, for 10s. a week, but when we levy our rates upon it, the sum jumps to 19s. 6d. a week, and we cannot let it unless at an uneconomic rent.
I suppose that for a very long time men will be emotional and sentimental. They will shed sad tears when they see men moving down the centre of the stream. They will devise many well-intentioned schemes to pull those fellows out of the stream, but they will never think of going up the stream to see who threw them in. With regard to the whole system of land holdings, the contrast has become clearer by virtue of modern or recent administration and the passing of Acts by this House. There was a time when you were able to go to a country district and ask the owner of land, "How much do you want for this land?" after which you were able to make a comparison between the amount and that at which he was rated by the local rating authority. There was a time when I could go outside Glasgow and ask landowners what was the figure at which they were rated. Sometimes they refused to say, but we had a very accommodating man at the municipal offices who would tell us. We could find land rated at half-a-crown an acre, but when we wanted that land for housing, it reached a sum of £600 and sometimes £1,000 an acre. I do not receive a shock when a landowner tells me—as landowners have told me before now—that he wants £800 an acre for his land. The other day I asked a landowner just outside the Potteries why the land there was worth £800 an acre, and he said, "Well, it gets the air from Buxton Moor." I said, "Can you tell me anything which the landlord has done to make it worth £800 an acre? "I said, "Who sent the air? You?" He then said, "It is on the sunny side of the hill." I said, "Who sent the sun?" I asked him to tell me something that the owner of the land had done which put him in a position to ask from the local authority £800 an acre, and he could not. Nor can any landowner. We are only saying that if the land is worth £800 an acre or £1,000 an acre, or, as in the 427 London area, £3,000,000 an acre, then that is the data upon which we are going to operate, and we are going to abolish the old, vicious data which gave a false value for rating and taxation. We are going to take the market value as the basis.
The right hon. Gentleman opposite said that the valuation is going to be costly. I know it is. The right hon. Gentleman the Member for Carnarvon Boroughs and I know a good deal about this. In the past he was in the forefront of the battle; I was somewhere behind! We wanted a valuation. I and my colleagues protested in Glasgow and elsewhere against the procedure of the right hon. Gentleman in going in for his form of valuation at the time. I knew that it would be costly and not easy to work, that partly trained men would have to go into difficult propositions in order to make balances and adjustments, and that it would give much cause for litigation. We knew that. But the right hon. Gentleman was not the sole driver in the cart at that time. He had a little coterie behind him who represented the vested interests, which were holding him back. He had to make concessions, and the valuation was costly and almost futile. Is that agreed? If the right hon. Gentleman who has made so much of the costliness of the valuation to-day will be good enough to get up in his place and reply to this challenge, I shall welcome him. If the valuation is costly, long drawn out and, like a snowball, gathers and gathers as it proceeds in its accumulation of bureaucratic officialdom, if the right hon. Gentleman rejects the proposal, will he accept the landlord's valuation this year?
I should be willing for my right hon. Friend the Chancellor of the Exchequer to scrap valuation to-morrow on the grounds of expense and long and protracted litigation, if the Opposition would be willing to accept this proposition, namely, that we ask the landowners of England and Scotland to state the value of their land, with this little proviso, that if they make a statement the amount will be taken both in respect of Probate Duty and of sale. Will the right hon. Gentleman accept that? Will anyone accept it? Silence! If valuation is to be carried through and the landowners 428 are not willing to fall in with my suggestion, it is thrown upon the State to carry through the valuation alone.
Apart altogether from what one may feel on this matter, it would be sublime arrogance on my part to make out that land valuation is an easy job. It is full of complexities. It is full of difficulties. When the commission has been formed, there must of necessity be quite a number of that commission who have never done this kind of valuation before, and in the very nature of the case there are bound to be difficulties and traps and any amount of opportunities for litigation to arise. As I say, there is no alternative before us but to accept governmental valuation. I wish with all my heart—and my right hon. Friend knows it—that we could have expedited valuation and used to some extent that part of the previous valuation which was carried through by the right hon. Member for Carnarvon Boroughs from 1910 to 1915. But perhaps the Chancellor of the Exchequer may have some views upon this matter, and it is better that I should keep clear of it until he comes to the more meticulous details of the proposition which he has in mind.
During the course of the Debate many references have been made to the Budget of 1909–10. I want to deal with them for a moment. The right hon. Gentleman the Member for West Birmingham (Sir A. Chamberlain) got up in his place either the day before the Budget statement was made or just after it was made, and asked how much it had cost to carry through the valuation of 1909–10, and what had been the sum total of the taxes secured. I want to assure the right hon. Gentleman, and the right hon. Member for South Croydon, that there is really nothing in that point at all. I think that the right hon. Gentleman the Member for Carnarvon Boroughs will admit that the only tax in his Budget which was in any way a land tax was the undeveloped land unit. The other taxes were not in any way a direct levy upon the site value of land at all. There were four taxes brought in—the Increment Duty, the Reversion Duty, the Mineral Rights Duty and the Undeveloped Land Duty. He had to bring in these taxes in order to get a concurrent valuation carried through at the time.
429 I am not concerned with the cost of valuation, provided that it is carried through effectively, because it will be a final and a splendid structure which has caused much attention and labour in the laying of its foundation. This initial valuation will be a new Dooms day Book, and although it may cost much in its initial stages in regard to collection, hon. Members have no right whatever to make comparisons between the income of the tax derived from an impost of land taxation and the initial cost of valuation. The initial cost of valuation will be enormous, but if the subsequent valuations come speedily and are not too far away, one from the other, there is no reason why the subsequent valuations based on the primary or first valuation should not run as easily as clockwork, and cost the State little or nothing at all. Therefore there is really nothing in the argument about the £5,000,000 for the cost of collection, which, I dare say, hon. and right hon. Gentlemen opposite will trot about the country. There is nothing in it at all. It is only £5,000,000—[Interruption.] Yes, hon. Gentlemen opposite know that the subsequent valuations will cost us little or nothing. But the income from a tax on land values based upon them will far outbalance the cost they will incur. They know that, hence this rooted opposition to the first valuation.
Before I leave the Budget of 1909–10, I wish to say that the right hon. Member for Carnarvon Boroughs was not a free agent, although many a time I used to think that with his power over his party in those days he could very often have checked the intimidating influences behind him. When the courts through their legal decisions made the Budget taxes unworkable, promises were given by the Liberal party in those days that in subsequent Finance Bills these things would be rectified, but they were never carried through. [An HON. MEMBER: "The War intervened!"] The War intervened, and we know what happened. The right hon. Gentleman the Member for South Croydon said—and this is very important—" You will go to the landowner and you will say to him, 'Despite the fact that you bought the land at its statutory value, despite also the fact that you are going to be taxed under Schedule A, we are going to put 430 another impost upon you.'" I want to remind him of this fact—it must have escaped his memory—that it was agreed that if anything was paid by any landowner in respect of his land under Schedule A, he would be relieved to the extent of an equivalent amount if a land tax was imposed upon him.
I do not know what the Chancellor of the Exchequer thinks about this, but in the past, when faced with the same problem, we made an agreement that the landowners should not be taxed twice and that under Schedule A they should get remissions of the amount charged upon land taxation. I am sorry that I am taking so long, but I think it will be agreed that I seem to be rather obsessed with the whole question. In fact the hon. Member for Eastbourne (Mr. Marjoribanks) paid me a great compliment the other day when he called me a fanatic. It is very interesting to be called a fanatic or a crank, it has advantages. I remember on one occasion Mr. Speaker was going to rule me out of order because he thought I was going to use a certain phrase. But I assured him I did not need to mention it, because the whole House knew what I meant, and therefore he could not rule me out of order.
The proposals laid before the House differ from the Budget proposals of 1909–10 in this respect, that they are more direct, more simple, and they are the greatest advance that I have ever known in this or any other country in attempting to remove taxation from industry and to begin imposing some taxation on land values. I want to congratulate the Chancellor of the Exchequer on one thing. In the valuation proposals of 1909–10 the valuations were more or less private and secret. You could not find out the valuation unless you were a solicitor or an interested party. The Chancellor of the Exchequer has taken the bold course; a course justified by practice in other countries, and that is that after the valuation has been made it shall be open to the light of inspection, so that one person can compare the value of his site with the value of another. The open inspection of sites valuations brings about speedy valuations.
In New York they have a unique system. The blocks are marked in charts. 431 You can go into the City Hall and see the blocks of New York marked out on the chart. Every landowner in New York knows that he has a land tax to pay. No notices are issued, but the landowner knows that his block stands charged with a land tax and that he can go to the City Hall and consult the chart. The chart shows the amount of land tax that he has to pay. If he does not pay the land tax within the given time, anyone can go off the street in New York and by payment of the land tax take a lien on the plot, and he has a first charge on the plot until the rate, with interest, has been paid. Publicity of valuation causes expeditious valuation, keeps the valuation up to date, and removes causes of suspicion between one landowner and another. That is a good thing. There is one thing about the speech of my right hon. Friend the Chancellor of the Exchequer which I regret. I understand that minerals are to be exempted. I regret that more than I can say, because minerals have an enormous value. I hope that the definition of minerals will be so defined as not to include surface land.
§ Mr. MacLAREN
I would have liked all these things to have been included, but if there are to be certain concessions made, I hope that the definition Clause will be so drawn that no escapes will be possible. I thank the House for the patience and toleration that they have shown for one who feels deeply on this matter. I only wish the right hon. Member for Epping (Mr. Churchill) had been in his place, because I would have liked to bring before his notice a little classic, which I am sure he would have liked to hear when I brought it to his memory. The right hon. Gentleman is a master of language, of simile and of dexterous, flashing, brilliant eloquence. He knows much more than I do the value and the weight of words. He knows how so to use his words that they fly directly to the spot that he means them to reach. As a master of language, I will quote his words. This is what he said at Drury Lane Theatre on 20th April, 1907. [HON. MEMBERS: "Oh!"] Yes. The Church-illian mind goes like the hands of a clock, 432 ever moving from point to point. I am from this particular 1907 point. This is what he said:We have to face all the resources of a great monopoly so ancient that it has become almost venerable. We have against us all the modern money power. We have to deal with the apathy and levity of all sections of the public. We have against us tie political machinery of class and privilege represented by the Second Chamber in the State. There are only two ways in which people can acquire wealth. There is production and there is plunder.I have never used that word—Production is always beneficial. Plunder is always pernicious, and its proceeds are either monopolised by a few or consumed in the mere struggle for possession. We are here to range definitely on the side of production, and to eliminate plunder as an element in our social system. The present land system hampers, hobbles and restricts industry. They, the landlords, were resolved if they could to prevent any class from steadily absorbing under the shelter of the law the wealth in the creation of which they had borne no share, wealth which belonged not to them but to the community, wealth which they could only secure by vexatious obstruction of social and economic progress, far more injurious and wasteful than could be measured by their inordinate gains.How the whirligig of time brings changes! Who would have thought that the author of those words was the right hon. Gentleman who tried to save the Conservative party by bringing in that fatuous futility called de-rating?
Mr. LLOYD GEORGE
This is my hon. Friend's happy day. When these occasions arise, too often there is a feeling of disillusionment, but I am very glad to find that in the case of my hon. Friend the Member for Burslem (Mr. MacLaren) he is very happy. I congratulate him upon seeing the coming accomplishment of a great many years of hard work in converting public opinion to the acceptance of this idea, the taxation of land values. We have heard this afternoon from the right hon. Member for South Croydon (Sir W. Mitchell-Thomson) a notable speech, and it gives me very great pleasure to congratulate him upon it as a Parliamentary performance. I will not say that I did not agree with a single sentence, because there were a few sentences with which I did agree. That makes me an impartial judge of his speech as a performance. It was a case very powerfully 433 presented and marshalled. There is an advantage in that, because it enables those of us who take a different view to hear, powerfully presented, the worst that there is to be said against these taxes.
The right hon. Gentleman left us in no doubt as to the attitude of the Conservative party in regard to these taxes. The right hon. Member for Epping (Mr. Churchill) has arrived about 10 minutes too late. He might have heard a very brilliant passage of oratory, which I have no doubt he will have many other opportunities of hearing, in support of this particular form of taxation. Until the right hon. Member for South Croydon spoke, I think there was some doubt as to the attitude of the right hon. Gentlemen sitting alongside him and hon. Members behind him. I heard part of the Debate on Monday and I read it all. I was not quite sure at the end of that perusal whether the Conservative party mean to fight these taxes. There were bitter memories of 1909–10 as the result of the conflict at that time. How bitter those memories are one can learn from the way that the references to that conflict are greeted after a period of 20 years have elapsed. I think the right hon. Gentleman certainly means to fight these taxes root and branch. [HON. MEMBERS: "Hear, hear!"] The cheer was very much more vigorous in 1909. There was a greater air of conviction about them in those days. One would like to know, because unless the principle is challenged, these two days' Debates are wasted.
It is no use discussing the details of a Bill which has not appeared. [HON. MEMBERS: "Hear, hear!"] Well, they cannot appear until a Financial Resolution of the House of Commons has been passed. There was the same experience in 1909, and the Conservative party on that occasion realised how futile it was to go on discussing the proposition and asking questions upon matters of detail which would be solved the moment the Bill appeared. [HON. MEMBERS: "Solved? "] It was solved in the sense that anyone would know when the Bill was printed what the proposals of the Government were. To ask questions on a Resolution of this kind with regard to what is going to be included in the Bill, is just as much waste of time now as the 434 Conservative party realised it was in 1909. If there is to be a challenge of the principle, then this is practically a Second Reading Debate upon the question whether we ought to tax site values or not.
I am going to deal with the points presented by the right hon. Gentleman. I will take the objections which he raised. He said: "I object because of the staff you have to create, and the cost to the country." I believe he is a supporter of tariffs. Has he ever put that question to himself with regard to tariffs? Has he ever asked himself about the staff that has to be created for tariff purposes? Let him look at the increase of the Customs House staff which has been the result of the very few tariffs that have been created. With regard to the tariff on motors, silk and a few other things there has been a very considerable increase in the staff. That has been due entirely to a very few tariffs. Has it ever occurred to the right hon. Gentleman what will happen when every commodity, every article which is imported into this country is subject to a duty, with exemptions, drawbacks, grades, shades, scales, all kinds of commodities being in one scale at a certain point, and in another scale at another point? The number who would be employed in regard to tariffs would not be the few thousands about which the right hon. Gentleman complained, amidst the resounding cheers of hon. Members behind him, but would number scores of thousands if a tariff was enforced in this country.
The right hon. Member naturally objects to it here because he objects to the tax, but that is a very different thing to objecting to a tax because it creates a staff. If it is a duty of which he approves he is quite willing to go much further with regard to the cost of administration. He was a member of the last Administration which brought in a Bill for revaluation. I do not say whether it was a good or bad Bill, I really forget the adjective I used; and for the purpose of this argument it does not matter. If the valuation was a good one the cost was justified, if the valuation was not necessary the cost was not justified. But the cost was enormous, and if the right hon. Gentleman will make inquiries in the counties and the towns and cities he will find that the expenditure was very 435 considerable. It ran into millions, and I should be surprised if before the end it will not cost almost as much as the one he is denouncing. The point is not whether you should create a staff—al though there is of course a limit as to the cost—but whether the tax is a good one or is not. The other consideration is more or less irrelevant.
There has been a good deal of denunciation of this valuation, and as I was responsible for the legislation which inaugurated it I should like to say a few words upon it. These taxes were abolished in 1920, but it was part of the arrangement made at that time that if the taxes were abolished the valuation was to remain; and I shall have something to say about the way in which that pact was broken. The right hon. Member for West Birmingham (Sir A. Chamberlain) was Chancellor of the Exchequer at the time when the taxes were abolished and in his Budget statement he said:But whilst we propose to terminate the duty, we attach great importance to the existence of a State valuation of all the land and buildings of the United Kingdom based upon an up-to-date system of values, which would be available for the information of the Government and, within proper limits, of other public authorities, and which might be utilised in connection with any taxation proposals of the future or with a reform of rating.Then there are some words which are still more significant, and I ask hon. Members who say that that valuation was £5,000,000 thrown away to listen to these words. The right hon. Gentleman was speaking then not merely on his own behalf but on behalf of most right hon. Members sitting on the Front Opposition Bench. I was not in the House at the time; I was away.In our view it is essential that there should be a thoroughly equipped and skilled State Valuation Department whose services would be available for the use of the Government.Then Mr. Kennedy Jones, who was Conservative Member for Hornsey, interrupted and said, "Why not sack the lot?" to which the right hon. Gentleman replied:I will tell hon. Members why not—because we should lose a great deal more money than we should save. We are confirmed in the view of the necessity for the continuance of this Department by the 436 great assistance which has been afforded by the Valuation Staff during the War in the requisitioning of land for War purposes, and by the proved worth of their services in connection with the acquisition of land for public purposes, such as housing and land settlement, as to which the Government has taken further large financial responsibilities. Apart from their revenue functions in connection with Death Duties, the Valuation Department will render such assistance to other Government Departments as occasion may require. For this purpose it is essential that the system under which particulars of sales and leases of land are reported to the Inland Revenue should be continued in order that the Department may be in possession of the fullest information."—[OFFICIAL REPORT, 19th April, 1920; col. 85, Vol. 128.]I am not at all sure that the right hon. Member for South Croydon was not in the Government at that time. I believe he was. At any rate, the Leader of the Opposition was in the Government and, indeed, most right hon. Members on the Front Opposition Bench were in the Government at that time, and on this glowing defence of the valuation set up by the 1910 Bill I am perfectly satisfied to rest its defence. Then comes the question of time. The right hon. Gentleman said that it took four years. I take his figures, because I have no doubt that he has examined the matter. When I interrupted it was not to challenge him, but to know how far it had gone by 1914, and I understand that it was 79 per cent. that had been completed.
Mr. LLOYD GEORGE
I am not at all surprised. Why? It is one of those cases which I have always urged the Chancellor of the Exchequer to take as a warning. If anyone will take the trouble to look at the Act of 1910 he will know why it took all that time. I am not referring merely to the difficulties I had to get the Bill through, though with my critics in front of me and critics behind me it was a difficult thing to get a Bill at all, and I was much more concerned with getting a valuation than I was about the actual amount of the duty. The Bill was fought in this House for months. The right hon. Member for West Birmingham and I confronted each other day after day and when I looked across at him at 6 o'clock in the mornings I wondered whether I was looking as pale as he did. We hardly ever separated 437 until one or two o'clock in the morning—and this fight went on from April until December. There has never been a Bill that has taken so long or that has drawn so much on the physical and nerve resources of those engaged in it. I am proud of the fact that while the right hon. Member for West Birmingham and I fought each other night after night neither of us ever lost his temper.
In order to get the Bill through under those conditions concessions had to be made, sometimes to those behind me, certainly to those in front of me, if we were to make any progress. We were able to expedite proceedings a little by the Kangaroo, which was invented at that time, and anybody looking at that Bill will see such a schedule of exemptions, restrictions, reductions, and limitations—I will not say that it surpasses the wit of man to interpret them because a very able Department was set up—that it was bound to take time. I gave in; I was far too meek. But I have great confidence in the Chancellor of the Exchequer, and it is upon that that I base my confidence that the valuation will not take too long. There is only one way to get a valuation, and that is by having a simple and direct principle of valuation.
It may interest the right hon. Member for West Birmingham to know that I have not seen the Bill. [An HON. MEMBER: "Why not?"] That is another question; but if the right hon. Gentleman is under the impression that I have some information which he does not possess, which I am in a position to convey to him, I have not. [Interruption.] I assure the Noble Lady the Member for Sutton (Viscountess Astor) on my word of honour that I have not. May I commend to the Chancellor of the Exchequer, if he has not already determined on the draft of his Bill, the Bill which was introduced by the right hon. and learned Member for Spen Valley (Sir J. Simon) in 1924? It is a Bill for the Rating of Land Values (No. 2) Bill. He will find there a very simple very direct, and a very unequivocal definition of land values which is to be the basis of taxation. I earnestly commend the Chancellor of the Exchequer and the Attorney-General, who I have no doubt will be engaged in the 438 drafting of this Measure, to spend a few minutes in studying the draft of the definition of land values suggested by the right hon. and learned Member for Spen Valley as the basis of valuation.
A good deal has been said about the failure of the 1909–10 Act. Will the House extend to me its indulgence? I have never before, either here or elsewhere, occupied any time by defending it. The reason is very simple. In the course of a prolonged political life you leave a very extended front for defence. You are liable to be attacked here, and attacked there, and if you begin to defend yourself against every attack on what you did in nineteen hundred and this, and eighteen hundred and that—because I go back to the eighteen hundreds—then you will have no time for the real controversies of the hour. Therefore I cannot undertake to defend every sector of so long a front, especially as up to the present—if hon. Gentlemen will not mind my saying so—I have been too much bombarded by what used to be known as "pip squeaks." The bombardment is now by heavy artillery—by the right hon. Gentleman the Member for West Birmingham and the right hon. Gentleman the Member for Croydon. Now that I am getting a real heavy bombardment in this Debate I am bound to answer and to counter-attack. May I say another thing? The duties of 1909, I can see from the course of these Debates, have become a definite matter of urgent public importance for the first time since their abolition, and therefore I am bound to defend them.
It will be asked why were these taxes abolished, and why did they, according to the statements which have been made, not realise the estimate? I take first the Reversion Duty. The Reversion Duty was in a sense a Death Duty on leases and as hon. Members know there was not very much time for reversions to come in. There were no great reversions. Therefore there was nothing of value. It was, admittedly, an occasional duty and it depended upon the lapse of leases of very great value and nothing of that kind came in. When we come to Mineral Rights Duty that was converted into a royalty charge and produced a very substantial sum. But take the other two because they are relevant. Take, if you like, the Increment Duty. It was the only 439 duty which could be said to give any prospect of a very considerable sum in the future. But I never said that it was going to produce anything of substance for some years. The datum line was the date of the valuation. The right hon. Gentleman himself has said that the valuation, for the reasons which have been given, did not come into operation in the country and when the War came these things did not count. There was not much buying and selling then and, as far as the Increment Duty is concerned, it never really had an opportunity of beginning.
Now I come to the Undeveloped Land Duty. I never had a high estimate there. I never gave a high estimate of the return. It was only a halfpenny tax at the best and I never estimated a big return but during the passage of the Bill through the House of Commons it was cut up by exemptions and reservations and postponements until the amount which I had estimated became at the end a very small amount and I realised that its only value was that it provided a basis for valuation. That was how I regarded it. The right hon. Gentleman said that I had had to grub up my fruit trees. I will tell him why. It was because they were too severely pruned and that is a lesson to the Chancellor of the Exchequer. Anybody who knows anything about fruit-growing knows that you can see at once which buds are the fruit buds. Unfortunately the knife cut too many of the fruit buds. I advise the right hon. Gentleman to guard against that possibility, to keep his eye on that, and not to allow those buds to be cut, otherwise he will get no return either.
I come to another question with regard to the valuation. The valuation, in consequence of all these very complicated exemptions, led to a good deal of litigation, but it is no use talking of these taxes as if they were the only taxes that led to litigation. There has never been a tax yet which has not led to litigation. Consult any Law Officer of the Crown. Consult the hon. and learned Member for Fareham (Sir T. Inskip). He knows it. Most of the duties of Law Officers representing the Crown are concerned with fighting cases for the Revenue and all the taxation laws—I was almost going as far as to say all the 440 national rights—which we have to-day are the result of conflict between the State and the lawyers. I cannot recall a single Budget of any party which has not contained amendments of the law with reference to decisions of the Courts.
All Revenue Bills are the results of little decisions of the Courts which have made gaps in the dam. The water begins to flow through, and everybody knows that unless you close up the gap it will be widened. Had it not been for the fact that the House of Commons has had constant conflict with the courts of justice, on these things, the Income Tax return to-day would not be one-tenth of what it is because of the ingenuity of lawyers. They can get over this, and get round that, and get through something else—and they do so. It happens year by year that they succeed in doing so and you have the same experience as the experience which I had in regard to the taxes of 1909. But I presented too great a front because of exemptions. Simplicity of the basis of valuation is the best guarantee for the right hon. Gentleman the Chancellor of the Exchequer against litigation of that kind. There were several cases when the War came which more or less destroyed the tax in the absence of amendments made in the law by this House, and I could not propose amendments of the law in this respect from 1914 up to 1919. We had a far more terrible task to think about then. I see that somebody had time in 1917 to try to get up evidence against the land tax. I was too busy to defend that. There were five years gone, and the Bill only came into operation in, I think, August, 1910, and we could not amend it.
Then, it is said, "Why did you drop the land tax?" I say, quite frankly, that it was a Coalition Government. I am making no complaint against my old colleagues. I must say that they gave me extraordinarily loyal support in the carrying through of great progressive Measures which they might easily have opposed if the Government held been a purely party Government of their own colour. I say so at once. Let them not think that I am criticising them in the least in regard to that. There were such great progressive Measures as the lowering of the franchise, women's franchise, reforms in India, education and what 441 was, considering that they were a Unionist party, the biggest concession of all, Home Rule for Ireland. May I also remind hon. Members of another Measure which bears upon this very problem? In 1919 they agreed to the Land Acquisition Act. I agree with everything said by the right hon. Gentleman in regard to that Act. I think it has had the effect, in the main, of obtaining land for public purposes at more reasonable cost than was possible before it. This is the point about the Act of 1919. The valuation of land under the Act of 1919 was very largely based upon the public valuation under the 1910 Budget. That was a very big concession.
Therefore I am not complaining in the least in regard to that. But I was confronted with this position. It was impossible to go on with these taxes without amendment of the law. It was a Coalition and the (majority of those supporting it were at least three to one Conservatives, and I would have had to press them. I could not have insisted upon their amending laws which they had fought very strenuously, in order to make those laws more effective. The leader of the fight against land taxes was the right hon. Gentleman the Member for West Birmingham and he was Chancellor of the Exchequer. I would have had to ask him to do so. Any Coalition of that kind is bound to be a compromise, but what was the compromise in this case? The compromise has been very fairly stated in the words which I have read from the right hon. Gentleman the Member for West Birmingham—that the taxes were to go off but the valuation was to remain as a basis for Death Duties, for the purchase of land for public purposes and for future rating. What happened to that compromise?
The Coalition went out in 1922. In 1923 what happened to that bargain? Right hon. Gentlemen, some of them sitting there—the right hon. Gentleman the Member for West Birmingham was not one of them and had nothing to do with it—said, "No, we cannot abolish this valuation; it is part of the arrangement that the taxes are to go but the valuation is to remain. We will leave it to an open vote of the House." And all the Conservative Members voted to get rid of the valuation. Of course the Government 442 were not responsible! Had that been done by Labour or Liberal Members I know what would have been said. This is the first time I have had the opportunity of saying that, and I would not have said it except for the challenge which has been made.
I now come to another point raised by the right hon. Gentleman, and that is as to the merits of a duty upon land values. It has excited a good deal of indignation. Hon. Members have treated it as if it were something which had never been done before in any civilised country. They say that, not merely is it unjust, but that it is impracticable, that it cannot be done. My answer is that it has been done and is being done at this moment. It is being done in some of our Dominions—in some of the greatest cities in the Dominions. It is being done in the United States of America, it is being done in some European countries and it is working well.
§ 6.0 p.m.
Mr. LLOYD GEORGE
Certainly, in addition to Income Tax. There is Income Tax, I believe, in all these countries. In the United States there was no Income Tax, but since the War there has been an Income Tax. I think the same applies to Denmark and New Zealand and New South Wales. I think my hon. and gallant Friend will find that that is the case. Very well, it is being done, and why should it be such an outrage? There was a Noble Lord who was speaking here the other night and who was very angry. He was in a state of incoherent fury about it. [Interruption.] There were very few present, but I was. Why? He and many others here have come to the conclusion that it is necessary to tax bread. Why should the idea of taxing site values, whether they belong to great landlords or to small landlords, be such an outrage? If the Noble Lord had been here, I should have liked to have put him right. I tried to put him right the other day—
Mr. LLOYD GEORGE
If the Noble Lord takes part in these things, he must expect a reply. He referred to some books that I had written in regard to land, and he said that in those books I 443 had said that one of the defects of the present system of land tenure was that the land had been impoverished by the War and the landlords were therefore not in the same position to spend as before the War. I stand by that, but he interrupted me when I spoke about the agricultural landlords. There is a vast difference between the two. While the agricultural landlords undoubtedly have been suffering very severely in consequence of the pressure which has come from war taxation, and are not in a position to do what they are anxious to do, and which a great many of them did do before the War, because they have not the necessary resources, that is not the case with regard to the urban landlords, whose land is going up in value without any expenditure on their part, and going up in value year by year. There is a real distinction. It is not enough to lump the landlords together as if they were all one class, "one and indivisible.' They are two absolutely different propositions.
I do not quite accept the view of my right hon. Friend that this is a step to nationalisation. All taxation is the nationalisation of somebody's property. You are nationalising 5s. in the £ of every man's income. You are nationalising, in your Schedule A and in Death Duties, anything from five up to 50 per cent. at the present moment. That is nationalising property which before belonged to somebody else. All taxation is nationalisation, and it is only to that extent that this is nationalisation. If you acquire land, as you are doing under the Land Utilisation Bill, that is nationalisation, and it is to be used for the right purpose. But a penny in the £ is rather a slow process of nationalisation, and it does not come into operation for two years, and if it is added to at that rate, how long would the process take? Four hundred and eighty years. Really, for the land taxers to expect anything, they must get back to Methuselah. [Interruption.] As a matter of fact, for some reason or other, that is not the case, and I will tell the hon. Member why. He will find at the present moment rates in certain districts of 30s. in the £, annual. There is an appearance there of wiping out all value, but you are not quite doing it. 444 However, I do not want to enter into that argument at the present moment.
The case, I think, is an overwhelming one. The Noble Lord rather ignored, in the examples which he had of his own, and which I am not in the least challenging, the enormous values which had been created, as the right hon. Gentleman the Chancellor of the Exchequer pointed out, by the expansion of towns and cities owing to motor traffic. It is gigantic. I think it is worth while to read to the House one or two illustrations. I wonder how many Members of this House saw the triennial report of the Middlesex County Council the other day. The chairman said that since 1920 they had spent £6,000,000 of public money in making 70 miles of arterial roads. There was a discussion, and somebody got up who had been examining the matter—a councillor—and pointed out that this meant the creation of 740,000 feet of frontage. He pointed out the money which had been made by the sale of that land, a gigantic increase in value which was due to this expenditure of £6,000,000; and he pointed out another thing—which is an answer to the right hon. Gentleman who spoke about the powers with regard to purchase—that to depths from 220 yards to nearly half a mile from these roads the values had gone up, and he estimated the increase in value attributable to this expenditure of £6,000,000 at an increase of £15,000,000.
Take that case. There is an increase which is not due to any expenditure by the landowners—none—and it is an increase which is going on year by year. Men who are in business, in commerce, in finance, in a profession, have to pay heavy taxation upon that increase, and if they have anything to spare, then there is a very heavy rate of Death Duties; but here is an annual increase which is going on. I can give many cases. There is the Kingston by-pass, there is the Kingsway in Manchester, and there is the Edgware Road, where a tube was constructed. I can give cases where land which was worth £50 or £60, and could hardly be sold then, is now being sold at anything between £600 and £3,000 an acre, without any expenditure on the part of the landowner. Is it unfair that a Chancellor of the Exchequer, hard-pressed, should take these values, while he is putting 5s., running up to 10s., upon professional 445 men, and spending £140,000,000 upon public works which are developing these values, when he is putting heavy charges and Death Duties—is it unfair to resort to these means of taxation of men who, up to the present, have escaped?
Most of these cases are cases where you escape taxation altogether. Take the agricultural value, which is all that you can charge in those cases. A man may be receiving £l or £2 an acre in respect of land which is growing in value every year by perhaps £100 an acre. Is it unfair that the Chancellor of the Exchequer should put a penny upon that £100? I appeal to the sense of fair play of right hon. and hon. Members. When there is such very heavy taxation in the country, what injustice is there in calling these in aid to relieve general taxation, and to help the country out of its difficulties?
Earl of DALKEITH
Is it not the case that the owner of land is already paying 4s. 6d. in Income Tax and up to 12s. in the £ including Super-tax?
Mr. LLOYD GEORGE
I say that everybody in respect of income which he is actually receiving is paying Income Tax and Death Duties, but I think the Noble Lord has mistaken my point. That is true with regard to the rural landowner, but if he takes the urban landowner, he is only paying in respect of an income which he is receiving for agricultural purposes, while at the same time, year by year, the real value of the land is going up by £50 or £100 a year. He is paying nothing in respect of that, and he ought to pay. [An HON. MEMBER: "He is paying Death Duties!"] If the hon. Member will just consider it, it is unfair to the agricultural landowner, who is paying up to the last penny in respect of what he receives. On the Death Duties, I agree, they are both on a level, thanks to the valuation of 1910, but when you come to the actual increase year by year, one is paying up to the last penny that he receives, and the other is not, and I do not think it is fair.
My last point is this: The real value of this is not so much what the right hon. Gentleman gets out of his penny; it is the thing that he pointed out, that it is to be the basis of local taxation. What is happening at the present time? It is not merely because of the De-rating Act, although the De-rating Act has impoverished 446 the local authorities very considerably. There are some local authorities where a penny rate does not produce more than half what it produced before, and therefore that balance has to be redressed; but it is a little more than that. The local authorities now are too restricted in the basis of their taxation. They have practically only one tax that they can impose, and I do not know of any other country in the world where that is the case. It is not the case in America, or in Germany, or in France, or in our Dominions. They all have some other resources upon which they can depend, but in the case of our local authorities, with the first great national emergency that befalls them, they are completely at the end of their tether, they have completely exhausted their resources. There are a great many things that they would like to do, and that they know would be of enormous advantage to their towns, and cities, and counties, but they have no means. What is the result? They have always to come to the State, and the State is forced gradually to give a larger and larger percentage of grants. Why? Because the local authorities have been bankrupted very largely by this extraordinary restriction in their basis of taxation. This Measure of the right hon. Gentleman will broaden the basis of taxation; it will strengthen the local authorities: it will give them greater opportunities of beneficial action for the State; and, beyond that, it is in itself equitable, it is equitable as between one taxpayer and another, and it is equitable, as far as the whole community is concerned.
§ Major HILLS
The right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) asked whether the Conservative party would oppose this Measure with the same enthusiasm as they opposed the Measure of 1909. I can assure him that they will. Not only is the attack much stronger, but, unless I am very much mistaken, the defence of the Measure will be much weaker. I plead in aid the right hon. Gentleman's speech itself. Part of it was a defence of his own action in 1920, and the only part in which he dealt with land taxes was devoted entirely to one thing, namely, a tax on the increment value of land, which is not mentioned in this Measure 447 at all. The right hon. Gentleman told us that he had to defend a very extended front. His career proves that, and I do not think that he has shortened that front by his speech to-day. He made a good deal of play with what occurred in 1920, and he excused himself for dropping the tax in 1920. The charge is not that the tax was dropped in 1920; nobody objects to that. The whole charge against this legislation is that it was a dead failure and produced no money.
Mr. LLOYD GEORGE
Not quite that. I was referring to what was said here, that these taxes were dropped with my consent.
§ Major HILLS
I accept that statement. I accept that the dropping of the tax was one of those arrangements that Coalition Governments have to make—the sort of arrangement of which we have had several examples lately. The real gravamen against the system started by the right hon. Gentleman is surely that it took about £3 to collect £l of duty, and for that reason the tax was very properly dropped. The right hon. and gallant Gentleman the Member for Newcastle-under-Lyme (Colonel Wedgwood), who spoke on Monday, told the Committee—and I think that the Committee agreed—that a tax on increment value was the very worst tax of all, and he gave his reasons for that. The right hon. Gentleman the Member for Carnarvon Boroughs seems to me to be guilty of a confusion of thought. People who talk about taxing land values and taxing increment values seem to think that a pile of value is made on which somebody sits, and that the State can get a part of that value. If you could by any means separate from the piece of land that part of the value which was due to the community, it might be a proper subject for a tax, but taxes are not paid by land values; taxes are paid by individuals, and in the present case you are imposing the tax on certain individuals. Those individuals may be quite different people from the class referred to by the horn Gentleman the Member for Burslem (Mr. MacLaren) who bought land and sat upon it, and then extracted a ransom from the community.
The tax which will be imposed by the Chancellor of the Exchequer will fall, not on the exploiter, or the speculator, 448 or the man who withholds land from the community. It will fall on the man who has bought the land in order to bring it into consumption. He is the person who will be taxed. You can, of course, tax land. You can tax anything. You can get some money from the taxation of land, but when I am told that by taxing land it will be freed for production, or made cheap, or be brought into the market, I join issue. The right hon. Gentleman talked of land going up in value without any action on the part of the landlord, and he drew an emotional picture of what occurs when a man holds up his land and the increment value, which ought to go to the community, is absorbed by one individual; and he says that the State ought to take part of that increased value. That may be all very well, but you cannot distinguish between the part that the State has put into the land and what the private individual may have put into the land; and if you tax improvements made by the landowner, you will do a thing which you cannot possibly justify, and which is the very worst thing to do for the community.
The right hon. and gallant Gentleman the Member for Newcastle-under-Lyme is one of the few convinced and unchanging land taxers in this House. I am sorry he is not here, for I want to make some remarks on the speech which he made on Monday. He based his defence of land taxes, not so much on the economic return of the tax but on two effects which the taxation of land would produce. He said that it gave an incentive to a man to sell.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."—[OFFICIAL REPORT, 4th May. 1931; col. 78, Vol. 252.]Let me examine that for a moment. The argument is that this tax will drive land into the market and make it more saleable. I agree that if you tax land, and the tax that you have to pay yearly comes to more than the yearly return on the land, there is an inducement to sell, and to that extent land is forced into the market. But that only operates on the first sale, for the man who buys the land buys it at a price which represents the land with the capitalised value of the tax deducted. If you have land 449 that is worth £1,000, as the right hon. Gentleman supposed, you sell it less tax, namely, for £900, so that the man who buys it gets the tax paid. Therefore, he has no incentive to sell, because he has discounted the whole effect of the tax, and the same causes which make a man hold up land and keep it for a future increase in value, will operate on him. He will have no extra inducement to sell unless you impose an additional tax every year, approaching the method of taxation adopted by the late King John. As long as the tax remains the same, the only incentive to sell operates on the first man. The whole of that incentive is obliterated by the lower price for which the first buyer gets the land; he has paid part of the price to the owner and part to the State, and there will be no incentive for a re-sale.
The second argument is that this tax will cheapen land. It is a remarkable thing to argue that if you tax an article, you make it cheaper. I am surprised that the party that pins itself to the doctrine that Protection will make every article that is protected more expensive, should except land from that argument and say that taxation will cheapen it. Here, again, the right hon. Gentleman is wrong. He said that he wants land cheaper so that municipalities can pay a reasonable price for it. He said that when this Bill is passed, the building trade will get land at a much more reasonable price. They will pay the same price exactly. If land is worth £1,000, and they get it for £900, they really pay £1,000, because they pay £900 to the owner of the land and an annual charge to the Government, and the capitalised value of that charge is the difference between £900 and £1,000. It does not make the land cheaper at all. In fact, I shall show that it makes land a good deal dearer. As for the Increment Duty, the same right hon. Gentleman went on to say that there was nothing to be said for such a tax.
The right hon. Gentleman the Member for Carnarvon Boroughs is a powerful advocate of land taxes. One of his greatest supporters in the Bill of 1909–10 was the right hon. and gallant Gentleman the Member for Newcastle-under-Lyme. Yet they disagree with the root, the base, and the very essential incidence of this tax. They want to put it on to different subjects. The right hon. Member 450 for Carnarvon Boroughs wants to tax the increased value of land, which this Bill does not do, and the other right hon. Gentleman says there is nothing to be said for such a tax. I hope that before we have gone much farther we shall know which is the policy of the Government. They have the support of the Liberal party. On what terms was that support given? Are we to tax the increment value of land, or are we to tax the selling value of land? I think we ought to know, and I would suggest to the right hon. Member for Carnarvon Boroughs that perhaps this Bill does not do all that he imagines it does.
I see that my right hon. and gallant Friend the Member for Newcastle-under-Lyme is now present. I have been trying to explain that the two main theses on which he based his speech, the forcing of land on to the markets and not increasing the selling value of land, would not stand examination, but I will not weary the Committee by repeating those arguments.
§ Major HILLS
I quite understand. I should never ask the right hon. and gallant Gentleman to come here to listen to me. I think a great many hon. Members opposite are hypnotised by certain special cases. They have looked at the case of some London landowner whose ancestors bought land and have seen that land improving in value, and, as he has retained the whole of the freehold in his possession, he gets richer and richer as the leases fall in. That is really a criticism of our system of land owning. I have always been an opponent of the leasehold system, and if that question arose in this Debate I think I could give a good many reasons against it. It is the most illogical and unfair system that the wit of man has ever adopted, but it has been the system operating in England, and we in this country, with our sense of fair play and justice, and our capacity for practical adjustment, which give us a somewhat fatal facility in working unworkable institutions, have made the leasehold system not quite so unreasonable as it looks. But suppose all that value had been passed on to a lot of smallholders, to a lot of householders who had bought their houses, as would have happened if that land had 451 been in Edinburgh. I do not think there would have been any outcry. It would have meant that certain people had bought wisely. Is a man who buys a house wisely to be penalised? If so I do not see why a man who buys stocks and shares wisely should not be penalised. The picture is exaggerated, all the colours are heightened and a spot light is concentrated upon it.
Let us take the case of the factory. When hon. Members opposite speak of a factory and say that if you tax the land the tax cannot be passed on and will not become a charge on production, they always seem to picture a landlord in the background who is to be taxed, and think that however much he is taxed he cannot increase the rent of the factory because already he has got the economic rent. I do not think that contention is true even when there is a landlord in the background, but it is entirely untrue when the owners of the business also own the land on which the factory stands. The factory may be in a town and built on land of very high value. We put an extra charge on that land which it did not bear before, but in doing that we do not increase the productivity of that factory by a single sixpence. It will be an extra charge which the owners of the factory will pay as the freeholders. It is of no advantage to them that the land is of high value. Often it is impossible to sell the land and move the factory to a cheaper site. They will have to pay an extra charge which will be a direct charge on production.
When the hon. Member for Burslem said that he stood on two pillars, Free Trade and free production, I think he forgot for the moment that the Land Tax will tax production, and tax it in the very worst way, for it will not increase production. When the right hon. Member for Carnarvon Boroughs twitted my right hon. Friend who opened this Debate with complaining about the number of officials required to value the land while ignoring the number that would be required to impose a tariff, he forgot that the Custom House officers employed in collecting a tariff would be increasing the productivity of this country and increasing employment, whereas the 452 people employed to value the land will in no sense be increasing production.
The Government announced at the last election that they intended to make farming pay. Take the land which is to be seen near our big towns, the sort of land which is to be seen by those who travel on any of our railways. It is agricultural land, and for a long time, 10, 20, 50 or 60 years must be used only for farming. It cannot be used for anything else. The gradual growth of our large towns will, however, have an effect on the selling value of that land. If you put the tax on the landlord you will increase the cost of the land to the farmer; and how about the many farmers who have bought their land and are their own landlords? They may possess land which has a bigger value than its agricultural value, and that is to be taxed. They cannot pass land tax on to the consumer. [Interruption.] Yes, I agree that that tax cannot be passed on. There I agree with the right hon. and gallant Member for Newcastle-under-Lyme, but surely he realises that the increased value which is ascribed to that land does not add to the productivity of the land. The land is worth—what? Its power to produce food. Its value 50 years hence for building purposes has nothing to do with the present value. As the right hon. Gentleman has said that all reliefs to agriculture are a relief to the landlord, in cases where the farmer is his own landlord a burden on the landlord must be a burden on the farmer. I think he cannot get out of that.
§ Colonel WEDGWOOD
I quite agree, but if that land has a higher value than its value for agricultural purposes, it means that somebody else is anxious to use that land for more productive purposes than farming.
§ Major HILLS
No, that is where the right hon. and gallant Gentleman is in the world of theory. That land has got no other use except its use for farming for years to come, and he knows it has not, but he argues that it has another value because somebody who looks further ahead, or who is more speculative, thinks that a town will extend that way in years to come, and thus add to its value. It is not the case that you can say, "If that land has a higher value, 453 therefore it will be more productively employed in some other way," because that simply is not the fact. For many years to come that land must be farmed. It is land of that class which constitutes a very large share of the land in this small island. Our town" are spreading, our roads are spreading, but this land will be agricultural land for a long time and yet the effect of this Bill will be to say that that land has an increased value which has nothing to do with its present use.
This Bill is an attempt to abolish the effects of de-rating. The Chancellor of the Exchequer admitted it. He said it was aimed at minimising the effects of de-rating. I believe I am right in saying that de-rating has been accepted by the vast majority of the electors as a most beneficial thing. It was fought by the party opposite, but some of them now openly state that they were wrong and that de-rating was a good and a profitable act of State. We took a burden off production and we took a burden off agriculture. Now we are to reimpose burdens on production and on agriculture, and to do it at a tremendous cost to the State in machinery and personnel. We are to do this at a time when unemployment calls for the whole attention of this House, and yet what we do will not put a single man back to work, will, in fact, throw men out of work. This Land Tax will be a direct tax on production and it will throw men out of work, it will injure manufacture and will be a deadly blow to the depressed industry of agriculture.
§ Sir JAMES SEXTON
It has been my privilege to hear a good few Budgets introduced into this House. They always produce a remarkable variety of views, but never have I heard a greater variation in opinions than in those expressed on this particular item in this Budget. At one time there appeared to be indications of some kind of unanimity over the principle of a tax on land values, but the unanimity has suddenly disappeared. Personally, I am very glad to see the Chancellor reviving the old principle of the taxation of land values, which was first introduced in 1909, and to give it my support. We have heard some remarkable speeches on this subject, and I was gratified while listening to the right hon. Member 454 for Carnarvon Boroughs (Mr. Lloyd George). He went at very great length into his experience with his Bill of 1909, and I am glad he did so, because after what happened then, when compelled by circumstances to jettison his cargo, he lay under the suspicion of having burnt his boats. Personally, I never subscribed to that idea. My mind turns back over 25 years to that campaign in North Wales. I worshipped at his feet and heard the mountains re-echo to his eloquent denunciations of the privileges of landlordism in a well-known quarrying dispute, which dragged its weary length along for many months.
The right hon. Gentleman's surroundings were of such a character that he was quite prepared to give all those matters every consideration, and there is no doubt that he was engaged in very serious and complicated position as Prime Minister, and compromise was necessary. The nation itself was in duress in order to keep together the Cabinet of which the light hon. Gentleman was the head. He did yeoman service which redounds to his credit and will go down to posterity. I can quite understand that in those circumstances concessions had to be made. I was convinced that his transgression was but temporary. I have been associated with the right hon. Gentleman the Member for Carnarvon Boroughs for over 30 years, and I was convinced that when he discovered the fickleness of the political jades he was then coquetting with, he would eventually come back to his old love. I could not, however, help sighing for even the temporary loss of a touch of the vanished hand and the sound of the voice that for the time being was stilled. The Chancellor of the Exchequer in his Budget speech incidentally referred to Genesis, and the most extraordinary reference to this was the speech of the hon. and learned Member for Altrincham (Mr. Atkinson), who, despite his legal acumen, delivered a speech conspicuous only for its confusion of thought on the subject of land values, and its glaring inconsistency. The hon. and learned Member, who is a very clever lawyer, used these words:That may do for the street corner and for people who do not understand what they are listening to.He was evidently at sea on the subject. But technically he was right. For if the 455 people at street corners did understand there would be very little necessity for this Resolution, and very few, if any, landowners and very little unearned increment. The hon. and learned Member went on to put a question to the Attorney-General, and he asked: "Of what value was the land when it was given by the Creator to the people? I have great admiration for the Attorney-General, but I would hesitate to impose a burden like that upon his intelligence. The hon. and learned Gentleman further said: "Of what value was the land when it was given by the Creator to the people, if it ever was given? I suppose it was inaccessible, uncleared ground and worth very little." I was always under the impression that the great Conservative party accepted the Bible as the source of England's moral greatness. There might be one or two exceptions, but it gave me rather a shock to hear one of the most brilliant and learned members of that historic party questioning the authenticity of Genesis.
Perhaps the House will bear with me while I give another quotation from the first chapter of Genesis:And God said, Let the earth bring forth grass, the herb yielding seed, and the fruit tree yielding fruit after his kind, whose seed is in itself upon the earth: and it was so.And the earth brought forth grass, and herb yielding seed after its kind and the tree yielding fruit, whose seed was in itself, after his kind and (God saw that it was good.Here is a further quotation from the first chapter of Genesis:And God said, Let the waters bring forth abundantly the moving creature that hath life, and fowl that may fly above the earth in the open firmament of heaven.And God blessed them saying, Be fruitful, and multiply and fill the waters in the seas and let fowls multiply in the earth.And God said, Let the earth bring forth the living creature after his kind, cattle and creeping things and beasts of the earth after his kind; and it was so.With particular emphasis in the creeping things.And God said, Let us make man in our image, after our likeness: and let them have dominion over the fish of the sea, and over the fowl of the air and over the cattle and over all the earth and over every creeping thing that creepeth upon the earth.456 But, alas! it is not so to-day. For what about the gift of God to His people? Is there not something radically wrong there? Take Britain as an example. It is estimated that there are 77,000,000 acres of land in Great Britain and 44,000,000 people. According to Genesis the land belongs collectively to the people, and to-day we find that it is monopolised by a comparatively few individuals who lay down the conditions under which the bulk of the population, God's creatures to whom the land was originally given, shall make use of the land. One hon. and learned Gentleman said that this was a tax upon industry. May I give one or two examples? A passing reference was made to Liverpool in the opening statement made by the Chancellor of the Exchequer, and I want to deal particularly with Liverpool and the statement that this tax is a charge upon industry. The rateable value of Liverpool is £7,000,000, and the assessed value is something like £6,000,000, all of which is contributed by the ratepayers of Liverpool, consisting of workmen, shipowners, shopkeepers, employers and the ordinary man in the street. Those are the people who contribute these £6,000,000, and yet there is never a council meeting at which some statement does not come before the council in regard to the purchase of land, and I know of land in Liverpool which 100 years ago was estimated to be worth £60 an acre, or 20 years' purchase, sold to-day for something like £1,000,000 an acre.
A sum amounting to nearly £7,000,000 has been spent on street improvements and not long ago we paid £350 a square yard for city improvements in connection with the new tunnel. I am not blaming the landowner individually, because it is not his fault, and he has simply inherited the evil. I happen to be a landowner myself in a small way. I own very nearly two acres of land, and that land may possibly become valuable. If anybody comes along and wants to buy it he will have to pay the price, and no mistake about that. I am living in Rome and I am going to do as Rome does, and for every pound in value that my land goes up, if the Government will leave me 19s. 11d. I shall be perfectly satisfied, and I will pay it when the time comes. At the approach to the place 457 where I live outside Liverpool there is a tramway. The Liverpool Corporation wanted to extend the tramway and we had to purchase a slice of agricultural land from the landowner. I do not suppose the area will amount to more than 2½ acres. That agricultural land is generally rented at about £2 a year, and at 20 years' purchase it would be worth £50 or £60. The Liverpool Corporation paid £700 for it, in order to meet the necessities of the tramway, and the landlord laid down the conditions that common workmen's dwellings must not come "between the wind and the nobility of the villas," which sprang up on both sides and enhanced the value of his agricultural land over ten-fold. That is the position to-day. The erection of these villas has increased the value of the land from an ordinary agricultural value to £2,000 or £3,000 an acre and all that has escaped taxation. The people of Liverpool, who made all this land valuable, are finding £6,000,000 a year for local taxation.
We extended the dock system many years ago. I remember the time when at the North End of Liverpool we had a seashore that was valueless to the landlord. I am not blaming him; he is a friend of mine. I am simply describing a system which is strangling industry in this country. Let me work out my point. When it became necessary to extend the docks of Liverpool to the North End, the Dock Board wanted the seashore. Before they could use the seashore, it was said, they had to pay £80,000 before they put a spade in it. The Dock Board, being by Act of Parliament limited to 21/2 per cent. payment on their bonds, in order to meet that payment had to charge heavy dock and harbour dues to the shipowners. The shipowners, being taxed locally and Imperially and having to pay heavy dock charges and dues, went to the point of least resistance, the sailor, the dock labourer and the man who built the docks. The docks are useless without ships, the ships cannot sail without men, and they cannot be discharged without dock labourers. What is the result? The dock labourer and the sailor are ground between the upper and nether millstones of heavy dock charges and low wages and they have crowded, too, to the North End where the dock area has extended.
458 Then comes the question of housing accommodation. The sandhills in the neighbourhood were valueless, but beneath the sandhills is clay which is required to make bricks. The demand for the clay beneath those sandhills to make bricks for houses caused the value of those sandhills to rise immediately, from nothing to thousands of pounds an acre, and on that value the clay was taken from the ground to make bricks, and on every thousand bricks made by the brick-maker he paid the landlord 2s. 6d. a thousand. The clay was taken out and the landowner sent word round to all the manufacturers to dump their refuse into the big hole that remained and charged them 3d. a load for every load they dumped. When they had filled it up, he leased it to a jerry-builder at £2,000 or £3,000 an acre to put jerry-built houses upon it. There again the dock labourer and sailor were ground between the upper and nether millstones of low wages and high rates and rents.
I will give one more example. My recollection goes back to the time when Kirkdale Gaol was built in the late Fifties, out of the clay taken from a hole alongside the gaol. I remember the time when public executions used to be held there, and I used—as the local saying is—to "sag" school and go and see them erecting the scaffold on Friday afternoon. The time came when the gaol was not used and was pulled down, but the hole from which they took the clay to build that gaol was again filled up and sold or leased for £2,000 or £3,000 an acre valuation to the jerry-builder. When the gaol was pulled down, the bricks were used over again and part of them went to build a church, where the lay preacher, a jerry-builder, preached the way to Heaven to the children who lived in his jerry-built houses. The same bell that used to call men out to execution summoned people to this church, and they used to sing the Doxology, "Praise God from whom all blessings flow."
I could go on giving examples. The rateable value there is £480,000 and the assessment is £420,000. All that is paid by the people. They made the enormous value of the land. I am simply stating a hard historic fact. The community are finding £420,000 a year, just as Liverpool is finding £6,000,000. The employer and the workman, the housekeeper and the 459 shopkeeper, have between them created all that enormous value for ground rents, which a few years ago were sold for £2,500,000. Let me take the Committee across the road. Not long ago a Noble Lord sold eight and a half acres in Mill-bank, the value of which was created on gaols and slums, for £2,500,000. I agree that that escapes, or I should certainly call the attention of the Chancellor of the Exchequer to that point. An hon. Friend below the Gangway raised the very pertinent point that the purchase money should not be allowed to escape. I hope it will not be forgotten.
§ Lieut.-Colonel FREMANTLE
Does the hon. Member know that the Noble Lord in question gave £300,000 to the Westminster City Council for housing in respect of that particular negotiation and is badly out of pocket through it?
§ Sir J. SEXTON
That may be so, and it will be credited to his account for righteousness, but it does not interfere with my argument at all. The fact remains that 8½ acres, the value of which was created out of slums and gaols, was sold for £2,500,000. He could very well have afforded to give it. I do not want to pursue the question very much longer, but here is the example of a small place. The price paid for the whole of the land I have mentioned earlier did not exceed £1,200 100 years ago. The ground rents were recently sold for 2½ millions. Today its value is enormous and the people are finding £420,000, which is being spent in further improving the price in land. Every main road, every tramway, every pleasure ground, every open space, aye, every gaol and asylum, every workhouse built on the land, increases the value of the land. My regret is that the tax is so small. But it is a beginning. If we had a tax of 1s. in the £ on land values, the burden on industry would be lifted off Liverpool to the extent of 30 per cent. of the local rates, which are bearing on industry, which are now the cause of strikes and disputes, and which compel the local tradesmen to go for the point of least resistance all the time, the workman.
One more illustration and I have done. In the North End of Liverpool I have mentioned activities of the jerry-builder, who is no philanthropist but insists on 460 getting a dividend for his outlay. There the jerry-builders succeeded in getting themselves on the Health Committee. They passed their own plans to build their own streets with the open cesspool and no water closets—human excrement thrown on the bare ground with the effluvia arising from it creating an epidemic of scarlet fever and diphtheria. The jerry-builders called a town's meeting at nine o'clock in the morning, when all the town was at work, and passed a resolution authorising a loan of £17,000 for the erection of an infectious diseases hospital to accommodate the victims of the conditions under which they built those houses. Every Member of the House is familiar with the fine lines:Breathes there the man, with soul so dead,Who never to himself hath said.This is my own, my native land!How lovely and how pathetic, but how disconnected when you get down to bedrock! Talk about our native land—we cannot lay claim to a dog daisy that sprouts from its surface! The only claim we have to it is when we die and then, literally and figuratively, we do not get the land but the land gets us, and we get two or three fellows on top of our chest to see that we do not rise again until the Resurrection. We sent many men to fight for our native land. They expected to come back to a land fit for heroes to live in, but found it was only heroes who could live in it under existing conditions. The position simply is that no man has any right to exploit the joint industry of the people without giving something in return for it. The hon. and learned Gentleman said that this was a burden on industry and went on to say:Members talk about what the community put into the land, about the money spent by local authorities, but who finds it? The landowner finds it.He is quite right there. He does find it, but he does nothing to create it. Yet these gentlemen never lose an opportunity of reviling the men who are in receipt of the dole as men who are subsidised for their unemployment.
I do not want to detain the House any longer. I have given what I consider is an analysis of the evil, and there are other quotations from the Bible that fit the case. Here is one from the Book of Samuel, chapters 10 to 15, where the 461 people were clamouring for a king to reign over them, when be said unto them:This shall be the manner of the King which shall reign over you. He will take your sons for his charioteers and to run before his Chariot and set them to till his ground and reap his harvest and make his instruments of War; and your daughters as his cooks and confectioners and bakers, and your fields and vineyards even the best of them, and the tenth of your sheep and your seed and your goodly young men and your asses and put them to work.'But the people insisted upon Saul, who was seeking his father's asses, becoming their king, and Samuel said unto Saul, As for thine asses which were lost, set not thy mind upon them, for Lo they are found—just as they were at the Ashton-under-Lyne election.
I could give other quotations from the Bible. One in particular from the Book of Nahum:Was to the bloody city, it is full of lies and Robbery and the prey departeth not. There is the noise of the prancing horses and the flashing sword and spear, and there is a multitude of slain. We stumble over their corpses.
§ Sir W. BRASS
I do not propose to follow the hon. Gentleman into the realm of quotations from the Bible, but I would like to address myself to the question which is before the Committee. The hon. Gentleman seems to be affected by some confusion of thought, and I do not think that that confusion of thought is confined to him, for most of the speakers from the opposite side of the Committee have assumed that the tax which we are discussing is an increment value duty. They have used various illustrations of large increments of value due to what they call the community, but, if they will look for a moment at the Order Paper, they will see that what we are discussing is not the question of an increment duty like the increment duty which was set up by the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George), but quite a different thing. This is the Motion which we are supposed to be discussing: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 1d. for each pound of the land value of every unit of land in Great Britain.We have heard from the Chancellor of the Exchequer that he is proposing certain 462 exceptions from the taxation of every unit of land as mentioned in this Motion. The right hon. Gentleman during his speech made this remark:By this Measure we assert the right of a community to the ownership of land."—[OFFICIAL REPORT, 4th May, 1931; col. 48, Vol. 252.]That I imagined to mean that he was moving towards land nationalisation. I can imagine the right hon. Gentleman thinking out his speech, and wondering how far he could go—wondering whether he should make a really Socialistic outburst and advocate the nationalisation of the land, or whether he should try to whittle it down a little so as to soften it for his friends below the Gangway. I think he must have come to the conclusion that his friends below the Gangway were not worth considering, and on that point I agree with him. We have heard hon. and right hon. Gentlemen below the Gangway make many speeches against various suggestions of the Government, and we have seen them going into the Lobby to vote for the very things which they have been abusing. The other day the right hon. Gentleman the Member for Darwen (Sir H. Samuel) made a speech on the Budget, in the course of which he referred to a Division which took place in the House last year; and he explained to the House—and this, I think, is the reason why the Chancellor was ready not to consider hon. Gentlemen below the Gangway—that when a Liberal Amendment was moved it was not really necessary to divide upon it, even if the Liberal Whips were on, because all these things were merely brought forward as a basis of discussion. I think that, if the Chancellor had any fears about hon. Members below the Gangway, that speech of the right hon. Gentleman the Member for Darwen must have dispersed them. Another thing that the Chancellor "aid was this:The land was given by the Creator, not for the use of dukes, but for the equal use of all His people."—[OFFICIAL REPORT, 4th May, 1931; col. 48, Vol. 252.]After having said that, and after having moved a Motion to put a tax of one penny in the pound on every unit of land in the country, he then proceeds to tell us that he is not going to tax agricultural land. Agricultural land, I imagine, is possibly three-fourths or seven-eighths of the whole of the land 463 of the country, and I imagine also that some of that agricultural land belongs to those hated dukes to whom the right hon. Gentleman was referring; so that the deer forests, the grouse moors and so on are to be exempted, and are not to come under this tax.
Then the right hon. Gentleman considered something else. He wondered, I suppose, how many votes he was going to lose if he taxed every single unit of land, and so he decided that, as far as the Creator was concerned, and the giving of land, the small bits were not going to count, and that the small householder, the man who only owns a little piece of land worth not more than £120, is to be able to have that free without all this valuation. I want hon. Members to realise, therefore, that the real principle underlying this proposal has been destroyed by the exemptions which have already been decided upon. We are told that there are going to be at least 12,000,000 valuations. There are not 12,000,000 dukes, but there are possibly 12,000,000 people who own land, and every person who owns any land is to have that land valued, except, possibly, those who own purely agricultural land. How are we to know what purely agricultural land is? That is going to be a very difficult thing; I will deal with it in a minute.
We were told by my right hon. Friend this afternoon that, for the purposes of the valuation made under the Act of the right hon. Gentleman the Member for Carnarvon Boroughs, there were 5,204 valuers of various kinds. We were told by the Chancellor that it would take some time to carry out this suggestion of the Government, because they would have to train valuers; they were going to have, so to speak, apprentice valuers, who were going to be trained within a period of, possibly, six months. I wonder how many trade unions in the country would accept six months' training as a qualification for admission. I do not think they would accept so short a time as that. These apprentice valuers will have quite a lot of work to do. One of the things that they will have to decide will be what particular pieces of land are to be valued and what particular pieces of land are not to be valued. We are told that, in addition to churches 464 and so on, agricultural land is to be exempted, but that, if the land has any value above its purely agricultural value, then it is to be valued. I would ask the Solicitor-General to tell us, when he comes to reply, who is going to decide whether a particular piece of land is to be valued because it is supposed to possess a value above its agricultural value.
I would suggest that possibly some provision might be put in the Bill, when we see it, that all land abutting on to the main road within five miles of a big city shall be valued, because it has a certain potential building value, and that all land within one mile on big main roads of a town should be valued, because it might have a potential building value; and possibly also land within a quarter of a mile of a village might be included. Then, when the time arrived for deciding whether a particular individual holder of land should receive a notice of valuation, the valuer would know to whom to send the notice. It seems to me that, if agricultural land is to be exempted, it will be very difficult to know, when there is at the side of a road land which is partially agricultural and partially building land, which portions are to be valued and which are to be left out.
There are one or two questions—I do not know whether they can be called catch questions—to which I should like to have answers if I can. We have heard a great deal about catch questions, and, as we have had no answer, I suppose they still are catch questions. I happen to live in a place in London where there are freeholds on the ground floor, freeholds on the first floor, and freeholds on the second floor, and I should like to know, if the learned Solicitor-General can tell me, who is going to pay the land duty of one penny in the pound on those different flats. That is not a catch question, but a very real question, because I understand that in the case of other flats in different parts of London there are freeholds on the different floors. Possibly the tax may be divided up between all the flats, or possibly the ground floor flat, being on the ground, may have to bear the whole of the tax.
There is another point that I would put to the hon. and learned Gentleman, and that is with regard to the question of mortgages. If the proposal which is 465 now before the House is put into operation, it will be a very serious matter as far as mortgages are concerned. A great deal of property in the City of London and elsewhere is mortgaged. It is mortgaged up to a certain proportion of its assumed value. Directly you put an extra tax on that land, you immediately reduce the value of the security, and, when the security is not a very big one, it is quite possible—in fact, I think it is probable—that a large number of these mortgages might be called in. I would ask the hon. and learned Gentleman to consider why the owner of land who has borrowed money should be made to pay, while the man who has invested his money—the mortgagee who has lent his money on the land, and who is really benefiting by his investment in land—should not be taxed in the same way as the actual owner of the land himself.
§ It being Half-past Seven of the Clock, and there being Private Business set down by direction of the Chairman of Ways and Means under Standing Order No. 8, further Proceeding was postponed without Question put.