Sir H. YOUNGI beg to move, in page 29, line 38, to leave out from the word "authority" to the end of the Clause, and to insert instead thereof the words:
if within twelve months after the date on which the provision came into operation or such longer period as may be specified in the scheme, or within twelve months after the completion of the work, as the case may be, they make a claim in that behalf, may, subject to the provisions of this Act, recover from the person whose property is so increased in value an amount not exceeding seventy-five per cent, of the amount of that increase:Provided that, except where the person against whom the claim is made has claimed from the responsible authority by way of compensation under this Act in connection with the scheme an amount not less than the amount claimed by the responsible authority under this Section and the claim for compensation has been allowed in an amount not less than the amount claimed as aforesaid, or is outstanding, that person may at any time within twenty-eight days after service on him of the claim give notice in 1614 writing to the responsible authority requiring them to defer the claim, and in that event the claim shall be withdrawn.(2) Where a notice has been given in respect of any property under the last preceding Sub-section the responsible authority shall be entitled to make a fresh claim against the person who gave the notice—
- (a) on the taking effect at any time within fourteen years from the date of service of the said notice of a disposition of the property;
- (b) on the taking place at any time within the said period of fourteen years of a change in the use of the property;
- (c) in the case of property which was at the date of the original claim used for the purposes of any business or industry, and in respect of which there has not within the period of five years next after the date of the service of the notice been made any claim under paragraph (a) or (b) of this Sub-section, at any time within a period of twelve months after the expiration of the said period of five years:
Provided that no claim shall be made under paragraph (b) of this Sub-section in the case of property used at the date of the original claim as arable, meadow or pasture ground, or as market gardens, nursery grounds, orchards or allotments, or for a plantation or a wood or for the growth of saleable underwood, or as allotment gardens within the meaning of the Allotments Act, 1922, or (being land which exceeds one quarter of an acre) for the purpose of poultry farming, if the new use of the property is a use for one or more of those purposes.(3) If a claim is made on a disposition of property or, in the case of property used for the purposes of any business or industry, on the expiration of the said period of five years, the responsible authority may recover a sum not exceeding seventy-five per cent, of the amount by which the property has been increased in value by the coming into operation of the provision or by the execution of the work in respect of which the original claim was made, and the date of the fresh claim shall be the date by reference to which the increase in value shall be determined, and thereafter no further claim shall be made under this Section in respect of that property.(4)If a claim is made on a change taking place in the use of property the responsible authority may recover a sum not exceeding seventy-five per cent, of the amount by which the property has for the purposes of its new use been increased in value, and on any subsequent change of use taking place or upon any disposition of the property taking effect within the period of fourteen years a fresh claim may be made.(5)In assessing the amount of any sum payable under this Section in respect of any property account shall be taken—
- (a) of any principal sum paid or payable to the responsible authority in respect of the property under a claim previously made under this Section; and
1615 - (b) of any gift of land, or money, or any concession made by any person against whom the claim under this Section in respect of the property is made with a view to facilitating the making or carrying into effect of the scheme.
(6)Any sum recoverable under this Section may be paid either immediately or by such instalments spread over a period not exceeding thirty years as may be agreed or determined under this Act, and where payment is made by instalments interest at such rate as may from time to time be fixed by the Treasury shall be chargeable on the aggregate amount of the instalments for the time being outstanding.(7)A person who gives a notice under Sub-section (1) of this Section shall, within one month after the date on which any such disposition as is mentioned in paragraph (a) of Sub-section (2) of this Section takes effect or any such change of use as is mentioned in paragraph (b) of the said Subsection (2) takes place, give written notice thereof to the responsible authority and shall, within one month after receiving from the responsible authority a demand in that behalf (which demand shall be made within two months after the giving of the notice), furnish to the authority such particulars as they may reasonably require for the purposes of this Section:Provided that if at any time the responsible authority make a claim which under the provisions of Sub-section (3) of this Section is final they shall notify the person who gave the notice under Sub-section (1) of this Section that no further notice of disposition or change of user need be sent.(8)A claim made on a disposition of property taking effect or on a change taking place in its use shall be made not later than the expiration of twelve months from the date on which notice is given to the responsible authority under Sub-section (7) of this Section of the disposition or change of the use or, where particulars are demanded by the authority, the date on which the particulars are furnished to the authority.(9)The provisions of this Section shall apply to a disposition of, or a change in the use of, a part of any property in respect of which notice has been given under Subsection (1) of this Section as they apply in relation to a disposition of or a change in the use of the whole of that property.(10) Where any provision of a scheme, whether made under this Act or under any Act repealed by this Act, is revoked by a subsequent scheme no property shall be deemed to be increased in value by any provision contained in the subsequent scheme if and in so far as that provision is the same, or substantially the same, as a provision contained in the scheme so revoked:Provided that if at the date when the revocation of the said scheme becomes operative there is still outstanding any claim in respect of an increase in the value of any 1616 property duly made thereunder, or the time originally limited for making such a claim has not expired, any such outstanding claim, and any such claim made within the time so limited, shall be entertained and determined, and may be enforced, in the like manner in all respects as if all the provisions of the earlier scheme had continued in operation.(11) In this Section the expression "disposition" means a disposition by way of sale (including a sale in consideration of a rent-charge or other periodical payment) or by way of lease or tenancy agreement for a period of not less than three years, and references to the person who gives a notice under Sub-section (1) of this Section shall, where a devolution of the property to which the notice relates has occurred since the notice was given, be construed as references to the person on whom the property to which the notice relates last devolved before the date on which a disposition takes effect or a change of use takes place.This Amendment replaces, in substance, the present Clause 21, dealing with betterment. In its general lines it is the same as that Clause, only it makes one big difference as a result of a discussion in Committee. The view which was then arrived at is now carried out in this Amendment. As the House is aware, the principle of betterment is, of course, an old one in planning work, but the matter has to be reviewed now that we are extending planning. In order to enable town and country planning powers to work more smoothly in the wider sweep now given to them, it is necessary to make the compensation and the betterment Clauses work as smoothly as possible. In order that they may work as smoothly as possible, they must work as justly as possible. Therefore, it is necessary, as I say, in order to make the bigger machinery work well and smoothly, to avoid every form of injustice or inequality to the individual. Because, as has always been said by myself and others throughout this matter, town and country planning, in order to be an efficient engine for achieving its purpose must be one that is worked in co-operation between the planning authorities and the personal interests, the owner and occupier concerned.That is the object of the new matter introduced into this Clause—to make the compensation and betterment provisions, particularly the betterment provisions, as just and fair as they can be made. For this purpose, two principles, as it were, are established. The first is this— 1617 and I think it will commend itself to the House as a common-sense principle—that when one is putting his land to a certain use, and a scheme comes along and improves its value for another use, he shall not have to pay betterment in respect of its increased value for that other use, unless and until he puts that land to that other use. After all, he is master of his own, and is entitled to put his land to what use he likes, and until he puts it to the special use in respect of which the value of the land has been improved it would be arbitrary and unfair to expect him to pay. The second thing is that it is a sound principle in the payment of any betterment charge that it should not be paid unless and until there is some definite fund out of which it can be paid; in other words, the one who enjoys betterment should not be called upon to pay for it unless he is in actual possession of it. That is the second principle which we seek to enforce in the refinements introduced into the betterment Clause.
I come now to an explanation of the actual provisions of the Amendment. In the first place we say that, generally speaking, the owner who is receiving compensation under the Act is in a position to pay betterment because he has a fund out of which to pay, and so it is fair to set off the one against the other. But the matter is undoubtedly capable of refinement for the preservation of this principle not to pay betterment until it is realised, and an interesting point will arise on an Amendment moved by the hon. Member for one of the Divisions of Dorset which undoubtedly raises ground for discussion. Secondly, the general machinery of the Clause will be this: First of all, to repeat and re-establish the right to claim betterment—which is nothing new—and then to say that the actual payment of the betterment can be postponed, on the requirement of the owner who has to pay it, until the occurrence of one of these eventualities to which I have referred. The next thing we need is a time limit, and after a consideration of the practical aspects of the case, we propose to introduce a time limit of 14 years for the making of these claims. That is another provision which I think is quite legitimately asked for by those who have to pay the charges.
1618 Next we have to deal with cases of what I should call betterment which is not realised once and for all in the form of a lump sum, but realised only in the form of an annual increase of income. That can only apply to the case of a business or industry. In paragraph (c) it is provided that in the case of a business or industry which experiences betterment—a rare case—the claim for betterment can be made in respect of the increase in value. We preserve all the exemptions for agriculture which were preserved in the original Act. No betterment claim can be made in respect of agricultural land when it is changed from one agricultural use to another, even though there may be some betterment in the process. We define disposition of the land if, betterment is to be paid upon disposition, as the sale or parting with the land by lease or tenancy agreement of not less than three years. Then we make special reference to the sum recoverable being paid in whole or by instalments. That is a very important provision for removing any suspicion of inequity in view of the principle that betterment shall be paid upon realisation.
These will be the general effects of the new Clause as amended as a result of discussions in Committee, and I think it fairly embodies the undertakings given there. One matter of machinery may perhaps be worth mentioning. It is thought right now to make betterment payable in case of sale by the vendor, that is the person who actually realises the income, and since that is so it is no longer worth while to maintain betterment as an actual charge on the land. It is a good thing for the free dealing in land to avoid as many charges on land as we can, and so we cease to provide that betterment is to be charged on the land, and it becomes a personal debt of the person to whom it is charged.
Marquess of HARTINGTONI beg to move, "That the Debate be now adjourned."
It seems to me that the House is confronted with a very considerable difficulty. We are dealing here with no new matter. When the Clause was before the last Parliament, in 1931, I moved an Amendment to the old Clause, which was virtually the Clause as printed in this 1619 Bill, providing that betterment should only be chargeable when some increased value had been actually realised, either in the form of a sale, a lease, or other disposition of the property, or on the renewal of a lease—that is to say when some definite tangible betterment had been realised. On the general principle of betterment neither I nor, I suppose, any other hon. Member is in disagreement. We agree that where an owner of property secures an increase of value owing either to the coming into operation of a scheme, or to the carrying out of a work under a scheme, such as the widening of a road, it is only fair and reasonable that he should pass on at any rate a very considerable proportion of the increased value to the local authority which has incurred the expense. But there is a great difficulty about attempting to secure this betterment charge before it has been actually realised. For that reason I moved my Amendment in the last Parliament, and it was rejected by one vote only. It secured not only the vote but the support by speech of my right hon. and learned Friend the present Attorney-General, and commended itself, I think, to every member of the Committee.
That Amendment was proposed again in this Parliament, and, had it not been withdrawn, it would undoubtedly have been carried, and it was withdrawn only on a definite promise from my right hon. Friend the Minister of Health that he would insert in the Bill words having the effect of securing that betterment should only be charged when it had been actually realised. The pledge was not lightly or hastily given. I remember reflecting in. the course of the morning upon which that pledge was secured that a dentist's job was not so easy as I and other people had hitherto supposed it to be. Various efforts were made to arrive at a compromise. My right hon. Friend first said he would insert words in the Clause to secure that betterment should not be paid until some funds were available out of which it could be paid, but that the Committee, quite rightly, I think, were unwilling to accept. Then he promised to insert further words, and finally made use of this very definite and explicit pledge: 1620
I propose to add a provision—I must seek means for carrying it out—that in that case the betterment is not to be paid until it is actually realised.I hope I may be pardoned for going over the history of this matter, but it is one of great importance, which may affect the value of every single piece of land and every shop and business premises in the whole of England, and it is necessary to remind the House of what occurred in Committee. After that statement the Noble Lord the Member for South Dorset (Viscount Cranborne) asked:Will the betterment be assessed before that date? It seems to me that the whole problem in this discussion is as between potential betterment and realised betterment. My point is that the betterment should not be assessed except by sale, and that it is on the realised betterment that the 75 per cent. should be paid. Does the Minister still retain inside the Bill the principle of potential or assessed betterment, such as existed in connection with the Land Value Tax?On that the Minister said:No. The provision of the Bill is, and will remain, that the assessment of betterment takes place at the time of the claim unless the owner, at his option, prefers to have it made at the time of the scheme."—[OFFICTAL REPORT (Standing Committee A), 28th April, 1932; col. 740.]On that definite assurance that betterment should only be charged after it had been actually realised I withdrew my Amendment. That pledge was given on 28th April. This proposed Amendment of the Clause appeared only on or about 2nd June, which allowed only a very limited time for its discussion with the various experts who are capable of giving advice on matters of this kind. We have not been very much helped by the long delay between the promise which my right hon. Friend was good enough to give and the appearance of this Amendment to the Clause. My complaint is that in two respects the amended Clause will require that payment shall be made before the value has been actually realised in the form of a capital appreciation on which a capital charge can be assessed. One is the case provided for in line 9 of the Amendment, which provides that compensation may be set off against betterment. There may well be cases where compensation for a potential injury might quite reasonably be set off against betterment charges for a potential improvement, but where it is a case of actual injury received 1621 at the moment then it seems unreasonable that compensation for that injury should be set off as against a possible future betterment.4.30 p.m.
Take a case where four or five cottages have to be demolished in the course of carrying out a road improvement scheme. The local authority is liable to pay compensation to the owner of those cottages for what is to him an immediate loss. Under lines 9 to 13 of the Amendment it would be possible for the local authority to say "Yes, we owe you a sum of money in respect of the four cottages destroyed, but there is no doubt that the value of your land beyond these cottages has been improved by our scheme, your land which previously had little or no value now has a definite building value, and therefore we shall not pay you any money, but we will call it quits." To me that seems an unjust and unreasonable procedure. The local authority will admit liability to compensation, will agree that they owe the man £300 or £400 or £500 but will say "You must make us a forced loan of that sum, carrying no interest, until such time as you have been able to recover it by selling for building or other purposes your other land which has been improved in value." Quite true, you may do that. In that respect, it will be a question later on of discussing the exact merits of that matter. My contention is that, in spite of the very definite and express statement of the Minister, the promise that betterment shall not be charged unless and until it has been actually realised has not been carried out. By no conceivable stretch of imagination can compensation for a definite injury received be described as realisation of betterment. That is one case. The other case is one with which my right hon. Friend dealt fully, the case of appreciation for business purposes. It is true that in the case of business premises owned and occupied by a firm,, in which no change of owner takes place, there may frequently be capital appreciation as the result of the scheme coming into operation. In that case, my right hon. Friend proposes that, after a period of five years, betterment can be charged.
Whatever the merits of this question may be, and I shall be prepared to discuss that later on, by no conceivable stretch of the imagination can a temporary in- 1622 crease in the goodwill of a business be described as a realisation of a betterment charge, on which a betterment tax of 75 per cent. can be properly or justly imposed. I can easily imagine cases of that kind in which such a betterment charge may be made. Take the case of a garage which, owing to the fact that it was only on a small side road, did very little business. A scheme comes into operation to make a small side road into a large main road, the turnover of the garage increases. The garage appreciates in value and does better than it has been doing before. These are not good times, and I should not begrudge any improvement to anyone who increased his annual turnover, but to place a capital charge on an increased turnover for a period of five years seems to be a wholly unjustifiable proceeding. Again, by no stretch of the imagination can an increased turnover, increased profits, or increased volume of business over a period of five years be described as a fair basis for levying a tax of 75 per cent. on the capitalised value of such increased turnover. In those two respects, whatever my right hon. Friend's proposal may be—there is a certain amount to be said on both sides—it certainly does not carry out the very definite and very final and conclusive pledge which was made that betterment should only be charged upon an actual realised benefit.
My Amendment proposed that betterment should be charged on lease, sale or realisation. All those are factors which have a definite assessable value on which you can borrow money. You cannot borrow money, for instance, on an increased turnover, and you cannot borrow money on compensation for injury received, or the destruction of property which, ipso facto, requires an immediate spending of the money again, or which is compensation for an actual injury. The Clause does not carry out the promise which has been made, and the House is therefore confronted with an extremely difficult situation. My right hon. Friend when he spoke mentioned that an interesting point would occur in connection with the Amendment to be moved by my Noble Friend the Member for South Dorset (Viscount Cranborne). That may be so. In a situation of this kind it is not for private Members to 1623 move Amendments. We do not know what the fate of those Amendments may be. We are speaking in a comparatively empty House, and we know what happens when the Division takes place. It may be that the Amendments will not be selected, or they may be out of order because they will impose a charge. It is impossible to know what their fate may be.
In a case of this kind, the Committee undoubtedly would have taken a definite course except for the definite pledge given by the Minister, and it is for the Minister to carry out the promise fully when the discussion reaches the Report stage. I need not labour the merits of the case. A definite pledge has been made, and has not been carried out, and private Members are in an extremely unfortunate position. My Motion is put forward in order that the Minister may have an opportunity of making a statement on the position. If he would either move the two Amendments which would secure fully the carrying out of the undertaking which he has given to the House, or would indicate that he would take steps to deal with the matter in another place, we shall be very happy to proceed with the discussion. It is difficult, if not impossible, to proceed with the discussion unless and until some further statement has been made by the right hon. Gentleman. In conclusion, I wish to say that I am very far from imputing in any kind of way any breach of faith by the Minister. I realise that this difficulty is due entirely to there being no opportunity for consultation. Our opportunity for consultation has been very limited indeed, but that is due entirely to a misunderstanding, and is not due in any way to any attempt by my right hon. Friend not to carry out his obligation.
Sir H. YOUNGBoth points which the Noble Lord has raised are points which arise on specific Amendments which are to be proposed to this Clause, first of all on the Amendment by the Noble Lord the Member for South Dorset (Viscount Cranborne) on compensation and betterment, and, secondly, that to be proposed by the Noble Lord the Member for West Derbyshire (Marquess of Hartington) on paragraph (c) of Sub-section (2). For myself, I have looked forward to those two matters being discussed on the 1624 specific Amendments where I think they could most easily be discussed, and I should have suggested to the House to leave the settlement of the issue which the Noble Lord has raised to those two actual Amendments. He has said that it is possible that those Amendments will not be called, or that they will be out of order. I had not considered that possibility. The Amendments appear to be in order, and to be straightforward Amendments. Perhaps, in the course of the one or two observations I shall make in reply to the Noble Lord, I can satisfactorily deal with that possibility.
I am anxious to deal most fully and closely with any suspicion on the part of any hon. Members that any undertaking which I gave in Committee has not been carried out. I fully recognise that in a matter of such great complexity as this doubts may honestly arise as to whether any principle has been absolutely maintained. They have arisen in my own mind with regard to the first point raised by the Noble Lord the Member for West Derbyshire. The principle upon which we agreed was, as he says, that betterment should only be paid when realised, and not when it was merely potential or assessable. That is the principle which we maintain. In regard to this first point where the application of the principle is questioned, the Amendment says:
Provided that, except where the person against whom the claim is made has claimed from the responsible authority by way of compensation under this Act in connection with the scheme an amount not less than the amount claimed by the responsible authority under this Section and the claim for compensation has been allowed in an amount not less than the amount claimed as aforesaid, or is outstanding, that person may at any time within twenty-eight days after service on him of the claim give notice in writing to the responsible authority requiring them to defer the claim.What that means is that if, after betterment was claimed, it was certain that the party against whom it was claimed would be in possession of a fund by way of compensation out of which betterment could be paid, then he could be called on to pay at once because there would be a realisation. That seems, at first fight, to be adequate and full establishment of the principle, but representations have been made, and it is possible to say, that, although there is a fund out of which the betterment can be paid, it is not a 1625 relevant fund. The compensation may be in respect of different matters, and not in relation to the betterment. So, in substance, there is money, yet it is not money due to the betterment itself. It is money due to something else. That is a rather fine, but still no doubt logical and just interpretation of the strict principle of betterment. It may be said that asking a man always to pay his betterment out of his compensation, if he has any, is not a strict adherence to the principle of realisation. It is because I have been convinced of the logic of this criticism—I do not think there is anything in it from the practical point of view, but, logically and theoretically speaking, I see that it is not a fulfilment of my original undertaking—that I have made up my mind to accept the Amendment of my hon. Friend the Member for West Dorset, which would do away even with the, theoretical departure from the principle of realisation in that respect. If, when we arrive at the Amendment of my Noble Friend the Member for West Dorset, we do not find it is in order—I think it will be quite in order—and if by any accident it cannot be moved, I will myself see that that Amendment is proposed in another place. When I have done that I feel that I have removed the last doubts in my mind as to whether I have strictly, literally, and practically fulfilled the undertaking which I gave in Committee.The second point that was made by the Noble Lord the Member for West Derbyshire does not, in my opinion, involve any departure from the principle of realisation. What is the case? It is the case where a business, or an industry, is affected by a planning scheme. Owing to the carrying out of that scheme, there is some betterment in the actual value of the business or industry. That is an extremely rare and exceptional case. It is a case which very seldom occurs. It is possible to imagine such cases, and cases might occur in practical work, but it is a very small and limited class of case, and there is no betterment in 90 cases out of a 100. We have here a possible case of a business or industry the value of which is improved by a scheme.
This is a point to which I specifically want to call the attention of the House, and to which I do not think the Noble Lord gave sufficient prominence in his 1626 observations. It is the case of a business or industry where you have betterment, and there is actual realisation of the betterment going on from day to day, from week to week, and from month to month. In the rare case where there is any betterment at all, there is an actual realisation in the income or profits arising from the business. So you get betterment realised in the way of increase of profits and income, and it is in accordance with the principle of realisation to require betterment to be paid, because there is value in hand out of which it can be paid. The Noble Lord criticised, I think justly, the difficulty of assessing betterment in the value of an industry or business. That is so. I can see that it is exceptionally hard. It must be very difficult to come to the conclusion that there has been an increase in the value of the trade or business as a result of the planning scheme. It is a question for the arbitrator to decide whether there has been betterment or not. That in the nature of the case, arises generally where the question is, whether betterment has occurred or not. The point with which we are dealing is a different one. It is as to whether the value of the betterment is in hand, and in the case of a business or industry whose profits or income are increased as the result of the scheme the value is in hand.
Let me ask the attention of the House to another point. The value is in hand, but, owing to the nature of these cases in general—the fact that the businesses are carried on by firms and so on—there never will be any single occasion upon which the whole value will appear in the form of a capital sum. Suppose that a business belongs to a company—a great multiple shop company or something of the sort. It goes on and on, and nothing is realised except in this form of increment in annual value. There the betterment is realised. It may not be realised as a capital sum, but it is definitely realised day by day, week by week, and year by year in the form of increased profits.
I say then that there is no departure whatever, in the proposal made here, from my original undertaking that betterment was not to be charged except when it was realised—not if it were merely assessable or only potential. Here it is not potential, but is being realised day 1627 by day; it is represented by an actual increment in value. It is, no doubt, difficult to assess, but that is a question for the arbitrator. It may well be that this is particularly a case which is appropriate for payment by instalments, and, indeed, I think that any possible hardship or difficulty as regards finding the betterment out of an annual increase in value would be dealt with by payment by instalments.
Finally, I think the House must be asked to consider the fact that while as I have said there is no breach of the principle of realisation, the result of the omission of this provision would be to make a perfectly arbitrary, unjustifiable, inequitable distinction between two classes of persons who are enjoying actual realised betterment. People who enjoyed their betterment in a form in which it could come to hand as a single payment would have to pay, but the others—few, no doubt, but still there may be some—who enjoyed their betterment in the realised form, not of a certain capital payment, but of increased annual value, would escape payment of betterment altogether.
I submit to the House that that cannot be justified. You cannot justify dealing differently with the case of an owner who sells his land and has to pay betterment on the sale of his land, and the case of a multiple shopkeeper who is enjoying an increased profit, but who, under the proposal of the Noble Lord, would escape ever having to pay anything in respect of the assessment of the betterment which is held to exist in respect of the value of his shop. When you are establishing a scheme of this sort, you must do equal justice all round; you must leave no grave sense of inequality in the mind of any person; and I have been unable to see anything that would enable one to distinguish the class of persons who have realised betterment on their business or industry in the form of an annual payment from the other class who enjoy it in the form about which there is no disagreement. In these circumstances, I am prepared, as I have said, to meet the first point in the form of the Amendment proposed by the Noble Lord the Member for South Dorset, because there I have some doubt as to whether the prin- 1628 ciple established in Committee has been carried out; but on the second point I have no doubt at all that we have carried out the principle established in Committee, and that if we were to omit paragraph (c), we should be creating a perfectly illegitimate distinction between two classes of persons who have realised betterment. In these conditions I must resist the Motion for the Adjournment, and ask the House to continue consideration of the Clause.
§ Mr. MICHAEL BEAUMONTI want, first of all, to thank the right hon. Gentleman for his concession in regard to the first of the two points which were made by my Noble Friend. We feel that that is certainly the strongest point on which the Clause departs from what was done in Committee. The right hon. Gentleman has met the objection thoroughly, and we are duly grateful to him and wish to express our thanks. But I desire to call the attention of the House to the second of the two points which the right hon. Gentleman has just been discussing, and to put another side to the question. I think it is possible that he is correct in saying that this particular point is not affected by the undertaking given in Committee, but I do think that, on merits, there is considerable danger, certainly of great confusion, and possibly of great injustice, if paragraph (c) is allowed to stand in its present form. I am aware, of course, of the arguments which the right hon. Gentleman has used as to the extreme rarity and complexity of the case, and the extreme difficulty of arriving at a truly equitable solution; but I suggest that the principle of paragraph (c) sets up a very dangerous state of affairs. Let us examine it more closely.
Under that paragraph, any increase in the profits of a business or industry which may by any stretch of the imagination of the appropriate authority, be attributable to any work that they may do under a town planning scheme, may be claimed to be chargeable with a contribution for betterment. This betterment differs distinctly from the betterment which is realised in a lump sum, in that the betterment realised in the form of an increase of profits is liable to direct taxation, and, therefore, every year, that sum, whether it be due to the work of the local authority or to the enterprise of the man con- 1629 ducting the business or industry, is paying its quota of taxation to the State. I suggest that that alone is a differentiation which might justify exemption from the payment of betterment under this Bill.
I think the right hon. Gentleman will admit on reflection that it is not correct to say that it is never realisable in a lump sum, because, if the business is sold or wound up, it will, of course, be realisable in a lump sum in exactly the same way as any other betterment, and then, under the other part of the Clause, it could be charged as such. But, while it is running on as an annual increment, not only is it liable to taxation, but it is, we submit, utterly impossible for any arbitrator to assess it. Consider the circumstances. A man has a business. Owing to road alterations, his shop is in a better position. If we assume that that happens this year under the present Government, when trade is going to look up, and his business increases by leaps and bounds, how is it possible to say how much of that increase is due to the general increase in prosperity caused by the beneficent action of the Government, and how much is due to the benevolent action of the town planning authority? I submit that it is utterly impossible. It is all very well for the right hon. Gentleman to say that it must be left to the arbitrator to decide, but I think it is putting too big a burden on the arbitrator.
There can be no reason why this way of improving trade should be treated any differently from any other measures that the Government put forward for that purpose. If a town planning scheme has the effect of definitely giving an impetus to business in the locality, it will be a better scheme than I believe any of them are likely to be; and in view of the possibility that betterment might very easily be charged on what might be due, not to the scheme, but to the man's own energy, and in view of the fact that any betterment that does accrue in this way is liable to taxation, and, therefore, pays its contribution, I suggest to the House and to the right hon. Gentleman that on consideration they and he will find that there is a very good case for treating this form of betterment in a different way from betterment that is realisable in a lump sum; and, whether or not this 1630 question is affected by the statements made in Committee—and I am inclined to agree that in this particular case it is not—I suggest that; the House will be well advised to treat this matter somewhat differently, and, when the time comes, to exclude the paragraph.
§ Mr. C. WILLIAMSIf, as the Minister says, the occasions on which this question will arise are very rare, might not the way to peace be simply to leave out the provision altogether? If these cases are only going to occur very rarely, it is hardly worth while having a. dispute in the House of Commons about them. On the other hand, some of those who have listened to a discussion on this point for the first time may remember that, after such provisions have been put into operation, although the official view is that the cases will be very rare, the taxing authorities, when they go into the matter, find that they can make a large number of cases. From that point of view the Minister might surely, on his own assumption that these cases will hardly ever happen, relieve the feelings of certain hon. Members opposite by giving way on both these points. I believe that the House is generally speaking trying to meet him in regard to the whole of his Bill, and I put forward that suggestion on the basis of his own argument that these cases are likely to be rare.
§ Motion, by leave, withdrawn.
§ Question, "That the words proposed to be left out stand part of the Bill," put, and negatived.
§ Question proposed, "That those words be there inserted in the Bill."
§ Captain HEILGERSI beg to move, as an Amendment to the proposed Amendment, in line 7, at the end, to insert the words:
unless the land has been in the same ownership for the previous ten years, when the amount shall not exceed fifty per cent. of that increase.In moving this Amendment, I do not want to revive the controversy on the question of betterment, but rather to ask for some discrimination between the sheep and the goats—between genuine landlords and land speculators․․
§ Mr. SPEAKERI think that, before we proceed any further with this Debate, I had better explain to hon. Members exactly what the position is. It is rather a peculiar position. Having proposed the Question, "That those words be there inserted," I see that a great many Amendments to the proposed Amendment have been put down, and that to several of them the same names are attached. I want hon. Members to understand that an individual Member can only move one Amendment, and can only second one Amendment, and that, having done so, he exhausts his right to speak on the Question, "That those words be there inserted." Of course, other Amendments can be moved by other Members, but the same Member cannot move more than one Amendment. or second more than one Amendment.
§ 5.0 p.m.
§ Captain HEILGERSMy purpose in moving this Amendment is to ask for some discrimination between the sheep and the goats—between the speculator who deals in land and the genuine landlord. To illustrate the point, I will put a case of which I know in the Southern Counties, where there is an area ripe for development near a rising town. In that area recently—just over a year ago—a speculator bought an estate which had come into the market. He has done nothing to the estate since he bought it except let thistles grow. The adjoining estate is heavy, wet land which has belonged to the present owner for 25 years. He has done his best to keep it in good order, spending money on hedging, draining, ditching and fencing. He has had to pay rates and taxes and he is considerably out of pocket. If an Order was made under a scheme which gave equal benefit to both, there would be an equal claim against both owners, but surely their position is very different. A great deal of the increased benefit that the man gets who has had his estate for 10 years has already been discounted. It is rather similar to the case of a sweepstake where two men each win a £100 prize. One man has taken a ticket, worth 10s., and the other has taken 50 tickets, worth £25. They both get the same benefit, but they do not get the same increase in value. In the case of the sweepstake, it is only a question of the interest of the two men, but in the case 1632 I have tried to picture, of the genuine landowner who has been there for 25 years and the speculator, it is different. In the case of the speculator it is selfish, and in the Case of the landlord who has been trying to keep his land in order, he has done something for the good of his country. I am a landowner, but, lest hon. Members should think I have an axe to grind, I should like to say that my own land is entirely rural and remote and is never likely to be the subject of a scheme, but if I were in the position that I might be mulcted for betterment I should feel it a great injustice if I was treated in exactly the same way as a land speculator, who had only just come in and bought the land. Finally, if the Clause stands as at present, with no preference given to the man who does his best for the land, it will be a definite discouragement to all those who own and those who want to buy land.
Sir H. YOUNGI agree even more with the atmosphere of the hon. and gallant Gentleman's speech than I find myself able to agree with the conclusion that he has expressed in the Amendment. I am afraid it would be impossible of acceptance. The result of the Amendment would be that the betterment that a man would be called upon to pay would depend on the length of time for which he had owned the land. Clearly there is no connection between the two things at all. The amount of the betterment to be charged is entirely a question of fact—as to what is the actual betterment—and the betterment is enjoyed by the person who happens to be the owner of the land at the time. Those are the only two things that could possibly be considered—what is the amount of the betterment and who enjoys it? It is rather a curious assumption that a man is to be considered a good landlord because he has been there for more than 10 years, and a bad landlord if he has not been there for 10 years. It may often be true, but there is no reason why it should be true necessarily. A man may have been there for 100 years and may yet be a very bad landlord, and he may have been there for only a short time and yet may be a good landlord. In a practical world I think the arrangement of the Bill is really the only possible one.
§ Amendment to the proposed Amendment negatived.
§ Viscount CRANBORNEI beg to move as an Amendment to the proposed Amendment, in line 10, after the word "scheme," to insert the words:
and in respect of any injurious affection other than injurious affection immediately suffered.In view of the Minister's statement, I will move this formally. I thank him for the great concession that he has made. I rather gathered from what he said that he regarded it more as a concession of appearance than of reality, but I do not feel that myself. I believe it to be a most valuable concession. I believe there are a large number of people who, before the concession, would have received an amount of compensation for an actual injury and would have to pay it straight back again by way of betterment through an increased value which might not accrue for a good many years. That cause of hardship is now removed and I thank my right hon. Friend.
§ Major MUIRHEADI beg to second the Amendment to the proposed Amendment.
Sir H. YOUNGI should like to make it clear in reply to the Noble Lord that I think this is a very substantial concession. What I meant was that I think the proposed Amendment as it stood was only in a rather fine point of theory, a departure from the principle that we arrived at in Committee, but, since I recognise that it was a departure from that principle, I feel bound to make the change even though it involves a substantial difference.
§ Amendment to the proposed Amendment agreed to.
§ Sir S. CRIPPSI beg to move, as an Amendment to the proposed Amendment, in line 12, after the word "claimed," to insert the words "by the responsible authority."
I do not quite know what the position is, but I understand that the Minister is at liberty to speak on each Amendment while others are not.
§ Mr. DEPUTY-SPEAKER (Captain Bourne)When a Member is moving an Amendment, he is speaking to the original Question before the House; in other words to this very long Amendment in the 1634 name of the Minister. But, once I have put the Amendment from the Chair, a new Question is before the House, so that the Minister is in point of fact on each occasion speaking to a new Question.
§ Sir S. CRIPPSI understand that, each time a Question is put, any Member of the House is entitled to speak on each Amendment.
§ Mr. DEPUTY-SPEAKERYes. Members who have not already spoken on an Amendment are entitled to speak on it. What they must not do is to move more than one Amendment or second more than one Amendment. A Member who has moved or seconded an Amendment cannot move or second another. I hope that is now clear to the House.
§ Sir S. CRIPPSA Member is entitled to speak but must not move or second more than one Amendment to the Amendment?
§ Mr. DEPUTY-SPEAKERThat is correct. I heard Mr. Speaker lay down a Ruling on that point.
§ Sir S. CRIPPSI misunderstood. I thought Members were only allowed to speak once on the whole Amendment.
§ This Amendment that I am moving is verbal. As the principal Amendment reads at present, there is rather a mix-up as regards whom the claim is by and the amount of each claim mentioned, and whether it is a claim for betterment or for compensation. This is to make it clear that it is the amount claimed for betterment that is spoken of and not the amount claimed for compensation referred to in line 11.
Sir H. YOUNGI think the hon. and learned Gentleman is right. This Amendment will be an improvement, and I am able to accept it.
§ Amendment to the proposed Amendment agreed to.
§ Lieut.-Colonel ACLAND-TROYTEI beg to move, as an Amendment to the proposed Amendment, in line 19, to leave out the word "fourteen" and to insert instead thereof the word "seven."
I am grateful to the Minister for putting in a limit of 14 years, but I think seven would be very much better, because, the longer the time is, the more complication will arise if the property has been split up or has changed hands.
Sir H. YOUNGI will ask my hon. and gallant Friend not to press this Amendment to the proposed Amendment. The period of 14 years has been selected after most careful consideration and consultation with experienced practical men of the type that have to deal with these questions. If the period is limited to seven years, we are not doing justice to the scheme as a whole because we limit it to a shorter period than that in which it is possible to trace the increased value of the land to the operation of the scheme. It would very much increase the element of chance, and, by doing that, you would be increasing the sense of inequity between various persons which would not make for smooth working.
§ Amendment to proposed Amendment negatived.
Marquess of HARTINGTONI beg to move, as an Amendment to the proposed Amendment, in line 23, to leave out paragraph (c).
In spite of the argument used by my right hon. Friend, I still cannot agree that this proposal to charge betterment on the increased value for the purposes of a particular trade is one which is just or which will promote prosperity or good business in the future. It seems to me that it imports a new elements of risk and uncertainty into the conduct of every business in the country, and I am surprised that my right hon. Friend should attempt to collect betterment assessed in this way. It means that every business throughout the country which is fortunate enough to have an increased turnover in any district where a town planning scheme has come into operation may be faced with a demand for 75 per cent, of the capitalised value of that increased turnover, which might amount to many hundreds or even thousands of pounds. The proprietor of the business will be faced with the necessity of contesting the claim before an arbitrator and, although in the end the amount to be paid may not be large, great uncertainty and a feeling of insecurity and instability must be created. I would remind my right hon. Friend of what occurred in one well-known case where betterment was collected. It is the well-known London Bridge case where a claim for betterment was made owing to 1636 the coming into operation of a scheme. A sum of £20,000 was collected in betterment. The ratepayers of the London County Council were no better off, because the law costs in securing the £20,000 amounted to £25,000, and they were, in fact, £5,000 out of pocket. The individual property owners who were charged betterment were £20,000 out of pocket, plus whatever sum their law cost amounted to, presumably not much less than the law costs of the London County Council, say, round about £25,000. The property owners were thus £45,000 out of pocket, and the ratepayers were £5,000 out of pocket. The only people who. gained were the arbitrators, the lawyers and others who appeared in the case. The surveyors possibly, and the town planning expert witnesses had their dip as well. That is an extremely unsatisfactory position, and to allow for any extension of a capital charge as heavy as 75 per cent, to be made upon the capitalised value of anything as uncertain as increased profit in trading extending, over a period of five years is wholly indefensible.
I realise that a case may be made out that it is hard for a particular individual to have to pay 75 per cent, while a corporation or multiple shop can carry on and get off scot free. Times are not so good that we need grudge anyone who is fortunate enough to increase his turnover or carry on a larger business and come upon him and stamp him down by imposing a capitalised tax of 75 per cent. Moreover, the contention of the right hon. Gentleman that the individual who carries on his trade escapes scot-free while the individual who sells land and realises benefit is not a fair assumption. Anyone who carries on increased trade attracts higher rates and a higher rate of taxation, and he does not get away with anything substantial. I wish to make it clear that we do not object to the collection of this tax from people who buy land for a rise, for on principle they ought to pay the full 75 per cent. If we pass paragraph (c) it will add greatly to the uncertainty and the risks, already great, of carrying on business of any kind.
§ Mr. M. BEAUMONTI beg to second the Amendment to the proposed Amendment.
1637 I do not propose to recapitulate the arguments which I have already used, but wish to address two questions to the Minister and remind him once more that there is already a differentiation between this and the other sort of investor. Will the betterment which this man is called upon to pay be subject to tax? When he is making more money out of his business and therefore has to pay increased taxation, will he be taxed upon the money which he has to pay in betterment to the local authority? Upon what principles, if any, can the arbitrator assess this man? The right hon. Gentleman said just now that this was a matter to be left to the arbitrator. I cannot for the life of me see how the arbitrator is to discriminate between increased business turnover due to improvements, and increased turnover due to a return of trade, increased industry, change of proprietor or whatever it may be. I once more remind my right hon. Friend of the essential difference between realised betterment of a capital nature and realised betterment of this nature, in that the latter already pays taxation whereas capital betterment does not. It is well to remember that we often do these things in a light-hearted way. No one pays very much attention, and they slip through in a comparatively empty House like the present, and then they are quoted as precedents for exactions by hon. Gentleman opposite. I warn my right hon. Friend against allowing this sort of thing to creep into the Bill. I think that on reflection he will realise that there is a case, and I hope that either now or before the Bill reaches another place he will reconsider his decision.
§ Sir S. CRIPPSI really fail to realise the argument which the Noble Lord and the hon. Member have put forward. I understand that they start with the premise that here is a property which has been improved in value by reason of work undertaken at the instance of the local authority. That apparently is the basis upon which they start.
§ Mr. BEAUMONTThe basis upon which the local authority start.
§ Sir S. CRIPPSIt is the basis upon which the Amendment proceeds. If there is no betterment, then we are discussing a case which does not fall within the 1638 Amendment at all. We are discussing presumably cases falling within the Amendment. Therefore, there will be cases where property must have been improved by works carried out at the cost of the local authority. I cannot understand why, in the case of a garage run by a company, the company should escape a betterment which has to be paid by everybody else. That is the perfectly simple proposition which has been put forward. The hon. Gentleman shakes his head.
§ Mr. BEAUMONTWe both endeavoured to point out that betterment is a capital charge. This is in the nature of a charge upon income, and the two things are entirely different.
§ Sir S. CRIPPSReally, the hon. Gentleman is not doing himself justice. There is no such distinction at all. The disposition of property need not be by way of capital amount but by way of ground rent, which is an annual sum. The position of the person receiving ground rent will be precisely similar to that of the person receiving rent for the garage. Whether it is a garage or house makes no difference. It is an entirely false assumption that all payments from which betterment is to come will be capital payments. There may be payments under leases or payments on ground rent when a disposition takes place by either of those means.
§ Mr. BEAUMONTThe hon. and learned Gentleman is under a misapprehension as to the meaning and the effect of the Amendment. It does not cover the question of ground rent. It only covers the question of money made in the business from increased turnover—it is not a question of rental or the value of rent at all—which may or may not be the result of work done by the local authority.
§ Sir S. CRIPPSI may have entirely misread the Amendment of the Minister. As I understand it his Amendment deals with the case of property, and under Subsection (3) the claim will be for 75 per cent. of the amount by which the property has been increased in value by the coming into operation of the provision. The property and the case taken is a garage; it is not a business. The arbitrator, as is always done in these cases, will ascertain the proper rental for the 1639 garage, let me say, £50 a year. If he finds that by reason of the improvements the garage has become worth a £100 a year, the increase in the value of the property is £50 a year, and if he capitalises it at 20 year's purchase it will be £1,000. That will not bear any direct relationship to the actual amount of receipts which the man is getting from the business at the moment, whether it happens to be winter or summer, or whether they are good times or bad times. It will depend upon whether the new arterial road has made the property and the garage of more value or not. It is not a question whether the man happens to carry on more business, or whether he is a good or bad business man. This fact is not considered in respect of the increase in the value of property. As I understand the position—perhaps the hon. Gentleman will tell me whether I am wrong—it always relates to land, but not always to the business carried on upon the land.
§ Mr. BEAUMONTIt is a matter of improvements. The whole principle of the Amendment of the Minister, and the Amendment which he has accepted is that betterment shall be paid only when it is realised. Paragraph (c) lays it down that this is realised for increased turnover, and we say that you cannot tell whether it is due to that or not, and that it is wrong to charge it. It should only be charged when betterment is realised as to sale or to lease.
§ Sir S. CRIPPSAs I understand the position, the garage is in the possession of a company which does not sell or lease it. It goes on with it. Therefore, either it will never pay betterment, or it will have to pay betterment at a certain period of time to be determined in some way or another. Otherwise, it completely escapes, and it escapes, not because it has not derived betterment from the scheme, but it escapes from the instant that it happens to be in possession of a company which is perpetually in succession and goes on for ever, and does not belong to an individual who has to sell or lease it at the end of a period of year3. That is the only difference, and yet the hon. Gentleman says, "Oh, yes. The man who has to sell it after a certain number of years is charged betterment to the full, but the company which does 1640 not sell is not charged." I cannot understand what the argument is at all. It seems to me that it is either right or it is wrong to charge betterment to everybody who has a garage of this sort. It cannot be wrong in one case and right in another because of the incidence of the person in whose possession the garage happens to be. That seems to be the fallacy in the argument of the hon. Member. I believe that the Amendment of the Minister is perfectly justifiable, and that it will not inflict any hardship upon any one. Money for a period of five years will have been accumulated and with that money it will be possible to pay betterment; and if there is hardship, it can be spread over a further term of years under the Sub-section. I shall support the original paragraph (c).
§ 5.30 p.m.
§ Sir HENRY CAUTLEYI should be glad if the Minister of Health or the Attorney-General would enlighten the House as to the real meaning of the Clause. I rather agree with the hon. and learned Member for East Bristol (Sir S. Cripps) that the movers of the Amendment are not quite right, but I think that he, too, is not right. The view that I take is that the betterment is only assessable at the date of the coming into operation of the scheme and that payment is deferred, or may be deferred, on giving notice under Sub-section (I). Then, if there is no disposition, if the property is not dealt with, there is to be no payment of betterment under Sub-section 2 (a). It makes no difference up to that point whether the property in question is land, a house or a business. Then comes in Sub-section 2 (b). Again, if there is no claim within 14 years no betterment is to be paid if the occupation remains the same. For some reason or other, since the Committee stage, the Minister has chosen to differentiate—this is where I differ from the hon. and learned Member for East Bristol, because the Minister seems to have gone back on what was arranged in Committee—between business premises and other premises, and he says that the demand for betterment shall not cease at the end of 14 years, but that there shall be power to the local authority to come along and claim in respect of business premises within 12 months after the expiration of five years.
1641 If I am right in my interpretation, I would ask whether such a provision has ever been made in any Act of Parliament giving the right to betterment. How can it be fair that this should take place in regard to business premises 1 The premises may be let, probably are let, and the Minister is seeking to say that because the tenant has made a good business there, the owner by reason of that fact is to be made liable for payment of betterment, although he derives no benefit from that improvement and in regard to any other class of property he would not be liable for it. Such a provision surely needs justification. The question of a garage has been raised. Let us say that the garage belongs to "A" and has been let to "B." Why is "A" in that case to be made liable for the payment of betterment at an earlier time than any-one else I He may have got a tenant of whose business goodwill the Government seem to be availing themselves in order to claim, betterment. The betterment has already been assessed, and payment has been deferred. Why, then, because the tenant for the time being is someone who by the exercise of' his capacity for business has been making a profit, although the owner of the property cannot derive any profit, should a claim for benefit be put upon him in contradistinction to other owners of property? For these reasons, unless the Attorney-General can explain the matter satisfactorily, I shall vote for the Amendment.
§ The ATTORNEY-GENERAL (Sir Thomas Inskip)I have not clearly apprehended what was the first question put by the hon. and learned Member for East Grinstead (Sir H. Cautley). He described the Clause as if it were an attempt to obtain betterment upon a business. This Clause deals with property and Subsection (2, c) deals with property which is used for the purpose of a business or industry. If we bear in mind that the whole purpose of the Minister's alteration of Clause 21 is to give effect to the arrangement that no betterment should be paid until the time of realisation has arrived. I do not think that it will be difficult to appreciate the purpose of paragraph (c), to omit which an Amendment has been moved. The betterment of property which is used for the purposes of a business or industry, and is not property which comes under paragraphs 1642 (a) and (b), is to be dealt with by a claim that must be made within a period of 12 months after the expiration of five years.
My hon. and learned Friend may differ as to the choice of five years. He may say that there is no reason why the betterment should be realised in such a case at the end of five years any more than at the end of one or two years. He may say—I understand he does say—that the period ought to be 14 years, as in the case of other property. The intention is to require betterment to be paid on a claim being made within 12 months after the expiration of five years in the case of a property which is being used for a business or an industry, and the reason is to provide for a case which otherwise would not come under either paragraphs (a) or (b). If paragraph (c) is not put into the Bill, a great number of properties will escape altogether, because there will neither be a disposition of the property under paragraph (a) nor an alteration in the use of the property under paragraph (b). Therefore, paragraph (c) is intended to provide for that case. My hon. and learned Friend may object to the period taken or to the case being dealt with at all, but it is a question for the House to consider whether they intend to allow such properties to escape altogether, or whether paragraph (c) is not the best and most reasonable method of dealing with the matter.
§ Sir H. CAUTLEYWhy should business premises be distinguished from other premises or buildings?
§ The ATTORNEY - GENERALThe Minister of Health explained why paragraph (c) has been drawn in this way. Where premises are being used for the purposes of a business or an industry and there is nothing to entitle a claim to be made under paragraphs (a) or (b), then paragraph (c) is put into the Bill. The illustration which has been given of a garage is one illustration of many which might be given of cases where paragraph (c) would be required in order to make a property subject to betterment.
§ Lieut.-Colonel Sir MERVYN MANNINGHAM-BULLERThe last two speakers have convinced me that the case against paragraph (c) as it stands is very much stronger than I thought it 1643 was. What action is going to be taken if this Clause becomes the law of the land in the case—and there will be many hundreds of cases—of a man carrying on a business on a tenancy for a considerable period of years, perhaps seven, 14 or 21 years, or even more? If his business improves owing to betterment being created by a town planning scheme, he is the man who benefits. His turnover increases because of the improvements, but he is not the man who will be called upon to pay the betterment charge. The betterment charge will come upon the owner of the property, who has let the premises very likely on a long term of years to the tenant. At the end of six years after a town planning scheme has been made the owner is to be called upon to pay a large sum of money because, theoretically, his property is improved in value, although financially he is none the better off.
The tenant is reaping the advantage of the improvement, if anybody, and the landlord is unable to recover from the tenant by increasing the rent until the lease expires in accordance with the improved value of the business. The tenant secures the advantage all the time by getting a better business, for which he does not pay, while the landlord who has let him the premises is to be called upon to pay the betterment. It may be said that if paragraph (c) is not put into the Bill, a business which is owned by a company will escape the payment of betterment. Sooner or later the lease of the premises will come to an end, and when a new lease is granted to a. new tenant it will be obvious what the betterment is. Then will be the time to recover the amount that is due on betterment. It is hardly just that the owner, who is debarred during the period of the lease from getting any increased financial benefit, should be called upon very likely to pay a large capital sum because his property has improved in value, although he may not be able to realise any portion of that value until 20 or 25 years or longer, when the lease expires and he is able to get something of the increased value by letting the property on better terms.
When the owner reaps the advantage by letting the property on better terms, in 1644 accordance with the increased value, surely that is the time to collect the betterment. That is the only way in which to carry out the desire and intention of the Committee. You should not cripple a man or partially cripple him by demanding a considerable lump sum by way of a capital charge in payment of betterment until he is in a position to pay that money by having realised to a great extent the value of the betterment. The Minister said that he would facilitate the payment by allowing payment in instalments. It certainly would ease the position if the instalments were spread over a considerable number of years, but that does not meet my point that under this Clause, as far as I can see, in the majority of cases one man, the tenant, would receive the benefit of the betterment and another man, the owner of the property, would be called upon to pay for it without any possible chance of recovering from the tenant.
Marquess of HARTINGTONBy leave of the House, may I ask a definite question of the Minister? Take the case of a garage quoted by the hon. and learned Member for East Bristol (Sir S. Cripps) which, owing to the operation of a scheme such as the construction of a new road, makes an increased profit of £50 a year which he calculated would have a capitalised value of £1,000. Is it the case that in regard to a garage which gets an increased business of £50 a year owing to the operation of a scheme and has been making that profit for five years, which would amount to £250, that it then becomes liable to a debt of £750, plus whatever legal expenses may have been incurred in getting the amount reduced to that figure?
§ Mr. HOROBINI had imagined that I agreed with the Minister of Health and the hon. and learned Member for East Bristol (Sir S. Cripps), but either the hon. and gallant Member for Northampton (Sir M. Manningham-Buller) or myself is inaccurate in the reading of a minor point regarding the Sub-section. As I understand it, this provision will have to be read in connection with the interpretation Clause, in which the owner in the case selected by the hon. and gallant Member will be the owner of a leasehold interest. Obviously, the owner of a freehold has no betterment and will 1645 not be charged. Therefore, the difficulty that I see is exactly the reverse of that raised by the hon. and gallant Member. I may be wrong, but it appears to me that the person who will be charged will be the holder of the leasehold interest.
Suppose you have a short lease of seven years, the owner of the leasehold will be quite fairly charged with betterment and will nave a fund out of which to pay it. The freehold reverts to the owner too late for a claim to be made against him, and he may have property in perpetuity trebled and quadrupled in value by a public improvement but nobody can make a charge for betterment against him. I may be wrong. If I am wrong, then the objection of the hon. and gallant Gentleman the Member for Northampton is well-founded. If the hon. and gallant Member is wrong, then my objection is well-founded. Either the leaseholder is fairly charged and the landlord may get away with some boodle, or the hon. and gallant Member for Northampton is correct, in which case the freeholder may be faced with an enormous claim for betterment while his tenant is getting all the money.
§ Mr. C. WILLIAMSThe Minister of Health has told us that this Sub-section will only apply to a few cases, but the Attorney-General said that it might apply to a large number of cases. In all fairness the Government should tell us whether it is to meet an occasional point or a vast number of cases. No one seems to know the real meaning of the Subsection, and as we want to see the Bill get through quickly, I think the Minister of Health might make a small concession, particularly as there seems to be so great a variety of opinion as to what the words really mean.
Sir H. YOUNGLet me reply to the four specific questions which have been put to me. The hon. Member for Ayles-bury (Mr. M. Beaumont) asked whether the amount of betterment payment will be taken into account by the Income Tax collector. Income Tax is collected on the net profits of a business, and such things as rates are taken into account, as well as such matters as betterment charges. He cannot be charged twice over. Then as to the distribution of betterment charge between landlord and tenant, an interesting point put by the hon. and gallant Member for Northampton (Sir M. 1646 Manningham-Buller). The hon. and gallant Member is under a misapprehension. From either party in the relation of landlord and tenant you can only recover in respect of betterment in proportion to his interest in the land. In the case of the landlord it would be the proportion of betterment represented by his reversionary interest in the land at the end of the lease. As regards direct betterment, you recover that from the tenant, who is in enjoyment of it, in proportion to the length of his lease. The arbitrator assesses the whole of the betterment charge and then apportions it between those interested in the land in proportion to their interest in the land.
The Noble Lord the Member for West Derbyshire (Marquess of Hartington) put the case of a garage which is making profit, but what he thinks is an unfair possibility is a possibility which is quite impossible to occur in the realm of world affairs. No arbitrator, no assessor, would ever dream of assessing the increase in the value of land due to a scheme at 20 year's purchase of the actual increase of profits enjoyed between the date of the scheme and the date of the arbitration. That is a perfectly fantastic valuation. As regards the question put by the hon. Member for Torquay (Mr. C. Williams), I should say that the number of cases involved is quite small in comparison with the total number of betterment cases.
§ Mr. CAPORNThe Minister of Health seems to differ from the late Solicitor-General in regard to what an arbitrator could or could not do. The hon. and learned Member for East Bristol (Sir S. Cripps) assumed that the arbitrator would say that £1,000 was the amount, and I submit that in the case mentioned by the hon. Member for West Derbyshire (Marquess of Hartington) it is very doubtful whether an arbitrator would not have to find that in fact £1,000 was the amount of betterment. The hon. Member for West Derbyshire definitely stated his assumption to be that £50 per year was the increase in value due to betterment. If £50 a year is the increased value due to betterment, then what is there in the Bill which will prevent an arbitrator saying that 20 year's purchase is the proper way in which to assess the capital value of that increase? Will the Government provide in the Bill that no 1647 arbitrator shall have the right to say that 20 years' purchase is the right and proper way of assessing betterment?
Take the case of property which is let at a yearly tenancy. In those circumstances it is clear that the landlord will be the person responsible for the whole betterment charge, but under the Land-land and Tenant Act he may be unable to obtain possession of his premises and get an increased rent; at any rate, he may be unable to obtain possession of his premises without having to meet a claim under the Landlord and Tenant Act for improvements. In those circumstances, is he to be liable for £750 when, in fact, he cannot obtain possession of his premises and when he cannot pass on to the tenant any increased charges due to an improvement in the premises? I submit that there is so much doubt as to what this Sub-section means that there is not a Member who really knows what a court of law is likely to hold to be its meaning, and I suggest that the Minister of Health should withdraw it now and consider whether it is necessary to substitute something for it in another place.
§ Mr. TRAINI had not intended to take part in this discussion but for a statement made by the hon and learned Member for East Bristol (Sir S. Cripps). If he is correct, then most other hon. Members are wrong. He gave us the case of a garage with betterment to the extent of £50 a year, and he calculated on a 20 years' purchase. That is, of course, the usual calculation as applied to land. But other hon. Members do not agree with the hon. and learned Member, and we have arrived at a state of great confusion on all sides of the House. If a man has a garage on a lease for 21 years, how can you apply anything in the nature of a ground burden to him? The landlord, the proprietor, of the land cannot get any more money until the expiry of the lease. Another man may come along and, because this garage is doing well, build a garage alongside it. He has to pay the betterment charge on the land; it is the land which bears the betterment charge. The man has to pay an extra £50 a year for the site on which his garage is built, whereas the man who has a lease of 21 years pays nothing; his landlord has to pay.
1648 I quite understand the principle of betterment when applied to land. It is a simple proposition. If a development company comes along and develops land and there is betterment accruing, then there is a right to betterment, but I cannot follow the argument when applied to a business, which may be affected by an increase in the population or an increase in prosperity brought about by the action of a town planning authority. I should like some explanation as to which argument is correct. I should like to vote for the Amendment, but we have hon. and learned Members on both sides of the House putting forward different arguments, and unless the Minister can give us some good explanation of this Amendment, I hope he will withdraw it.
§ Sir S. CRIPPSMay I, by the permission of the House, reply to the hon. Member for Cathcart (Mr. Train)? He is assuming the case where £50 a year is actually the increased value for 21 years. That increased value would be, as it were, the proved rental in the case of the man who has the lease, and after the expiry of the lease it would fall to the landlord. As far as the landlord is concerned, any profit out of the £50 increase is deferred for 21 years; and on the ordinary tables of calculation it would be reduced to a certain figure. The lessee of the land has a 21 years' term of that improved rental and, therefore, the total sum of betterment would be divided between the two in easily calculated proportions. Of these two sums the landlord would get only a small proportion and the lessee would get the major portion, because he, in fact, would be getting immediately the proved rental value for 21 years.
§ Mr. TRAINThe question is, how is betterment to be applied to land? The hon. and learned Member tells us that it will be divided between the two, but the man who has the lease has no interest in the land at all.
§ Sir S. CRIPPSYes, for 21 years.
§ 6.0 p.m.
§ Captain WATERHOUSEI do not know whether on this question the hon. and learned Member for East Bristol (Sir S. Cripps) can be considered as a sort of supernumerary adviser of the Minister of Health, but if he can it is 1649 rather unfortunate that he was not here when his new chief made his declaration, because that declaration on this £50 garage case was diametrically opposed to the interpretation which the hon. and learned Member gave. The Minister ridiculed the suggestion of my Noble Friend that the garage proprietor who had a real interest in the value of this garage of £50 a year, an increment due to a scheme, would have £750 to find. The right hon. Gentleman said, "Oh, no. No valuer would find on any such basis." I want to know on what basis any valuer can find if not on that basis or substantially that basis. If he finds on even half that basis, if he finds that the valuation is £375, then that decision would in effect be breaking the undertaking which I think that my right hon. Friend thought he had implemented in this particular Amendment, because he undertook that no payment for betterment should be made until the betterment could be realised. In that particular case the betterment would be paid when only half had been realised.
I have waited, and waited in vain, for some reason why business and industry should be put in a category worse than other things. It seemed to me that this Government's chief object in life was to promote trade and industry. When this Bill came before the Standing Committee we knew that it would most certainly have killed trade and industry, and we wore glad to find that the Minister was willing and anxious to collaborate with us in remedying its defects. I am sorry indeed that he has not seen his way to remedy this particular defect, but I hope that if he is unable to accept this Amendment now, possibly in another place he may find means of remedying what we believe to be a gross injustice.
§ Amendment to the proposed Amendment negatived.
§ Mr. EVERARDI beg to move, as an Amendment to the proposed Amendment, in line 34, after the word "farming," to insert the words
or for charitable purposes or wholly or mainly for the purpose of public religious worship or as a churchyard or burial ground, or mainly or exclusively for the purposes of open-air games or recreation or as a private aerodrome licensed under the Air Navigation Act, 1920.1650 I move this Amendment because I consider that the objects which I seek to exclude from the betterment value are objects which are not of a speculative value and should not come under the Bill. They are objects which are extremely desirable in the general well-being.
§ Captain DOWERI beg to second the Amendment to the proposed Amendment.
§ The ATTORNEY-GENERALI think my hon. Friend has moved this Amendment under a little misapprehension as to the effect of his words. It is quite true that the Clause in its original form, that is to say the words which we have now left out of the Bill, mentioned cricket grounds and playing fields, to which my hon. Friend has referred. But the object of the part of the Minister's Amendment which my hon. Friend seeks to amend provides that no claim shall be made in respect of a change in the use of the property when the use is only a change from one form of agriculture to another form of agriculture. My hon. Friend seeks to put into the Clause words which will add to the different descriptions of agriculture, and words referring to charitable purposes and churchyards and open-air camps and so on. Really, those words do not refer to uses of the same character as agricultural uses, and I think they are out of place and not necessary. If the words were inserted the only effect would be to provide for no claim being made in the case, for instance, of land which was used for one of the agricultural purposes mentioned being changed to use as a burial ground. I do not think that is my hon. Friend's intention.
Similarly, if his words were inserted the effect would be to provide that where land was used for the purposes of a cricket ground but was diverted for use as a burial ground, no claim could be made. I do not think that that is the intention. My hon. Friend's intention, broadly speaking, is to provide that no claim shall be made in respect of land which is being used for purposes of recreation or as playing fields. As the Clause stands that purpose will be effected. As long as land is being used for charitable purposes and continues to be so used, no claim will be made in 1651 respect of betterment. Of course if it is diverted from charitable purposes to what may be commercial purposes, such as an aerodrome or a burial ground, then a claim for betterment could be made on the assumption that that had in fact taken place. The cases are not likely often to arise where the use of ground for charitable purposes is changed to agricultural purposes. But even if such a case was likely to occur often, I am sure that my hon. Friend would not suggest that that was a case, assuming the principle of betterment, in which a claim for betterment should not be made. It is unnecessary, I think, to carry out my hon. Friend's most admirable purpose, with which the Government are in full agreement, that these words should be inserted. The Clause really does effect what is his purpose.
§ Mr. EVERARDTake the position of private aerodromes. Suppose that there are eight or nine fields of agricultural land, and the owner of these fields has got a private aerodrome, which may well be for the general advantage of the country in peace or in war, particularly in time of war. It is extremely hard that he should have to pay betterment value when to all intents it is exactly the same land as before.
§ The ATTORNEY-GENERALIf my hon. Friend wants legislation to facilitate the conversion of land at present used for one purpose or another into aerodromes, it will be for the House to consider what privilege it will attach to the use of grounds for aerodromes, but this Bill is not the place to provide facilities of that kind in connection with land used for aerodromes. My hon. Friend suggests that it might be for the public advantage that agricultural land should be taken for an aerodrome. I am not so sure. It might or might not be. It depends on the class of agriculture in operation on the land. The answer, broadly speaking, is that if you are going to deal with aerodromes and to facilitate the creation of aerodromes, it must be done in a Clause other than one dealing with betterment.
§ Lieut.-Colonel ACLAND-TROYTEThe right hon. and learned Gentleman does not seem to understand what the result of the Clause will be. It is true that the 1652 Clause is very complicated. One has to read it 25 times to make any sense of it. We see no reason why we should not put back into this Clause all the various things that were in the original Bill. I understood that in moving his Amendment the Minister said that it preserved the original exemption. It does not do so. Suppose that you have a ground used for charitable purposes and in future used for a cricket ground. Why not? Or take the case of meadow land to be turned over to charitable purposes. You should be allowed to do that without betterment being incurred. I do not think the explanation given by the Government covers the point at all. The learned Attorney-General did not seem to understand what we mean.
§ Amendment to the proposed Amendment negatived.
§ Mr. MOREINGI beg to move, as an Amendment to the proposed Amendment, in line 35, at the end, to insert the words;
and(ii) under paragraphs (b) or (c) of this Sub-section in the case of property belonging to a statutory undertaker.It is a coincidence that we should pass from considering the case of burial grounds to considering the case of a statutory undertaker—undertaker in this case in a very different sense from that in which we shall all meet the word one of these days. The purpose of the Amendment to the Amendment is to provide in this Clause what was originally included in another Clause of the Bill which was amended in Committee. In Clause 21 of the Bill as originally drawn betterment will have to become liable at an early date. Therefore certain provisions were put into a later Clause, Clause 25, to deal with the case of property which was not property actually subject to the usual laws relating to development or the sale or dealing in land. The property dealt with in Clause 25 was property belonging to statutory undertakings such as railway companies, docks and harbour boards, canals, electric power companies and waterworks. Under the Clause as it is now drawn, under Sub-section (2), paragraphs (a) (b) and (c), certain rules are set out, and the Minister puts in a provision that no claim shall be made under paragraph (c) of the Sub-section in the case of certain property. We hope to have that prin- 1653 ciple extended to the case of land belonging to statutory undertakers so long as it remains the property of the statutory undertakers.
Sir H. YOUNGIt may shorten the discussion if I tell the hon. Member that I propose to accept the Amendment to the proposed Amendment.
§ Amendment to the proposed Amendment agreed to.
§ Sir H. CAUTLEYI beg to move, as an Amendment to the proposed Amendment, in line 47, after the word "value" to insert the words:
by the coming into operation of the provision or by the execution of the work in respect of which the original claim was made.Sub-section (4) of the Minister's proposed Amendment provides for the case of a claim made, on a change taking place in the use of the property, but it does not explain what is meant by "a change taking effect."
Sir H. YOUNGI think this Amendment will improve the drafting of the Bill, and I am prepared to accept it.
§ Amendment to the proposed Amendment agreed to.
§ Colonel Sir GEORGE COURTHOPEI beg to move, as an Amendment to the proposed Amendment, in line 55, after the word "made," to insert the words "or his predecessor in title."
This Sub-section of the Minister's Amendment provides that in assessing the amount payable in respect of any property, account shall be taken of any gift of land or money or any concession made by any person against whom a claim under the Section in respect of the property is made․—
§ Major LLEWELLINI beg to second the Amendment to the proposed Amendment.
Sir H. YOUNGI am prepared to accept this Amendment also, but I suggest that there is no reason why my hon. and gallant Friend should limit it to "predecessor." Why not "predecessors"?
§ Sir G. COURTHOPEI would prefer the word suggested by the Minister 1654 and I wish to thank the right hon. Gentleman for accepting the Amendment in that form.
§ Amendment, to the proposed Amendment, by leave, withdrawn.
§ Amendment made to the proposed Amendment: In line 55, after the word "made," insert the words "or his predecessors in title."—[Sir G. Courthope.]
§ Proposed words, as amended, there inserted in the Bill.