HC Deb 19 June 1933 vol 279 cc539-46

Where an estate in respect of which Estate Duty is payable on the death of a person dying after the commencement of this Act comprises or consists of agricultural property there shall be deducted from the value upon which Estate Duty is payable in respect of the agricultural property an amount equivalent to any increment in the value of such property which is attributable to improvements effected by the person deceased during the ten years previous to such person's death.—[Lord Apsley.]

Brought up, and read the First time.

6.18 p.m.

Lord APSLEY

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

I am not sure that the hon. Member for Don Valley (Mr. T. Williams) will like this Clause either, and, if the hon. Member for Caerphilly (Mr. Morgan Jones) was in his place, I am certain that he would not like it. The hon. Member for Don Valley is, after all, an agriculturist though not a farmer yet, and he may see the advantages that the Clause would bring not only to landlords but to tenants. The hon. Member for Caerphilly would, I am sure, say that this is purely an Amendment to benefit the landlord at the expense of the poor man who is out of work. The trouble is that he has not yet got out of the Whig mentality which has crippled some portions of the Labour party, as it has done the Liberal party for many years. But I believe a new movement is on foot and that this old Whig idea, which is so narrow and restricted, is being thrown overboard. Taxation of the rich is all very well up to a point, but, when you get beyond that point, you do not only soak the rich; you soak the poor. That was discovered as early as the days of Solon in Athens. Solon was supposed to be a very wise man, but in reality he was a Liberal. Consequently he has been well written up by the historians of the nineteenth century, who were Whigs. If you go into his measures, they were nothing more or less than like those brought forward by a series of Liberal statesmen, including the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George), and they had exactly the same effect on finance and unemployment in Athens as they have here to-day.

This Clause is one small contribution to try to reverse that policy and to get back to an honest and sound economic one. It is not meant merely to benefit the landlord. It is to benefit the good landlord at the expense of the bad one. I do not wish to press it to a full conclusion if the Financial Secretary will assure us that the whole question of maintenance claims will be seriously gone into by the Government with a view to giving the landlord fair play. No one can pretend that present measures give the landlord any chance of keeping an estate in anything like proper order, or keeping the right number of men in employment, or helping the tenant to do so. As the law is framed at present he is, first of all, given an arbitrary allowance which he can deduct from his Income and Surtax. The allowance is, I think, a quarter if the property is under £100 a year, then a fifth and then finally a sixth, and it stops there. If you spend more than that allowance, which almost every landlord has to do, you have to deduct it from what you spend, and then you have to take an average of five years—a measure which has been abandoned in ordinary business as being unworkable—and on that you pay your Income Tax and Surtax. The effect of that is that the only man who scores is the small owner of property under £100, who spends nothing in maintenance at all, and he can deduct £25 as his maintenance claim. That, of course, is a contributory reason for the growth of slums, because it is essentially the small man owning one or two cottages who does practically no repairs who is the most difficult proposition to deal with in the clearance of slums. The man who tries to keep his property, whether small or large, in proper order is not in any way getting a fair deal from the Government as far as maintenance claims go.

The Clause is framed with the idea of giving a good landlord an incentive to make further improvements on his property, not only to keep it actually in repair, but to improve it and get it better year by year, thereby giving more and more employment. This is a case where the taxation of the rich is paid by the poor, because there are many agricultural labourers out of work for the sole reason that landlords as well as tenants cannot afford to keep them employed in keeping their estates up properly. If we could get this Clause, or something in its nature, adopted this year, or even next, it would give a great incentive to the improving of agricultural estates all over the country. After all, when an owner dies and 50 per cent, is taken off the capital value and goes into the coffers of the Exchequer, the heirs have to get on as best they can after having paid Death Duties-. It is not fair that, when work has been done in improvements, maintenance cannot be claimed on what has been paid out for the preceding 10 years and that the expenditure should be deducted from Death Duties when they have to be paid.

6.26 p.m.

Lieut-Colonel SPENDER-CLAY

I beg to second the Motion.

I believe this would be in the national interest, and I believe it would cost very little money. It would undoubtedly give increased employment, and it would improve the standard of equipment of agricultural holdings throughout the country. There is no doubt that at present agricultural land in many parts of the country is starved for capital, and the Clause would enable a great deal more money to be spent on improvements. There is a tendency now for even a good landlord, if he is fortunate enough to have any ready money, to hand it over to his heirs while he is still alive in order to reduce the incidence of Death Duties. If money spent on improvements in this way were allowed, I feel certain that every landowner who had the power to do it would feel am impulse to improve his estate in the interest of his tenants as well as his own. The adoption of the Clause would cost the Exchequer very little money and would give an impetus to employment and development and would be in the best interest of the country.

6.29 p.m.

Mr. HORE-BELISHA

If I understood my Noble Friend aright, he was not so anxious that the Clause should be accepted as that some revision should be made in the present practice of dealing with maintenance claims. He will recognise at once that I could not enter into any detail upon that matter on this Clause. The Clause, of course, is quite impracticable of acceptance. It is a. proposal to exclude from the capital value of agricultural land for Estate Duty purposes that part of it which is due to improvements effected by the deceased during the 10 years preceding his death. My Noble Friend, in the phraseology that he uses, evokes all the horrors of the land value taxation proposals. How is one to determine what part of the additional value in the last 10 years is attributable to the landlord and how much to the community? It is really impracticable to make a comparison of the value of a piece-of land to-day with the value of it 10 years ago, and to say exactly what portion of that increased value is attributable to the landlord and what to other causes. My Noble Friend appreciates that at once.

The Chancellor of the Exchequer in Committee, in dealing with the general matter of Estate Duty, made a most sympathetic speech. He said that if conditions were sufficiently propitious to permit any additional relief to be given in the future—and he did not deny his own desire to see it—it could be given in the most practicable way by a reduction in the rates of Estate Duty on agricultural land. That would be the safest way and rid us of any complexities, such as would be entailed in the acceptance of a Clause of this kind. My right hon. Friend is sympathetic, subject to the circumstances becoming favourable, and I trust that my Noble Friend will be satisfied if I represent to my right hon. Friend what he and the right hon. and gallant Gentleman who has supported him have said this afternoon.

6.31.p.m.

Mr. RHYS

The hon. Gentleman made a very sympathetic reply, but I think that he slightly confused the issue when he stated that my Noble Friend the Member for Central Bristol (Lord Apsley) was invoking all the horrors of the Land. Value proposals. It is simpler than that. The landlord must know exactly how much he has to spend. It is a questions of arriving at a conclusion whether to spend so much money or not that is the real point of the whole proposal.

6.32.p.m.

Mr. ATTLEE

I do not think that the hon. Gentleman the Member for Guildford (Mr. Rhys) has quite met the point. It is not a matter of how much to spend, but what the additional value is. If the landlord spends his money badly there may be no additional value at all. There are two other points I should like to make. Everybody must realise that there is something to be said for the proposed Clause if one believes in a continuation of the system of landlord and tenant of agricultural land in this country, but we have had a series of speeches which have constituted really very grave attacks upon that altogether. We understand from the speakers that practically all landholders to-day are philanthropists and that they are making no money; that they are trying to put money into the land, but they have no money. In fact the whole system by which the landowner was supposed to finance agriculture has broken down in spite of a large number of doles. We have had rates practically taken entirely off land, and there have been contributions of one kind and another, subsidies for beet sugar and for wheat, and assistance with regard to horticultural products and a number of other things, but apparently none of those efforts—I am taking my facts entirely from the statements of hon. Members opposite—are sufficient to induce anyone to put money into the land in spite of the glowing prospects that agriculture is to be made to pay by this Government.

What really beats me is the extraordinary self-denial of the landlords. I cannot think why they have not all joined us in a claim for land nationalisation, because they are not concerned with mere private interests; they are concerned with agriculture and the prosperity of agriculture in the interests of the nation as a whole. It is obvious that the Financial Secretary to the Treasury is not going to give them anything except sympathy, and sympathy does not go very far when put into land. If we really want to recreate agriculture it is obvious that we must have a very large capital expenditure, and, as has been pointed out, if that is done by private individuals the Estate Duties come along and remove the capital from the land. We want to keep the capital in the land in a more permanent form. Therefore, we must have something which is not subject to Death Duties. It is clear, therefore, that we want the national ownership of the land and national capital invested in the land so as to develop agriculture as a great national asset. I very much welcome those opinions which are spreading among hon. Members on the opposite benches, because they have all the facts and argu- ments before them. They only require a little logic, and they will come along with us.

6.36.p.m.

Mr. E. EVANS

I hope that the Noble Lord and his Friends will not press the Clause, because I do not think that they have worked out the possible consequences of it. As the Financial Secretary to the Treasury has said, it involves very considerable changes which cannot be introduced at this stage of the Finance Bill. I do not think that the Clause will enable the Inland Revenue to make a proper differentiation between improvements as a result of money spent by landowners and improvements as the result of expenditure made by the tenant. That is a matter of detail which is of very great consequence and importance in regard to which there should be further inquiries before hon. Members press a Clause of this character upon us. When they introduce a Clause of this kind they should be a little more chary about their treatment of Land Valuation.

6.37.p.m.

Earl WINTERTON

I should not have risen but for the speech of the hon. Member for Limehouse (Mr. Attlee). I do not propose to answer his point—I do not think it can really properly arise on this Clause—about the advantages or disadvantages of public or private ownership, but the argument which he used should not go out to the world without any answer, because it is based upon an entirely false assumption. In the first place, the hon. Gentleman suggested that British agriculture was receiving help at the present time under a system of subsidies and doles which was quite unprecedented. It may be unprecedented in this country, but I assure him that it is infinitely less than the agriculture of any other country of Europe is obtaining at the present time. Whether it is France, Germany, Italy, or any other country he likes to mention, he will find that agriculture is receiving in each country, in open or hidden subsidies, at least 50 per cent. more than it is receiving in this country.

Nor is it true that the money goes into the pockets of the landlords. In the matter of the remission of rates on agricultural land, it is notorious that the money does not go into the pocket of the landlord, but in relief of the burdens of the tenants. I challenge the hon. Member, or any other hon. Member who is unfriendly to landlords in this House, to give an example in any country of the world where the raw material of agricultural, which is, after all, the land, bears such a heavy tax due to Death Duties as does the land of this country. The whole difficulty of replenishing agricultural capital in this country, as far as concerns land which is owned and let out to tenancies, is due to the terrific impost placed upon that raw material by successive Governments, and Conservative Governments, I honestly admit, are as bad as any other Government in that respect. I only rose because I did not think that at such a time, when there are many foreign delegates in London, it should go out from this House that the arguments used by the hon. Gentleman are based on facts, because they are not.

6.39 p.m.

Captain ARCHIBALD RAMSAY

I desire to associate myself with the remarks which have been made by the Noble Lord the Member for Horsham (Earl Winter-ton). There is a further point which might be drawn from the speech of the hon. Member for Limehouse (Mr. Attlee). What he really argued was that the land should be transferred to national ownership in order to escape Death Duties, but he did not, incidentally, explain how he proposed to transfer it to national ownership or raise the money with which. to buy it. We can, however, accept this reason for the transfer as a valid reason to impress upon my right hon. Friend the Chancellor of the Exchequer in support of the Clause. It is quite apparent that Death Duties fall with such heavy inequality upon land and landowners that it seems almost impossible to devise any plan to relieve them of a sufficient portion of a burden which is the most unjust perhaps of all other burdens of taxation. I think that we might assume that the hon. Member for Limehouse, in proposing the transfer of the land to the nation, realises that Death Duties fall with such inequality and unjust severity upon the land.

Lord APSLEY

In view of the assurance of the Financial Secretary to the Treasury that he will go into the matter carefully with the right hon. Gentleman the Chancellor of the Exchequer with a view to removing the burden, I beg to ask leave to withdraw the Clause.

Motion and Clause, by leave, withdrawn.