CLAUSE 25.—(Repeal of land value tax.)

HC Deb 05 June 1934 vol 290 cc842-905

The following Amendments stood upon the Order Paper:

In page 15, line 30, to leave out "The provisions of Part III," and to insert "Section ten."

In line 31, to leave out from "shall," to the end of the Clause, and to add: have effect as though for the first financial year in which the tax is to be charged there were substituted the financial year ending the thirty-first day of March, nineteen hundred and thirty-six, and the provisions of Part III of the said Act relating to valuation shall have effect as if for the dates respectively mentioned in the definition of ' valuation date ' in section thirty-two of the said Act there were substituted the first day of January, nineteen hundred and thirty-five, and the first day of August, nineteen hundred and thirty-nine."—[Mr. Maclean.]

The DEPUTY-CHAIRMAN

The first two Amendments in the name of the hon. Member for Govan (Mr. Maclean) are out of order as they require a Financial Resolution.

8.22 p.m.

Sir GERALD HURST

I beg to move, in page 15, line 32, to leave out from "effect," to the end of the Clause.

Clause 25 is one of the Clauses of the Finance Bill which has given most dissatisfaction to people in the country, and the surprising thing—and it is to this object my Amendment is directed—is that the proposed abolition of Part III of the Finance Act, 1931, which charged Land Value Tax is expressed in such a way that Section 28, which is an integral part of the provisions of Part III, remains unrepealed. It is to effect the repeal of Section 28, as well as the other provisions of Part III, that this Amendment has been brought forward. Part III of the Finance Act, 1931, deals only with Land Value Tax, and among the provisions of Part III which Clause 25 repeals is, first of all, the charge on land values. and then the method of assessing land values and of placing them on record, and the method by which you can object to a land valuation and by which you can bring appeals for further exemption and secure reliefs. Part III is in fact a code. I do not understand why, if the whole code for effecting taxation of land values and stating how land values are to be assessed generally is repealed, one. Section, namely Section 28, is retained. Section 28 provides that: On the occasion of—

1. (a) any transfer on sale of the fee simple of land;
2. (b) the grant of any lease of land for a term of seven years or more;
3. (c) any transfer on sale of any such lease;

it shall be the duty of the transfer, lessee, or proposed lessee to produce to the commissioners the instrument by means of which the transfer is effected, or the lease granted or agreed to be granted. The Second Schedule of the Act contains very elaborate requirements in connection with the production of instruments of transfer. In my submission, it is clear that, in passing the Finance Act of 1931, Section 28 was not inserted as an independent piece of legislation standing on its own. It was simply part and parcel of the code setting up the taxation of land values and the methods for dealing with such taxation. Like other portions of the code it was, and is, onerous to persons taking transfers of land or becoming lessors or transferees of leases. They are under statutory obligation, with a penalty imposed upon them if the obligations are not fulfilled, to supply details as to the situation of the land, the terms of the lease and sales; and so on. My submission is that the mandate which the present Government received to sweep away the proposals of Part III of the Finance Act of 1931—

HON. MEMBERS

When?

Sir G. HURST

At the last General Election. My submission is that the mandate which they received then is not discharged if one essential portion of the code is unrepealed while all the rest is deservedly and rightly swept away. The Amendment is brought forward for the purpose of ascertaining the object of exempting what is clearly a part of the machinery set up by the Act of 1931 for the purpose of the taxation of land values. Every argument which weighs with those who desire the abolition of Part III can be brought forward with regard to Section 28. The Section is no less uneconomical, no less unjust and no less onerous, than other Sections of Part III of the Finance Act, and every argument which can be brought against the provisions of Part III of the Act of 1931, which are now repealed, can be quite, appropriately brought forward against Section 28. It may be said that this is an obsolete piece of machinery and as we are sweeping away all the rest what harm is there in retaining this particular piece of machinery? There may be some positive advantage in it. In my submission it is a source of danger so long as any of this machinery is retained because it makes it easier for a Government which looks on this question from a Socialist point of view, without regard to the well-being and needs of the country, to reintroduce this unjust tax.

Mr. KNIGHT

The hon. and learned Member has described this machinery and proposal as Socialistic. Is he not aware that it gives effect to proposals which have been supported by almost every municipal corporation during the last 40 years?

Sir G. HURST

Some of them may have supported it; if they were ill advised they have supported it. With all due respect to my hon. and learned Friend his intervention is very inapt. The point I am making is that the retention of this one piece of machinery will make it easier for any Government which wishes to re-introduce the taxation of land values. It preserves the one piece of machinery which requires those who deal in land to deliver to the Commissioners a record of their transactions. If the sense of the Committee is in favour of sweeping away the provisions of Part III of the Finance Act, 1931, they will be in favour of the Amendment, because its object is exactly the same, that is, to sweep away lock, stock and barrel, all the provisions of Part III to which the great majority of the supporters of the present Government objected strongly in the Debates of 1931. I am moving the Amendment to ascertain why it is that Section 28 has been retained, because in the absence of any obvious evidence to the contrary it is a bad thing to keep a bad piece of machinery on the Statute Book which makes the re-introduction of mischievous legislation easier.

8.31 p.m.

Major MILLS

I desire to support the Amendment. There may be some good reasons why the regulations which prescribe the formalities which have to be observed when land is transferred or when a lease is granted should be preserved, but I am unaware of them, and I shall be glad to hear from the Chancellor of the Exchequer what those reasons are. It is obvious that the formalities set out in the Schedule must cause work and, therefore, some expense, and such expenditure is likely to be more onerous on the small man than on the man of substance. For this additional reason, therefore, I shall support the Amendment.

8.32 p.m.

The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain)

It may not be within the knowledge of hon. Members who were not Members of the House in 1909–10 that the subject of Section 28 has been frequently debated in this House and defended by past Conservative Chancellors of the Exchequer on grounds which really have nothing to do with the question of land valuation and land taxation. The reason for the retention of Section 28 is that the information which the Valuation Department is able to obtain is of first importance in saving public money, and when I tell hon. Members that during 1933–4 the Inland Revenue Valuation Department valued property of an aggregate value of £133,000,000 for the purpose of assessing Death Duties and Stamp Duties, and property of an aggregate value of £27,000,000 for the purpose of advising other Government Departments in relation mainly to land requirements, either by the Government or by local authorities, it will be seen that figures of great magnitude are involved. In the process of valuation it is, of course, necessary that the Government valuer or those who represent the Government should be able to produce evidence of the current market value of land in different parts of the country. Unless they have that information at their disposal they must necessarily be placed at a great disadvantage as compared with the representative of the landowner who, of course, has that information at his finger ends. It is for that reason that in 1920 the then Chancellor of the Exchequer, my right hon. Friend the Member for West Birmingham (Sir A. Chamberlain) used these words in defending the retention of this provision: I do not believe there is a man in this House who does not admit that it has been a scandal in the past that a public authority desiring to purchase land for a public purpose has often been notoriously at a disadvantage compared with a private person buying in the same way. I am as anxious as he to see that when a public authority purchases—whether the Government or a local authority—they should pay a fair price and no more. Accordingly, I am anxious that we should have, and the Government desire that we should have, the knowledge that would enable us to check the price asked, to check by reference to the general stream of transactions a particular proposal which may be under our notice at any given moment."—[OFFICIAL REPORT, 14th July, 1920; col. 2434, Vol. 131.] This is not really an onerous matter for the landowner. All the landowner need do is to leave his deed at Somerset House for 24 hours or forward it through the local stamp office or post office to Somerset House, in order that the Inland Revenue officials may extract the required information. It cannot be said that that is a very severe burden to place upon the landowner, and, in view of the importance from the point of view of the public purse that this information should be continued, I hope that my hon. and learned Friend will not press this Amendment.

Amendment negatived.

Motion made, and Question proposed, "That the Clause stand part of the Bill."

8.36 p.m.

Mr. NEIL MACLEAN

The Chancellor of the Exchequer in replying on the last Amendment made a very important statement to the Committee. He justified his refusal to accept the Amendment on grounds of public policy and of safe- guarding the public purse. He read an extract from the OFFICIAL REPORT of 1920 of a speech in which the then Chancellor of the Exchequer, a relative of his own, justified at that time the provision now embodied in Section 28 of the Finance Act, 1931. It is rather a pity that neither the Chancellor of the Exchequer in 1920 nor the right hon. Gentleman himself carried further that regard for the public purse and the public well-being. The Chancellor of the Exchequer in 1920 desired that local authorities should pay-only a fair price and not an extortionate price for land. The present Chancellor of the Exchequer is apparently desirous of accomplishing the same end. He is anxious that local authorities shall not be held up to ransom in connection with the purchase of land. That is evidently his intention and therefore I should have thought that he would have allowed the Land Tax legislation of 1931 to have remained on the Statute Book and would have put it into operation so that it would have been possible for these authorities to obtain land at fair prices and not at the extortionate prices which are presently demanded, when local authorities are anxious to secure land for housing schemes or other schemes of public welfare involving the use of land. I think I hear an hon. Member say that I am wrong, but I shall prove that I am not wrong in saying that extortionate prices are being charged for land and that these extortionate prices would be prevented in the future if the Land Tax were allowed to operate.

The Land Tax provisions of the Budget passed by the Labour Government have been allowed to fall into disuse. Indeed they have never been put into operation. Last year the valuation provisions passed away and this year the power to tax disappears also. The attention given by the Government to this question seems to have been of a rather cavalier character. The Chancellor of the Exchequer made practically no mention in his Budget speech of the repudiation of the Land Tax. The Prime Minister who in the past has been one of the strongest propagandists of the taxation of land, is not in his place to-night and was not in his place during earlier Budget discussions when this matter was raised by several Members. I understand that the right hon. Gentleman has a reason, justifiable to him, for being absent to-night in that he has a dinner appointment. I should have imagined that having, in his past political life, spent considerable time and energy in advocating this principle of land taxation to the public, and having fought to get it made part of the legislation of Parliament, the right hon. Gentleman would have considered this occasion of sufficient importance to forego even such an appointment and come here and tell us exactly what has happened behind the scenes to justify this transformation. This legislation passed by a previous Government, was not we were told to be touched by a National Government. It is now being scrapped by this Government which has evidently ceased to be national, and has become solely Tory and landlord in its outlook. The Mover of the previous Amendment said that the Government had received a mandate at the last Election for taking this course. I challenge any Tory Member to say that he fought his election in 1931 on a proposal to repudiate and revoke the Land Tax.

Mr. MICHAEL BEAUMONT

I made it plain in speeches during my election that in no circumstances would I support a Government unless they were likely to repeal these taxes.

Mr. WILLIAM ALLEN

I did exactly the same.

Mr. MACLEAN

Now it is coming out. I made a challenge in 1931 when the National Government was first formed, after the Election, regarding statements in the election addresses of hon. Members opposite. Now we are hearing something which, evidently, was kept quiet then. I challenged at this Box Members supporting the National Government to state whether they had stood as Tory Members or as supporters of the National Government and they all said they stood as supporters of the National Government. Now they are repudiating that.

Mr. M. BEAUMONT

I only intervene again to reply to the hon. Member's challenge. I stood as a supporter of the National Government and I made it plain, not in my address but in speeches, that I demanded the repeal of these taxes.

Mr. MACLEAN

I challenged any Tory who had stood at the 1931 Election to state that in his election address he advocated this repeal. The hon. Member for Aylesbury (Mr. Beaumont) admits that he did not put it in his election address but merely made statements in his speeches. A lot of speeches are made which are not recorded. [An HON. MEMBER: "A good job."] It is a good job for some people and since we are talking about speeches which have been delivered on this subject I have some extracts here which I hope to read to the Committee. We shall be able to judge how far these speeches ought to have been recorded or ought to have been left without any record. There are certain Members of the present Cabinet who have spent a fairly long period in political life and have made many speeches, and it is significant that in the records of their speeches we find such passages as those which I am about to quote. The present Secretary of State for Scotland spoke upon this very tax that we are being asked to-night to revoke. He made a statement in the House of Commons on 25th June, 1914. I will come up-to-date as I go along, and the scratch runner, the Prime Minister himself, will have a chance of coming in at the end. That statement was: Every pound spent on education is well-spent public money. Better roads will make for improved transit. Attention to public health will increase the productive power of this country. With these factors at work, however trade may ebb and flow, special and specific advantages accrue to the property owners. The good government of a town and local activity will increase in the future, even more than in the past—the price of land. Why not, therefore, endeavour to tap and intercept these new sources of profit which this new public expenditure will create? The Foreign Secretary, in 1923, at the annual meeting of the Yorkshire Liberal Federation, referred to the taxation of land values and said: Liberals were determined to pursue a crusade, which was the only great crusade that the Liberal party had ever undertaken that it had not carried to a successful issue. In 1920 the last Government not only repealed the tax, but returned to People who had contributed to the public Exchequer the very large sums they had paid under the tax. The Government left the valuation untouched, but on the 19th June a Conservative majority in the House of Commons abolished the valuation and destroyed the last remnant of the effort made to get this information. He did not believe the people of our small island would accept this deliberate denial and obstruction of the right to get a proper contribution from those who received unearned wealth from the increment of the land. I should like to know where the Foreign Secretary is now. He made that statement, and he probably will be found in the Lobby voting for the present Budget. Are we to understand that all these statesmen have forgotten the statements that they made, and the principles which they claim they believe, principles their adherence to which they will claim has placed them in the position they now occupy. The President of the Board of Trade on the 28th March, 1925, said at the Reform Club, Manchester: In towns particularly, the whole system of assessment must be put on a new basis. Improvements must be freed from local rates and the burden placed directly on the unimproved site value of the land. You will notice I am coming up to date. That was in 1925. In 1927, at Manchester, on the 18th October, the following words were uttered by a present Cabinet Minister: Every one who has been concerned in the administration of a great town knows how when you want to cut a little bit off the side of one of your busiest streets to give a little bit of ease to your congested traffic, you have to pour out money by the thousands of pounds for very yard you snatch for the need of the community. You want to know who said that. It was the Chancellor of the Exchequer. That was in 1927. Now he is going to allow these people to snatch thousands of pounds for every yard that a public authority may desire to obtain along the streets of their towns. The Chancellor smiles. I hope he will explain away that statement or will reconcile the statement that I have just read with the action which he is proposing to take. Then we have another statement made at a meeting of the Conservative Parliamentary Agricultural Committee on the 30th May, 1933, to which all supporters of the National Government were invited. It was attended by 250 members According to a report of that meeting: Mr. Baldwin explained, the reason which led the Cabinet to decide unanimously that the Finance Bill now before the House of Commons should not include a clause dealing with these taxes which though in suspense remained on the Statute Book. …He said that be and his Conservative colleagues in the Cabinet had in no way changed their views in opposition to this form of taxation.…This, however, was a National Government, and he and his Conservative colleagues felt that the ungrudging loyalty with which their Labour colleagues had supported other features of the policy of the National Government did call for mutual consideration. He laid stress on the great public advantage of retaining a National Government. Because it was a National Government it had in the 18 months of its existence achieved more than any purely party Government could have hoped to achieve and they still had much useful national work to do. This is part of the useful work, evidently—repudiating the promise and the pledge made by the Lord President of the Council to his Labour and Liberal colleagues that they would not do anything to destroy this tax because they were all serving in a National Government. Finally, we have a statement made at the Albert Hall on 27th April, 1928. This was the statement: We suffer from economic parasitism, and a fine type of that is income derived from unearned increment of land values. A Chancellor of the Exchequer who taxes land values will deserve the gratitude of-the country. A Labour Chancellor will do this. That was said by the present Prime Minister. He said, in 1931, in a speech at Worksop: The taxation of land values flew in the teeth of every principle in which the Tory party believed. It was a recognition of the fact that what was socially made should be socially owned. Then, in an eve-of-the-poll speech in the General Election of 1931, he said: If there is to be any partisan manoeuvring, then I am not their man. Has he now become their man? What does the repeal of the land values taxation Clause in the Budget mean but partisan manoeuvring? The hon. and gallant Member opposite said only a minute or two ago that he in his speeches had made a statement that he would not support a Government that did not repeal the Land Tax. We all know, and we respect him for his strong advocacy of his Conservative principles. We prefer to have an opponent who states bluntly what he is and what he stands for. We know then what we have to face, and we hope that we are equally as straight in stating our points, but we and other members of the party to which he belongs are not so straight as he is and not so frank in their advocacy. They are willing to take all that can be given to them under a National Government so long as it serves their purpose to use it as a National Government, but when they feel that the time has come when they have the upper hand in that National Government they drop all pretence of a National Government and become the partisan manoeuvrers of the past. I notice that that provides some humour for some of the Tory Members. Having as a Conservative party got into office by the trick of calling themselves a National Government, they now come out openly as a Conservative Government. They have shred every vestige of pretence of being a National Government and have become a Tory Government. Is it not time they ceased this fraud on the public? Is it not time they told the public that all the things that were said over the wireless in October, 1931, were false? The three years since then had justified us in saying at that time that as soon as they came into office they would abandon all ideas of being a National Government operating purely in the national interest and revert to the policy of the particular party which had the predominant number in the Government. It has turned out as we said.

There are rather remarkable coincidences attaching to the dropping of this tax. The first Coalition Government scrapped the first land taxation proposals, introduced in the "Lloyd George Budget." This Coalition Government—because it is a Coalition Government—scrap the second attempt to legislate on behalf of imposing taxes on land values. The curious coincidence of it all is that the Chancellors of the Exchequer in those two Coalition Governments are brothers, and it is equally a coincidence, though not perhaps so startling, that both of them are Conservatives who were originally Liberal Unionists. In spite of the large number of Tory Members brought into this House on the wave created by the panic made by broadcasting in the 1931 election campaign I am hoping that, sooner or later, the public will realise and appreciate what this Government really is. When the General Election comes we hope it will sweep this fraudulent National Government out of existence. I am speaking, I hope, for the great majority of our supporters in the country, who still number millions and who are becoming increasingly numerous, in saying that when the next Labour Government comes in, after the defeat of this Government at the next General Election, these things which are being repealed by this Government will be brought forward again; and if I have any influence in that Government I shall see to it that anything that has been lost by the action of this Government is added to the very first instalment called for under the new land taxes in the Labour Budget.

9.1 p.m.

Sir F. ACLAND

I want to speak very briefly on this subject as an owner of land which would have been affected by these taxes if they had been imposed. Some comments have been made already, and more will probably be made, on the subject of political consistency in this matter, which is worth looking into a little more closely. I have been looking up the debates when this taxation was first carried through the House, in the Finance Bill of 1909, and it is interesting to see who, of the Members still remaining Members of the House of Commons, voted for it on the occasion of the Second Reading of the Finance Bill 25 years ago and to estimate what their attitude will probably be to-day. Of the very large majority who then voted for the Second Reading of that Finance Bill only 12 remain and of those 12 I imagine that five, if they are here, will vote against the position which they then took up, namely, the Prime Minister, the Foreign Secretary, the President of the Board of Trade and the right hon. Members for the Epping Division (Mr. Churchill) and the South Molton Division (Mr. Lambert). Against those five there are seven Members—three Labour Members and four Liberals—who, I think, will be of the same opinion still, curious as it may seem, even after 25 years, if they are in the House to record their votes. They are the right hon. Member for Clay Cross (Mr. A. Henderson) who, we know, is occupied elsewhere, but who undoubtedly keeps the same opinion on these matters; the right hon. and gallant Member for Newcastle-under-Lyme (Colonel Wedgwood), who certainly remains of the same opinion; and the hon. Member for Plaistow (Mr. Thorne). Those are the three faithful of the party above the Gangway. The four Liberals are the right hon. Members for Carnarvon Boroughs (Mr. Lloyd George) and for Darwen (Sir H. Samuel) and the hon. Members for Dewsbury (Mr. Russell Rea) and myself.

As things go nowadays, it is rather a remarkable tribute to political consistency to find that the majority of the twelve—seven out of the twelve—remain of the same opinion as they expressed 25 years ago, and that only five have thought it better to change their opinions, because of changing political fortunes and circumstances which have been, after all, more or less to their political advantage. I think it is worth while quoting a word or two to show how practically each of those five Members who then supported the Second Reading of the Finance Bill of 1909 have dealt with the matter. Many quotations have been made, and no doubt more will be made, from the writings of the Prime Minister, and I want to refer to one. He has been more emphatic about the necessity of this reform than almost anybody. He said: Economic rents must be taken by the State. That is fundamental. Then there is this very short sentence from the Foreign Secretary, put so well in his wonderfully lucid style: I do not believe the people of our small island will accept the deliberate denial and obstruction of the right to get a proper contribution from those who receive unearned wealth from the increment of the land. He could not have said that without being convinced that it was true. I wish he were here to explain why he has changed his views. The President of the Board of Trade said: The burden must be placed directly on the unimproved site value of the land. If that were true then, it is doubly true now. In a very eloquent passage which could only come from one right hon. Gentleman, the Member for Epping said: We see the evil, we see the imposture upon the public and we see the consequences in crowded slums, in hampered commerce, in distorted or restricted development and in congested centres of population, and we say to the land monopolist who is the holder-up of this land, ' If you choose to keep it idle in the expectation of still further unearned increment, then at least you shall be taxed at the true selling value in the meanwhile.' No one could put the principle of land taxation better than that. Those statements remain as true as at the time when they were said. The right hon. Gentleman the Member for South Molton (Mr. Lambert), from whom I learned to be a land taxer as far back as 1903, proposed at the National Liberal Conference at Newcastle a resolution which was seconded by the right hon. Gentleman the Member for Darwen (Sir H. Samuel), with a long string of land proposals, most of which have been carried into legislation since then, and the taxation of land values was first and foremost in that resolution.

Nobody can go about the country in any capacity without being convinced of the necessity of keeping and using the power of taxation of land values. It is quite extraordinary, as anybody with eyes to see surely must recognise, how quickly developments are happening and how the lack of taxation of this kind is hitting the public interest day after day, and in a very serious way. Is it from that point of view a disaster that legislation constructed with so much trouble and after so much controversy and difficulty should now be swept away. One sees industries moving from the north of England to the south, new coalfields developing in counties like Kent where it was not suspected a few years ago there was coal, and tube railways being pushed out from the big towns in a night almost—they decide where their new stations are to be, and land which is worth £100 an acre one day becomes worth £1,000, £2,000 or perhaps £5,000 an acre next day. One sees new roads and new electric cables adding to the value of land almost daily, according to the very rapid development that we have been making, but the nation does not get back one farthing of the added value, which is all passing almost automatically into the pockets of the private individual who happens, by good fortune, to own the land. That is a scandal which the owners of the land can hardly justify.

I am bound to say for myself that, in a very small way, I hold a little of this sort of land; I wish I held a lot more. It seems to be altogether wrong, when I pass, as I do about four times a week, through a few fields of mine four or five miles from Exeter—they have an agricultural value because they are used for agricultural purposes—that slowly but surely that land is getting more valuable, not because of anything that I am doing, but because Exeter is going out in the direction of my property. It seems an absolutely fair thing that I should be called upon to pay every year a small amount in taxation, such as was proposed by Lord Snowden, while that land is not developed. It cannot be unfair to have proposals of that kind, because one would feel as a landowner that one was pulling one's weight in the national boat better, and one would he free from the charge ordinarily brought against the landowner.

It is a most sinister triumph that we have been shown this evening by the action of the Government, of private selfishness over public good. We have done nothing at all, in spite of the efforts that were made in 1909 to bring the principle of the taxation of land values into effect, now that the efforts made under previous Governments are to be finally swept away. As was stated by an hon. and learned Member, practically all our great municipal bodies, who are by no means all of a Labour complexion or anything of that kind, have passed resolutions over and over again on this matter. Wherever the principle has been carried out by foreign countries or by our Dominions it has worked well, and has brought in useful revenue to them. This is simply a ramp on behalf of private land interests against the public interest, and I am ashamed when I feel that all this good work, which seemed to give promise of leading up to a real enactment of a system of land taxation, should be swept away. I said I would like to refer to one sentence recently written by the Prime Minister. I wish he were here.

Mr. KIRKWOOD

Why not demand that he come?

Sir F. ACLAND

I do not like to say anything in his absence because it seems like criticism, but I should equally say it if he were here. This is a concluding sentence in a letter written to the United Committee for the Taxation of Land Values. He says: A Government which was determined to ' take drastic and energetic steps to put into operation the taxation of land values,' would have to proceed to legislation, as the Clauses that have been in suspense for years, largely owing to Amendments which the Chancellor had unwillingly accepted from both Liberals and Conservatives, were not sufficiently full to enable a great deal to be done. If that is meant to mean anything, it means that these proposals are being dropped because they do not go far enough. I regard that as a piece of nauseating hypocrisy. Everybody knows that they are not being dropped for that reason, and that if and when you legislate on this matter it will be quite im- possible to please everybody. It will be quite impossible to please the out-and-out land taxers; we who have had negotiations with them know that. It is quite impossible to please landowners who have been affected. As a matter of fact, the proposals as they were put on the Statute Book were a very fair and a very difficult compromise between the interests concerned. They did give those who want exemptions to be made, in the case of land which has been partly developed, a very considerable reduction in the assessment of their land. They would have been Clauses which would have been perfectly reasonable and right to put into operation, not in the final and complete form which the thing might have taken after some years of practice, but very good and sound technically, and reasonably fair to all parties concerned. I feel ashamed, as a Member of the House of Commons, that I should be here to see a thing being swept away which is so wholly and rightly just in the interest of the whole community.

The DEPUTY - CHAIRMAN

Lord Eustace Percy.

Sir PERCY HARRIS

I want to move the Adjournment of the Debate.

The DEPUTY-CHAIRMAN

I have called the Noble Lord the Member for Hastings (Lord E. Percy).

9.14 p.m.

Lord EUSTACE PERCY

The Debate, so far as it has gone to-night, is a most excellent argument for the necessity of having a National Government. We have heard two speeches; I can only congratulate the hon. Members who made them on their command of vituperative language. Although my right hon. Friend the Member for North Cornwall (Sir F. Acland) who spoke last, may be said to have fairly touched the question of land taxation, the hon. Member for Govan (Mr. Maclean) who opened the Debate did not refer to the question at all. We are discussing to-night, and it is very important that we should, the problem of the taxation of land, and there is really no good in the right hon. Member for North Cornwall talking as if that problem was settled 25 years ago. What is the use of discussing this problem, as the hon. Member for Govan has discussed it, with all his quotations about the consistency of various hon. and right hon. Members of the House, as if a state- ment in favour of taxing the unearned increment of land was an argument in favour of the duties which it is proposed to repeal to-night? The two propositions not only have nothing to do with each other, but the proposition of taxing unearned increment was often urged by Conservative Members of Parliament during the passage of Lord Snowden's Budget, and was contemptuously rejected by the apostles of the single-tax theory, then on the Government side of the House. This problem, after all, must be discussed with some reference to the economic facts, with some reference to economic consequences, and with some reference to the whole range of land taxation.

What are the arguments in favour of any form of taxation of land values? They are, I think, three. One is that land should contribute its full share to the revenues of the State. The second, no doubt closely connected with it, is that increment arising out of public activities, or at any rate out of activities having no connection with the landowner, should, in part anyway, be paid over to the State; and the third is not really a taxation question or a question of social justice at all, but the desirability, as a matter of planning expediency, of forcing land which is ripe for building into the building market.

These are three perfectly clear considerations. So far as the first two are concerned—I say frankly that I am expressing only my personal view—there is very little difference between my attitude and the attitude of any Member of the other side of the House. I accept the principle that land should pay its full share, which has to be assessed on a number of considerations, to the revenues of the State, and that increment arising out of public improvements, and possibly out of other automatic developments, may properly be specially taxed by the State. In doing so I am voicing principles which I learned in very Tory circles when I was young, and am also voicing principles which have been accepted by the whole Tory party and by the whole of the supporters of the National Government within the lifetime of the present Parliament. Let it be remembered that at the present moment we have not only our system of Death Duties—and that, I suggest to the Liberal party, is perhaps why this is the one crusade of theirs which has not been successfully carried out, because they started off on the red herring of Death Duties under Sir William Harcourt, and never quite succeeded in getting back from that red herring, which has irrevocably fouled the line of a deliberate taxation of laud values—

Sir F. ACLAND

Never was fish more productive.

Lord E. PERCY

I am not at all sure that the right hon. Gentleman is correct, but if, without wearying the Committee, I have time to deal with that question very briefly, I will do so later. We have also had, again within the lifetime of the present Parliament, the Town Planning Act. I was absent when the Bill was going through the House, and I do not necessarily defend the particular expedients adopted in its Clauses; I think they are rather cumbrous; but that Act enshrines the principle of the taxation of unearned increment.

The third consideration has completely changed in the last 25 years. The old 19th century idea that the one great act of public spirit that any landlord could perform was to offer his land for the building development of the jerry-builder who was building for the industrialist population in the big towns has faded out within the last 25 years, and within the last 10 years we have begun increasingly to realise that my right hon. Friend the Member for North Cornwall may be performing the most essential public duty in preventing those fields of his from ever being developed for building, either now or in the future. Of course, if he intends to develop their building value, I quite understand that he should not object to paying some small taxation, with all the protections devised by Lord Snowden, during the interval. But suppose that he considers it to be rather his duty—and I fancy it is a very arguable question in Exeter, as it certainly is on the outskirts of many towns—that that land should not be developed for building, is it desirable, speaking now from the landlord's point of view, that the fear of taxation should drive that land into the building market when the landlord otherwise would not have put it in?

My conclusion, of course, is obvious, and it is one with which I think we all agree. It is that we have now entered the region of definite town planning, where a local authority, with, of course, appropriate appeals, ought to be in a position to force the development of land, either by taxation or otherwise; or possibly, as I should prefer, a more appropriate town planning authority than a mere municipal body, which I do not think can prove in the long run to be the best town planning authority. We are in that region of deliberate town planning, and this kind of hit-and-miss land taxation by rule of thumb for the purpose of driving land into building development is as out of date as Noah's Ark. What, therefore, is the good of wasting the time of the House of Commons in reminiscent, vituperation about the records of elder statesmen when the whole character of that section of the problem has changed?

After all, can there be, to any calm student of economics, a more hopeless confusion than our present system of land taxation? Does anyone suppose that the Conservative party are satisfied with the present land taxation of the country? It is a confusion in which Death Duties and increment duties under the Town Planning Act combine to constitute the most uncertain and capricious form of taxation which has ever been devised for land or any other kind of property. When the right hon. Member for North Cornwall (Sir F. Acland) says that after all Sir William Harcourt's was a very profitable discovery, is he so certain of that? What is happening all over the country at the present moment? You have an estate, which, in the first place, may have to pay Death Duties once in 40 years, or three times in 20 years, according to the accidents of human life.

You have one estate which, taking it as a whole, it is undoubtedly undesirable, should be developed for building, but which has a high building value. That estate preserves the result of the landowner's policy, which the local authority, not yet having completed its town planning scheme, has taxed, and unfairly taxed in my judgment on its building value, but it is, in view of these factors, taxed rather lightly. On the other hand, an estate which it is desirable should be developed for building, is also valued very modestly and taxed very lightly because of the very uncertainties that I have been suggesting, imposing upon the valuers of the Inland Revenue in valuing for Death Duties, a policy of moderation which must be robbing the Exchequer of hundreds of thousands of pounds every year. That is the result of trying a hit-and-miss policy of land taxation, instead of a deliberate planning policy which enables you to tax heavily the land you ought to tax, and not to tax the land you ought not to tax.

I apologise for detaining the House like this, but I wish to represent a point of view which may be largely an individual one. The attitude of a National Government faced with this problem ought emphatically to be to repeal those sections of Lord Snowden's Finance Act which we are now proposing to repeal. Those sections are out of date, out of relation to the new problem, and out of relation to already existing forms of taxation of land values. They therefore merely make worse confounded the confusion of our system of land taxation that already exists. Therefore, I shall certainly support this Clause in the Finance Bill.

On the other hand I think it is peculiarly the duty of a National Government, faced by a situation of such confusion as our land taxation to-day, not to be content with mere repeal of an additional element of confusion, but to tackle the problem constructively. I know it will not be popular. Nothing done on this subject will be used for anything but partisan attacks by the Opposition. That is why it is necessary to have a National Government that there may be some section of persons prepared to consider some subjects on their merits. In spite of this unpopularity it is the business of a National Government I believe to produce a constructive reform of the whole system of land taxation, which shall ensure that land shall pay its fair share, shall ensure especially that (the fortunate landlord who earns—put the emphasis on "earns"; not who is deemed likely to earn by speculation—an increment which does not entirely arise from efforts of his own, shall be heavily taxed on that increment, and which shall ensure that the land the community want for development shall be made available to them, by a deliberately planned system of taxation, while the land they do not want to see developed, such as agricultural land, shall be continued in its present user, and no tax shall be imposed upon it which, by changing the user, might be detrimental to the public interest.

9.31 p.m.

Mr. WEST

I have listened to speeches on the hardship of Super-tax payers and just now on the hardship of landowners and the taxation system. Obviously, they are so miserable and unfortunate that it would be a kindly act for a future Labour Government to take the huge super incomes and land from people so unfortunate. I do not complain of the attitude of the Conservative Members opposite. I think they have been most consistent in their policy on land taxation. It is consistent with the fact that already during the last 12 months they have been most kind to interests that support them, kind to the higher Income Tax payers, generous to the brewers, and now are giving an additional concession to the last of the holy Tory trinity, the landowners. Although I am not surprised at that, I wonder how they are going to square the fact that the Lord President of the Council stated last year that to repeal this Clause would not be playing the game. If it were not playing the game last year, I would like to know how it becomes playing the game this year. I do not think the question of playing the game, however, will trouble the Tory party long. They only understand playing the game when playing the game for vested interests for which they stand in this House as a National Government. I am concerned at the attitude of other Members. I am not surprised at the attitude of the Secretary of State for the Dominions. Long before his act of treachery in 1931 many of us suspected him.

I am not very much surprised at the attitude of the Prime Minister. The right hon. Member for Epping (Mr. Churchill) described the Prime Minister as a boneless wonder, and indeed he has shown himself extraordinarily flexible, a contortionist so far as past principles and pledges are concerned. I am rather surprised at those hon. Members below the Gangway, former believers and supporters of the last Labour Government. Their attitude does surprise me. I wonder what they are going to do tonight? Three years ago most of them supported this idea in the Lobbies. Tonight apparently they are going to march into the opposite Lobby and support the repeal. I wonder how many pledges they could repeal and not feel miserable. They must know something of the pawnbrokers: they know something about swallowing pledges. Perhaps the most astounding thing is the attitude of the Government towards a person who, I think, still had some elements of manliness about him, even although he went against the Labour Government in 1931. I refer to Lord Snowden. I think he was the principal architect of this scheme of land values. He put most of his life's work into it. I should like to read what he said on the Third Reading of the Finance Bill in 1931: The principle underlying this Bill is to assert the right of the community to the ownership of the land. This is only the first step in the reform of our land system. The effect of that system has been to place a burden on industry of hundreds of millions a year. It has crowded our people into pestilential slums, and it has driven hundreds of thousands of people from the land into the towns to compete with the town workers, with the result that wages have been depressed and unemployment has been increased. I commend the Bill to the House of Commons not only upon its financial proposals but also upon its land proposals. I think that when they come into operation their social and economic effect will be seen, but it is only the first step. The party for whom I speak have always put the question of land reform in the forefront of their programme. Although I may not live to see the step that we have taken this afternoon advance still further, at any rate I submit this Bill to the House of Commons with the satisfaction that I believe we have begun a far-reaching reform which some day will liberate the land for the people and abolish once and for all the tyranny under which the people in this country have suffered."—[OFFICIAL REPORT, 3rd July, 1931; col. 1684, Vol. 254.] Those were the views of Lord Snowden three years ago. I believe they are the views of Lord Snowden in 1934. I wonder if hon. Members opposite have forgotten what they owe to Lord Snowden. It is, surely, true to say that, owing to his reputation for integrity, owing perhaps still more to his broadcast before the election, probably millions of votes were gained by the National Government through his influence. Scores of Members opposite owe their seats to his influence even more than to the influence of the Prime Minister. They, perhaps, think they have paid him well. Perhaps they think that in giving him a coronet they have paid him for his services. I do not think so. If I understand Lord Snowden's mind, if he had the choice to-day between keeping his coronet and retaining the principle of the taxation of land values, he would let the coronet go. It shows a low idea of political morality to turn down the measure of this great statesman that they claimed him to be three years ago for the benefit of the vested interests which support their party. That is a low-down game to play with a man who did so much to make the National Government possible. Although the Government may repeal the taxation of land values, they will not be able to Ell the idea behind it. I do not want to prophesy, but I feel certain that after the next election we shall have a Government which will bring in a much more vigorous form of land values taxation and a Measure which will make hon. Members opposite very much regret their action to-night.

9.40 p.m.

Mr. KNIGHT

We have reached a Clause which is bound to excite a good deal of controversy, especially in the minds of those who have been associated with the agitation around it for a good many years, as I have. I want to state the view that I have formed about this proposal—it is a difficult task—in a way which I hope will not unduly excite the criticism of colleagues with whom I am now acting and with whom I desire to act. I am here, as most of us are, on a view taken by the country of the commission which the Government sought at the hands of the electors. It seems to excite merriment on the part of the hon. and learned Gentleman the Member for East Bristol (Sir S. Cripps), but I well remember the fate that he barely escaped in that election. That commission I understood to. be to apply the economic resources of the country in the way thought best by a Government containing elements drawn from all political parties. The practical question is this. From the assessment of the economic resources of the country which, in a state of emergency which still continues, we have to mobolise and apply, can" the value of the land be excluded? In my view it cannot. I regret the course that is embodied in this proposal, because I do not think it gives effect to the commission which the Government received from the country. It will cause widespread dis- appointment among large sections of the electorate, who may withhold their support.

I think it has certain practical consequences which I want to describe. First, in the necessary acquisition of land required for public purposes, there will not be available a valuation which will prevent taxpayers and ratepayers being called upon to pay extortionate prices. What sort of effect will that have on the general body of taxpayers and ratepayers, out of whose pockets those values are paid? Take any large municipality which has had to acquire land. I do not want to go into cases which are notoriously on record, but the history of the transactions between the Liverpool Corporation and certain landowners in that area are very well known, and that sort of experience will be the experience of (municipalities if, when they have to buy land, there is not available an assessment of the land to regulate the price paid for it. The second result is this: When land has to be acquired, why should not the man who owns the land whose wealth has increased as the result of national or municipal expenditure contribute towards the cost which the public authority has to pay for the land?

Sir JOSEPH McCONNELL

On a point of Order. Is it not a fact that under the town-planning scheme—

The DEPUTY-CHAIRMAN

That does not appear to be a point of Order.

Mr. KNIGHT

I think I know what my hon. Friend wanted to ask, but I am trying to state the matter as uncontroversially as possible. I say that it is fair that that part of the value of the land which has accrued from public expenditure should be returned in part by the owner when it is sold by him. The third case is that of the occupier of a house, who at present has to pay the full rates and taxes required for the occupation of that house, and the man who owns the site of the house contributes nothing to the municipality whose expenditure largely creates the site value. Those are actual, practical illustrations of what is going to happen in the absence of a valuation. I am bound to say that in my view that is not giving effect to the commission that this Government received, and I am afraid that in the days to come the sup- port which may be received by them will diminish if this sort of policy is persisted in. The right hon. Gentleman the Chancellor of the Exchequer used the exact description which I ask the Government to bear in mind when he justified the valuation which is abolished under this Bill on the ground that it was designed to save public money. All that I am saying is that in all transactions, some of which I have described, where public money can be saved by the existence of a valuation, the Government in their wisdom ought not to take any action which will deprive the nation of that valuation.

I ventured to interrupt the hon. and learned Member for Moss Side (Sir G. Hurst), who is not here now, in his speech on a preceding Amendment, in which he described this valuation of land as a Socialist proposal. As a matter of fact, I thought his memory was at fault, for as long as I can remember, the great corporations of the country—I remember in particular the Glasgow Corporation, the Edinburgh Corporation and the Birmingham Corporation—year in and year out have registered their view that the land of the country should be valued, so that the nation and individual citizens might profit from the value which was created by public expenditure. I recollect that one of the most notable features of the Career of the late Mr. Joseph Chamberlain who was the father of municipal government in this land as we now understand it, and who applied his great abilities in this House and in Birmingham in an unparalleled way to the extension of local government was that he always pleaded—and I venture to remind his distinguished son of it—that the land had a part to play in providing relief to the State and its citizens by contributing to the wealth which was created by the nation. Frankly, I am sorry that the Government have taken this course. I think it is a course which they will regret. I am very sorry to say this, but I have thought it my duty to express here a view which I have held as long as I have lived, and so long as I think that that view is required in the public interest, as I do at this moment, that is a view which I shall uphold.

9.50 p.m.

Mr. MANDER

I beg to move, "That the Chairman do report Progress, and ask leave to sit again."

After the very painful speech of the hon. and learned Member for South Nottingham (Mr. Knight)—painful, because he was obviously feeling the difficulties of his position—I desire to move to report Progress in order to secure the presence of the Prime Minister. It seems to me, for reasons which I propose to give, that it is impossible to give proper consideration to the Clause which we are now discussing without the presence of the Prime Minister and without the explanation which he alone can give of the present proposal. I am one of those who are privileged to receive, once a fortnight, a very attractive little publication with a somewhat alarming cover, known as the "News Letter," and I am a very careful student of its most excellent, entertaining, and literary pages, but I was very much struck with a certain passage in the political notes. I presume they express, first of all, the views of the noble editor, but I presume also that they are a reflection of the views of the Prime Minister, because it is known that this is his personal organ.

I ask permission to call attention to certain criticisms. We have had already an expression of them in a mild form from the hon. and learned Member who has just spoken. He had to walk very delicately, because the situation in his constituency requires careful judgment, but, as far as I could gather, he did not threaten definitely to go into opposition. I could not quite understand whether he was going to vote against the Government tonight, but he seemed to hold out some sort of threat that if this kind of thing went on, then I gather the whole forces of the National Labour party would be thrown against the Government, if they continued the reprehensible practice which has been started in this Clause.

Mr. KNIGHT

I think this is a mistake, but I should be making a much greater mistake if I should take any course which would dislodge this Government from office.

Mr. MANDER

I am the first to admit that I was wrong in my impression and to withdraw it, and to offer my congratulations to the Government on the fact that my hon. and learned Friend still intends to continue that support which is so valuable to them. The passages which I say reflect the views of the Prime Minister from the last issue of the "News Letter" are these: The Land Taxes: The Government's first thoughts in the matter of the Snowden Land Tax clauses were so clearly wise that-it seems regrettable they should have been revised this year. The article continues: The damage of this year's change of front is not so much practical as political. The original compromise was in accordance with the spirit in which the Government was formed, and in which, on all the major issues of the day, it has carried on its work. Everyone knew that this was a point on which its supporters could not be expected to agree, and on which, therefore, having regard to the much larger issues on which they did agree, they would have to give and take. And it was precisely on those grounds that Mr. Baldwin defended the postponement as distinct from the repeal, of the Clauses in 1932. As things are now, every critic of the Government who wishes to deny the justice of its claims to be national—and the charge that it is merely Tory in disguise, is the common coin of almost every Opposition speech—has been made the needless present of a useful argument. That is a very strong criticism of the Government. It is just the criticism that has been made from this side of the House to-night. It may not be of supreme importance if it is only put forward from this side, but when it is expressed, as I submit, by the Prime Minister himself, or as representing his views, it does show the necessity for his presence here, in order that he may make clear where he and the Government stand. I cannot help thinking that this position has some very dangerous possibilities. It may foreshadow the possible break up of the Government. It shows that there is a difference of opinion in the Cabinet on this point.

It may be that the Prime Minister intends to resign and to go to the country on the programme of the National Labour party, and nothing else, making an appeal to the country, with his hon. Friends, and asking the country to send them back in a majority at the next general election. If he were to do so and he obtained a majority, I do not think he would have much difficulty in forming an Administration. He would not have to look very far to find the Lord Chancellor. I can see sitting opposite, beside the prospective Lord Chancellor, the Chancellor of the Exchequer, and I do not think that the Home Secretary is very far away from the Chancellor of the Ex- chequer.If the Prime Minister is forced, owing to differences in the Cabinet on the Land Taxes, to appeal to the country on his own, and he persuades the country, and the National Labour electors to return him with a majority to this House he will have a very impressive and very capable nucleus of a Cabinet, even if he has to stop there, which is quite possible.

Is it really fair to other Members of the National Government. There is the Secretary of State for Dominion Affairs. Is it fair to put such a strain on his conscience? He has been a life-long sup-

porter of the Land Taxes. He has voted for them and he supported them in the Cabinet, and to expect him to surrender on a matter of principle of this magnitude is asking something which I think is going beyond what is reasonable, fair or just. For these reasons, I submit that it would be right at this stage to adjourn the Debate in order that we may secure the presence of the Prime Minister.

Question put, "That the Chairman do report Progress, and ask leave to sit again."

The Committee divided: Ayes, 65; Noes, 251.

Division No. 269.]	AYES.	[10.0 p.m.
Acland, Rt. Hon. Sir Francis Dyke	Griffith, F. Kingsley (Middlesbro', W.)	Mallalieu, Edward Lancelot
Adams, D. M. (Poplar, South)	Griffiths, George A. (Yorks. W. Riding)	Mander, Geoffrey le M.
Banfield. John William	Groves, Thomas E.	Mason, David M. (Edinburgh, E.)
Batey, Joseph	Grundy, Thomas W.	Milner, Major James
Bevan, Aneurin (Ebbw Vale)	Hall, George H. (Merthyr Tydvil)	Owen, Major Goronwy
Brown, C. W. E. (Notts., Mansfield)	Hamilton, Sir R. W. (Orkney & Zetl'nd)	Rathbone, Eleanor
Cape, Thomas	Harris, Sir Percy	Sinclair, Maj. Rt. Hn. Sir A.(C'thness)
Cocks, Frederick Seymour	Holdsworth, Herbert	Smith, Tom (Normanton)
Cove, William G.	Jenkins, Sir William	Thorne, William James
Cripps, Sir Stafford	John, William	Tinker, John Joseph
Curry, A. C.	Jones, Henry Haydn (Merioneth)	Wedgwood, Rt. Hon. Josiah
Daggar, George	Jones, Morgan (Caerphilly)	West, F. R.
Davies, David L. (Pontypridd)	Kirkwood, David	White, Henry Graham
Davies, Rhys John (Westhoughton)	Lawson, John James	Williams, David (Swansea, East)
Edwards, Charles	Leckle, J. A.	Williams, Edward John (Ogmore)
Foot, Dingle (Dundee)	Leonard, William	Williams, Dr. John H. (Llanelly)
Foot, Isaac (Cornwall, Bodmin)	Llewellyn-Jones, Frederick	Williams, Thomas (York, Don Valley)
Gardner, Benjamin Walter	Logan, David Gilbert	Wilmot. John
George, Major G. Lloyd (Pembroke)	Lunn, William	Wood, SN-Murdoch McKenzie (Banff)
George, Megan A. Lloyd (Anglesea)	Macdonald, Gordon (Ines)
Graham. D. M. (Lanark, Hamilton)	McEntee, Valentine L.	TELLERS FOR THE AYES.—
Greenwood, Rt. Hon. Arthur	Maclean, Nell (Glasgow, Govan)	Mr. Walter Rea and Mr. Harcourt
Grenfell, David Rees (Glamorgan)	Mainwaring, William Henry	Johnstone.
NOES.
Adams, Samuel Vyvyan T. (Leeds, W.)	Buchan-Hepburn, P. G. T.	Dunglass, Lord
Agnew, Lieut.-Com. P. G.	Burghley, Lord	Edmondson, Major Sir Alber
Albery, Irving James	Burnett, John George	Elliot, Rt. Hon. Walter
Allen, Sir J. Sandeman (Liverp'l, W.)	Campbell, Sir Edward Taswell (Brmly)	Ellis, Sir R. Geoffrey
Allen, Lt.-Col. J. Sandeman (B'k'nhd.)	Campbell-Johnston, Malcolm	Elmley, Viscount
Allen, William (Stoke-on-Trent)	Caporn, Arthur Cecil	Entwistle, Cyril Fullard
Anstruther-Gray, W. J.	Chamberlain, Rt. Hon. N. (Edgbaston)	Erskine-Bolst, Capt. C. C. (Blackpool)
Applin, Lieut.-Col. Reginald V. K.	Chapman. Col. R.(Houghton-la-Spring)	Evans. Capt. Arthur (Cardiff, S.)
Apsley. Lord	Clarke, Frank	Everard, W. Lindsay
Aske, Sir Robert William	Colfox, Major William Philip	Fleming, Edward Lascelles
Astor, Viscountess (Plymouth, Sutton)	Conant, R. J. E.	Fremantle, Sir Francis
Bailey, Erie Alfred George	Cook, Thomas A.	Fuller, Captain A. G.
Baldwin, Rt. Hon. Stanley	Cooke, Douglas	Ganzonl, Sir John
Baldwin-Webb, Colonel J.	Courthope, Colonel Sir George L.	Gault, Lieut.-Col. A. Hamilton
Balfour, Capt. Harold (I. of Thanet)	Craven-Ellis, William	Gillett, Sir George Masterman
Balniel, Lord	Croft, Brigadier-General Sir H.	Gledhill, Gilbert
Banks, Sir Reginald Mitchell	Crooke, J. Smedley	Gluckstein, Louis Halle
Barclay-Harvey, C. M.	Crookshank, Col. C. de Windt (Bootle)	Goff, Sir Park
Barton, Capt. Basil Kelsey	Crookshank, Capt. H. C. (Gainsb'ro)	Goodman, Colonel Albert W.
Beaumont, M. W. (Bucks., Aylesbury)	Croom-Johnson. R. P.	Gower, Sir Robert
Beaumont, Hon. R. E. B. (Portsm'th, C.)	Cross, R. H.	Grattan-Doyle, Sir Nicholas
Bernays, Robert	Cruddas, Lieut.-Colonel Bernard	Graves, Marjorle
Bevan, Stuart James (Holborn)	Culverwell, Cyril Tom	Greene, William P. C.
Blaker, Sir Reginald	Davidson, Rt. Hon. J. C. C.	Grenfell, E. C. (City of London)
Boulton, W. W.	Davies, Edward C. (Montgomery)	Grimston, R. V.
Bowater, Col. Sir T. Vansittart	Davies, Maj. Geo. F.(Somerset, Yeovil)	Gunston, Captain D. W.
Bower, Lieut.-Com. Robert Tatton	Davison, Sir William Henry	Guy. J. C. Morrison
Bowyer, Capt. Sir George E. W.	Dawson, Sir Philip	Hacking, Rt. Hon. Douglas H.
Braithwaite, J. G. (Hillsborough)	Denman, Hon. R. D.	Hales, Harold K.
Broadbent, Colonel John	Denville, Alfred	Hamilton, Sir George (llford)
Brocklebank, C. E. R.	Dickie, John P.	Hanbury, Cecil
Brown, Col. D. C. (N'th'l'd., Hexham)	Drewe, Cedric	Harbord, Arthur
Brown, Ernest (Leith)	Duckworth, George A. V.	Haslam, Henry (Horncastle)
Browne, Captain A. C.	Duncan, James A. L. (Kensington, N.)	Headlam, Lieut.-Col. Cuthbert M.
Hellgers, Captain F. F. A.	Milne, Charles	Shaw, Captain William T. (Forfar)
Henderson, Sir Vivian L. (Chelmsford)	Mitchell, Harold P. (Br'tf'd & Chlsw'k)	Shepperson, Sir Ernest W.
Heneage, Lieut.-Colonel Arthur P.	Morris, John Patrick (Saltord, N.)	Shuts, Colonel J. J.
Hepworth, Joseph	Morris-Jones, Dr. J. H. (Denbigh)	Simmonds, Oliver Edwin
Hills, Major Rt. Hon. John Waller	Moss, Captain H. J.	Skelton, Archibald Noel
Hope, Capt. Hon. A. O. J. (Aston)	Munro. Patrick	Smiles, Lieut.-Col. Sir Walter D.
Hore-Belisha, Leslie	Nation, Brigadier-General J. J. H.	Smith, Sir J. Walker. (Barrow-In-F.)
Hornby, Frank	Nicholson, Godfrey (Morpeth)	Smith, Louis W. (Sheffield. Hallam)
Horsbrugh, Florence	Normand, Rt. Hon. s	Smith, Sir Robert (Ab'd'n & K'dine. C.)
Howard, Tom Forrest	O'Donovan, Dr. William James	Somervell, Sir Donald
Howitt, Dr. Alfred B.	Oman, Sir Charles William C.	Somerville, D. G. (Willesden, East)
Hume, Sir George Hopwood	O'Neill, Rt. Hon. Sir Hugh	Soper, Richard
Hunter, Dr. Joseph (Dumfries)	Peake, Captain Osbert	Sotheron-Estcourt, Captain T. E.
Hunter, Capt. M. J. (Brigg)	Pearson, William G.	Southby, Commander Archibald R. J.
Hurd, Percy A.	Peat, Charles U.	Spencer, Captain Richard A.
Hurst, Sir Gerald B.	Percy, Lord Eustace	Spender-Clay, Rt. Hon. Herbert H.
James, Wing-Com. A. W. H.	Petherick, M.	Spans, William Patrick
Jamieson, Douglas	Peto, Sir Basil E. (Devon, Barnstaple)	Stanley, Hon. O. F. G. (Westmorland)
Jennings, Roland	Peto, Geoffrey K. (W'verh'pt'n, Bllst'n)	Stevenson, James
Jesson, Major Thomas E.	Pike, Cecil F.	Stewart, J. H. (Fife, E.)
Joel, Dudley J. Barnato	Powell, Lieut.-Col. Evelyn S. H.	Stuart, Hon. J. (Moray and Nairn)
Johnston, J. W. (Clackmannan)	Pybus, Sir Percy John	Sugden, Sir Wilfrid Hart
Jones, Sir G. w. H. (Stoke New'gton)	Radford, E. A.	Tate, Mavis Constance
Kerr, Hamilton W.	Ramsay, Alexander (W. Bromwich)	Templeton, William P.
Keyes, Admiral Sir Roger	Ramsay, Capt. A. H. M. (Midlothian)	Thompson, Sir Luke
Kimball, Lawrence	Ramsden, Sir Eugene	Thorp, Linton Theodore
Knight, Holford	Rankin, Robert	Todd, Capt. A. J. K. (B'wick-on-T.)
Lamb, Sir Joseph Quinton	Ray, Sir William	Todd, A. L. S. (Kingswinford)
Law, Sir Alfred	Reed, Arthur C. (Exeter)	Tufnell, Lieut.-Commander R. L.
Law, Richard K. (Hull, S. W.)	Reid, David O. (County Down)	Turton, Robert Hugh
Leech, Dr. J. W.	Reid, William Allan (Derby)	Wallace, Captain O. E. (Hornsey)
Leighton, Major B. E. P.	Remer, John R.	Wallace, John (Dunfermline)
Little, Graham-, Sir Ernest	Renwick, Major Gustav A.	Ward. Lt.-Col. Sir A. L. (Hull)
Lloyd, Geoffrey	Rhys, Hon. Charles Arthur U.	Ward, Irene Mary Bewick (Wallsend)
Lockwood, John C. (Hackney, C.)	Roberts, Sir Samuel (Ecclesall)	Ward, Sarah Adelaide (Cannock)
Lockwood, Capt. J. H. (Shipley)	Rosbotham, Sir Thomas	Wedderburn, Henry James Scrymgeour
Loder, Captain J. de Vere	Ross, Ronald D.	Wells, Sidney Richard
Loftus, Pierce C.	Ross Taylor, Walter (Woodbridge)	Whyte, Jardine Bell
Lumley, Captain Lawrence R.	Ruggles-Brise, Colonel E. A.	Williams, Charles (Devon, Torquay)
Lyons, Abraham Montagu	Runge, Norah Cecil	Williams, Herbert G. (Croydon, S.)
McConnell, Sir Joseph	Russell, Hamer Field (Sheffield, B'tslde)	Wills, Wilfrid D.
McCorquodale, M. S.	Russell, R. J. (Eddlsbury)	Wilson, G. H. A. (Cambridge U.)
MacDonald, Malcolm (Bassetlaw)	Rutherford, Sir John Hugo (Liverp't)	Windsor-Cilve, Lieut.-Colonel George
Macdonald, Sir Murdoch (Inverness)	Salmon, Sir Isldore	Winterton, Rt. Hon. Earl
McLean, Major Sir Alan	Salt, Edward W.	Womersley, Sir Walter
McLean, Dr. W. H. (Tradeston)	Samuel, Sir Arthur Michael (F'nham)	Worthington, Dr. John V.
Macquisten, Frederick Alexander	Sandeman, Sir A. N. Stewart	Young, Rt. Hon. Sir Hilton (S'v'oaks)
Margesson, Capt. Rt. Hon. H. D. R.	Savery, Samuel Servington
Mason, Col. Glyn K. (Croydon, N.)	Selley, Harry R.	TELLERS FOR THE NOES.—
Mayhew. Lieut.-Colonel John	Shakespeare, Geoffrey H.	Captain Austin Hudson and Mr. Blindell.
Mills, Major J. D. (New Forest)	Shaw, Helen B. (Lanark, Bothwell)

Original Question again proposed, "That the Clause stand part of the Bill."

10.9 p.m.

Mr. BERNAYS

After that entertaining interlude I would direct the attention of the Committee once more to the merits or demerits of land taxation. I must confess that I share the misgivings of my hon. and learned Friend the Member for South Nottingham (Mr. Knight) at the scrapping of these taxes. Surely, there can be no dispute that a serious problem is involved in land values. They are in many cases rising to staggering heights. I had a vivid picture of that during the last week-end, when I visited Stanmore, which I remembered from my boyhood years and which is now being swallowed up by Greater London. Ten years ago Stanmore, which is only 10 miles from the Marble Arch, was in the depths of the country, and agricultural land was then worth something like £20 an acre. First of all the railway, then the motor omnibus, then the arterial road, and now the Metropolitan, have made these pleasant fields what the building speculators call "ripe for development."

What has happened? The land, instead of being worth £20 an acre, agricultural value, is fetching anything from £500 to £1,000, up to £1,500 an acre. Owners of derelict and waterlogged land, business men with unimposing country estates, butchers with their few acres of agricultural land, are all in now on the building boom. They are making profits undreamed of. I cannot see that there is anything unfair in making them contribute out of their profits a penny in the pound to the community. Nor can I understand why the Conservative party should be so fierce in their opposition to this proposal. I understand that the argument is that it will increase the woes of the landlords. But there are two classes of landlords; they are not one and indivisible. There are the agricultural landlords, I cannot see how they will be affected by these Land Taxes, because agricultural land is specifically exempted. People who will be affected will be the urban landowners or the semi-urban landowners, and they are well in a position to pay. In the interests of fair taxation why should a professional man have to pay 4s. 6d. in the pound Income Tax, or a rich man as much as half his income in taxation, and these landlords be able to reap their harvest, which in many-cases they have not sown, without any additional impost upon them? It is argued that taxation of land values will never work, that it never has worked. It has worked in the Dominions; it has worked in the United States; it has worked in several European countries. Surely, it is not beyond the capacity of British statesmanship to make it work here.

The case for some form of increment tax, I suggest, grows with every year. There is the instance of the Becontree housing estate. The London County Council bought 2,000' acres for housing. That land was valued for local rating purposes at £7,000, but when it came to be sold it was sold for £295,000. Why one value for rating and another value for building, for sale, 40 times the rating value? It is a travesty of justice. It is not merely Liberals or Socialists who protest against this land escaping taxation. There was Lord Ashfield who the other day, with regard to the Edgware Tube, said: Land speculation at the Edgware terminus has forced the price to a level which restricted purchases, and he suggested that something should be done to secure the increment value due to the making of the railway. Why is not something done? As long ago as 1885 the taxation of land values was in Mr. Joseph Chamberlain's unauthorised programme. It was in the Newcastle programme of 1891. Time and again the electors have voted for this form of taxation, and time and again they have been thwarted. On no fewer than six occasions the Bill to tax land values passed a Second Reading in this House. Six hundred municipalities have petitioned in favour of it, and I suggest that the Gov- ernment have no right to drop this tax. The policy was not an issue at the last election. If it had been, we might never have had the very powerful support of Lord Snowden. I agree that the value of that support must have been worth something like 100 seats to the National Government. If the Government decide to scrap these land taxes, at least they ought to put something in their place. What I most disliked about the whole business was the air of finality with which my hon. Friend the Financial Secretary to the Treasury buried these land taxes in his Second Reading speech.

Mr. HORE-BELISHA

Burial is always the final act.

Mr. BERNAYS

Exactly. That is precisely my point. Here are his words, and I will refresh his mind. He said: The Government having decided, having examined the whole matter, that some future Parliament should not be deprived of its right to examine the whole matter afresh, in the light of the new conditions which will then prevail."—[OFFICIAI, REPORT, 16th May, 1931; col. 1899, Vol. 289.] But why some future Parliament? I agree entirely with what my Noble Friend the Member for Hastings (Lord E. Percy) said on the question of land taxation, and I was very glad to hear that the Conservative party were not opposed to the principle of increment value. I hope we shall have some reply to-night from the Financial Secretary to the Treasury that, though this form of land taxation has been scrapped by the Government, they proposed to put something in its place. This question does, after all, raise issues far beyond the actual taxation of land values, issues which concern the whole future of the National Government. I wonder if the Government realise in what position they put non-Conservative supporters by the scrapping of these taxes? Do they realise that on every platform we have to meet the charge that it is not a National Government we support, but a Tory Government? I suggest that it is very difficult, on the scrapping of these land taxes, to refute that charge.

I believe in National Government. I stood for it at the last election, and, according to my lights I have tried to stand for it in this House. Though I have opposed some of the Measures of this Government, particularly the Protectionist Measures, I did not feel that they justified the extreme step of going into opposition, and with great personal reluctance, because it is a big thing in politics to separate oneself by this floor from one's friends, and after peculiar and powerful temptations to the contrary at the time, I separated myself from my hon. Friends' decision to sit on those benches in opposition. One of the reasons why I did it was because I believed, and still believe, that the right hon. Gentleman the Lord President of the Council, when he spoke at the election about playing the game meant to play it himself, and I believe that he is striving his utmost in very difficult circumstances to keep the Government on an even keel and that the great majority of the supporters of the Government are sincere when they wish to keep alive the national idea. But I ask them this question in all sincerity. Are they prepared to pay the price for national government? Great portions of the Conservative programme have been carried out; is it unreasonable that we should ask that there should be rather more freer borrowings from the Liberal programme?

The Noble Lord spoke of the need for national government, and with all that he said I am in agreement. National government is not just a question of the arrangement of seats, it is not a question of a Conservative standing down here and a Liberal standing down somewhere else. If that is the only basis of national government then national government is national humbug. National government to be both honest and effective, is surely to be not merely a union of men of opposite parties but a union to some extent of opposite programmes. This is the first time, since I separated from my hon. Friends, that I have ventured to attack the Government, but I felt that I could not sit silent to-night and see land reform, which I regard as urgent and long overdue, recklessly scrapped, without anything being put in its place, merely because the dominant section of the Coalition says it must go.

10.22 p.m.

Sir G. COURTHOPE

We have listened to a very interesting, very able but very surprising speech. I should be largely in agreement with it if the tax which we are discussing was a tax upon increment values. It is not. It is news to me that the Liberal party are in favour of land value taxation in the form included in Part III of the Act of 1931. The hon. and learned Member for South Nottingham (Mr. Knight) made a fluent speech in favour, among other things, of the valuation of land as a record of its market value. I should largely agree with him, but is this a record of the market value of land? It is a travesty of valuation. Speaking from memory and subject to correction, I believe that in supporting the principle embodied in Part III of the Act of 1931, the hon. and learned Member for East Bristol (Sir S. Cripps) used two examples. He admitted that the proposal was to value every possible site as if it were the only possible site, and when challenged he gave an example and admitted that in the Strand he would value the site of the Savoy Hotel as if that site were clear and every other site in the Strand were in its present state of occupation. That is substantially correct. I say, what a travesty of valuation.

I want to give a practical reason why in my opinion the Government are to be heartily congratulated upon their courage in repealing this part of the Act of 1931. In my ordinary day-to-day business I have to deal a great deal with the flow of credit on the security of real property, both urban and rural but particularly rural, and I have argued in the House of Commons before, and I do not go back on one word that I have said, that the presence of Part III of the Act of 1931 on the Statute Book was a standing menace to the flow of credit on the security of real property. For that reason it has been a definite handicap to every transaction in land and to operations, particularly agricultural operations, which require a flow of credit into land and on the security of land. It has had the effect of raising the rate of interest at which money could be borrowed for operations in land and to that extent it has definitely hampered the recovery of agriculture and everything else that depends upon the security of the value of land.

There has been tremendous relief in that respect since the announcement of the Chancellor of the Exchequer in the Budget Speech. The interests concerned with the business and management of real property are profoundly grateful to my right hon. Friend. It will be a relief to agriculture and industries of that kind. Last year I raised this point in Debate and it was said to me, "Why bother? The tax is suspended." It was suspended in precisely the same way as the traditional sword of Damocles was suspended—a perpetual menace to the man who sat and worked under its glittering point. The removal of that suspended sword has removed a state of constant suspense from rural industry, which needs the encouragement of security as much as any other industry.

10.28 p.m.

Mr. CLEMENT DAVIES

It is so seldom that I intervene in Debate that I almost feel called upon to apologise and to make the usual request for the indulgence of hon. Members on this occasion. But to-night I feel that I ought to trouble the Committee with a few facts which are unknown to many hon. Members present but are very well known to hon. Members sitting opposite. The speech of my hon. Friend the Member for North Bristol (Mr. Bernays) is the speech which I myself delivered against these very taxes in 1931. I then pointed out that the proposals of the Chancellor of the Exchequer of that time did not embody the principles for which we had stood and which had been accepted by the House of Commons on, I think, four occasions when there were Conservative majorities in it. Those were not the principles which were being put forward by Mr. Philip Snowden as he then was. No, his proposals were a partial, a small, a out-down, an almost twopenny-halfpenny embodiment of the principles for which many of us fought in the past. That is why we took exception to them at that time.

Speaking for myself, I have always believed in the valuation of land so that we might have a true record of the land. That was embodied in the Act of 1909–10 which followed the Budget brought in by the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George). That was an entirely different thing from the Budget proposed by Mr. Philip Snowden. When the Budget was introduced in 1909 it was proposed that there should be a valuation of the land from John o' Groats to Lands End whether it was agricultural land or whether it was land which had become covered with factories or covered with houses or was industrially occupied. It was a valuation of the land throughout the whole of the country. That was not the case in this Bill. Agricultural land was to be kept out. The only land that was to be valued was land which was taxable, and you could only find out what was taxable by finding out the difference between what was agricultural and what was non-agricultural.

I pointed out from the very seat now occupied by the right hon. Gentleman the Member for Caithness (Sir A. Sinclair) that the thing was unworkable unless you could have a complete valuation. Secondly, in the Act of 1909–10 the taxation was entirely different from the taxation which was proposed in this case. I agree with many of the things said by my hon. Friend on my left and by the right hon. Gentleman on the other side, but I must say that they are both mistaken in their facts. Neither was present in this House, neither knew what was going on and neither knew of the negotiations which took place. In the Act of 1909–10 the very thing that both of them have asked for to-night was included, namely, that there should be a tax upon increment value which had been provided by the public, so that you could divide the value which had been created by the owner of the land himself or his predecessors in title and the value which had been created by the public. The value which had been created by the public, according to certain Members sitting on that side, ought to belong to the public entirely. According to the Liberal party in 1909–10 and the Government of that time it was not right to take the whole, but they took 20 per cent. When they came to this side of the House, and the matter was proposed by their Chancellor of the Exchequer, he did not propose any tax upon the increment value which had been added by the public. What he did propose was a capital duty which was a double tax upon land already paying Schedule A taxation.

That matter was brought up in the various party meetings which were held elsewhere. I was then under the whip or the lash of the right hon. Gentleman the Member for Caithness who was at the time taking his instructions from the right hon. Gentleman the Member for Carnarvon Boroughs. For the very first time there was a united party determined, to throw out the Labour party who proposed double taxation. We were all united upon that one point. I was then in the position of having the honour of speaking from that side of the House on the Second Reading of the Finance Bill. I gave the Bill the sort of blessing that one expects from a party which is completely in opposition, but which is not quite sure in which Lobby it is going to vote. I said that the Bill was good in parts, that so far as valuation was concerned we welcomed it, as I myself certainly welcomed it but—so far as I remember there were only three sound land taxers in the House at the time: the right hon. and gallant Member for Newcastle-under-Lyme (Colonel Wedgwood), Mr. Maclaren and myself—I had to point out that at the moment the Bill only went one-tenth of the way we desired it to go. It did not provide for the complete valuation of the land and it did not provide for the proper taxation of income derived from the land, but it put on an extra capital tax over and above the Schedule A taxation already upon it.

Then what happened? I am sure that certain Members of the Government who were present will forgive me for making a reference to this. I am sorry the right hon. Member for Darwen (Sir H. Samuel) is not here. The first meeting that took place in order to discuss how we could meet this situation—the double taxation to which I took the most strenuous objection—was at the House of the right hon. Member for Darwen, and there were present that night the Prime Minister, the right hon. Member for Carnarvon Boroughs and the then Solicitor-General. We then discussed how best we could meet the situation so as not to turn out the Government, although we were against double taxation. I will not go through all the ramificiations—[HON. MEMBERS: "Go on"]—the meetings which took place in 10, Downing Street or the meetings which took place behind this Chair; but ultimately a formula was devised in order to save the situation. That formula was devised by the then Solicitor-General. We had to accept it, because it was then thought desirable to keep in the Labour Government. We accepted it. It meant in truth and in fact that the taxation was useless which it brought in; but it meant, on the other hand, that the face of the Government had been saved, and I had to give way and pretend that I no longer took any objection to it. I sat here and I heard the then Chancellor of the Exchequer make his Third Reading speech and direct it entirely to me. He had lost his taxation, he had lost his valuation, and his attack was entirely directed towards me. One has only to read his speech on the winding-up of the debate on that occasion. The result is that there is now on the Statute Book an Act which does not provide for full taxation, which is what is always required by the land taxers, and is a nonsensical valuation, because it does not value the whole of the land but values only a portion of it. What is more, the taxation brings in nothing, and the Chancellor of the Exchequer at the time knew that it would bring in nothing. No wonder that he said that I had destroyed his Budget. All I am saying is that if you remove it from the Statute Book you are doing no harm to land taxation, or to the views that we have always held regarding the valuation of the land and the way in which land taxation should be treated; you are removing a thing which is absolutely useless, and was known to be useless at the time that it was introduced.

10.41 p.m.

Mr. DAVID GRENFELL

It is a great pity and disadvantage to the Committee that the usual channels did not find it possible to adjourn this Debate until the Committee and the disorganised and confused supporters of the Government had been able to recover. The hon. Member who opened the Debate claimed that a mandate had been given in the first instance for the repeal of this tax, but he has been answered by speeches from his own side of the House. Those speeches, following in rapid sequence, have shown how utterly unfounded is the claim that any mandate was called for or received by the Government for that decision. The Noble Lord the Member for Hastings (Lord E. Percy) said that the Debate showed the greatest justification for the existence of the National Government and, in a speech which I found most difficult to follow, claimed to have been grounded in principles—Tory principles, he claimed them to be—which he had received at the hands of leaders of the Tory party, and which were definite in every way.

The Noble Lord went on to give a dissertation on the duties of landowners in regard to housing and the development of the land of this country, and spoke of the fear of taxation which was driving land into the market for the purpose of building. The Noble Lord must have lived in a very strange country; he does not know the conditions in the industrial areas and the environs of those areas if he claims that there has been, at any time, an outside or external influence driving unwanted land into the market for building houses. I live in a part of the country where a large number of houses have been built in recent years, and I never knew of any unduly cheap land having made its appearance on the market. My experience, and the experience of housing authorities in all parts of the country, has been that cheap land is difficult to get. Land has always been obtainable, not at a low price but at an extraordinarily high price, whenever it was wanted by the community. Because of the difficulty of obtaining land, the considerably increased prices and the very large increment of value—the Noble Lord laughs. He will laugh at the futility of his own speech when he compares it with the one which I am trying to make at the present moment.

Lord E. PERCY

I cannot help laughing at the hon. Gentleman. Why does he expect that you should get cheap land by taxing land any more than cheap whisky by taxing whisky?

Mr. GRENFELL

We are failing to obtain cheap land because of land monopoly and because of interest falling upon the price of land. In consequence of that monopoly, the State and the community are entitled to have the tax. The difference between the Noble Lord and others who spoke after him is very significant. It reveals the wide difference, the utter incompatibility, between the views of Members supporting the Government. One hon. Member complained that the full measure of taxation was not required, that the community's full share was not demanded; he said that the figure was too low. There is no point of agreement between these various hon. Members. I have worked with the hon. and gallant Member for Eye (Sir G. Court-hope) on occasion, and have found him to be a fair and stubborn advocate of the views which he holds. He does not believe in the taxation of land values; he believes that the whole effect of this kind of legislation is to hamper and interfere with the organisation and development of land. We respect that point of view, but is that the view of Members in all parts of the House? Do all those who nominally support the National Government to-night hold that view? If I were to ask hon. Members on the other side of the House to hold up their hands to signify whether they agreed with the hon. and gallant Member, I am sure a considerable number would express their dissent from the view which he puts forward. Really, this question has not been discussed to-night.

I am very sorry that the Prime Minister's name has been brought in, and that of Lord Snowden, to whom many hon. Members owe their presence here. The Prime Minister is not here to speak for himself. What does the House think, what does the public outside think, of a Prime Minister who is a Member of the House, whose words have been quoted so explicitly on this matter, and who is not here to defend himself against a charge of that kind? If there has been a change of view in regard to the principles of taxation, if there has been a change of view in regard to the merits of the particular provision which is now to be repealed, if there has been a change of view as regards either principle or expediency, those who have experienced that change of view ought to be here in their place to explain to the House the reason for their change of view.

We complain because the Prime Minister is not present, and we are astonished to hear the views of his henchman. One of the Prime Minister's supporters in the House, who claims to-night to be a sup porter of the National Government, warned the Government, and in doing so pointed an admonishing finger at the Chancellor of the Exchequer, to watch what they are doing, and said that a large number of people in this country who voted for the National Government might not vote for them again—that the Government ran the risk at the next election of losing the votes of a very large number of electors because they had played them false this time. The question that I would put to him, and I extend the invitation to others who sit on this side of the House, is this: If the electorate are entitled to withhold their votes from the Government at the next election in consequence of what is being done to-night, do you expect the electorate to be more loyal to political principles, do you expect them to show their dissent from the sharp practice of the Government, do you expect them to be an example to you, or are you going to be an example to them? I ask hon. Members in all parts of the House who believe that the Government had no mandate—and they certainly had not—I ask those Members who have supported the National Government, are they going to withhold their support from the National Government to-night? I ask the hon. and learned Member for South Nottingham (Mr. Knight) whether he feels justified in warning the Chancellor of the Exchequer that public opinion and the electorate of this country will show their dissent from what has been done?

Mr. KNIGHT

If the hon. Member puts that question to me, he must expect some answer. I am going to decide my support of the Government on general lines of policy. I am not going to place this subject above the whole policy.

Mr. GRENFELL

Involved in this Debate to-night is a repudiation of pledges, a breach of faith with the electorate and among parties. I do not know whether hon. Members on the Front Bench dissent from me or with each other. They shake their heads, but will they answer the Prime Minister to-night when they come to speak? I can give quotations from the hon. Member who is always honest enough with himself and this House. I believe he is. I have not found him out yet. We on this side of the House watch Members opposite closely, and I have not found him failing to state his position. We shall expect a statement as to why he has joined in this attempt to repeal and repudiate pledges of Members of the Government of which he is one of the leading lights.

Mr. CHAMBERLAIN

Will the hon. Member tell us what are the pledges to which he refers?

Mr. GRENFELL

Pledges not to take party advantage, not to undo the work of other parties, but to work for the economic reconstruction of the country. If part of the economic or national structure is to be pulled down, let us have a reason. I shall expect the Chancellor of the Exchequer to tell us that, instead of meandering philosophies like that of the right hon. Member for Hastings (Lord Percy), who, sitting there in his-high altitude, looking down on the rest of the House with contempt— [Interruption.] The right hon. Member has a superior way of speaking to the House. I would ask the Chancellor of the Exchequer to say what alternative plan he has. In the Schedule to-day it is difficult to give an exact figure for the increment of land values year by year. It is true that under Schedule A an additional £100,000,000 a year in the taxable income has made its appearance in the last 10 years. There is a considerable increase, and I have instances here sent to me in print of that considerable increase, not 10 per cent. annual increment in value, but an annual increment at the rate of hundreds per cent. in certain localities, because of industry and the community, and not because of anything the landowner does.

Will the right hon. Gentleman, who does not deny the considerable increment in land value, say whether he assumes that the present incidence of Death Duties takes a sufficient hold of this increment in value, or whether he thinks, as the noble Lord the Member for Hastings thinks, that there should be a more scientific way devised for taking off the part of the increase in value that belongs to the community? As the Chancellor of the Exchequer did not take the opportunity on the Second Reading, I should like him to tell the Committee whether he has it in his mind that he will be able in the lifetime of this administration, having achieved his work of destruction in taking this off the Statute book, to devise a plan by which the people of the country can have restored to them that part of the increment of land values that belongs to the community.

10.56 p.m.

Major Sir ARCHIBALD SINCLAIR

The hon. and learned Genleman the Member for Montgomery (Mr. C. Davies) startled me by referring to the occasion when the land Clauses of the Finance Bill of 1931 first came under discussion, and he said he attacked these proposals. The hon. and learned Gentleman's attack took the form of saying he could understand that to most Members of the Labour party and hon. Members on the other side the Bill was welcome. He added, I, too, welcome it. At the beginning of his speech he said: In the first place, I should like to congratulate the Government upon the opportunity that has been presented to them of once again tackling this question of land values and assessment of site values. I should like to felicitate them upon the will they have shown in taking advantage of the opportunity offered."—[OFFICIAL REPORT, 19th May, 1931; cols. 1815–16, Vol. 252.] He went on to make a few criticisms. [Interruption.] Do not supporters of the present Government make criticisms? Have we not listened to some this evening?

Mr. C. DAVIES

I think I can remember a passage where I said I would give all the pomp and circumstance to the Government of the day so long as they would give me the right of drafting that Bill and making it a very much better one.

Sir A. SINCLAIR

That emphasises my point. The hon. and learned Gentleman mentioned the question of valuation and said: These are matters which will have to be discussed very fully in a later stage. They can only be discussed by the House giving, as I hope it will, a Second Reading to this Bill. He said to-night that he had objected to the double tax. In his speech on the Second Beading of the Finance Bill of 1931 he said: Frankly, it is undoubtedly an extra tax and an additional burden upon certain taxpayers which will continue as a burden additional to other burdens until the right hon. Gentleman the Member for Newcastle-under-Lyme and the hon. Member for Burslem form a Government of their own,"— Obviously he did not think that was very likely— when all the other burdens will disappear and will be buried in some mysterious way into the land and we shall have only one tax. Until that time comes, this tax will be an additional burden over and upon all the other burdens of taxation that have to be borne."—[OFFICIAL REPORT, 19th May, 193.1; cols. 1824–25, Vol. 252.] He further said that Lord Snowden devoted himself to attacking him as the chief architect of the destruction of his land Clauses. I have glanced hurriedly through this Third Beading speech since he spoke, and I see attacks on the Minister of Health, on the Chancellor of the Exchequer, on the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George), and on others, but I cannot find a single attack on the hon. and learned Member for Montgomery. He further said that he attacked these proposals because they did not fulfil the purposes of land taxation, and he hinted that they were a bargain—I do not think I am putting an unfair interpretation upon the hon. and learned Member's speech when I say that he hinted that they were a corrupt bargain— between the right hon. Member for Carnarvon Boroughs and the right hon. Member for Darwen (Sir H. Samuel) on the one hand and the then leaders of the Labour party on the other, a bargain to which he very reluctantly lent himself as a distinguished instrument. I can only quote the hon. and learned Member's own words at the time, when he said, in regard to the formula for land valuation to which he referred in his speech tonight: I do not hide from myself that in that formula, in some instances, there were injustices, but, on the whole, through and through, and throughout the country, it may be taken as a fair compromise. You cannot have a compromise without hurting somebody. During the 20 years' experience that I had at the Bar, I realised it was better to fight for your client than to try to effect a compromise. If you compromised you lost your client, and both sides hated it, but if you fought it out both sides were satisfied. So far as this compromise is concerned, I think it is fair and will satisfy everybody. The only people not satisfied will be the Chancellor of the Exchequer and myself. Neither he nor I have our way completely, but, on the whole, I think justice has been done. I am perfectly willing that he should have as much credit as he likes to take upon himself for having won as much as he did upon that compromise, and I take to myself credit for the fact that for every site value at any rate there will be deducted four times the annual site value for Schedule A purposes, and the tax will not be as heavy as otherwise it would have-been upon fully developed sites. But in his peroration he waxed positively lyrical. He said: We on these benches desire to support the right hon. Gentleman in the great step which he is taking in having, once again, the land valued. Hon. and right hon. Gentlemen above the Gangway may laugh"— Some, I regret to say, abandoned themselves to irreverent laughter, and I am afraid there will be more laughter at the hon. and learned Gentleman's expense to-night— but this House fought this question for 71 days in Committee, as to whether there should be taxation on site values and whether the land should be valued or not. This House ultimately decided that it should be done, and that decision was carried by a Liberal and Labour majority, as this proposal again will be carried by a Labour and Liberal majority."—[OFFICIAL REPORT, 30th June, 1931; cols. 1200–1, Vol. 254.] That was carried with the help of the enthusiastic speech and vote at every stage of the hon. and learned Member. The hon. and learned Member for Montgomery says that it was under the lash of my whip, and that I was under the right hon. Member for Carnarvon Boroughs. When I found it was necessary, on account of a difference of opinion on a great political issue, to part with the right hon. Gentleman I did so, and I regretted it very much. The difference between the hon. and learned Member and myself is that whereas I stand by my responsibility he now seeks to hide behind what he calls the lash, under the flail of which he cowered in the last Parliament. That is not a very proud position for an hon. and learned Member representing such a distinguished constituency.

On this occasion we have had speeches from various members of the Conservative party demanding. action. We had a most interesting speech from the Noble Lord the Member for Hastings (Lord E. Percy). Even members of the Conservative party are vocal, but the hon. and learned Member who claims to be one of the only two land taxers in this Parliament—there were three in the last—when he finds that the Government are proposing to repeal this tax, makes no suggestion that they should put anything else in its place. I do not think I need waste any more time on the hon. and learned Member.

Let me say a few words upon the main issue with which the House is confronted. One or two hon. Members on this side have been twitted for not referring to the issue with which we are confronted. I do not want to go deeply into this very great and complicated question at this hour of night, but I would say briefly that I would rest the case for the taxation of land values upon three main propositions, none of which is affected by the changes in the economic situation during the last 30 years, to which the Noble Lord drew the attention of the Committee. The first proposition is that site value is created not by the owner of the fend but, apart from special circumstances as to the nature and situation of the land, by the growth of population, the development of industry, the extension of public works, and so on.

It is said that a great many public spirited and enterprising individuals by the expenditure of capital have greatly developed the land within their own control and that the development is entirely due to them. That cannot be true in hardly any case. I have in my mind an example of the exact opposite in regard to a certain village in the Island of Harris, where the late Lord Leverhulme spent tens of thousands of pounds upon the development, but nobody followed him. The fishermen did not go. The fishermen did not choose to fish from there. The result is that there has been no increase in the value of that land. Therefore, it is clear that the contribution of the community is an essential one in the improvement of the value of the land. In the second place, the amount of land cannot be increased. That is what differentiates it from other commodities. The critics of land value taxes often say that rubber, cotton, boots and other goods depend for their value upon the action of the community which buys those necessary articles. In those cases, as the population increases the value of those goods does not increase but tends to fall. As the demand increases so the supply increases, but the supply of land cannot be increased, because it is a fixed quantity. The value of the land may fluctuate. In some parts of the country the land values may stand still for a time, and in very remote parts of the country they do not increase, but, taken by and large, with the exception of a very few remote corners of the country, they go on steadily expanding and increasing year after year, without any active steps being taken by a landlord, unless, of course, the individual landlord happens to be enterprising and develops his property. Without the necessity of any action being taken by the landlord these fruits fall into the lap of the landlord.

My third proposition is this: If site values are taxed and the burden of taxation is removed at the same time from improvements, a double stimulus is given to industry and development of all kinds. On the one hand the penalty for holding up land becomes taxation and the access of the community to the land is rendered easy on fair terms, while on the other hand the reward of development becomes relief from taxes and rates. It is quite true that one of the chief defects which the Liberal party saw in Part III of the Finance Act of 1931, in its original form, was the failure to provide for the untaxing of improvements pari passu with the taxation of site values. That criticism was met by Clause 18, the effect of which is to graduate the tax in accordance with the development of the site, leaving on the fully developed site merely a nominal tax of one-eighth of a penny, for the payment of which industry would be amply compensated by municipal and national development and by the reduction of other forms of taxation.

I am far from saying that these taxes cannot be improved. The Financial Secretary to the Treasury, who is the only Minister who has opened his mouth on this question since the Budget was first introduced, in reply to some remarks which I made on the Second Reading of the Finance Bill, said that I was careful to say that I did not approve of the tax itself. I never said anything of the kind. I have looked carefully through the OFFICIAL REPORT, and I said nothing of the kind. The nearest approach I made to it was that I was not wedded to the particular form which it takes in the Finance Act of 1931. Certainly I think it is capable of improvement. I do not think there is any one who would quarrel with that statement. I see present the hon. and learned Member for East Bristol (Sir S. Cripps), who did as much as anyone to form that Act. I think he would be the last to say that the tax is incapable of improvement and that it represents a perfect sample of land taxation. We should like to see the total abolition of Schedule A, which of course is not an Income Tax at all. It is paid on property, whether income is drawn from it or not.

Hon. Members are fond of scoffing at the hypothetical character of land valuation under the 1909 and 1931 proposals, but Schedule A is a tax assessed upon a hypothetical income received by a hypothetical landlord from a hypothetical tenant. So I would welcome the removal of Schedule A, but I am far from saying that it could be done by a stroke of the pen. It could be done by a constructive effort of thought and study such as the Noble Lord the Member for Hastings invited the Government to undertake. It would demand a re-casting of our tax system. I cannot understand why this National Government, especially after the remarkable character of this Debate, should not address itself to that task. But I certainly say that these Clauses are better than none. I certainly say that they are workable, that they provide a valuation which is the indispensable basis for any action in the direction of land taxation at all. Certainly I think that this House should take a firm stand on the question of preserving the land valuation Clauses, which must be the basis of any such constructive action as the Noble Lord the Member for Hastings and other speakers have asked for to-night. Members of the Government must have other ideas for their improvement. In fact, hon. Members on these benches could supply some, but why should they come to us? The Government is full of men, perhaps fuller even than the Labour party, who have devoted no small part of their political influence to the propagation of the principles of land values taxation. Apart from the Prime Minister himself, and the Secretary of State for the Dominions, who has a long record on this matter, there is the Chancellor of the Exchequer, who in public speeches has drawn attention to the part which private interests have played. I think he said on one occasion when Minister of Health, when a little bit of land was wanted for the widening of a street, that private interests would levy extortionate sums of money from the community.

There is the Secretary of State for Foreign Affairs, who has a very special record on this subject, and who as recently as 1924, only 10 years ago, which is, surely even now quite a short time in a man's political life, introduced into this House a Bill for the valuation of land and the rating of site values. When the Liberal party was preparing its proposals for dealing with urban and rural land, it was the Secretary of State for Foreign Affairs who came down to the conference and drafted a resolution putting land values taxation in the forefront of that Liberal programme. The views of the President of the Board of Trade have already been referred to by my right hon. Friend the Member for North Cornwall (Sir F. Acland), and, not least, there is the Financial Secretary to the Treasury himself who now bears a special responsibility for these financial questions. It is true that he was one of those who criticised the details of Lord Snowden's proposals, but he criticised them on the ground that they did not go far enough. He showed by his speeches that he had made a deep and careful study of this question. He traced the development of the idea from the doctrines of the physiocrats and impôt unique through Henry George and down to the Prime Minister, and Mr. Andrew MacLaren. I would suggest that he is the man who is eminently qualified to assist the Government in dealing with this problem of land taxation in a constructive way. Perhaps it is not quite for me to say, but my view is the same as that of the Noble Lord the Member for Hastings, that this is essentially a task which the National Govern-men should perform. There are Conservatives, Labour men and Liberals all over the country employed in municipal and political work of various kinds who are keenly devoted to this proposal. The hon. Member for one of the divisions of Nottingham referred to Glasgow which passed a resolution in favour of this, although it had an anti-Socialist and moderate majority, and I think it applies to a great many other municipalities. Some hundreds altogether have passed resolutions in favour of this principle. The Government might perform this task of thrashing out a fair and effective scheme for the taxation of land values. The Noble Lord the Member for Hastings said that the policy of the taxation of unearned increment was often urged by Conservative critics during the passage of the 1931 Finance Bill, but that was when they were in Opposition. Why do not they urge it on their party when they are now in power? I see that the Noble Lord has done it here to-night on the occasion when these taxes are to be repealed, but he will be voting for the repeal, and I cannot help thinking that his intervention might have come with even greater force last year or the year before when the question of land taxa- tion was shelved and when the study of it might then have been started.

It is true that Conservative Members have made proposals for tackling the question of land values when in Opposition, but when they have been in power they say very little about it—and that is the time when they ought to be able to translate their views into action. The Noble Lord said that there was no difference in his attitude on the question of the land making its contribution to the revenue of the State and that of hon. Members on this side of the House. Why then is this action deferred, and why is the, only action taken that of repealing these land taxes? The Noble Lord says that the policy embodied in Part III is as old as Noah's Ark, but surely it is better than the present position which the Noble Lord described as losing hundreds and thousands of pounds in land value to the State through the incomplete and inefficient action of the present scheme of Death Duties. Surely this is a condition of affairs which calls for immediate action, not negative action, but positive and constructive action. The Noble Lord said that it showed the necessity for a National Government. With all respect, it shows nothing of the sort. It shows its futility. When Members in all parts of the House are demanding constructive and positive action, we see that the only action to be taken to-night is a negative action, the repeal of the taxes which now exist. The Financial Secretary in his speech on the Second Reading gave the reasons why the Government were taking this action. He said: Accordingly, the Government have decided, having examined the whole matter, that some future Parliament should not be deprived of its right to examine the whole matter afresh, in the light of the new conditions which will then prevail, and in detail. The Financial Secretary knows well that nothing can deprive a future Parliament of any of any of its rights in this matter. He also said: As three years must elapse between the necessary preparation and the exaction of the tax, it becomes plain that the tax could not become operative in the lifetime of the present Parliament."—[OFFICIAI, REPORT, 16th May, 1934; col. 1899, Vol 289.] He was slightly mistaken, as only two years must elapse, and that is all the greater reason for getting on with the valuation now, which must form the basis of the constructive action for which hon. Members are clamouring. Delay is wasteful. I have some figures here provided by the London County Council in a book called "London's Statistics," showing the valuation for rating. Let me make it clear that the figures include buildings as well as land, undeveloped land on the basis of agricultural land. The figures show that in the last 25 years land in the County of London has increased in value 37 per cent., in Greater London by 53 per cent., and land in extra London, that is excluding the County of London, fey no less than 100 per cent. That is the source of revenue which is going to waste while the Financial Secretary allows these provisions to be repealed.

This repeal exhibits the Conservative party in complete control of the National Government. There was the other day a leading article in the "Times" which said that the inclusion of the Clause repealing the scheme in the Finance Bill could only be taken to mean that Ministers who formerly supported it believed that it might as well be formally abandoned. That presumably refers to the Prime Minister and the Secretary of State for the Dominions and it is a pity they are not here to answer for themselves to-night. The efforts of Canute to stop the tide were not more ludicrous than those of the main body of the Conservative party to stop the taxation of land values. The permanent retention of power by the Conservative party is impossible and nothing is more certain than that any progressive majority must reintroduce the taxation of land values. To my mind, the gradual method would have been better. I think this is a controversy which has suffered from its handling by the protagonists on both sides. On the one side, the extremists among the land taxers have made embittered and unfair attacks on property owners and have stirred up great feeling against this just—as I believe it to be—and workable principle. On the other side, the defenders of property have been only too apt to adopt the course for which they were chided 11 years ago by the right hon. Gentleman the Member for West Birmingham (Sir A. Chamberlain) of trying to defend and protect, abuses of the present system. This Clause is not the tomb of the land taxes. The tomb is the tomb of National Government which died long since and this Clause is the stone rolled across its mouth. That it is inconsistent with the idea of a National Government is plainly shown by recent utterances of leaders of the Conservative party.

Hon. Members have quoted the utterances of the Lord President of the Council and Lord Hailsham, who in another place spoke of the humiliation to which this repeal would subject the Prime Minister. How can the imposition of this humiliation upon the Prime Minister and other supporters of these taxes be justified except upon the assumption that a condition of their retention of power by those Ministers who shrink from calling themselves Conservative, is that they submit themselves to the will of the Conservative party? Why has the Prime Minister submitted? Some Members of other parties at the last Election were prepared to swallow anything. There was a well-known case of a Member whose Conservative constituents were reluctant to accept him as their candidate. They tried to make it as difficult for him as possible. They brought him up to one steep fence after another but the candidate jumped them all and as every question was asked his formula was: "But I go further." The Conservataive Association to its disgust was forced to accept him. The Prime Minister goes slower but he goes just as far. The Prime Minister said at the Albert Hall in 1928: A Chancellor who taxes land values will deserve the gratitude of the country. A Labour Chancellor will do that. Now a Labour Prime Minister is repealing it—well, a Prime Minister who holds his position by virtue of the fact that he is taken to represent Labour in this country, rightly or wrongly. We, at any rate, will be no party—

Mr. MACLEAN

The right hon. Gentleman was Secretary of State for Scotland in this Government.

Sir A. SINCLAIR

Certainly I was Secretary of State for Scotland as long as I agreed with the Government. I do not know to what the hon. Member refers, but he knows perfectly well that I served as long as I honestly could. When I could no longer serve in the Government to my re- gret—it must be a matter of regret to anyone—I resigned from the Government. If the hon. Member refers to my attitude on the question of land taxation I say it was quite obvious that when a National Government was formed in a great crisis, and when we were faced with this question, which had been a sharp cause of division between the Members of the Government and between their supporters only a very few weeks before, and which left open sores, it was a matter of practical arrangement that it should be shelved in the manner in which it was and left completely open. It was left open for this Government if it liked this year or last year to deal with it. After the wounds had healed they could have taken it up on constructive lines, as was said by the Noble Lord the Member for Hastings. We will be no party to the betrayal of the Prime Minister's policy. Equally we shall oppose at every stage this foolish and reactionary party manoeuvre.

11.33 p.m.

Mr. CHAMBERLAIN

The right hon. and gallant Member who has just spoken devoted the first part of his observations to a display of not unnatural arrogance at the revelations of the hon. and learned Member for Montgomery (Mr. C. Davies). To those of us who were in the last Parliament, it seems that the Liberal party found itself in the matter of land taxes and valuation in a very curious position. On the one hand, there was a desire to keep the Labour Government in office. On the other hand, they were opposed, and in some cases bitterly opposed, to the particular form of the land taxes which had been introduced. The final result, as the hon. and learned Member for Montgomery said, was that they saved the face of the Government and preserved it for the time of its existence, but at the cost of the whole value to the then Chancellor's proposals. As my hon. and learned Friend has explained, the Amendment which the Liberal party then forced upon the Government really completely destroyed the value of the tax for revenue purposes and rendered it useless and futile. My Noble Friend the Member for Hastings (Lord E. Percy) did great service in brushing away the cobwebs which in the course of the Debate accumulated round the question. Nothing is more extraordinary to me than the way in which hon. Members like the hon. Member for Govan (Mr. Maclean) who were supporting the Government neither at that time nor to-day have ever learned what the proposals really meant.

All the arguments which have been adduced to-night in favour of the maintenance of the proposals on the Statute Book are founded on a complete misconception of what those proposals, if they had been carried into operation, would probably have effected. My hon. and learned Friend the Member for South Nottingham (Mr. Knight) has expressed in very moderate and temperate terms his regret at what he deems to be a retrograde step on the part of the Government. He has given three reasons why he thinks it is unfortunate that this Clause should be passed. The first was that it would deprive local authorities of a valuation which had saved them from exploitation. It does not do anything of the kind. The valuation under the proposals of Lord Snowden was what I might call an artificial valuation, a valuation made solely for the purpose of imposing this particular tax, and not a valuation which could have served generally as a basis for the valuation of land to be compulsorily acquired by local authorities. What is needed to save local authorities from exploitation is the sort of information which is obtained under Section 28, which is being retained by the Government. Therefore my hon. and learned Friend is wrong in supposing that anything of that kind is being sacrificed by the repeal of the other Clauses. His second reason was that where the value of land belonging to a private person has been increased, not through anything that he has done, but by the action or the expenditure of the community, it is only fair and just that some part of that increase shall be returned to the community. But does my hon. and learned Friend think that that was the effect of Lord Snowden's proposal? There was no increment tax 'at all. His was a capital duty, not a duty upon the increased value of the land due to the expenditure of the community. In the third place, my hon. and learned Friend said that a man ought to contribute something to the rates of his municipality through his land when the value of the land had been increased by the action of the municipality. Again, this was not an instrument for the relief of rates. This was an instrument of taxation, and not of rating. Therefore, in every one of his arguments my hon. and learned Friend completely misapprehends the effect of these proposals.

Mr. KNIGHT

I took those as three instances of the harm which would result from the absence of a system of valuation. I was not describing the particular incidence of Lord Snowden's proposals. I was pleading for the existence of a land valuation.

Mr. CHAMBERLAIN

My hon. and learned Friend's interruption is very typical of the attitude of a great number of hon. Members opposite. To them a Land Tax is a Land Tax. It does not matter what the nature of the tax is, it is all one system, and all their arguments are devoted sometimes to one form of taxation and sometimes to another, but never with any particular reference to the particular scheme before us. The charges of inconsistency which have been levelled against so many hon. and right hon. Members are irrelevant, because the inconsistency does not exist. The speeches quoted were speeches in support of proposals different from the proposals of Lord Snowden. I am a little astonished that the right hon. Member for North Cornwall (Sir F. Acland) should have been audacious enough to charge the Foreign Secretary with inconsistency in this matter, because he, at any rate, must remember that the Foreign Secretary was one of the most determined and damaging opponents of these proposals.

The fact is that the arguments in favour of an increment duty asking an owner to make some contribution to the community in respect of an improvement in the value of his property which has been brought about by the community, appeals to a great many hon. Members, to whatever party they belong. I myself cannot see any unfairness in the application of such a principle, so long as it is fairly carried out. I must also add that I have never yet been able to see any practicable way of putting it into operation. In the first place, of course, it ought to carry with it a natural corollary that if the value of the property of an individual has been diminished or decreased by the action of the community, he should be entitled to equivalent compensation. It is extremely difficult—so difficult that I have not seen any way of overcoming the difficulty—to separate out that part of the increased value of property which is due to the community and that part which is due to the action of the owner himself. A right hon. Gentleman spoke of a case where an owner had spent a great deal of money upon development of property which, after all, had not increased in value. That is one case. I know of a case where an owner spent a great deal of money upon developing a property, and it did increase in value, and no doubt that increase in value was partly due to the fact that the land was in the neighbourhood of a large population. As a matter of fact, changes in the habits of the people, after a time, brought about a change in the conditions; the sort of people—at any rate, wealthy people—for whom this property had been developed, and whose occupation had raised its value, ceased to live in that neighbourhood at all, and the value of the property diminished. What is the owner to do then? In this case he spent more money on redeveloping the property on a different plan to suit the changed conditions, and that property is to-day again increasing in value. Is anybody going to say that no part of the increase in value is due to the large capital sums that have been spent upon it by the owner? It would be perfectly absurd to say so. The difficulty is to see how much is due to expenditure by the owner and how much to the fact that it is within the reach of a large population.

I am here now to speak on behalf of the National Government—and on behalf of all the Members of the National Government—and to explain why we have introduced this Clause into the Finance Bill. Let me, just for a moment, touch upon a trivial point, because more than once it has been suggested that I purposely omitted to say anything about this in my Budget speech. I am not one of those who want to pack out Budget speeches to inordinate length. This proposal did not in any way affect the revenue of the country, nor did it require a Budget Resolution. There was, therefore, to my mind, no reason why I should take up the time of the House in dwelling upon that subject in the Budget speech. Let me explain what is the position of the National Government. Some hon. Members, who take a lofty view of the functions and duty of the National Government, nevertheless fail to appreciate what is really the method in which a national Government must approach national problems. Some suggestions have been made that there was no mandate for the National Government to repeal the proposal. My answer to that is, neither was there a mandate for the National Government to carry out a complete new scheme of land taxation, such as has been suggested by the hon. and gallant Gentleman the right hon. and gallant Member for Caithness and Sutherland (Sir A. Sinclair). The mandate of the Government was what was called at the time a doctor's mandate—to get the country out of the mess in which it had been left and to carry on the administration in the best interests of the general community.

The hon. Member for North Bristol (Mr. Bernays) said that a National Government should not only constitute a union of parties, but there should be also a union of programmes. His idea was that you should take the whole of the programmes of the Conservative, Liberal and Labour parties, put them in a hat, mix them up, and draw out some of the mixture. That is not my conception of the way in which a National Government should approach its duty to the country. What we have to do is to face up to realities, to try to free ourselves as far as we possibly can from all past prejudices which may exist in our minds, and to judge each problem as it comes before us simply and solely upon its merits. Let us look at the realities in this matter. It is quite irrelevant to dis. cuss the merits of this or that form of land taxation in this connection. The facts are that the proposals of Lord Snowden were suspended in the early part of 1932, and that, instead of the land valuation or the land tax coming into operation on a particular date, in both cases they were suspended until Parliament should fix a date for their coming into operation. What are the realities? Does the hon. Member for Gower (Mr. D. Grenfell) suggest that there was any likelihood that this Parliament would name a date upon which either of those provisions should come into operation? We all know perfectly well that we had no mandate to do it. We know perfectly well that there was not the slightest prospect of this Parliament naming a date; and, even if there had been a prospect of its naming a date, the tax could not have been put into operation during the lifetime of this Parliament. Therefore, it remained upon the Statute Book as a piece of useless lumber. That alone, perhaps, might have been a reason for removing it, but that was not all that we had to consider.

We had also to consider the facts which were adduced a little while ago by my hon. and gallant Friend the Member for the Rye Division of Sussex (Sir G. Court-hope). Representations were made to us, which we could not neglect, as to the fact that this proposal, still remaining on the Statute Book, was actually interfering with the flow of credit into the land—was actually preventing or hindering the operations of landlords for the improvement of their property which it was in the interests of the country that they should carry out. Whatever may be the views upon these particular proposals—and I doubt if, in their present form, they have really any sincere advocate in the House to-day—whatever may be their merits, I say that it would not be right to leave upon the Statute Book, until the Government are prepared to bring in a scheme of their own, proposals which are interfering with the due development of property to-day, and that it was therefore our duty, as realists, to remove this obstruction and to leave the site clear and unencumbered for the future. We have done no injury to anyone by that. We have not changed the position so far as the practical realities are concerned, except in one respect, to which I have referred; and, if hon. Members opposite are as confident as they profess to be that they are going to succeed this Government, and that they are going to carry out their new programme in the future, they ought to be grateful to us for leaving the ground clear for them in order that they may develop their own ideas unencumbered by Liberal Amendments, and may bring in land taxation in a Measure after their own hearts

11.50 p.m.

Sir S. CRIPPS

I propose to make very few remarks at this time in the evening. I want to enter a strong protest against the failure of the Prime Minister to be present during this Debate. We have been told that he had some private engagement early in the evening, but it is now 10 minutes to 12. I should have thought that the Prime Minister, who does not often attend this House, would have taken the trouble to come down when he knew this matter of his behaviour with regard to land taxation would be discussed. We do protest against the casual way in which he is treating the Committee, even if a dinner engagement did keep him, in not attending the rest of this Debate to give the Committee the benefit of his views on this subject. The Chancellor of the Exchequer tells us that the question of inconsistency is irrelevant and that the matters about which the Cabinet were speaking were not of this type of taxation. I am afraid that does not apply to the Prime Minister, because he was one of the protagonists of this Bill and took a great part in the negotiations of which the hon. Member for Montgomery (Mr. C. Davies) gave details, which have passed out of my memory. I do not seem to recollect the hon. Member playing so important a part in the negotiations, and anyway the part he played with regard to the Liberal party has been adequately dealt with by the right hon. and gallant Member for Caithness and Sutherland (Sir A. Sinclair). So far as the question of the precise form of the taxation of land values is concerned, that is a matter almost of academic interest at the present moment.

This section which is being passed is a token section, showing the behaviour of the National Government rather on the whole approach to the problem of combined action, than the particular problem of land values. It is perfectly true, as the Chancellor of the Exchequer says, this particular method would not, in the first instance, have produced any amount of revenue. But it could have been increased in the next Budget, up to 20s. in the pound. That should have been the course taken. But now, owing to the action taken by the National Government, hon. Members will appreciate any such approach to the land problem has disappeared in this country, either being continued under a Tory Government, with the land untouched and the landowner subsidised whenever he wants it, or increased under a future Labour Government. Straightforward nationalisation of the land is now the only alternative, largely because of the action taken by this Government in doing away with what might have been the first stages of gradual transition to national ownership. That change will now have to be made when it comes much more suddenly, much more thoroughly. It may not come in the next Parliament or the one after but it will come, and hon. Members know it in their bones. When it comes, I hope the hon. Member for Aylesbury (Mr. M. Beaumont) will be here to see it, because I know how much he will enjoy it. I hope hon. Members will remember with great satisfaction that it was due to them very largely that it came in that form. Perhaps therefore, it is academic to discuss now the question of the precise form of the taxation of land values which is never likely to be a practical point in the policy of any Government again in this country.

But the major question which we have not had elucidated to-night, owing to the absence of the Prime Minister, is to get an explanation from the Government, which the Chancellor of the Exchequer has not given—we could not perhaps expect him to give it because it depends on a statement made by the Lord President of the Council, who also unfortunately is absent. Perhaps he is ' dining with the Prime Minister and discussing the question. The Lord President on a former occasion said the Conservative Members in the Cabinet must play the game. They must not humiliate the Prime Minister. What we want to know is why it is now permissible to humiliate the Prime Minister. Is it the Conservative Members of the Government who now have ceased playing the game or is it that the Prime Minister has become such a nincompoop that he can be humiliated? [HON. MEMBERS: "Withdraw!"] Certainly not. Let the Prime Minister come here and ask me to withdraw. The hon. Member need not worry. I gave the Prime Minister notice, and he has had plenty of time to get here if he wanted to. I should be glad to know why it is that this year they need not play the game. Why this year they can humiliate the Prime Minister, when last year they could not. What are the circumstances inside the National Government which have altered in order to make it decent and proper to do this year that which last year was improper? That question has not been answered. [Interruption.] The hon. Member seems to make a very irrelevant remark. Perhaps he has not been able to follow the argument. If he reads the OFFICIAL REPORT to-morrow he may do better. Perhaps the right hon. Gentleman will ask the Prime Minister, as he cannot be here tonight, whether he will come on the Report stage in order that he may answer

the questions that have been addressed indirectly to him to-night and we will try, through the usual channels, to arrange that this part of the Bill is taken on Report at a time when the Prime Minister notifies us that it will be convenient for him to attend the House of Commons.

Question put, "That the Clause stand part of the Bill."

The Committee divided: Ayes, 232; Noes, 56.

Division No. 270.]	AYES.	[12.0 m.
Adams, Samuel Vyvyan T. (Leeds, W.)	Elliot, Rt. Hon. Walter	Lloyd, Geoffrey
Agnew, Lieut.-Com. P. G.	Ellis, Sir R. Geoffrey	Lockwood, John C. (Hackney, C.)
Albery, Irving James	Elliston, Captain George Sampson	Lockwood. Capt. J. H. (Shipley)
Allen, Sir J. Sandeman (Liverp'l, W.)	Elmley, Viscount	Loder, Captain J. de Vera
Allen, Lt.-Col. J. Sandeman (B'k'nhd.)	Entwistle, Cyril Fullard	Loftus, Pierce C.
Anstruther-Gray, W. J.	Erskine-Bolst, Capt. C. C. (Blackpool)	Lumley, Captain Lawrence R.
Apsley, Lord	Evans, Capt. Arthur (Cardiff, S.)	Lyons, Abraham Montagu
Astor. Viscountess (Plymouth, Sutton)	Fleming, Edward Lascelles	McConnell, Sir Joseph
Bailey, Eric Alfred George	Fraser, Captain Sir Ian	McCorquodale, M. s.
Baldwin. Rt. Hon. Stanley	Fremantle, Sir Francis	McKie, John Hamilton
Baldwin-Webb, Colonel J.	Fuller, Captain A. G.	McLean, Major Sir Alan
Balfour, Capt. Harold (I. of Thanet)	Ganzonl, Sir John	McLean, Dr. W. H. (Tradeston).
Balniel, Lord	Gault, Lieut.-Col. A. Hamilton	Macqulsten, Frederick Alexander
Banks, Sir Reginald Mitchell	Gledhill, Gilbert	Margesson, Capt. Rt. Hon. H. D. R.
Barclay-Harvey, C. M.	Gluckstein, Louis Halle	Mason, Col. Glyn K. (Croydon, N.)
Barton, Capt. Basil Kelsay	Glyn, Major Sir Ralph G. C.	Mayhew, Lieut.-Colonel John
Bateman, A. L.	Goodman. Colonel Albert W.	Mills, Major J. D. (New Forest)
Beaumont, M. W. (Bucks., Aylesbury)	Gower, Sir Robert	Milne, Charles
Beaumont, Hon. R. E. B.(Portsm'th. C.)	Graves, Marjorle	Mitchell. Harold P.(Br'tf'd & Chisw'k)
Bevan, Stuart James (Holborn)	Greene, William P. C.	Mitcheson, G. G.
Blindell, James	Grenfell, E. C. (City of Londan)	Munro, Patrick
Bossom, A. C.	Grimston, R. V.	Nation, Brigadier-General J. J. H.
Boulton, W. W.	Gunston, Captain D. W.	Nicholson, Godfrey (Morpeth)
Bowater, Col. Sir T. Vanslttart	Guy, J. C. Morrison	Nicholson, Rt. Hn. W. G. (Petersf'ld)
Bower, Lieut.-Com. Robert Tatton	Hacking, Rt. Hon. Douglas H.	Normand, Rt. Hon. Wilfrid
Bowyer, Capt. Sir George E. W.	Hales, Harold K.	O'Donovan, Dr. William James
Braithwaite, J. G. (Hillsborough)	Hanbury, Cecil	O'Neill, Rt. Hon. Sir Hugh
Broadbent, Colonel John	Hanley, Dennis A.	Peake, Captain Osbert
Brocklebank. C. E. R.	Hannon, Patrick Joseph Henry	Pearson, William G.
Brown, Ernest (Leith)	Harbord, Arthur	Peat, Charles U.
Brown, Brig. Gen. H. C.(Berks., Newb'y)	Hartington, Marquess of	Percy, Lord Eustace
Browne, Captain A. C.	Harvey, George (Lambeth, Kenningt'n)	Petherick, M.
Buchan-Hepburn, P. G. T.	Haslam, Henry (Horncastle)	Peto, Geoffrey K. (W'verh'pt'n, Bllst'n)
Burghley, Lord	Headlam, Lieut.-Col. Cuthbert M.	Pike, Cecil F.
Burgin, Dr. Edward Leslie	Hellgers, Captain F. F. A.	Pybus, Sir Percy John
Burnett, John George	Heneage, Lieut.-Colonel Arthur P.	Radford, E. A
Cadogan, Hon. Edward	Hepworth, Joseph	Ramsay, Alexander (W. Bromwich)
Campbell, Sir Edward Taswell (Brmly)	Hills, Major Rt. Hon. John Waller	Ramsay, Capt. A. H. M. (Midlothian)
Caporn, Arthur Cecil	Hope, Capt. Hon. A. O. J. (Aston)	Rankin, Robert
Carver, Major William H.	Hore-Bellsha, Leslie	Ray, Sir William
Chamberlain, Rt. Hon. N.(Edgbaston)	Hornby, Frank	Reed, Arthur C. (Exeter)
Chapman. Col. R, (Houghton-le-Spring)	Horsbrugh, Florence	Reid, David D. (County Down)
Colfox, Major William Philip	Howard, Tom Forrest	Raid, William Allan (Derby)
Colville, Lieut.-Colonel J.	Howitt, Dr. Alfred B.	Remer, John R.
Conant, R. J. E.	Hudson, Capt. A. U. M.(Hackney, N.)	Rhys, Hon. Charles Arthur U.
Cook, Thomas A.	Hunter, Capt. M. J. (Brigg)	Roberts, Sir Samuel (Ecclesall)
Courthope, Colonel Sir George L.	Hurd, Sir Percy	Rosbotham, Sir Thomas
Cranborne, Viscount	Hurst, Sir Gerald B.	Ross, Ronald D.
Craven-Ellis, William	Inskip, Rt. Hon. Sir Thomas W. H.	Ross Taylor, Walter (Woodbrige)
Croft, Brigadier-General Sir H.	James, Wing-Corn. A. W. H.	Ruggles-Brise, Colonel E. A.
Crooke, J. Smedley	Jamleson, Douglas	Runciman, Rt. Hon. Walter
Croom-Johnson, R. P.	Jennings, Roland	Runge, Norah Cecil
Cross, R. H.	Jesson, Major Thomas E.	Rutherford, Sir John Hugo (Liverp'l)
Cruddas, Lieut.-Colonel Bernard	Johnston, J. W. (Clackmannan)	Salmon, Sir Isidore
Culverwell, Cyril Tom	Keyes, Admiral Sir Roger	Salt, Edward W.
Davidson, Rt. Hon. J. C. C.	Kimball, Lawrence	Samuel. Sir Arthur Michael (F'nham)
Davies, Edward C. (Montgomery)	Lamb, Sir Joseph Quinton	Sandeman, Sir A. N. Stewart
Dawson, Sir Philip	Latham, Sir Herbert Paul	Savery, Samuel Servington
Denman, Hon. R. D.	Leech, Dr. J. W.	Shakespeare, Geoffrey H.
Drewe, Cedric	Leighton. Major B. E. P.	Shaw, Helen B. (Lanark, Bothwell)
Duckworth, George A. V.	Lennox-Boyd, A. T.	Shaw, Captain William T. (Forfar)
Duncan, James A. L. (Kensington, N.)	Lindsay, Noel Ker	Shepperson, Sir Ernest W.
Edmondson, Major Sir James	Lister, Rt. Hon. Sir Philip Cunllffe-	Shut", Colonel J. J.
Simmonds, Oliver Edwin	Stuart, Hon. J. (Moray and Nairn)	Whyte, Jardins Bell
Skelton, Archibald Noel	Sugden, Sir Wilfrid Hart	Williams, Charles (Devon, Torquay)
Smith, Bracewell (Dulwich)	Sutcliffe, Harold	Williams, Herbert G. (Croydon, S.)
Smith, Sir J. Walker. (Barrow-In-F.)	Tats, Mavis Constance	Wills, Wilfrid D.
Smith, Louls W. (Sheffield, Hallam)	Templeton, William P.	Wilson, G. H. A. (Cambridge U.)
Smith, Sir Robert (Ab'd'n & K'dine. C.)	Thomas, James P. L. (Hereford)	Windsor-Clive, Lieut.-Colonel George
Somervell, Sir Donald	Thompson, Sir Luke	Winterton, Rt. Hon. Earl
Somerville, O. G. (Willesden, East)	Thorp, Linton Theodore	Wolmer, Rt. Hon. Viscount
Sotheron-Estcourt, Captain T. E.	Tree, Ronald	Womersley, Sir Walter
Southby, Commander Archibald H. J.	Tufnell, Lieut.-Commander R. L.	Worthington, Dr. John V.
Spencer, Captain Richard A.	Turton, Robert Hugh	Young, Rt. Hon. Sir Hilton (S'v'oaks)
Spens. William Patrick	Ward, Lt.-Col. Sir A. L. (Hull)
Stanley, Hon. O. F. G. (Westmorland)	Ward, Irene Mary Bewick (Wallsend)	TELLERS FOR THE AYES—
Stevenson, James	Ward, Sarah Adelaide (Cannock)	Major George Davies and Dr.
Storey, Samuel	Wedderburn, Henry James Scrymgeour	Morris-Jones.
Stourton, Hon. John J.	Wells, Sydney Richard
NOES.
Acland, Rt. Hon. Sir Francis Dyke	Griffiths, George A. (Yorks, W. Riding)	Mainwaring, William Henry
Adams, D. M. (Poplar, South)	Grundy, Thomas W.	Mallalieu, Edward Lancelot
Banfield, John William	Hall, George H. (Merthyr Tydvil)	Mander, Geoffrey le M.
Bernays, Robert	Hamilton, Sir R. W.(Orkney & Zetl'nd)	Mason, David M. (Edinburgh, E.)
Bevan, Aneurin (Ebbw vale)	Harris, Sir Percy	Milner, Major James
Brown, C. W. E. (Notts., Mansfield)	Holdsworth, Herbert	Owen, Major Goronwy
Cape, Thomas	Jenkins, Sir William	Rea, Walter Russell
Cocks, Frederick Seymour	Johnstone, Harcourt (S. Shields)	Sinclair, Maj. Rt. Hn. Sir A. (C'thness)
Cripps, Sir Stafford	Jones, Morgan (Caerphilly)	Smith, Tom (Normanton)
Curry. A. C.	Kirkwood, David	Thorne, William James
Daggar, George	Lockle. J. A.	Tinker, John Joseph
Davies, David L. (Pontypridd)	Leonard, William	West, F. R.
Edwards. Charles	Llewellyn-Jones, Frederick	White, Henry Graham
Foot, Dingle (Dundee)	Logan, David Gilbert	Williams, Edward John (Ogmore)
Foot, Isaac (Cornwall, Bodmin)	Mabane, Willia[...]	Wilmot, John
Gardner, Benjamin Walter	Macdonald, Gordon (Ince)	Wood, Sir Murdoch McKenzie (Banff)
George, Major G. Lloyd (Pembroke)	McEntee, Valentins L.
George, Megan A. Lloyd (Anglesea)	McKeag, William	TELLERS FOR THE NOES—
Grenfell, David Rees (Glamorgan)	Maclay, Hon. Joseph Paton	Mr. John and Mr. Duncan Graham.
Griffith, F. Kingsley (Middlesbro', W).	Maclean, Nell (Glasgow, Govan)

Motion made, and Question, "That the Clause stand part of the Bill," put, and agreed to.