HC Deb 12 June 1934 vol 290 cc1617-22

For the two financial years ending on the fifth day of April, nineteen hundred and thirty-five, and the fifth day of April, nineteen hundred and thirty-six, respectively, paragraph (2) of Rule 8 of No. V of Schedule A of the Income Tax Act, 1918, as amended by Section twenty-five of the Finance Act, 1924, shall have effect as if the words "and in so far as they are made in order to comply with the provisions of any statute or the regulations or bye-laws of a local authority" were omitted therefrom.—[Mr. Turton.]

Brought up, and read the First time.

7.42 p.m.


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

The effect of this Clause would be to alter Rule 8 of No. V of Schedule "A" of the Income Tax Act, 1918, so as to widen the definition of maintenance, and if the Clause were carried, the effect would be that in certain cases owners of property would gain a reduction of assessment if they undertook certain works. My hon. Friend the Financial Secretary to the Treasury, in dealing with the last Clause, said there had never been any public demand for it, and I think I had better go back in history and see what the public demand has been for this particular Clause. In 1918 the Income Tax Act defined the term "maintenance" as including: the replacement of farmhouses, farm buildings, cottages, fences, and other works where the replacement is necessary to maintain the existing rent. That was an awkward provision that worked badly, because the owner of property might well want not merely to replace what he had before, but to improve it, from the point of view either of health or of the commercial advantages of the agricultural buildings. The right hon. Member for Tonbridge (Lieut.-Colonel Spender-Clay) moved an Amendment in the 1924 Parliament in the exact terms of my proposed new Clause, and the then Chancellor of the Exchequer, Lord Snowden, did not accept it on the Committee stage, but on the Report stage undertook to meet it; and he tried to meet it in this way. He added to that definition that the term "maintenance" should also include: additions or improvements to farmhouses and buildings in so far as they are made in order to comply with the conditions of any Statute or the regulations or by-laws of any local authority. That, I submit, was a bad Amendment, not only because it was proposed by Lord Snowden, but also because it worked injustices, and those injustices were foreseen at the time by, I believe, nearly every Member of the National Government sitting on these benches to-day. For instance, the present Chancellor of the Exchequer, speaking in favour of the very new Clause that I am proposing, said he thought it could be adopted and that there was a real grievance to be remedied. When, on the Report stage, Lord Snowden introduced his present wording that I am asking the Committee to leave out, the present Chancellor of the Exchequer said: Lord Snowden is not giving words in conformity with the undertaking given on the Committee Stage. The difference is that the Chancellor of the Exchequer (Lord Snowden) by his proposed Clause is limiting the concession to those cases only where the additions or improvements are made necessary in order to comply with Parliamentary or local Statutes or regulations. There was no such limitation in the Clause as moved on the Committee stage, and therefore as the Chancellor of the Exchequer admits that was the understanding in his own mind at the time, I think it would be fairer to go a little further than the Clause which the Chancellor of the Exchequer has now put forward."—(OFFICIAL REPORT, 15th July, 1924; cols. 243–4, Vol. 176.] What I am asking the Committee to do is what Lord 'Snowden failed to do in 1924. I believe there is good reason for the change. Let me put two positions to the Committee. I will take first the case of a farm owner who wants to add to the farm buildings. If he wants to add to the farm buildings, even although it must be a condition that he does not increase the rent, he will not get the advantage of the Act unless he is complying with the provisions of a Statute or local bye-law. If, for instance, under the Milk and Dairies Order he alters and improves his cowshed, he will get advantage, but if he does anything to his pig-sty he gets no advantage and can claim no relief. Let me take another case. There are different by-laws in different parts of the country. In one district of which I have knowledge there is a by-law which says that every house shall have a cesspool. A neighbouring locality has no such local by-law. If a landlord in district A wishes to put in a cesspool he can include it in his maintenance scheme, but if a landlord in district B puts in a cesspool he gets no relief. I do not think the Committee will regard that as a satisfactory state of affairs.

We want a much wider term. This is a matter of urgent importance, because it will provide labour, if you allow the owners of property to get relief by carrying out improvements. The present law is really in effect benefiting the bad landlord against the good landlord, benefiting the man who has not carried out necessary sanitary improvements, especially a water supply at the present time, the man who is forced by a Government Department or by local by-laws, as against the man who is carrying out sanitary improvements, which we all regard as satisfactory. There is throughout the country a great need for water supply. To some extent the Government have met that need by the Rural Water Supply Bill. If a landlord wants to carry out such work voluntarily he does not get the relief that he would get under, this new Clause.

There is one further aspect of the question which I would like to emphasise, and that is the question of the pig scheme. We have a pig marketing scheme which is of considerable importance to the whole economics of the countryside, but only the large farmers are to-day taking advantage of that scheme. The smaller farmer or the small man in his cottage has not the necessary accommodation for his pigs. One reason why I would like the new Clause to be accepted is that if the owner of property put in new pig-stys, on the understanding that he did not charge any extra rent, he would gain the advantage of including the cost in his maintenance scheme. Under my Clause if he did make an increase of rent he would lose that advantage. Therefore, the effect would be that the cottage holder would have an incentive to go in for pigs, and the landlord would have an incentive to build stys for him, while the economic advantage of rent increase would not result.

When I suggest this change it may be asked why I have put it in the form of a temporary provision. The new Clause is only to apply to the two financial years ending the 5th day of April, 1935, and the 5th day of April, 1936. My reason for doing that is that I regard the employment question on the countryside of far more importance than any other factor that I have mentioned. It is in the rural districts where you have the lad in employment, especially in the building industry. For that reason I want to give this temporary incentive. If you give it for two years it will mean that all the owners will rush to take advantage of the provision and the result will be reflected in a higher degree of employment for those who are erecting new agricultural buildings or houses, thereby engaging manual labour, or in providing water supplies and cesspools. When the right hon. Member for Tonbridge moved the Clause in 1924 the numbers of the unemployed in the building industry were 59,000. Last month the figures were 152,000. Therefore, there is three tinges the argument to-day for making the change than there was when the proposal was made in 1924.

The Government by their housing policy have made a great alteration in the numbers of unemployed in the building industry. If we only go back to last December, the numbers of the unemployed were then 220,000, but in the intervening months 70,000 more men have been put into employment in the building industry. That means that there may be still 150,000 unemployed. If we investigate the figures of this unemployment in the building industry compared with 1924 we shall find that the great proportion of them are in the rural areas. The Government are achieving great things with their slum clearance scheme, but they are not really touching the problem of rural housing.

It is said that people do not want to live in the country. That is because they have not the amenities in the country that they have in the towns. If we can get owners to improve their property, whether on sanitary lines or by adding rooms, then we shall retain a greater proportion of people on the countryside. It is for these reasons that I would ask the Committee and the Financial Secretary to accept the new Clause. I believe the cost of it would be offset by the increase in employment that it would give, and also by the increase in the Income Tax assessment occasioned by the improvements. I believe that it would be doing work of very considerable value to the pig policy of the Government, and also in retaining on the countryside a greater number of men and women. If hon. Members will look at the census returns for 1931 they will be appalled at what has happened in England in the last 10 years. People have been sweeping into the towns and deserting the countryside. I know one village where to-day there are only four houses, whereas in 1800 there were 40. That sort of thing is going on all over the country. On these grounds, I ask the Committee to accept the new Clause.

7.54 p.m.


Under the existing law agricultural landowners already receive preferential treatment compared with other property owners, in that they include in maintenance claims certain capital expenditure upon improvements to farm houses, farm buildings and cottages, in so far as the improvements are made in order to comply with the provisions of any Statute or any regulations or by- laws of a local authority. The proposed new Clause seeks to take that privileged position further by removing for two years the condition that the expenditure must have been undertaken to comply with the regulations of a local authority. The proviso which the hon. Member desires to take away is the only justification that I can see for the concession which enables owners of agricultural estates to obtain an allowance in respect of capital expenditure.


It is on condition that there is no increase in rent.


That provision would be quite ineffective, because there would be nothing to prevent an increase in rent being obtained from a new tenant or from the sitting tenant at a subsequent date. There is nothing that would safeguard that position. Therefore, the provision would be ineffective. My hon. Friend will agree that capital expenditure is common to industry and to accept this Clause applied to agriculture alone while denying it to industry would be an untenable position. If you start upon a policy of allowing capital expenditure for the purpose of Income Tax, you would leave more money in the pockets of certain people which they may spend in all kinds of beneficent ways, but as receipts of a capital nature are excluded from Income Tax so should expenditure of a capital nature be similarly excluded. If the hon. Member desires to maintain the integrity of the Income Tax he will not press this Clause. One is naturally concerned at the prospects of the worthy enterprises that would be undertaken as a result of the acceptance of the Clause, but I am sure my hon. Friend will in justice admit that this concession could not be made to the agricultural community and be denied to the industrial community.

Question, "That the Clause be read a Second time," put, and negatived.