HC Deb 18 June 1934 vol 291 cc117-36

Where an estate in respect of which estate duty is payable on the death of a person dying after the commencement of this Act comprises or consists of agricultural property, the amount of estate duty payable in respect of the agricultural property shall be the amount ascertained under section twenty-three (Estate duty payable in respect of agricultural property to be charged in part on agricultural value at rate under Finance Act, 1919) of the Finance Act, 1925, less a deduction equal to thirty-three and one-third per centum thereof.—[Lieut.-Colonel Acland-Troyte.]

Brought up, and read the First time.

8.38 p.m.

Lieut.-Colonel ACLAND-TROYTE

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

Whatever we may think about Death Duties as a means of raising taxation it must be agreed that these duties bear very much more heavily upon the owners of agricultural land than upon the owners of other forms of property. This fact has been recognised by previous Chancellors of the Exchequer. The Chancellor of the Exchequer in the last Conservative Government and the Chancellor of the Exchequer in the last Socialist Government gave some relief. We were very glad for the relief given but we do not think that it is enough, and the time has come when further relief might and should be given. In the case of other industries, when stocks and shares are sold the industry itself is not directly affected, but in the case of agricultural land where the land may have to be sold in order to pay the duties, money has to be found directly out of the industry itself.

There are three ways in which the money can be raised. The first way is by the reduction of the amount of repairs which the landowner does to his property. He may be able to raise a certain amount towards paying the Death Duties in that way, but not the whole amount. Moreover, that is very bad for the industry of agriculture. It means that the farms go out of repair. The second way of raising money is by means of a mortgage. That is a permanent charge on the land, and there is less money available to be spent on repairs and also less money for employing labour. Also, the number of mortgages that can be raised on any property is necessarily limited. The third way of raising money is by the sale of the whole or part of the property. That is bound to have very bad and very serious results on the industry. It upsets the whole economic life of the village and the countryside. It means that the tenant has either to clear out of his farm or to buy it. In order to buy it, he has to borrow money or use his own capital, which would be very much better employed at the present time in his agricultural operations. It means, also, that men employed on the estate are thrown out of work—carpenters, masons, woodmen who have been employed for 10, 20 or 30 years, with every hope of continuing to be so employed for the rest of their lives. These men are thrown out of work, with little chance of getting employment in their own or other occupations.

This state of things affects occupying-owners as well as large owners. When an occupying-owner dies, Death Duties have to be paid, perhaps only on a small amount, and in order to raise the money one or two fields may have to be sold, and that may completely upset the whole economic unity of the holding. Therefore, the occupying-owner is affected in the same way as the larger owner. Another way in which Death Duties are unfair as regards agricultural land compared with money invested in stocks and shares is the method of assessment. In the method of assessment for agricultural land, the actual valuation bears very little relation to the amount which the man may expect to receive from that land, but that is not so in regard to stocks and shares. Another and less important way in which agricultural land suffers is in the cost of realisation. It costs a great deal more to realise agricultural land than to realise stocks and shares. You can sell stocks and shares for something like one-half per cent. commission but if you wish to sell agricultural land it may cost anything from 6¼ per cent. for a small property down to 3 per cent. for a larger property.

These facts emphasise the unfairness of Death Duties in their bearing upon agricultural land. Death Duties form a continual drain on the money invested in agriculture, and it is of the greatest importance that that drain should be stopped as soon as possible. The Government are bringing forward many proposals to help agriculture, but those proposals cannot come to fruition unless there is sufficient capital invested to carry them on. Take the question of milk. We all want to see a better supply of milk, produced under improved conditions. If the capital is taken away from agriculture it is impossible to spend the money necessary to improve the places where the milk is produced. That is only one single instance which may affect the Government's milk scheme. Some hon. Members may have read the census of production of agricultural produce. If so, they will have noticed that between the years 1925 and 1931 there has been a reduction of the capital value of agricultural land in this country by 21 per cent., and there has been a reduction of £250,000,000 in the capital employed in agriculture between those two dates. There can be no doubt that the decrease has continued since 1931, when the census was taken. I do not say that this decrease has been caused by Death Duties, but no doubt it has been hastened by Death Duties.

Death Duties do a great deal to cause the break up of agricultural estates. Some people may think that is a good thing. Many people thought that years ago, but they have changed their minds and now think that it is a pity that agricultural estates have been broken up. Certainly, the farmers who have been forced to buy their farms think so and most of them would be only too glad to get back under the landowners, who have always been prepared to supply the necessary capital at a very low rate of interest. No substitute has yet been found for the landowner as a supplier of cheap capital. Something like two-thirds of the capital employed in agriculture at the present time in this country is supplied by the owners of the land. Whether or not we like the system of land tenure which exists at the present time, we all want to make the best of it. Hon. Members opposite wish to change it to a system of land nationalisation, but surely they wish to have an efficient national system. They do not want to take over the land when the farm buildings are falling down, when the fences are all broken down and the land is going back to prairie. They want to see agriculture efficient, but the efficiency of the agricultural industry is undoubtedly handicapped by the heavy Death Duties that have to be paid.

If this Amendment could be accepted it would be of great benefit to the agricultural industry and the country as a whole. A very strong case can be made out for the entire abolition of Death Duties on agricultural land, but we do not ask for that. All that we are asking for is for a reduction of one-third in the Death Duties. Thirty-three per cent. of the receipts from agricultural land is about the average amount spent by the landowners on the maintenance of their farms. Surely, it is fair that the capitalised value of the money spent in the upkeep of the farm should be allowed to be deducted before land is valued for Death Duties. The second reason is that the 33⅓ per cent. is about £700,000, and as the Chancellor of the Exchequer has a nice little surplus of about £800,000 he could find no better way of using that surplus than by reducing the amount of Death Duties upon agricultural land. Replying to a discussion on this subject last year the Chancellor of the Exchequer said: If it were possible to give relief, and if the Government of the day thought it desirable to give relief, that could be done very simply by a percentage reduction in the capital value of agricultural estates.… If it were desired to do anything it would be quite a simple matter to do it."—[OFFICIAL REPORT, 1st June, 1933; col. 2122, Vol. 278.] I hope he will consider that it is both possible and desirable to give relief at the present time. It would be a great advantage to agriculture and to the nation; and I hope he will see his way to grant the concession.

8.47 p.m.

Brigadier-General CLIFTON BROWN

I am sorry that the Chancellor of the Exchequer is not at the moment present; it may be that he does not want to be reminded too much of what he said last year. In his Budget Speech, as my hon. and gallant Friend has pointed out, he said: If it were possible to give relief, and if the Government of the day thought it desirable to give relief, that could be done very simply by a percentage reduction in the capital value of agricultural estates. That is the reason we have put down the new Clause. Later on the Chancellor of the Exchequer said: All the facts are known. All you have to decide is, first, is it desirable to give relief by way of a reduction of Death Duties upon agricultural land; and, secondly, how much are you prepared to give? "—[OFFICIAL, REPORT, 1st June, 1933; col. 2122, Vol. 278.] My hon. and gallant Friend has enumerated many points in answer to the question of the Chancellor of the Exchequer showing how desirable it is to give relief by way of a reduction of Death Duties upon agricultural land. There is one other point which I think should be considered, and that is that all professional bodies interested in land are at one with those who own land in saying that Death Duties do more harm to the business of agriculture than any other single item. That opinion comes not only from the Chambers of Agriculture but also from the Surveyors' Institution, the Land Agents Society, and the Law Society, all of them professional bodies; and you could not have a better answer to the Chancellor's question, as to why agricultural land should have this relief, than the opinion of these professional men who are dealing with questions affecting land every day. My hon. and gallant Friend referred to the cheapness of capital, to which agriculture is accustomed. When these estates are broken up, as they are being, owing to Death Duties, what happens? The tenant has either to go and find something else to do, as well as his labourers and his family, or else he has to buy his land. If he has to buy his land, he cannot an ylonger borrow capital at 2½ per cent., which is all that an agricultural land-owner gets; he is very lucky if he gets more. The tenant has to go and borrow money at 4 or 5 per cent. from a bank. That means that he has not enough working capital left to run his farm, and the farm and land deteriorates. That is a very important point.

I think that the Chancellor of the Exchequer has been given good reasons why there should be some reduction in the Death Duties upon land. They press far more heavily on agricultural land than on any other single industry. If the right hon. Gentleman will look at the pamphlet which my hon. and gallant Friend quoted, and which I quoted the other day when asking for another form of relief which was refused—I hope we shall have better luck with this one—he will see that the amount of capital taken from the agricultural industry in the last five years is £250,000,000. If that is not worse than the conditions which apply in any other industry it is nevertheless fatal to the agricultural industry. It means in addition a reduction in rents of 20 per cent., which is much to be deplored, and also a reduction of £85,000,000 in the capital of the tenants; and on the top of that you have this system of capital robbery by Death Duties. It has been said that after all other industries have lost capital in the same way as agriculture during the last five years. That is true, but other industries while they have lost capital have also had a capital appreciation by means of the Conversion Loan, and this capital appreciation has affected nearly all businesses and industries in the last two years to a far greater extent than agriculture. While income has gone down the capital depreciation has continued as well in the case of agriculture. While all industries may have suffered they have not suffered in the same way as agriculture in a reduction of capital values.

8.52 p.m.

Viscount WOLMER

I am glad that my hon. Friends have raised this matter, but like them I am sorry that the Chancellor of the Exchequer is not at the moment present. No doubt it is due to the time at which the Debate has come on. I am sorry also that there is no Minister on the Treasury Bench representing agriculture, and, if the Financial Secretary will allow me to say without any offence, no Member who knows anything about agriculture except the First Lord of the Admiralty who is sitting in the corner, and who I am sure sympathises with us in this matter. I make that comment because I think it is almost impossible for anyone who has not a practical experience of agriculture to realise what a devastating blight Death Duties form on the whole agricultural industry. The fundamental reason is a little bit complex and difficult for people not connected with the land to understand. It is simply this, that land has an amenity value which is altogether distinct from its agricultural value.

We who represent the agricultural industry are making this claim on behalf of agriculture. When an agricultural estate passes at death, the land is valued by a valuer at a price which it is assumed it would fetch if it was put up in the market and there was a purchaser ready to buy it. People will pay for land prices greatly in excess of its agricultural value. They will buy land possibly as a building speculation, but generally they buy it mainly because of the beautiful trees upon it; it is a good sporting estate; it is in a known part of the country, and there are beautiful views. But the owner of the land who is trying to run that property as an agricultural estate is forced to pay Death Duties on an amenity value which he does not in the least want to realise and which it is greatly to the interest of the country, and especially of the countryside, that he should not realise.

What happens when he is forced to sell under the burden of Death Duties or any other cause? A speculator will buy the land and the old tenants are all liable to be turned out. The estate may be broken up. All the traditions are thrown away and the new purchaser, especially in these times, as often as not has simply bought the land for what he can make out of it from an amenity or building point of view. This process is going on all over the countryside at the present time. It is causing no benefit to the farmers and none to the farm-workers; in fact, very much to the contrary, because what happens is either one of two things: Either the old landowning family is hanging on to its property and is finding its capital taken away by every death to such an extent that it is no longer able to keep the estate in proper repair, no longer able to give the farmers, the tenants, that financial support which has carried them through many a crisis in the past; or else the estate is put into the market, is bought by a land speculator and the old tenants are given notice, and even agricultural labourers are turned out of their houses for week-enders who wish to buy the property; and all the amenities of the place are disturbed.

People who buy property in that condition are not the old friends who are going to stand by the tenants in their hour of difficulty. Hon. Members of the Labour party really do not in the least appreciate how much the agricultural landlords have done for the farmers and the farm workers in the past. With all respect, I say to them that that is one of the reasons why they have failed to convince the agricultural districts that the Labour party is a wise party to vote for. Hon. Members come down to our villages and they blackguard the landlords as if they were talking about urban landlords, and then they are very much surprised when they find that they are blackguarding someone who is known to have been only the friend of the farmer and the farm worker in the past.

It is because these excessive Death Duties, based on figures out of all relation to the agricultural value of the land, are driving the old landowners out of the country or driving them into such a position that they are no longer able to fulfil their old functions, that they are doing such immense injury to agriculture. We had a classic case mentioned two or three years ago by Lord Lothian, who cannot possibly be described as a die-hard Tory or one who is unable to accommodate his mind to new situations and new facts. Lord Lothian wrote to the "Times" and gave the figures relating to an estate which he had just inherited. On an agricultural estate which brought in on an average less than £1,000 a year Lord Lothian had to pay £200,000 in Death Duties. He pointed out that it was absolutely impossible to pay those Death Duties without either drawing on other funds which had nothing to do with the estate, or else putting that property into the market. He followed both those courses; he sold a great deal of the property, and no doubt had to draw upon other funds in order to pay the money demanded. But in either case that great agricultural estate has been injured; it has been deprived of its working capital to a far greater extent than it could possibly bear.

As my hon. Friend has pointed out, this is not true of industry. A man who owns a colliery or factory worth so much dies, and the property is valued at what it economically returns or brings in. His heirs have to pay Death Duties which bear an accurate relation to what that property earns. The whole burden of the case with regard to agriculture is that the successors have to pay Death Duties at a figure which bears no relation to the economic return, but is merely caused by this so-called amenity value. There are many ways of dealing with the question, and the way proposed in this Clause is only one of them. I understand it was the way suggested by the Chancellor of the Exchequer himself last year. It is not a logical solution. It is one of those rough-and-ready practical methods which afford a great deal of relief. I think it does not go far enough. It does not do complete justice, but it would certainly ease the situation very much, and, as the Chancellor himself suggested it, I hope that the Government will be able to agree to it now.

There is another point I would mention to hon. Members opposite. Although this form of taxation is doing so much injury to the countryside, it brings in a very small sum of money to the Exchequer compared with the gigantic figures of our national Budget. That is because it is taken from such a limited class. It is taken from, comparatively, a very small number of men. Although these men and these estates are crippled, and all who are dependent on these estates are injured—that includes by far the greater part of our agriculture—I think I am correct in saying that the total amount brought in by agricultural Death Duties is a comparatively small part of what accrues to the National Exchequer. Therefore, I think it is true to say that pound for pound what the Government collects by these duties does more injury probably than any other tax on the Statute Book. Having regard to the value received by the Exchequer, more injury is caused by this tax than by any other.

It would be out of order to discuss the subject on this occasion, but I believe that Death Duties as a whole are doing great injury to all our trade, because we as a nation are living on our capital. But it is only in the case of agriculture that the assessment of that capital value is carried out on a basis which bears no relation to its economic return. Therefore, I hope that the Government will be able to do something to meet us. Those who know the countryside, those who see our farms deprived of capital, those who realise the greatly increased number of men who could be employed if there were more money to spend on the land, if the land were kept properly drained, and the fences kept properly up, if the farm buildings were brought up to date, if money could be advanced for the installation of new machinery and improvements—those who realise what all that would mean to the countryside, join with me in beseeching the Government to have sympathy with agriculture in this respect.

I do not think that any Government, or any Minister, has done more to help farming than the present Government and the present Minister of Agriculture, but his position in this respect is rather like that of a man pouring water into a barrel which has a hole in the bottom. You cannot put agriculture on a satisfactory basis, if the capital—the very cheap capital about which we have been hearing—is being continually taken away from the industry. All your marketing schemes, all your rationalisation, all your quota schemes and your wheat schemes, excellent and splendid as they are, will not succeed in their object of restoring agricultural prosperity until this running sore has been healed. It is impossible to carry on farming, or any other industry, if great chunks of capital are to be taken away from it, every time a property passes, to the extent of preventing farms and machinery being kept in working order. This is a matter of great importance to the whole of agriculture. I fear that many people from the towns do not realise its importance but I am sure that no one single act which the Government could do, would be more effective as a step towards putting agriculture on a sound basis, than to provide in whatever way they like, that the Death Duties paid on agricultural property should not be greater than the agricultural return coming from that property.

9.7 p.m.


Not for the first time to-day have we heard the voices of those who represent agricultural constituencies, and I confess that I grow more and more surprised with each successive intervention from that quarter in these Debates. I am forced to the conclusion from the speeches of hon. Members opposite that they have little if any faith in the Government's agricultural policy. Had they any faith in that policy, I do not think we should be hearing the pleas which they have made to-day. Earlier in these discussions in connection with the new Clauses dealing with the Irish Free State Special Duties and the question of food taxes, agricultural representatives opposed the views put forward from this side. Incidentally, in the course of those arguments, some hon. Members contended—and I am not going to deny it—that agriculture was just as much entitled to protection as any other industry. It was sought by arguments of that kind to justify the policy of the Government in connection with agriculture. That policy has now been followed for two years or more. Yet each agricultural Member who rises to speak in this House paints a gloomier picture of agriculture than his predecessor. We still hear stories of decay and decline and ruin. We are now told that agricultural estates cannot afford to pay Death Duties at a certain rate, and here we have a new Clause proposing that lower Death Duties should be payable on agricultural estates.

To me this is a curious revelation of the attitide of mind of agricultural representatives opposite. Surely, if the Government's agricultural policy is going to have the results which many of them have prophesied for it, agriculture will soon be prosperous, and will have no difficulty in meeting its liabilities. Surely, agricultural estates will be able to pay these Death Duties, if the Government policy is going to suceed. Hon. Members cannot have it both ways. Either they have faith in the Government's policy or, alternatively, they are looking to a future in which, despite all the Government can do, agriculture will go from bad to worse, and will be unable to meet the obligations which now rest upon it.

I do not know what will be the reply of the Financial Secretary to those who have brought forward this new Clause. I suppose that, in accordance with the principle which the Chancellor of the Exchequer has laid down in regard to the disposal of any Budget surplus, the Financial Secretary will turn down this proposal. If I were in his place I should turn to hon. Members opposite and tell them, "The Government are doing everything they possibly can for agriculture; agriculture is going to have a period of abounding prosperity in the future; agricultural estates will jump up in value, and there will not be the slightest difficulty in finding this money.' But I think that hon. Members opposite would rather see the national revenue provided from other sources. That was clearly revealed by their attitude towards the new Clause dissenting from the imposition of further food taxes. They would rather see the revenue was obtained from taxes on the food of the people than continnue paying these duties at the level at which they now stand. May I give them a word of encouragement? I say to them: "Trust your Government and have faith in their policy; agricultural prosperity lies just round the corner, and your difficulties will disappear in the twinkling of an eye once the Government's policy has been brought to full fruition."

9.13 p.m.


My hon. Friend the Financial Secretary to the Treasury has been reminded that this proposed new Clause proceeds from a suggestion which was made by the Chancellor of the Exchequer himself in reply to the arguments which we laid before him last year. In fairness to my hon. Friend, it ought to be recalled that the Chancellor of the Exchequer, having made that suggestion, proceeded to add: I do not propose to express any opinion as to whether or not it is desirable to do that, because I know that anything I might say would be liable to be brought up in evidence against me on some future occasion.—[OFFICIAL REPORT, 1st June, 1933; col. 2122, Vol. 278.] But the Chancellor of the Exchequer concluded by describing this as a live question, and I hope we may be forgiven for reminding the House that it is not yet moribund. It ought to be made plain, and I think it has been made plain by my hon. Friends who have spoken, that we are not now discussing the merits of Death Duties in general. It may be argued that Estate Duty is a bad tax, which drains away the capital of the country, or it may be argued that it is a good tax which serves to correct the inequalities of wealth. We are not now discussing that question. We are simply considering whether agricultural land, which has already enjoyed, since 1925, some preference in comparison with other classes of property, should be accorded the further advantage proposed by this new Clause.

There would be no time to discuss the principle, which was always recognised by Parliament until Sir William Harcourt's Budget of 1894, that real property should be taxed on a different basis from personalty, but I think that the practical difference between the effects of Death Duties on agricultural land and the effects of Death Duties on other kinds of property are sufficiently obvious. If a man inherits an estate which is invested in stocks and shares, in house property, in coal mines, in shipping, or any other kind of property you care to imagine, its capital value, that is to say, the selling value upon which Death Duties are assessed is normally governed by the amount of revenue yielded by that property. If the annual yield is £l,000, if the money is invested in a first class gilt-edged security, and if the current rate of interest on that class of investment is 3⅓ per cent., the capital value will be £30,000. If it is in some less secure investment upon which the current yield is 5 per cent., the capital value will be £20,000 and so on.

But in the case of agricultural property, the realisable value, or the estimated selling value, is not solely governed—it may indeed in some cases hardly be governed at all—by the net annual income which is derived from it. It so happens—perhaps it may be an unfortunate thing—that the ownership of agricultural land is not simply regarded as an income-producing asset. The Noble Lord the Member for Aldershot (Viscount Wolmer) spoke of amenity value, but he might have gone a good deal further. The ownership of land is regarded as a social responsibility which many people desire to assume for reasons other than financial reasons. If the heir to an agricultural property chooses to sell it, and succeeds in selling it, I do not see any reason why he should not pay Death Duties at the same rate as anybody else, and indeed, if the principle of this Clause were accepted by the Chancellor of the Exchequer, I think it would probably be necessary to insert some further provision to the effect that if an owner, having paid Death Duties upon this lower basis, were within some prescribed period of time to change his mind and sell his land, he should then pay to the Treasury the difference between the sum which he had already paid and that which he would have paid if he had immediately realised the price which he received.

If the owner, however, decides that the good management of his property will be permanently destroyed by its being broken up, or if, as may sometimes be the case, he is legally prohibited from selling it by an entail, or if no purchaser is forthcoming, or if for any other reason he does his best to hold his property together, the burden of discharging these Death Duties year after year—and I am not only speaking of large estates, on which the rate of duty is very high, but of small estates, on which the rate of duty is moderate—deprives him not only of the money which he ought to be spending on improvements, but of the means of maintaining his property in a reasonable state of repair.

Just as the actual effect of Death Duties prevents an owner from undertaking improvements on his estate, so the prospect of Death Duties may, and does, deter him from doing it. I do not think it has ever been seriously questioned that this tax has exercised the most deplorable effects by holding back the improvement of British agriculture and its adaptation to modern requirements. That is the justification for this Clause; that the ownership of agricultural land is not merely regarded as a pecuniary asset and nothing more. If it had been so regarded, I think it is probable that the greater part of England and Scotland, except in some particularly favoured localities, would within the last two or three generations have become prairie land. In many parts of the country arable farming has only been able to be continued because estates which have been forced into the market have been purchased by wealthy persons who have been able, and willing, to subsidise the agricultural property which they have acquired from the alternative sources of wealth which they already possess. I think that is an unhealthy state of affairs. I think that agriculture ought to be able to stand on its own legs and to bear its own burdens. We have put down this new Clause because we believe these burdens are altogether excessive and that this particular tax operates on the agricultural industry with peculiar unfairness.

9.20 p.m.


May I say, in supporting this new Clause, that I listened with very great care to what fell from the hon. Member for Mansfield (Mr. C. Brown), and I think he made a very great mistake in trying to confuse, in the minds of hon. Members present, the question of an agricultural policy for those who are producers as producers with the question of an agricultural policy for those who are owners as owners; and it is not quite fair to confuse the two issues. I understood from him that his policy was that it was unfair to ask for justice to the producer while he lived because, at the time of his death, something else might happen. That is hardly a conclusive argument. What happens at the death of an owner of an estate has, it is true, a great effect upon the producer, as confined to those who follow after, and not the actual man, who, of course, has held the estate during his lifetime.

The case has been put so forcibly and convincingly by those who have spoken from this side, and by the hon. Member for Western Renfrew (Mr. Scrymgeour-Wedderburn), who are, I believe, all of them large landowners, that it is unnecessary, and perhaps would be presumption, for me to attempt to add anything to it from that standpoint, but this is not a question which affects the large landowner only. It affects the industry as a whole, and particularly the tenant farmer, who, because of its effect on the large landowner, finds himself put in this very unhappy position: The large landowner, because of the lack of fluidity of the assets of the estate, finds that a part of the estate probably, if not the whole of it, is put up to auction, and unwillingly, but on purpose to protect his home and livelihood, he has to go into the market and to compete against others to become the owner of that of which he was previously the tenant. In all cases that means that a greater burden is placed upon the tenant than previously, because he would have been able to obtain the ownership capital, the capital value of the farm, at a very much lower rate of interest from the previous owner than he could possibly do from anybody who took up a mortgage on the property.

During his lifetime there is a great deal of extra burden placed upon him as a producer, but as an occupying owner he finds himself in a very much worse position at the time of his death, because his estate then comes under a very great difficulty with regard to Death Duties. If the new occupying owner cannot find the capital, he has to sell perhaps a few fields from his farm and what is the effect of that? By selling a few fields, he decreases the amenities of the farm and the possibility of its fulfilling the object of the farm as a unit. He does that, and in doing so he reduces the value of the buildings on the farm, because a certain amount of their raw material, the land, has been taken away from them. So there is an injury to him. He sells a portion of the farm, reducing the value of the buildings which remain.

On the other hand, what happens? He is selling that land without the amenities; consequently, the value of the land is very much less than if it remained in his own hands. There you get double reduction, with the owner unfortunately penalised in having to sell a portion. If he does not sell, you know the difficulty a farmer has of trying to do it out of capital. It does not rest here. The effect of this heavy charge does not finish with the tenant or the owner occupier; it extends to the actual worker. We know that a man prefers to retain labour on a farm, for it is necessary for efficient working, but as one of the first economies he must do with one man less. That man suffers, for he may be in a position where he cannot transfer to somebody else and may have difficulty in finding employment.

There is another class of worker employed by the large landowner, the servant who has been employed on the estate. I have in mind a particular estate which recently suffered from the same thing. I go through that estate pretty regularly and the landowner has suffered to an extent, but not nearly so much as those who were dependent on him. He is living in a few rooms with only a housekeeper, a few indoor servants and one chauffeur. The large staff of servants he had before have now to go out in competition with others in the labour market. Almost every cottage is now occupied by somebody who has come out of town. It is true that they are paying rent.

In supporting this Clause, I would like it to be understood that it is not a large landowner's question only. Undoubtedly it affects him and affects him seriously, but it does not fall on him largely as an individual, but on those dependent on him—not in an objectionable way—for occupation, those formerly tenants now owner occupiers, and the present owner occupier who happens to be a small man. I deplore very much that this new Clause has come forward with the House sparsely occupied. The number of those in the House does not indicate in any degree the gravity of the subject under discussion. I hope that the Financial Secretary, when replying, will give us something. He will not at any rate gauge the gravity of this subject from the agricultural industry point of view by the number present.

9.29 p.m.


I do not propose to examine in any detail the effects of Death Duties on agricultural estates. The subject was a matter of examination before the Colwyn Committee on National Taxation. They took evidence from all quarters, including the Central Landowners Association, and that is what they say in their report—I am not sure that the House will differ seriously: In general, we are opposed to tax relief provisions in favour of a particular class of individuals. The case put to us for the relief of agricultural landowners rests largely on the general condition of agriculture, a remedy for which, it is to foe hoped, may be found in other ways than by the undesirable expedient of tax remission. While we recognise that Estate Duties under present conditions do weigh very heavily on the purely agricultural estates, we have reluctantly come to the conclusion that special relief from the duty,—in which we include the existing relief—is unjustifiable. That was the recommendation, not unsympathetic, of the Colwyn Committee, having regard to agriculture as a whole. They actually recommended the abandonment of the existing special relief. I would remind the House that, although the rates of Estate Duty as a whole have twice been raised, in 1925 and again in 1930, for agricultural estates, so far as the agricultural value is concerned, the 1919 level of rates has remained in the case of estates of £12,500 and upwards. It is important that the House should observe that the duty on the agricultural value of estates is paid on the 1919 level, whereas for other estates it has twice been raised. Therefore, it cannot be contended that the legislature refrained from recognising such very weighty arguments as have been addressed to us this evening. If the value of relief is assessed in terms of particular estates, it will be found to be quite considerable. It is only flair to remind the House of that special position in which agriculture is placed by favour of the legislature.


Does the hon. Gentleman appreciate that the Value of other property has increased more than agricultural property?


It is impossible to say without reference to particular estates how far that may be true. I do not want to destroy any of the arguments put before us this evening. They will be for the Chancellor of the Exchequer to review when he finds himself in a position to re-examine afresh the incidence of this duty. He has already uttered remarks not unsympathetic. In reading a quotation from the Chancellor of the Exchequer one hon. Member did not read the whole passage. I must thank the hon. Member for West Renfrew (Mr. Scrymgeour-Wedderburn) who complemented the quotation and disclosed thereby that the statement was not quite in the terms which the House had been led to expect. As regards this year, my right hon. Friend has made it plain, and obtained the concurrence of the whole House, that any money he has at his disposal has first of all to go to those who made sacrifices in 1931. He must observe, so far as this year is concerned, that principle.

The concession which has already been made to agriculture, to which I have referred, costs the State £600,000 a year on an average. The proposed Clause invites us to incur for the benefit of agriculture a loss of another £700,000 a year. Plainly, whatever one's views might be upon the merits of this proposal, it offends the principle which my right hon. Friend has laid down. I feel closely in agreement with my Noble Friend when he deplores the absence of the Chancellor of the Exchequer. Unfortunately, he cannot be here all the time. I would have much preferred that my right hon. Friend had heard the arguments himself. The fact that he did not hear them does not mean that he will not read them, and I can assure my Noble Friend and my hon. Friends behind me who have spoken so sincerely and in many respects convincingly, that, even if my right hon. Friend had been here, he could not, within the limits of the propositions that he himself has laid down for the distribution of the surplus, have accepted the Clause this year, and in no event could he have accepted it in its present form for the reasons among others which were so well explained by my hon. Friend the Member for West Renfrew.

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