§ Order for Second Reading read.
§ 11.11 a.m.
§ Mr. MacLaren
I beg to move, "That the Bill be now read a Second time."
By the accident of the Ballot, and probably by some providential luck, I find that I have this opportunity of introducing a Bill to enable local authorities to rate land values. I dare say that there are many hon. Members who wonder whether this is an opportune time to introduce such a Bill, seeing that there are so many other problems of greater magnitude and importance than the question of the rating of land values. I would like briefly to consider the circumstances of the moment in order to see whether they warrant our taking the time that is to be spent to-day in discussing this Bill.
A few days ago there was a Debate in the House which made a very strong impression on my mind, because it was one of the few occasions on which the House settled down to try seriously to review not merely the present situation but to project itself, as it were, into the future, and to anticipate the possibilities of the menaces which apparently already overshadow us. One of the most remarkable contributions in that Debate was the speech delivered by the hon. Member for Oxford University (Sir A. Salter). I am sorry the hon. Gentleman is not in his place to-day, but I intimated to him that I should be referring to his speech, and he told me that circumstances over which he had no control would prevent him from being here. The main consideration in the minds of those who took part in that Debate was how best to avert the possibilities of the severe impact that may come upon trade, which hitherto we have always called a trade depression, but which has now assumed a very nice and palatable name and is called a trade recession.
The hon. Member for Oxford University pointed out that if it be true—and all seem to accept it—that within the next two years there may possibly be the beginning of what may be termed a trade depression, it would be wise for the Government to prepare for the emergencies 1576 and the exigencies of such a time. The hon. Gentleman pointed out, I think rightly, that it would be well, in preparation for this depression, for the Government and the local authorities, at this moment, to devote time to reviewing what they could do in the institution of public works. I am paraphrasing what the hon. Gentleman said, because frankly I look upon these proposals as futile in the extreme. The interesting thing is that he said that when a depression is upon us, it is too late to consider the financial obligations that these public works involve. If it be true that there is, more or less, the fear that a decline will take place in the line of the graph of trade, then it is likely that the Government, with the local authorities, will in due course enter on a great scheme of public works. Who is to bear the great brunt of this burden? The local authorities.
May I here introduce this point for the benefit of those who intend to oppose the Bill? It is characteristic of depressions that when they begin to make themselves felt, people who have money invested in various undertakings invariably take fright. It is a very remarkable fact, but one which is natural, that they withdraw their investments from industrial undertakings and immediately, on the best advice, reinvest their money in land as a basic and sound security. Land is a sort of impregnable fortress for investors when depression affects other forms of investment. The net result is that just at the time when the local authorities and the State are entering into vast undertakings, such as public works, and so on—at least one assumes that they would do so—the investing world is transferring its investments into what it deems to be the impregnable security of the value of land. Thus we get a condition, not merely of depression, but of speculation which is bound to take effect. With the rush of investors the value of land rises at the very moment when local authorities and the State are looking for new outlets for public works to meet an emergency.
The hon. Member for Oxford University adumbrated much of what I am saying now in his speech the other night, and I refer to it to-day because very often in this House speeches seem to drop into watertight compartments. One night the House is debating one topic and the next 1577 night it is debating another, and often we find that, even on the Government Benches, there seems to be no correlation between what is said on one occasion and what has been said on another. I am linking up to-day's Debate with that very important Debate of a few nights ago on the possibility of depression and the necessary preparations therefor. If the speeches made on that occasion have any prophetical value at all, then in the near future we shall have a rise in unemployment and the necessity for large expenditure of local and national taxation to meet the schemes which will be launched. When I sit in this House and hear schemes advanced to deal with unemployment, with housing, with air-raid precautions, with all sorts of things intended to patch up this society of ours where poverty is constantly breaking through in wounds and sores, I always wonder who is to pay for those schemes. When the account is totted up, what is likely to happen to the finances of the State and the local authorities? There is a sort of sublime complacency in this House when schemes are discussed. One would never think that someone had to pay for them. One would have thought that the lesson of 1931 would have awakened politicians to the fact that you can go on with grandiloquent schemes for a while, until someone cries "Havoc!" about the finances, and then down comes the Government of the day.
I am leading up to this point. Let hon. Members look at the facts with regard to local rates. In 1913 the local rates collected in England and Wales amounted to £71,000,000 and the national taxes for that year amounted to £160,000,000. Add those two figures together and apportion the total in accordance with the population at that time, and it works out at £5 10s. 3d. per head of the population. What are the figures to-day? The local taxation is equal to the national Budget of 1913–14. It is £164,000,000, and the national Budget is £835,000,000 and whereas, in the earlier period, it worked out at £5 10s. per head of the population, to-day it works out at £21 15s. per head of the population. Thus we see the steady growth, the snow-ball development of taxation. Old Carlyle, anticipating this kind of develop- 1578 ment, became quite poetic. In one of his most cynical moments, he said:On with it. Glorious Bankruptcy. That will teach statesmen wisdom if nothing else.This is what is happening—local rates climbing up steadily all the time. We have heard of the depression of 1931 and all that it implied. Many things suffered a recession in that period. The only thing that did not recede was the volume of local burdens. That went steadily up and up and up—as MacDonald used to say—but never down and down and down. May I, in passing, say this? At every local election, hon. Members go down to various constituencies and lend their aid and oratorical powers to various candidates for local authorities. Take London, for example. Hon. Members opposite—and I am not blaming them—go down to those constituencies and ask the people not to vote Labour, because, they say, if you do, the Socialists will put up the rates. There is psychology behind that appeal. Under our present system rates are levied upon the rental value of the people's houses, and the Conservative party know how to use their facts. Indeed, I often wish that the Labour party were as good masters of psychology as hon. Gentlemen who sit opposite. The people are told, "If you vote for the Socialists with their wild-cat schemes up will go the rates." Those who make that appeal, know full well that the average working woman looking at the rate paper will be stirred by it.
I do not want to be provocative this morning. I would rather that my opponents reasoned with me, though I confess that, personally, perhaps, I invite retort rather than reason. But I challenge any hon. Member of this House, especially hon. Members opposite, who have, no doubt, spent many hours in making that form of appeal; I challenge the Minister of Health, I challenge the Chancellor of the Exchequer or any Member of the Government, to say that rates will not go on increasing, apart from the Labour party, apart from the Socialists, apart from anything which they may say. Why? For this reason. You started many years ago to develop the social services of this country. They have become part and parcel of the make-up of the State, and they are something now that is indispensable to local administration.
1579 There will be an insistent demand for further expenditure in local taxation, for the simple reason that the towns of this country, the cities and boroughs, are in such a condition that you will virtually have to spend millions to remake them according to the desires now to be found in the minds of even the lowest of the working classes of this country. The people are determined to have better education, more clean and sanitary conditions, better housing. These demands will become more insistent, the more intelligent the working classes in this country become, and, therefore, the rates are bound to rise. The rates will rise in spite of anything we may say or do in this country. They have now, as I have pointed out, got to a point when they are becoming intimidating. Not merely are your rates standing at £164,000,000 in England and Wales, but in 1913–14 the cost of your loans to local authorities amounted to something less than 50 per cent. of the rates collected, whereas to-day the cost of your loan financing is over 80 per cent. of the rates. Is it not clear, apart from party politics, that here is a tendency which means that, if it goes on in its present form, something is bound to crack, bound to give way? I have said "if it goes on in its present form," and I mean by that that I would have no objection to the rates being double the volume that they are now, if they were levied in such a way as not to bring harassment to the social well-being of the community.
How are the rates in this country levied? May I be forgiven if I review that for a second or two? After there had been an obliteration of the common land of this country, which was brought about by the Reformation, after the commons had been divided and spoiled and the monastery lands had been handed over to retainers of the King who then was, and the Queen who followed him; in other words, as Chesterton said, when man's green hospitals, the commons of England, had been closed against him, he then became a robber and a vagabond on the King's highway. So it was necessary that there should be organised charity of some kind, as a sort of substitute for the robbery that had taken place before. I often wish, when I hear debates in this House on unemployment, that the House would remember that un- 1580 employment began when you took from man his right to use the land, and the employment exchange became the natural outcome of a system which closed the land against man. If you want to close the employment exchanges, you will have first to open the land, but if you still close the land, then you must keep open the employment exchanges.
That started in 1601, under that notorious Act, when the assessor had to go round the parishes and levy a rate, a collection, to maintain the poor. One does not mind maintaining a man who is blind, or lame, or incapacitated, by some accident or other, but on top of that, to be asked to maintain a man because he is poor and unable to maintain himself, when he is in full possession of all his faculties, seems to me to be wrong, because as a man he is fully charged with desires, with wanting things, and he has power to produce them. Why does he not get on the land? No, he must go to the employment exchange, hence the rating system. We had then to collect money for the poor, having created the poor. It is in the beginning of imposing these rates that you find the trouble, or the seeds of the trouble, in our present rating system. Money had to be raised by levies on the inhabitants of the parishes, on the houses, and money had to be collected to put the poor to work.
Time goes on, and then the contest arises as to whether movable property should be subject to the rates. This House adjusts the question and makes the rates something that shall fall upon immovable property. The practice grew up as to the assessment of property to make it subject to the rates. I need not worry the House with all the various Amendments that this House has made in the rating law, but the thing that is most noticeable and interesting with regard to all those Amendments which this House had ever made is this: They amend here and there the machinery of the law of rating, but they leave the basic wrong in the rating system intact. I mean by that that the rates are levied upon houses, so that the system of rating now derivable from the Act of 1601 is this: Let me paraphrase the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George), who was aptly described the other day by the Chancellor of the Duchy of Lancaster as the independent 1581 and heterodox mufti of the Liberal party.
In 1913, on this very point, the right hon. Gentleman the Member for Carnarvon Boroughs described himself as a sort of assessor going to a moor and asking the owner, "What are you doing to it?" The owner says he is doing nothing but holding it up until the public want to make a reservoir. So the assessor shakes hands with him and says, "Such men as you make your country great; write yourself down in the rate book 73 per cent." Those were in the days when agricultural land paid on only a quarter of the rateable value. Then he says, I, as an assessor, go further down the street and meet a man, and I am told that So and so, round the corner, has put up a very fine workshop, with ventilation perfect and with everything that conduces to the well-being of the workers in the factory." He says, "I, as assessor, ask, 'Is this true'? 'Yes.' 'Then you have enhanced your real value by so much by virtue of these improvements?' 'Yes.' Well, having done so, there is another £500 on your rates, and do not let me hear of you doing it again'." The assessor then leaves him and goes down the street.
I see that the right hon. Member for Carnarvon Boroughs has just come into the Chamber. I am paraphrasing one of his famous parables, and I was saving that the assessor goes down the street from the factory and meets someone, who says, "Have you heard that Brown has put a new bathroom in his house?" The assessor goes round to Brown and says, "Is this so?" "Yes." "Well, 25s. more on your rates for the bathroom. How dare you increase the assessment value of your house? Do not let me hear of this again." The assessor then leaves him, thinking he has clone a good day's work, and goes down to a slum area of the town. He meets the owner of the slum and says to him, "Any improvements around here?" "No sir, everything is worse than since you were here before. All is in disrepair and dilapidation." The assessor takes him by the hand, and says, "Well, done, thou good and faithful servant; go round to the Town Hall and have your assessment cut down by 50 per cent.
Those were the days when the right hon. Gentleman the Member for Carnar- 1582 von Boroughs was really cutting into this question. I invite him to join with me again, and not leave me in this isolation. I invite him to come back to the fold and not to leave me. He inspired me when I was a youth; let me inspire him now. Having given this parable, which is one of the most remarkable parables I have ever heard in this connection, the right hon. Gentleman said to his audience, "Do you think I am caricaturing? That is the rating system of England. If you use the land of England it is rated according to its use. If you hold the land fallow and wait until the local authorities want to expand for housing, you pay no rates at all". It is worse than when the right hon. Gentleman spoke because now, owing to derating, land is not rated in and around the cities. Henry George, whose name I can ring through this House to-day, said 62 years ago men did not see the operation of this belt of land speculation which holds them in—the unseen belt which has been strengthened and buttressed by the iniquitous derating part of the Local Government Act, 1929.
Never was a more vicious Act passed through this House than that, because what we wanted was to weaken this belt of speculation in land so that our cities could expand and get into God's fresh air. When you have made it a paying proposition by virtue of removing any incidence of tax from this land, what do they do? Exactly what they are doing now. The assessor, therefore, is bound when he goes round the towns to ask himself, "What will this property, land and buildings combined, let for from year to year in its present condition?" That is the vicious part of the machinery, when the assessor asks, not what the land would sell for in the open market, but what the combined land and building will let for from year to year in its present condition. That meant, as the parable pointed out, that if a good house is built or a fine factory is built, the assessor under the assessing law has to take into account the possible rental value which could be derivable from that property from year to year between the landlord and a willing tenant. It means that the better the property the higher the rate.
Millions have been poured out by this House for housing subsidies. If the other side want to maintain this system of 1583 rating, I will always vote for housing subsidies. I do not mind whether the millions amount to the height of Big Ben. I know, however, that that is wrong, and that this constant pouring out of public money into subsidies for housing will not solve the housing problem. Think of the contradiction. With one hand this House pours out millions on subsidies for housing, while with the other it allows a law to be maintained in a rating system which penalises every person who builds a house. The case I am arguing for to-day has been partly conceded by the very derating proposals of the Government. Year in and year out in their early days the right hon. Gentleman the Member for Carnarvon Boroughs and my right hon. and gallant Friend the Member for Newcastle-under-Lyme (Colonel Wedgwood)—I do not know what he is thinking of me now—fought this same question. Commissions were called into being and the usual cumbersome and lumbersome data were thrown before them. The net result was that the Commissions' reports were put tidily away on the library shelves.
Insistent before those Commissions were the best minds in the country demanding that the best way to deal with housing was to derate houses. It was to take the rates off houses and industry. Let it be remembered by those Members who claim to be much concerned about the export trade of this country that the dead weight of rates and taxes is passed into price, and in proportion as the rates and taxes are greater in volume than those levied in the country of your competitor, to that extent you are undercut in the open market with your goods. In this country we have a volume of rates and taxes not lower than any other country in the world, amounting to £21 per head of the population, which inflates prices to that extent. Instead of cutting down that inflation by removing the present system of rates and taxes and allowing industry to leap forward unbridled by this burden, the pundits come in and say, "What you want is protection against the foreigner." Sometimes I wonder whether I should be in this House or outside when I hear these speakers for Protection against the foreigner and when I know perfectly well that the reason the foreigner is having the advantage of us is because we have inflated 1584 prices by the inevitable consequences of the rating and taxing system of this country.
The older Members of the House who advocated this policy were insistent that the industry of this country must be relieved in some way of this heavy pressure of rates which was handicapping industry. At last, in the Local Government Act, the Government made a concession to the very principle about which I am speaking by making a 75 per cent. reduction of the rates on industrial hereditaments and wiping out entirely the rates on agricultural land. With all the sincerity of which God can give me possession at this moment, I put this to the House. It may be very necessary, when once a fact is seen clearly, to derate industry so as to give it fair competitive power against other countries. I would even go as far as to say that it might be necessary to aid agriculture in some measure, as has been done, but I do not know of anything that is more important for the well-being of the people than the homes of the people. The family is the centre and mainspring of the State, and it is the home, the tabernacle in which the family is reared, which should be encouraged before trade, before agriculture and before anything else.
Great concessions have been made to agricultural land, to industrial hereditaments and to transport hereditaments, but the worker's house has been left with the 20s. in the £rates, and in some cases 30s. Rates are still levied heavily on the houses of the people, and then you get a comical experience. You get the Minister sending down subsidies to subsidise rentals, and when you analyse those rentals and the subsidy you find that, if the rates had not been levied upon a house, the person in occupation could have paid an economic rent without any subsidy at all from the State. It means, in fact, that the rentals which are now supposed to be going into subsidies for building are really subsidies to a rotten rating system, and the workers who occupy the houses are getting the name of benefiting by the amount of the subsidy to the rental. A Government with any concern for the masses of the people would first have de-rated the houses of the people, but no, they are still standing there with the full weight of the rates upon them. The rating system, hardening the value of the land, makes it almost impossible in some 1585 cases for the cities to clean up the slums by moving the people into the country owing to the fact that by derating agricultural land we have induced speculators to hold on tightly to it. We are still heavily rating the people in these congested streets on what is deemed to be the rental value of the property. Not merely do we fine by an annual rate any man who builds a house for himself, his wife and family, but when the Budget is introduced here we begin, through the process of indirect taxation, to tax that man indirectly on his other necessaries, in order that he may make a contribution to the expenses of the State.
What does the State do with a lot of that money? The State has to consider the well-being and the general planning of the country, and of recent years we have seen £20,000,000, £30,000,000, £40,000,000, or may be more millions, poured out annually on making new roads. The other day a Liberal Member was telling the Minister of Transport how London ought to be planned. He said there ought to be a great road running from Hampstead right across to, probably, Wandsworth Common, 300 feet wide and with trees down the middle, and the Minister of Transport rightly reminded him that the difficulty of making new roads has been the difficulty of getting the land. The ratepayer is not merely being rated on his house but indirectly taxed through the taxes on food and other necessities to create a national fund which is used to make roads. What is the net result of that? I see that the Middlesex County Council have been reviewing the situation. No one could charge the Middlesex County Council with being tainted with Bolshevik ideas. I do not know where one would find more specimens of crustaceous Toryism than on the Middlesex County Council. There it is, impenetrable, well entrenched. What did the surveyor tell them when he was looking over their new roads schemes in Middlesex? He said that as a result of making 70 miles of arterial reads in Middlesex they had presented the landlords of the contiguous land with a free gift of £15,000,000—the worker all the time paying and the State spending. By this State expenditure we are enhancing the value of the land for the landowner.
I asked the Minister of Transport to give me figures of road casualties. From 1586 1931 to 1936, 40,965 persons have been killed on the main roads of this country, and 1,306,039 have been injured. Let the House visualise 40,000 people. It is an army. We are getting annually the casualties of a war by the slaughter of the people on the high roads. What is the cure? New roads, wider roads. Some enthusiastic Members of this House visited Germany during the Autumn. They were anxious to find out the latest about roads in Germany and to tell the Minister of Transport here what to do, and I hear that they are now rather worrying him to look into the position. I wonder whether they have told the Minister of Transport this: Herr Hitler is going to carry through a scheme of great wide roads from Berlin, Hamburg, Munich and Nuremberg. What precautions has he taken? He found that 10-year contracts will be necessary to carry through that scheme, and that the roads will not be ready until 1950, almost. The great Herr Hitter, the man before whom everything goes flat in Germany, suddenly found that there were some who would not go flat in front of him. Who were they? The landlords. What did he do with them? He passed the expropriation law—I am reading now from the "Daily Telegraph"—to prevent speculation in land values. Will the Members of the House who went to Germany tell the Minister that that is what Hitler did, that he put an end to the power of the landlord speculating in increased land values as a result of those road improvements?
§ Mr. MacLaren
Will the hon. Member forget for a moment a cheap gibe at Socialism and look at the facts? Hitler had the provision to see that if he made those vast roads, and did not at the same time take steps to check the flow of these private fortunes into the pockets of private landowners, all this improvement would accrue to the benefit of private landlords. In England we are spending millions on the roads. We sit in the House and listen to the Minister of Transport telling us that the difficulty for him is to expend the money he has in hand. At the last General Election we were told to vote for the National Government—excuse me for using the word "National," but that is what they call themselves—because 1587 they had a five-year plan for the roads to expend £100,000,000. The other day the Minister of Transport was standing at the Box and was being gibed at from all sides. "How much have you spent?" he was asked, "How much have you still to spend?" He was saying, "I am getting rid of it as quickly as I can get anyone to take it." Millions poured out on the roads, and what is the net result? I see an hon. Member opposite smiling. I hope he will smile at this. I wish he would take this matter as seriously as I am trying to present it seriously.
Take London. The congestion of this City is notorious, and its death rate, too. If there is anything that makes the foreigner gasp when he comes here, it is to see the narrowness of London streets. A great scheme had been promoted for years by the London County Council to make a great roadway from Hampstead through Trafalgar Square, streaming across the river and down to the Elephant and Castle. A Bill was brought before this House to deal with it, the Charing Cross Bridge Bill, which was dropped after inquiry into the propositions behind the Bill. What was the result of the inquiry? Before I give the figures, perhaps I had better make a comparison, which is not odious. The second largest steel span bridge in the world was built across Sydney Harbour. Under it Atlantic liners can move with ease. It cost £9,500,000 to build, and the Sydney Corporation, rating on land values as they do, put a rate on the increased value of the land on either side of the harbour to pay for the bridge. A bridge was opened the other day in Denmark, over 2½ miles long, the longest bridge in Europe. How much did it cost? Less than £2,000,000.
How much was asked for the bridge across the River Thames? £14,660,000. That was at the time when there was pressure for schemes to be put in hand to give work to the unemployed. The idea was that you should get on with the bridge in order to give somebody a job. What are the details of this sum? Listen to this: How much do you think, out of £14,660,000, had to go to the landowners before we could do anything with the bridge or the roadway over the Thames? £11,126,000, or much more by way of compensation to the landowners than it 1588 took to build those large bridges elsewhere. Not merely that, but if the scheme had been carried through, the values of the adjacent land would have leapt enormously. So that, first of all, you had to give the landowners over £11,000,000 to get them out of the way to make the bridge possible. It is better to murder people by the congested traffic in London than to refuse to pay the landlords this fortune; that is what it means. Let every man take note of the fact that the death and the congestion on London streets are due to the blackmail demands of the landowners of London. The Bill was dropped because of this demand.
I have said that even if the improvement had been carried through, the adjacent land values would have risen. I am tempted to go over the various services, but I have said enough to prove that everything you do to enhance the local services, either by hospitals, education, lighting, better streets or sanitation, enhances the value of the land. How do we treat this enhanced value when we comes to rates? We go to the workingman's house and say: "What would you get for this house if you were renting it to somebody else?" We rate him according to the rental value which he would get if he were letting the house. We look down the street and see a man who has enlarged his house—and there is nothing more vicious that what we do with him. The other day this House was working itself into a fit of excitement about the decline in the birthrate. What we wanted was a new register. What happens under the rating system if a man has more than two children? He wants more room and accommodation for his children. How do we encourage him, and give them more room to live in?
What do we do under the rating system? When we find that his house is larger than the other man's house, we make his assessment larger, and the rating penalty goes up accordingly. [Interruption.] If I have taken too long I will stop. Apparently when one begins on this subject—at least I do—one always forgets the time. I will stop where I have got to, and just formally move the Bill in the hope that those who want to come into the discussion know what it contains. I am doing so because I see that I have overstepped my time. I hope the House will forgive me if I have gone on too long, in my earnestness of 1589 conviction which, however, is no reason why I should have overstepped my time. I am extremely sorry, because I cannot now take further time to go in too the contents of my Bill, but I will leave that to those who know the contents of it.
§ 12.2 p.m.
§ Mr. McGhee
I beg to second the Motion.
It would be somewhat superfluous on my part to offer congratulations to my hon. Friend the Member for Burslem (Mr. MacLaren) for the excellent speech which he has just delivered. Is it a good thing that men are occasionally elected to this House who stand for a specific principle? Those who know my hon. Friend will agree that since he entered the House, first, I think, in 1922, his name has been closely linked with the cause which he is seeking to promote this morning. If he puts his face inside the door at any time of the day, somebody will say: "Land values." It is a great honour to me to be allowed to second the Motion for the Second Reading of the Bill.
Many cases of how our rating system penalises industry and enterprise in this country have been given by him, and I would like to add only one or two. In 1929, when the right hon. Gentleman who was then in charge of unemployment in the Labour Government assisted the great industries to rationalise themselves, the town of Penistone was rationalised into a famine area. The Cammell Laird works were closed. After inducing the local authority to spend large sums of money on housing to provide homes for their workers and leaving the local authority with a large burden of rates, they walked off in a night and left the town like a stricken famine area. The rates of that council were practically completely removed. As unemployment rose, the rates rose. All my hon. Friends, in spite of many protests from the other side, know that insufficiency of allowances after 1931 threw huge burdens on the local authorities. With a population of 3,000 people, Penistone had over 600 registered unemployed.
Last year, in spite of the talk about the unemployed being demoralised, in spite of the difficulty that we still hear about in this House and outside of training men for new industries, a great firm decided to 1590 take a chance on the Penistone works. They came in, opened the works, and opened up new prospects for the people of Penistone. They were then rated on £70 a year, the rates amounting to £17 10s. During the course of last year, they actually reduced unemployment in Penistone from 420 to 65. That is a great achievement. But, in consideration of their having done this great piece of work, their rates have been increased over 30 times, and to-day they are paying, not £17 10s., but over £500. That, in my view, is the one real way to prevent industrial establishments from coming into distressed areas.
Hon. Members will recollect the famous slogan that we had all over the country: "Give that man that job." We had a Minister of Health in those days, Sir Hilton Young, who, speaking to architects, surveyors and valuers, said that, when work had been put in hand in order to provide employment, the rating assessor might ease the burden a little on those who had made efforts to provide employment. A friend of mine in the City of Sheffield took this too literally, and decided to give quite a number of men that job. He put in a new shop front and made various improvements, and those of my hon. Friends who know that city will agree that, at the bottom of the Moor in the City of Sheffield, the improvement has been very great. His reward for "giving that man that job" was an increased burden of £120 a year in extra rates. I claim that that is a very serious penalty on the industry of these people, and I do not suppose there is a Member anywhere in the House who has not numerous similar cases in his mind where his friends have responded to the appeal to "Give that man that job" and have been punished immediately after having done so.
A second side of this problem is the crippling effect of high land prices on both private and public development. I think everyone in the House will agree that high land prices are one of the major barriers in the way of public improvement all over the country. The present Prime Minister himself saw that this was so, because, when he was Chancellor of the Exchequer, he said in Manchester on 18th October, 1927:Everyone who has been concerned in the administration of a great town knows how, when you want to cut a little bit off the side 1591 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 every yard you snatch for the need of the community.In the City of Sheffield we have found that to be the case. In every improvement we have made we have had to meet these high prices for the land, and the net result of all our improvements has shown itself in increased land value. I would like to give one or two cases which I think are rather startling. Fifteen years ago a large estate was bought in the City of Sheffield at £80 an acre. It is to-day being let on lease for building purposes at a net rent of £153 an acre, or nearly twice as much in one year as was paid for the land 15 years ago. I have another case in the same district. Before the Northern extension was mooted, a professional friend of mine bought some land on the south side of the Totley main road for £75 an acre. The extension came about. This House granted the City powers to extend its boundaries, and we took in that district. We put in all our municipal services. We were rather frightened of the old sump drainage that there was in that part of the city, and we spent huge sums of public money on re-draining and re-sewering, new water services, gas and electricity, right up that main road. This friend of mine has sold some of his land, with, as he told me last week, great regret, because land that he bought 12 years ago for £75 he has sold for £400 an acre. He said to me during last weekend, "If I had not been a fool, and had held on for another couple of years, I could have got £600 for it." This is the advertisement that appeared with regard to that land:Good building land, ripe for development. Near a bus service. Water, gas, electricity and main drainage. Healthy situation; low Norton rates.The words "low Norton rates" refer to the differential rating of 10s. in Norton. I would ask hon. Members who are opposing this Measure, what was it that this gentleman was selling? It was good building land, ripe for development, near a bus service, with water, gas, electricity and main drainage, coupled with a healthy situation and low Norton rates. What of these advantages did the owner produce? Not a single one. But when the people of Sheffield want to extend, 1592 they have to pay for these advantages which they themselves created.
We have had a measure of derating. We on this side of the House have, of course, always contended that the benefits of derating flow, if not directly, almost directly, into the pocket of the ground landlord. I think we are confirmed in that opinion by an answer which the then Lord Advocate gave to my hon. Friend the Member for Burslem, when he said:I do not want to argue at length the question of whether a benefit like this ultimately comes to the landlord or not. My humble view is that it certainly does."—[OFFICIAL REPORT, 20th February, 1929; col. 1245, Vol. 225.]I can confirm that. In the City of Sheffield we have a large number of small tenant manufacturers who are called master cutlers—"little mesters." I know of one who became due for de-rating in 1929. His total rate and rent bill was £45 10s.—he had a very small place. He got his derating and to-day, with derating, his rent and rates come to £45. So that what actually happens is this: Out of the derating proposals he gets 10s. a year and the landlord gets £5 a year. I have another case of a manufacturer with a rent of £300 who became eligible for £54 derating. He enjoyed it for three years. His rent has been increased to £360, an increase of £60, and the net result of the derating proposals is to add a burden of £17 a year to that manufacturer. The whole of the rest has flown straight into the pocket of the landlord.
I think all my hon. Friends will be able to multiply these cases. The problem with which we are faced now is how to remove these penalising rates, how to bring down high land prices and how to prevent the advantages of any derating proposals going into higher rents. My hon. Friend claims, and I agree with him, that the Bill does all of these things. The total rate bill of this country this year is about £164,000,000. If the proposals of this Bill are adopted by local authorities, by any local authority or all of the local authorities of the country. the advantages of derating would, in the first five years, leave about £40,000,000 in the pockets of the people, and in the second five years about £80,000,000. As the working classes, in whom I am most interested—I have no hesitation in saying that— 1593 pay over one half, to put it moderately, that would be tantamount to £20,000,000 increase in their wages and spending power in the first five years and £40,000,000 in the second five years. In the Bill we propose that the amount that is taken off by derating must fall upon the site value, and, falling on both used and unused land, on the site value of unused land, it will drive land into the market and keep prices down, and the benefits of derating will not flow into the pockets of the ground landlords of the country.
With a falling land market the great schemes for roads and for development will have a chance of maturing. But if speculation continues as it is to-day there will be very little hope that this country will ever be able to enjoy the glories of roads like those in Germany, to which reference has been made. In this movement we used always to be faced with the question, will it work? We were told time after time that this system would not work, but like a good many impossibilities it was put into operation and has worked splendidly in many parts of the Dominions. I do not want to be unfair, but if anyone with a reasonable mind will compare the advance that Sydney has made under this system of rating with a city which is not close by but in the same Dominion, namely, Melbourne, which has not the advantage of the system, he will see that Sydney has advanced by leaps and bounds until it has out-distanced even the great Birmingham and has become the second city of the Empire under this system.
In the first 10 years of this scheme the whole face of Sydney was transformed. Over £82,000,000 worth of completely new buildings were erected in that time. I represent in part a rural area. We had in Penistone a great outcry for houses two or three years ago. The Wortley Rural District Council called into consultation a large number of the parish councils, and the net result of their deliberations was that they came to the Ministry of Health and asked permission to build 20 houses to the acre, because in the rural area of Wortley there was no land on which to build houses for the people; land was too dear and they had to build in terraces 20 to the acre. In Sydney, where this system is working, houses are built five to the acre. There 1594 are no semi-detached and no terrace houses allowed in Sydney; every house must have sunlight all round it. Single-room and two-room dwellings have practically disappeared altogether and the people in Sydney to-day are getting good homes at reasonable rents with no rates to pay. I think it is true of many other cities, both in our Dominions and abroad, especially in Denmark, that wherever this system has been tried it has shown continuous success.
One of the objections to this proposal of the Bill, I know, will be that we are trying to levy a special impost on a special class—the ground landlords. That is not true. If hon. Members will look at the Bill they will see that what we are trying to do is to stop the growing burden of high land prices and that we are not trying to make ground landlords disgorge past receipts, what they have already got out of local authorities and the public. But we say to them, "You shall no longer be allowed to plunder the public as you have done in the past." My hon. Friend has said that there have been Many instances of attempted plunder. I hope that when the new Charing Cross Bridge scheme comes up it will come up after such a proposal as this has become law. We are not making extravagant claims for the Bill. All we say is, "Here is a growing fund created by the activity and enterprise of the community. To what better purpose could you put that growing fund than providing the community with services?" Land is essential to every scheme of private and public development. All we say is that no longer should the public have to snatch a few yards of it for development.
My hon. Friend at the beginning of his speech said that efficient local government was essential to the prosperity of the people of this country. He showed that local government in this country was blocked and choked by high land prices and the vicious system of rating. The twin problems of high land prices, preventing development, especially public development, and high rates, preventing private development, are tackled in this Bill. We claim that this Bill, while not being a great Measure, is certainly some contribution towards solving the difficulties of the local authorities in this country and, through them, a contribution to the happiness and prosperity of the people.
§ 12.26 p.m.
§ Mr. Raikes
I beg to move, to leave out the word "now," and, at the end of the Question to add the words "upon this day six months."
I should like, first, to assure the hon. Member for Burslem (Mr. MacLaren) that I certainly did not find his speech too long; but he, I think, created one record in that he spoke—and it was a most interesting speech—for 50 minutes on rating in general, but never referred to a single Clause of this Bill. I think that when we examine the Bill we shall find the reason. I have very few political illusions, and I have now lost one of the last. I have always looked upon the hon. Member opposite as being one of those fiery believers in the iniquity of the landlord system who for year after year have thundered against the iniquities of the past. I looked to see them, in this Bill, swept away for good; but those two mountains, the hon. Member for Burslem and the right hon. and gallant Member for Newcastle-under-Lyme (Colonel Wedgwood), have laboured together and produced this miserable mouse of a Bill.
First of all, this Bill is a permissive Bill. If the landlord system is so terrible and these iniquities exist all over the country to-day, surely it is for Parliament to make a compulsory Measure of this kind, and not to hide themselves behind the skirts of local authorities. I wonder why these bold champions of land taxation in the past have become the tender, tentative champions of land taxation to-day. It may be that they hope that some guileless Liberal, if one exists—I do not think that any hon. Member will remain a Liberal for long and still be guileless—will be induced to go into the Lobby in support of the Bill. If that is not the reason, I can imagine only one other. Suppose you pass this Bill, you will have some local authorities taking it up and others not. You will have uniformity of rating destroyed completely; you will have a piebald donkey of a rating system. There must be confusion, and then, instead of admitting the weakness of the Bill itself, they will put the blame on the local authorities and say that Parliament ought to decide to make it compulsory.
Even if I were in favour of these proposals, I should be very half-hearted about adopting them, in view of the feeble 1596 and half-hearted character of this Measure. But I propose to go on to the general argument advanced in favour of the taxation of land values. I notice that one of the old fallacies was more or less left out. I do not think that either the speech of the Mover or the very admirable speech of the Seconder, who, at any rate, did deal with the Bill, that the argument that site value is entirely created by the community, was mentioned. Certainly the argument with which, personally, I have some sympathy, though it does not attach to this Bill, is the argument that community action does in certain instances increase unearned increment, and that, therefore, the community ought to get some share of the increase, and, thirdly, that by putting this tax on you will force property into the open market, and so reduce prices.
But the argument that site value has been created by the community has been proved to be false time after time. Where was the site value at Bournville before the Cadburys came there? It was not the action of the community that brought employment to Bournville, but the action of the Cadburys, the men who came there. One could quote many more instances. But even if hon. Members were to accept that fantastic suggestion that site value is entirely due to the community, that could be no argument for the Bill, because, if the whole system is wrong and the whole of the site value is created by the community, and nothing by the land owner, you have an argument for nationalisation, but no argument for playing about and putting these taxes on. If land is a monopoly, the Tax will be passed on by the owners; if not, there is no ground for special taxation.
We will come to a more serious argument which has been put forward, namely, that the community ought to get some part out of the unearned increment that arises from development. If this Bill were really going to achieve that, there might be something to be said for it, but the Bill is not a tax on unearned increment as such. If people own land and make money out of it and pocket their unearned increment, that will never be touched; but any person who has bought land and paid unearned increment for it to the owner, who has sold it in the last two years, is to be 1597 taxed. Let us take a further point with regard to unearned increment. We will assume that we are going to get the tax from land which has been held by the same people for a considerable time. You have, in the same county and the same rating district, two land owners, one of whom has developed his land, building roads, drainage and sewers, while the other's land has never been developed at all. The man who has to pay very heavily is the man who has developed his own land, and, on the other hand, upon that which is so poorly developed and left to itself that it has very little site value, there is to be next to no tax. You talk about unearned income. If that is not a tax upon the owner's labours, for my part I do not know what is.
§ Mr. Raikes
The hon. Gentleman asks who is this gentleman who has developed his own land? If you go over the country you will find numerous instances where the landowner has deliberately developed his own land. He has spent capital upon it—upon drainage and upon sewers, and, in many cases, upon private works. The House and the hon. Gentleman know as well as I do that that is not the point at issue. The hon. Gentleman knows as well as I do that you have a complete difference in attitude between men who take a delight in developing their property and land, and others who take a delight in allowing their land to drift.
§ Mr. Williams
Does not that argument precisely apply to local authorities who develop land? There may be exceptional cases of a landlord having to pay the penalty for developing his laud, but surely the community pays the price for its development?
§ Mr. Raikes
I will come to the question of local authorities, but I am only making what is an absolutely fair point, that, as far as the landowner is concerned, the landowner who has developed his property is the one who would have to pay the most under this tax. It is possible to come on to a matter, about which, I am quite certain, the right hon. and gallant Member for Newcastle-under- 1598 Lyme will have to say some words to us, and that is the question of, by means of this tax, cheapening land and forcing it into the market. It is not quite so simple as one might have imagined from the rosy optimism of the hon. Member for Penistone (Mr. McGhee) in discussing that problem. You are up against certain difficulties about which I should like to hear also from the other side in the course of the afternoon. First of all, you put this tax on the potential values and it may be practical if once your owner decides to sell his land.
Take, for example, a piece of land worth £1,000 at the present time. I take that low figure because it is simple. What happens? The owner sells his land for £800 and the buyer bears the burden of the new tax. There may be no particular hurry for the buyer to exploit that land and sell it again. Until the next quinquennial valuation comes along there cannot be any alteration in the valuation of the land. There is no inducement to hurry the sale, if, by holding up the sale, he can get a better price than he can at the present time. We will take it a stage further. We have had examples given of the amounts which, in the past, local authorities have had to pay the landowners in order to purchase land needed for the necessities of life of their communities. We have passed much legislation in the last 10 or 15 years to prevent the exploitation of local authorities in regard to these properties and, even so, when you bring the matter down to the question the effect of the price of the land in rent, the amount is small.
I was looking a short time ago into the figures of the Becontree Estate, which is a large estate in the London area. I thought that it was worth while to see exactly how the fact of that land being bought by the London County Council had affected the rents charged on that land. Taking, for example, a five-roomed house which would let to-day, including water rate and municipal rate, at somewhere about 15s. 10d. or £1, I discovered that the average cost of the land would be £18 per house, that is to say, 5d. a week on the rent. There you have an extreme example of rich property near London which, in point of fact, when you come down to the actual rents per house hardly touches the land question at all.
§ Mr. Raikes
In London, yes, and near a big community, and since that time we have been endeavouring to strengthen the hands of local authorities time after time in order to prevent exploitation in regard to land purchase.
That is not all. I want to come to another point upon which nobody has yet touched, and that is with regard to the builder. The builder purchases the land, and, as hon. Members know, he does not build upon it at once. Very often three or four years elapse before he starts building. He deposits the title deeds of the vacant land with his banker in order to get the security for his building at a later stage. [HON MEMBERS: "Hear, hear."] Quite so, and what will happen? You put on this tax, and the moment you do so, you depreciate the security of the builder which is with the bank, and start to create something of the same confusion and disturbance that led to the fiasco of the land taxes of 1909, to which allusion has been made in the course of this Debate.
§ Mr. Silverman
Would not the effect of that be that he would be compelled not to wait for three years to begin, but to begin building at once? If that were the effect, would it not be a desirable thing?
§ Mr. Raikes
My reply to the hon. Member is, that he has deposited his title deeds with the bank in order to raise the money to build, and if as a result of the depreciation of the land his security with the bank fails, he will be less able to build than he would have been otherwise. That will be fairly obvious. We have had one example of these land duties on a minor scale when they were tried out in 1910. There is no need for me to labour that point again, but I would warn hon. Members opposite to be a little careful before they tamper with a form of taxation which, in the course of nine years, brought in about one-quarter of the expenditure on land valuation revenue and which held up the building of working-class houses very considerably, at any rate for the last three years before the War. It is very easy to be theoretical and to put down these things upon paper, and to point out that there are cases in which unearned increment is obtained by those 1600 who have no real claim in theory to it. But it is quite another thing to produce measures which will have the effect, first of all, quite possibly of holding up building, and also have an effect upon agriculture, upon which I propose to say only a very few words, because my hon. Friend who is to second the Amendment is largely going to deal with that side of the question.
§ Mr. E. J. Williams
Is not the solution of the example which the hon. Member has placed before the House to take control of the banks as well?
§ Mr. Raikes
My reply to the hon. Member is that the nationalisation of banks has nothing to do with this Bill. The effect of the Bill passing into law would not nationalise the banks, and therefore it would not assist the hon. Member, even if the argument is a good one, which I do not think it is. We are dealing with the Bill and have to consider how it would affect land under the present system of society if it were put into operation this year or next year.
I come to the question of agricultural land. Hon Members will appreciate that under Clause 4, Sub-sections (1) and (2) it is laid down that if the property is not occupied, whatever the property may be, the owner pays the rent. If it is occupied, the occupier pays, but if it is unoccupied, the owner pays. At the present time you can levy a rate on the potential value of land almost anywhere, although there are one or two instances where you cannot. It is proposed under this Bill to value the whole land of the country, which would mean considerable cost, because you have first to discover whether or not the site is liable to rating. Look at the position of some of my poor farmers on the hard clay of Essex, compared with other farmers on the rich fen lands. You will consider whether there will be a potential value on their land for building purposes in the next few years. You put a potential value upon that land, with a consequent burden upon men who are unable to part with their land at the present time, even if they so desired, and who are struggling to keep their heads above water.
You cross from Essex into the fen lands around the Isle of Ely, where the farmers are probably more prosperous than in other parts of England. You do not take the potential site value there, because you 1601 say that if the land was cleared it could not be used for building. It is fen land. Therefore, you propose to tax the poor farmer who is struggling along on the hard clay of Essex, while those farmers who are prosperous on the fen lands are left untouched because there is no potential building value on their land. If you had a sufficiently skilful surveyor, he might be able to wangle a little bit by saying that by various drainage operations it might be possible to get a potential value from that fen land at some time, but that would not be for years, and the cost would be very considerable.
What good is this Bill going to do for the development of land on the agricultural side? None at all. On the contrary, you are going to destroy at one stroke the whole of the benefits of de-rating, and the occupier, the tenant farmer, not the owner, is to have the privilege of paying the tax. You will strike another blow at an industry which is just beginning, after years of depression, to get its head a little bit out of water. Let me give one or two illustrations. Here are two sites side by side. They are sites of the same size, and I am assuming that they are built upon. One has been let and wholly built upon, and the owner is getting a nice little rent. The other site has had two or three houses built upon it, but they are unlet. You decide on the site value by taking away the value of the buildings from the site value. It comes down to this, that the prosperous owner where the value of the buildings are higher than the site value will pay no land value tax, but the property next door which is unlet and where the site value is assumed to be higher than the buildings upon it, although the owner has not managed to get a tenant, will have to bear the tax. If that is not in direct opposition to the principle of taxing ability to pay, I do not know what is.
You can carry that illustration a good deal further. References have been made to industries being derated. You can take side by side a great shipyard, covering a very considerable surface, which is just emerging from difficult times. The site value in that case will be assessed on the neighbourhood and there will be considerable land value tax upon it. Close by you have a small, compact factory, standing on a small site and making com- 1602 fortable profits. That will not be taxed, because the value of the buildings will exceed the site value. Therefore, in the latter case, although the factory has been prosperous for years nothing will be paid, whereas the shipyard will have an additional burden placed upon it.
I should like to put one or two questions in regard to the Schedule. In the Schedule it is provided that:The anneal site value of any hereditament shall be the amount of a perpetual annuity which the fee simple thereof with vacant possession might he expected to realise upon a sale in the open market upon the assumptions.Suppose I have a plot at present unbuilt upon, property which it is possible I may be able to part with for a housing estate, in which case I may be able to get anything up to £10,000 a year. On the other hand, the housing may not come there, and I may have to let the site for a golf course on a 99 years' lease at £150 a year. How are you going to value that property on the first valuation? Are you going to value it on its potential value as a housing estate, or its potential value as a golf course, or perhaps as a site for an aerodrome? Suppose you assess the value on the assumption that houses are going to be built and that a big income will be derived therefrom; but I cannot let it for that purpose, and I have to let it as a golf course for £150 a year. That valuation would ruin me completely before the next valuation.
Then there is the case of land liable to flooding, which generally would be exempt from annual site value. Close to my home we have some beautiful meadows, down by the River Derwent, very charming, but unbuilt upon, because the site is liable to be flooded two or three times a year. On the face of it there is no site value there, but I cannot help thinking that some intelligent, ingenious surveyor might come along to these flooded grasslands and see the print of horses' hooves. There is a race-horse training establishment close by, and the horses practise over the jumps in those meadows. He might say: "Although this land is flooded two or three times a year, it is within six miles of Derby, with its big population, and it might be valued on the assumption that it might be sold in the open market for a steeplechase course." Although you would not be able to put houses upon the site, be- 1603 cause of the flooding, you would in that case be able to put a potential value on it.
I am wondering whether I shall be let into the secret of the right hon. Gentleman opposite as to when potential value begins to be seriously considered under this Bill, because the Bill does not tell us, except in a broad way in the Schedule. If the right hon. Gentleman would give us some indication, it would be helpful to us. I do not know whether any one can reckon out the process except perhaps a surveyor of ingenuity, or those who may be thinking of giving training at the university to persons who are going in for that form of business. I close by moving the rejection of the Bill because, first, I consider it is a weak and cowardly Bill, which endeavours to give over the duties of Parliament to local authorities; secondly, because I believe it will destroy uniformity in rating, hold up housing development and injure agriculture. Upon those grounds I move its rejection and I sincerely hope that it will be defeated on Second Reading, as it deserves to be.
§ 12.55 p.m.
§ Mr. Donner
I beg to second the Amendment which constitutes a rejection of the Bill and which was so ably moved by my hon. Friend the Member for South-East Essex (Mr. Raikes). He has endeavoured to maintain fair treatment for the farmers in his constituency, and no doubt they will be grateful to him for his speech on their behalf. He has pointed out the contradictions and iniquities which would be created if this Bill became law. The Debate has reawakened memories of the bitter and acrimonious debates which took place in pre-War days. Indeed, the principles of this Bill are relics of Victorian and Edwardian days. In my belief the Bill is obnoxious in principle, would cause great injury and hardship to thousands of people in this country, not excluding my own constituents, and I submit, therefore, that it is the duty of this House to bury it finally and decently this afternoon, in spite of the speech and deep conviction, and almost fanatical sincerity of the hon. Member for Burslem (Mr. MacLaren) who has presented it to the House.
As far as I am aware, this is the first time Parliament has been asked to sanction a proposal which at one and the 1604 same time sets out to apply a site value tax on agricultural land, which was de-rated to the great benefit of farmers by the Conservative Government in 1929, and at the same time includes a substantial, if diminishing, tax upon improvements and buildings. It is only when we keep in mind the false anthropological theology and that peculiar interpretation of history which form the background of this Bill that we can fully realise how it is that the obsession for the taxation of site values, from which the promoters suffer, has, like wine, clouded their judgment. Indeed, the worshippers of this idol have deceived themselves with the belief that their reason has had something to do with their faith. The object of the Bill is to undermine individual ownership of land and the underlying reasoning for this may be found in an open letter written by the hon. Member for Burslem to the late Duke of Northumberland in regard to the evidence he submitted to the then Coal Commission and reported in February, 1926, in "Land and Liberty". The hon. Member on that occasion wrote:An elementary acquaintance with history shows that the origin of all property in land was robbery on the part of the few of the common rights of the people.When I showed this to a friend of mine the other day, "Elementary, acquaintance," he remarked "very elementary, positively childish." When the hon. Member appeals to history in support of the principles of this Bill, I should like to suggest to him that he is repudiated by history. His interpretation begins with the assumption that men are born into this world with certain rights, whereas we who are Conservatives believe that men are born into this world, not with rights, but with obligations, first to parents, then to the family, then to the body politic, an ever-growing and ceaseless stream of obligations. If insistence is placed upon rights, it may be conceded that men are born with the right of life, but even this is only acquired by conquest of circumstances.
Six years ago when the then Socialist Government's Land Taxes were the talk of the day, I remember a phrase which was much used at that time: "God gave the land to the people." I went to a cinema and saw a film called, I think, "Africa," in which were portrayed a number of terrified human beings seeking refuge among the branches of trees— 1605 terrified on account of the ferocious lions and other animals beneath them, and which were laying claim—and very successfully laying claim—to the ownership of the land, by the animals. I remembered the phrase, "God gave the land to the people". If I had been a small boy, too young perhaps to be acquainted with that particular jargon which is known in this House as Parliamentary language, I should have known how to dismiss that pretentious sentiment. I should have called it "bilge," but having subsequently grown up and become a Member of this House, I will limit myself to the observation that the assertion that "God gave the land to the people" is not "in accordance with the facts." If it is really to be argued that God gave the land to the people, it might as well be argued that God gave the land to the brontosauri. Where is the evidence that the land was ever robbed from the people? At what point in our history did this alleged robbery take place?
Kingship is the oldest form of Government known to us in this island and I would remind hon. Members that the land belonged to the kings. Military tenures involved holdings of considerable areas of land by tenants-in-chief, and further holdings were held by their vassals. It is a well known fact that small holders of land voluntarily became the feudal tenants of landowners, while military services were converted by the king into money payments, because the kings realised that the existence of large independent bodies of armed retainers under the tenants-in-chief constituted a source of danger, and because they realised that this system was not the most efficient for the purpose of developing the land. In consequence, the king gave the land to the nobles; he gave the land as reward for services rendered, and, secondly, because it was politic to provide an incentive of self-interest so as to ensure that the land would be put to the best possible use. They realised that the institution by which incentive is preserved unimpaired and the spirit of trusteeship and security of tenure are protected, is the individual ownership of land. If the hon. Member for Burslem had in mind his open letter to the late Duke of, Northumberland when he drafted this Bill, he denies the fact of human progress and repudiates the methods employed 1606 which are responsible for it. Human progress has been identified with the individual ownership of land, because the owner works for permanent development and not for temporary exploitation achieved by present enjoyment.
§ Mr. Donner
I know the hon. Member finds it almost impossible ever to listen to a speech with which he disagrees in this House, but I would ask him to try to listen to the argument, and if he applies himself to it, he may be able to understand it. Those who deny the identification of human progress with the individual ownership of land have great names arrayed against them, including Gladstone and Harcourt, to mention only two. Indeed the report of the Select Committee of the House of Commons of 1892 testifies to the truth of this contention.
There can be no more wasteful system than the communal ownership of land. Is it to be seriously argued that a man will expend the necessary capital, time, energy and labour upon levelling, manuring and developing his land in the knowledge that neither he nor his kin will enjoy the fruits of his labour, and that these fruits will be used and enjoyed by his neighbour, or perhaps by some person whom he heartily dislikes? A true understanding of this Bill and the philosophy underlying it requires a careful examination brief though it be of the theory underlying it which history repudiates and philosophy scorns. If it be argued—as it is by the hon. Member for Burslem—that the land was robbed from the people, and if, in consequence of that, this tax on site values is to be instituted, then I say that the promotors of this Bill examine the soundness of present day institutions and even seek invalidation or justification for them in the habits and usages of savages in their primitive state.
This anthropological theory appears to rest on the belief that if it can be shown that a particular institution existed amongst barbarous tribes before the dawn of civilisation, this should compel our respect and furnish a model which we should admire, emulate, and copy. Academically interesting as the habits and customs of savages may be, they cannot be of assistance to us as guiding principles upon which we can to-day 1607 formulate laws suitable to modern conditions and requirements. Even if the promoters of the Bill could prove that unsophisticated humanity in Great Britain, before the dawn of history, existed under a system of communal ownership of land, are we to accept this as evidence in favour of the establishment of similar conditions in the twentieth century? Even if they could prove that communal ownership of land, communism, was the primitive form, and exists amongst backward tribes to-day, it may well be questioned whether these existing primitive tribes do not owe their backward state to the very system which we are asked to revere. You cannot entirely divorce their settled inferiority in the hierarchy of races from the social principles by which they govern their lives. An endeavour to base upon anthropological data principles for the establishment of a system to meet modern requirements or to fix any rule for the observance of parliament and people to-day is absurd; and its absurdity lies in the fact that these data represent a microscopic part of their development, namely, the early stages and these bear no relation to present-day realities. I repeat that if it be asserted that the land was robbed from the people, that assertion rests upon the assumption that Communism at one time existed in this country before the dawn of our history. That assertion is made without any evidence to substantiate it.
I will come now to the Bill. [Interruption.] Hon. Members opposite may laugh, but they themselves have not touched very much on the Bill, and I thought it was necessary to say something of the underlying philosophy of the Bill in order that we may fully understand it and its implications. No attempt is made to estimate the cost of valuation, nor is any estimate made as to the amount of revenue likely to be collected at any given rate in any given district. I congratulate the hon. Members who moved and seconded the Motion on their prudence in that respect. Many years ago the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) dangled before the country the benefits of his particular form of land taxation. Hon. Members will recall how at that time a vivid picture was painted of the Dreadnoughts and 1608 old-age pensions which were to be derived from those taxes; but when the revenue was collected it was discovered that it savoured not so much of Brobdingnag but of Lilliput.
In 1892, the Select Committee of the House of Commons on town-holdings reported on the question of the taxing of site values as follows:An annual tax … at variance with the axioms of taxation generally accepted from the time of Adam Smith, that a taxpayer should contribute in proportion to the revenue he enjoys and that a tax ought to be levied at the time and in the manner most convenient to the contributor.This site value tax offends against all accepted canons of taxation. The whole conception is unjust because it flies in the face of the accepted principle of taxation that citizens should contribute to the public revenue in proportion to their ability to pay. To continue to recognise individual ownership of land in law, and simultaneously to set about surreptitiously to penalise an owner for possessing something which in law he is entitled to own, is so fundamentally dishonest a practice that if suggested to a self-respecting burglar, it would probably make him blush.
How is this site-value tax to be ascertained? To ascertain the annual site value for the purpose of the Bill, a plot of land is stripped, in imagination, of all its improvements brought about in it or on it by the hand of man, except roads; and the tax is levied upon the supposed value of what remains. Although this proposal is intelligible, its peculiarity is as remarkable as its effect in practice. At the outset, the site value tax by itself consists in the removing of practically everything capable of yielding revenue, before beginning to impose taxation. An attempt is made to evade the effects of this: when each particular plot is in turn stripped in imagination of all its improvements except roads, all the land surrounding it still remains in statu quo. By this means the value of this plot, bare except for roads, is raised above its prairie value by the existence of manmade improvements all around it. And it is upon this value that it is taxed. But even so, the value still remains less than the value of the same piece of land with its own improvements actually attached to it.
1609 That is why the promoters of this Bill are, themselves, driven to commit what they have always denounced as deadly sin, namely, the taxing of improvements, because it is impossible to raise the whole sum required by a tax on site values only for the very good reason that they do riot yield enough. From this alleged sin of taxing improvements, the promoters of the Bill have not escaped, and never can escape. If you do not tax improvements, there is virtually nothing left to tax; and that is the conclusion of practically all the authorities who have examined the suggestion to tax site values.
The Departmental Committee on Local Taxation, known as the Kemp Committee, reported in 1914, and, by a majority, emphatically condemned the proposal to make the rating of site values either the sole or the partial basis for local taxation. In spite of this the latter is the object of this Bill. This majority report is completely ignored by the supporters of this Bill, thus revealing the mentality of those who, as good democrats, attach importance to majority opinion at elections but do not accept as evidence the judgment of the majority of carefully selected men who, fulfilling the functions of judges, are held to be of no account.
§ Mr. Donner
I am not dealing with the Sankey report, I am saying that the majority of the Kemp Committee condemned the proposals to make site values the sole basis of taxation. It is true, and I want to be perfectly fair, that the minority reported in favour of the principle, but even the minority dismissed the proposal that a site value tax should be the sole basis of taxation as being "impracticable and impolitic." But there is nothing in Clause r of the Bill to prevent the raising of the whole of the amount by the site value tax at the end of the second quinquennial period, and that is in direct contradiction of even the minority report of the Kemp Committee.
It would be impossible to apply this tax at all equitably. Take a plot of land which is taxed at a given rate and assume, for the sake of argument, that it is owned by four different people.
1610 Assume that the first person has upon it a block of flats which yields an income of £3,000. The second person owns a restaurant which yields £6,000 a year, and the third persons owns a cinema which yields a revenue of £10,000 a year. The fourth possesses a private house which yields no income whatever, but all these four people under the proposals of the Bill would be taxed at one and the same rate, and that tax would have no affinity with, and bear no relation to, the income which each owner receives from his property. Where is the justice in such a proposal?
§ Mr. Silverman
Does the present rating system apportion the burden according to the income of the ratepayer?
§ Mr. Donner
My contention is that, however many may be the failings of the present system, the alternative which is proposed in this Bill would be still more unjust. Not only so, but it would create the greatest injury and hardship for thousands of people including my own constituents. Take the case of the man who owns 50 or 100 acres of agricultural land. He would be penalised, but the successful barrister, or the rich man who had money invested in the Argentine, would not be touched under these proposals. It is proposed to penalise the little man who owns 50 or 100 acres because, apparently, hon. Members object to the fact that he owns any land at all.
The right hon. and gallant Gentleman the Member for Newcastle-under-Lyme (Colonel Wedgwood), in a notorious speech on 14th July, 1924, said that the then Labour Government's land tax proposals "would knock the bottom out of land values." Is that the contention now? Is that the intention now? We have been told of the revenue which could be collected by means of this tax. But what is to happen to the revenue if you knock the bottom out of land values? What is to happen to the small farmers and to the small investors who, for years, have been assured that the best and the most secure investment is land? What is to happen to mortgages and to trustees who for years have advised the little man and widows and orphans to put their savings into land? This country, after all, is not the size of the United States. Does the hon. Member who has moved the Second Reading of this Bill want to see our cities 1611 spreading further and further over the good agricultural land of this country? Does he, really believe in making us more dependent than we already are upon imported foodstuffs from abroad? Does he think that that would be in the best interests of the nation as a whole? I think it was the Seconder of the Motion who said something about the narrow streets in London and other towns and cities, and suggested that foreigners who visited this country were horrified by those conditions. I submit that abroad one sees much narrower streets and much more overcrowded conditions than are to be found in this country. His reference to Sydney was no analogy at all, because it is impossible to compare the conditions in a new country with the conditions in an old country.
I would like to refer to the position of the farmers and tenants who live next to me in Hampshire in order to show how they would be affected under Clause 4 (2) of the Bill. They would be very severely hit by this proposal. Their land is agricultural land, but much of it runs alongside the railway and is not very far from the railway station. They get a few pounds for the produce of those agricultural acres, but if a site value tax were put upon those acres, then the land would be valued at a very much higher figure because of its proximity to the railway station, and the increased tax would bear no relation to the income which they derive from tilling the soil. In justice to the case which I am endeavouring to put to the House, I would add this. I certainly have put the case as a landowner, but I should like to make it clear that I spoke on similar lines five years ago when I had the honour to represent not Basingstoke but West Islington in this House and before I ever owned as much land as would cover a sixpenny piece. I hope, therefore, it will not be supposed that I am taking an interest in this Bill merely because in the last year or two I happen to have acquired some land of my own.
§ Mr. MacLaren
Is the hon. Gentleman aware of the fact that the Basingstoke council petitioned Parliament for power to rate land values?
§ Mr. Donner
If they did I think they were very much mistaken in so doing.
1612 I am one of those who believe in the old Tory principle that it is a mistake to divorce obligations and duties from individual ownership of land. I would have greater sympathy with the hon. Member who moved the Second Reading of the Bill, if he had accepted the principle of Aristotle that individual ownership of land should be wedded so far as possible to functions and responsibilities and obligations and free from it present irresponsibilities. As the Bill stands, however, I believe it to be as fallacious in theory as it would be unjust in practice. I believe it would undermine the sense of trusteeship of those who own land; that it would be fatal to thrift and good husbandry and therefore injurious to the national character. I believe that it would be a menace to security of tenure and that it is therefore pregnant with evil, and should be rejected with the aversion which it deserves. I hope that the hon. Member who follows me, whoever he may be, will not feel it necessary to say, as John Beresford said in 1785 when he had listened to a speech in another place, "Hell and the Devil—two hours and twenty minutes."
§ 1.22 p.m.
§ Mr. Kingsley Griffith
I rise in my capacity as "a guileless Liberal"—the title bestowed upon me by the hon. Member for South-East Essex (Mr. Raikes). I suppose he meant to draw a distinction between me, as a guileless Liberal, and the Parliamentary Secretary to the Ministry of Health and the hon. Member for Sunderland (Mr. Furness) sitting on the other side of the House. I accept that distinction as a very neat one, and I am comforted to think that with the principle of this Measure at any rate the Parliamentary Secretary—who has, I regret, temporarily left his place—must be in agreement. It would be unfair to quote anything which he said from this side of the House, but speaking in 1934, from the other side of the House as a supporter of the National Government he said:I could not sit silent to-night and see land reform, which I regarded 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."—[OFFICIAL REPORT, 5th June, 1934; col. 875, Vol. 290.]That, of course, was dealing with land taxes. It is open to the Parliamentary 1613 Secretary to draw a distinction between the proposals now before us and those earlier proposals. I am only seeking to assure myself that his heart is still with us, even though his seat may be elsewhere. With regard to the admirable speech of the hon. Member who has just sat down, I cannot follow his anthropological discourse, but I was interested in his theory that God really made the land for the brontosaurus. The brontosaurus, for all we know, occupied an enormous site value, but the brontosaurus is now in a museum, where, I am afraid, he may shortly be joined by the hon. Member.
I do not think that the hon. Member who moved the rejection of the Bill was altogether disingenuous when he attacked the promoters of the Bill for having brought in a mean, miserable, petty-fogging Measure that really was not worth while. If my hon. Friend the Member for Burslem (Mr. MacLaren) and his supporters had brought in a comprehensive Measure, we should have been told that this was altogether an unsuitable Bill for a Friday afternoon, a private Members' day, and that only a Government Measure could deal with anything of the kind, and I think the hon. Members have shown great common sense in introducing something which enables the principle to be discussed and at the same time is within the Measure of being dealt with on a Friday afternoon by the House and subsequently by a Standing Committee of the House. As far as that is concerned, I think they have enabled us to have art admirable discussion and are not at all to be blamed, least of all by the opponents of the Bill, for not having gone further than they have.
I want to deal with some of 'the arguments of the hon. Member for South-East Essex. I am still quite unrepentant in the belief that site value is the creation of the community, and I was not much impressed when he quoted the example of Cadbury's, of Bournville. They are undoubtedly benefactors of humanity, but not because they have created the site. They are benefactors because they have developed it.
§ Mr. Raikes
They have developed the value of the site. If they had not come there, the site would have remained as it was.
§ Mr. Griffith
The hon. Member is really confused in his argument. The value of 1614 the site was always there, ready for anybody to develop. This Bill is not attacking or in any way injuring people who come and exercise their activities in developing a site, but merely those who are passive occupiers. Of course, we have had the usual refrain from the hon. Members opposite who appear among the opponents of land reformers every time. They always say that they agree that some part of the unearned increment ought to be taxed, but it is always jam to-morrow and never jam to-day. We never see them bringing forward or supporting any remedy for the evil which they admit to exist. On the contrary, the hon. Members are mere smoke-screens to try and make out that they are not animated by motives which interest any particular class, and that if only the right sacrifice were indicated, how gladly would they run to the altar in order to be immolated thereon. That does not and will not impress me very much until I see some of these people actually going into the Lobby in support of a proposal which really does tackle this question.
Doubt has been raised by the hon. Member as to whether Measures of this kind really bring land into the market. He took the case of the second buyer, who has bought after the imposition of site value rating, and he said that he will no longer have any more motive, having bought under those circumstances, to bring his land into active use than anyone at the present time. I entirely deny that, because I think that a buyer who buys land under those circumstances has almost inevitably bought it for the purpose of development. He will not want to go on paying the site value rating on undeveloped property. That would defeat the whole object of his own speculation, and, therefore, I think that argument does not hold water in the least. Then we were told about the builder who has deposited some deeds as security with his bank for a loan, and we are told that he will lose that security. Will he? The whole of the circumstances indicate necessarily that the land is suitable for development and that he intends to develop it. In these circumstances the deeds of that land will be excellent security, and the bank will be willing to lend money on them. That argument again therefore appears to me to have no validity whatever.
1615 Then we had the story of the valuation cost. The hon. Member was wise not to dwell on it very long, because, whatever kind of proposal you are going to have with regard to taxation or rating, a correct valuation, for valuation and rating purposes, of the land of the people is an absolute necessity in order to arrive at any just system whatever. With regard to agricultural land, the hon. Member did not dwell on it very long, and, after all, the proposals here, as one sees from the Memorandum, are only to restore agricultural land to the list in respect of the annual site value; and I notice, oddly enough—it is rather mysterious—that the very agricultural land that the hon. Member chose to talk about, I understood him to admit would not be in fact injured by the operation of these proposals, and I have no reason to suppose that anything of the kind would happen. Then he comes to urban values, and he compares two buildings, one of them in active use as a restaurant and the other whose occupier has not succeeded in letting it. I am afraid that an illustration like that does not go very far with me. It is perfectly true that what these proposals will do is certainly to benefit the man who is getting the full value out of the site rather than the man who, through insufficient energy or enterprise or, it may be, insufficient capital, has not brought that land into full value.
It is there that, I think, the hon. Member who seconded the rejection of the Bill was rather wasting his time by taking the argument from this side, about the rights that individuals may acquire in land, too much as if we were solely interested in some historical disquisition as to exactly the way in which the land came to be acquired in the past. That aspect of the case leaves me almost completely cold. It does not interest me from that point of view. What does interest me is that here is a monoply value, something which, if you took it to the reductio ad absurdum, if you had all the land of the country controlled by one great trust, that trust would be all-powerful in the country and could dictate the whole life of the nation.
§ Mr. Griffith
Perhaps some hon. Member above the gangway on this side of 1616 the House might be able to say whether or not that is his idea. What I am saying is that the land appears to me to be different from all other forms of property, not on the ground of any historical disquisition about it, but owing to its overmastering position as the ultimate source, with labour, of all the wealth that can be produced in the country. It is that that gives it a peculiar position, so that the community simply cannot tolerate any system under which it may be more advantageous to a private individual to keep the land from being fully developed than to put it to its greatest possible use.
§ Mr. Donner
My object was to deal with the historical disquisition inasmuch as only two days ago a book was sent to me by a Mr. Dundas White, who based his case on the assertion that God gave the land to the people. So did the late Lord Snowden and a great many others who have advocated the single tax. I thought, therefore, that it would be of assistance to examine the historical basis in order to show that it is fundamentally false.
§ Mr. Griffith
Any writer goes back for his foundations, if he can, to Adam and Eve in the Garden of Eden, but for my part, I am not interested in that method of treatment. I am dealing with this question from the point of view of present facts and necessities, and it is on that basis that I think the promoters of the Bill have made out an unanswerable case and that they ought to receive the support of this House.
§ 1.35 p.m.
§ Lieut.-Colonel Heneage
I think the hon. Member who has just spoken is one of the most charming speakers on those benches and he speaks in such a way that we listen to the way he says it but the people outside might be easily misled. At the beginning of his speech he used the phrase "the value of the site ready to be developed." There might be two sites on one of which a large factory might be built, and on the other a small cottage. If a person builds a small cottage when he might have built a large factory, I do not see how the theory will work in practice. That is what we on this side always like to see. The hon. Gentleman also criticised us because, as he said, we always seem anxious to bring forward a Measure some time or other but that we 1617 do not do it. The hon. Members who brought in this Bill drew a desperate picture of slums and of how the landlord of the slum would get off under the present system of rating. The facts are that slum dwellers to-day are being rehoused at the rate of 150,000 a year. That is not done just waving a wand; it is done by the Measures which this Government have brought in. The hon. Gentleman cannot have it both ways by criticising us for not being in favour of this Measure, and at the same time saying that nothing is being done. In 1931 only 15,000 slum dwellers were being rehoused, and there was then a kind of tax on land values on the Statute Book.
That brings me to what I really dislike in this Bill, and that is the effect of land taxes or rates on those who wish to develop sites. In my own area of North Lincolnshire, the moment the proposals of the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) were made, building stopped. If this Bill became law there would be the same trouble. The hon. Member for Burslem (Mr. MacLaren) thinks perhaps that it would be only a temporary phase. I do not think it will. It will be more than a temporary phase as long as private enterprise has a share in building? Is this the beginning of the Socialist idea? Who, under the Socialist regime, when everything is owned and run by the State, will pay the rates on site values? When the hereditaments are owned by the State, the only people who can pay them will be the State.
In the old days the United States had a tax and a rate on land, and if they were not paid they accumulated as a debt on the land. I had a share in some land in the United States years ago and was one of 30 people with shares. We were heirs of an estate. There were so many of us that we could not agree whether the taxes should be paid. The result is that they were not, and the taxes went on accumulating. It was in New York, and it happened that alongside this land was a piece on which the taxes had been regularly paid. Imagine somebody seeing the former site and wanting to buy it. According to this scheme of land taxation, some of the land will be rated high possibly because the rates and taxes have not been paid on it, and some will be low. Eventually, you would get to a place where some sites could not be 1618 bought because the accumulated rates and taxes were so high. That is one of the problems which is not dealt with in this Bill, but it is one of the dangers which we might foresee as a result of it, and we would be likely to have a certain amount of derelict land.
§ Mr. MacLaren
Will the hon. and gallant Gentleman point to any Clause in the Bill where we are charging the site with the accumulated taxes and rates?
§ Lieut.-Colonel Heneage
It is fairly obvious that if the taxes and rates are not paid they are not wiped out. In the United States, when this plan was first drawn up, there was no provision dealing with that kind of thing, but it was what eventually happened.
§ Lieut.-Colonel Heneage
The hon. Member is assuming a thoroughly successful State such as we have under the National Government, when people can pay their debts. Under the measures of the Socialist party people may not always be able to pay their debts. The rates and taxes will therefore accumulate. Debts due to the State are far harder to get rid of than debts to a private individual.
I want to come to the main argument behind this Bill, namely, that dealing with the question of improvements. I do not like the present system of dealing with improvements by increasing the rates. If I thought this Bill would find a solution for that problem, I should not be so much against it. The best way of dealing with the improvement of a site is to give a temporary moratorium for a period of years. That is a much simpler way than by putting a rate on the site. I prefer that system to the system advocated by the hon. Gentleman. The question of agricultural land has been touched on. I do not see why agricultural land is brought back into the list if it is not proposed to rate or tax it. I shall regard with suspicion any proposal to bring agricultural land back into the list. After a tremendous struggle we have got it free from rates, and we do not want it back again. This Bill is a typical thin end of the wedge to bring in agricultural land again, and I shall certainly, therefore, oppose it. I want to ask Members of the Socialist party if they are really going to 1619 support the Bill. I can understand the Liberals supporting it, but how will the Bill work in a Socialist State? If it cannot work in a Socialist State because private ownership of land is done away with, what is the use of bringing in the Bill? Presumably any Bill brought in by hon. Gentlemen opposite is brought in with a view to being worked eventually in a Socialist State. I think it is right that those who support the Bill should answer us. It is no use saying, "It will work all right," as they are so fond of doing on the platforms of the country. They say, "You trust us, and you will see that it is all right." Then the conntry trusts them, and in two years we get a slump and frightful disorganisation.
What we want in this House is more definite statements on how it will work in a Socialist State. I have suggested that the State would have to pay the rates on land values, that it would be a case of Peter paying Paul. I do not know whether it is the idea, but I rather think it is, that in a Socialist State you can take out of one pocket and put into the other. Do not hon. Members think the whole of this scheme is absolute nonsense? Let hon. Members opposite, who are thoughtful, come down to practical details. When they are dealing with a theory, like that which is in this Bill, they go all out and say what a grand idea it would be to put all the rates on the land and take them off the hereditaments and in that way do away with the slums. But will they get the slums swept away by those means? Let them tell us whether their Measure will improve things, and, if so, how. Let us have some examples from foreign countries which have tried this system to see whether it has been a success. In this country, on the whole, we legislate a little behind the need point, and we do often profit from the experience of foreign countries. I am not saying that we do not sometimes introduce legislation which is entirely novel, but usually that is only when there is a crisis, and there is no crisis here. I ask, finally, What is the need for this Bill and how will it work in a Socialist State?
§ 1.47 p.m.
§ Mr. Barr
There is only one point in the statement—the excellent statement from his own point of view—of the hon. 1620 and gallant Member for Louth (Lieut.-Colonel Heneage) to which I would refer. I can speak only for Scotland, but I can say that his assertion that even the prospect of such legislation as was brought in by the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George) checked housing developments is not true in the case of Scotland. A Housing Commission composed of members of all parties in Scotland, of which I had the honour to be a member, sat from 1912 to 1917, and on this point, and after exhaustive inquiries, they came to the conclusion that that legislation of the right hon. Member for Carnarvon Boroughs had had no appreciable affect in slowing up the building of houses in Scotland. The hon. Member for Basingstoke (Mr. Donner) quoted Adam Smith's views about making taxation accord to the ability of the taxpayer to pay; but he must know—I gathered from his apt quotation of Aristotle that he was a philosophical student—that Adam Smith devoted many pages of his writings, and long arguments, to expounding the very principle which this Bill seeks to establish.
§ Mr. Donner
The hon. Member is mistaken. I was not quoting Adam Smith, I was quoting a Select Committee appointed by this House of Commons on Townholdings which reported in 1892. It was they who adopted the views of Adam Smith.
§ Mr. Barr
Surely the hon. Member did mention the name of Adam Smith, or it would never have occurred to me to make this reply. But I am more concerned with what he said in challenging the doctrine that there had been communal ownership of land earlier. Here, again, I would go to that greater philosopher and authority, Sir Henry Maine, who in his "Ancient Law" traces back the ownership of land to the village and to the community. How else can you explain the seizure of the commons? A law was made to the effect that where land was held in common by villagers, a landowner, accompanied by two witnesses, could go to court and if he could prove that he was able to put it to better use, the land passed into private ownership. Under the operation of that law in 150 years no less than 7,669,000 acres of land in this country passed from common into individual ownership. [Interruption.] I shall not 1621 be tempted into the wide subject of the Highlands.
The hon. Member who moved the rejection of the Bill found fault with the Bill on the ground that it was permissive, and therefore he thought it a trumpery Bill. I venture to say, following an argument used effectively by the hon. Member for West Middlesbrough (Mr. K. Griffith) that if it had been made compulsory the mover of the Amendment would have pointed out the great divergencies between one local authority and another, and would have said the Bill went much too far. Ten years ago I went all over Australia and New Zealand. In New Zealand I found that legislation on these lines was in force, but was permissive. In Wellington, using these permissive powers, they were going from strength to strength; they were making it stronger year by year. The idea of making this Bill permissive is that we shall be able to show the advantages of this system, and that gradually the whole country will come to see the value of adopting it. A few years ago a noble president of the Conservative party, speaking at one of their annual conferences, referred to general elections and to the value of keeping Socialists off local authorities. He said that the Conservatives might well win the big battles—the general elections—but would lose the whole campaign if they allowed Socialists to man the local authorities. We are convinced that if we allow the local authorities to set an example in this way it will lead on to larger things.
This legislation, or something akin to it, is in operation in every State in Australia. It is in operation in New Zealand. Reference has been made to Sydney, New South Wales and to the bridge there, the second longest bridge in the world. That bridge, which was opened on the 19th March, 1932, cost £9,500,000. May I interpose the statement that since 1916 every penny of local rating in Sydney is raised by a tax on the unimproved value of land. When this bridge was built the people of Sydney said that it would profit all the holders of land around, and they imposed a tax, on the principal of betterment, on the unearned increment. The tax was a halfpenny in the pound on the capital value from 1922 to 1932; it dropped to one-third of a penny from 1932 to 1935; and to two-ninths of a penny from 1936 to 1622 1939. By that means Sydney has, up to the end of 1933, raised £1,747,000 toward the cost of the bridge.
Complaint has been made of the injustice of taking any part of an increment value. The hon. Member for South-East Essex (Mr. Raikes) used this argument in connection with the landowner developing his property; and, although this was not a Bill for taking unearned increment it belonged to the same class of legislation. In proposals for taking the unearned increment, improvements effected by the owner have always been exempted. One of the great pillars and advocates of taking unearned increment was John Stuart Mill, and I would read what he proposed:To take a fair and even liberal estimate of the market value of all the land in the Kingdom, and that future additions to that value, not due to improvements of the proprietor, should be taken by the State.The hon. Member who moved the rejection and other hon. Members, including the hon. and gallant Member who last spoke, have dwelt on the injury which you might do to agricultural land. It seems at first sight, and a priori, as if a. tax on all land, rural and urban, might be hard on the tillers of the soil. It is forgotten that agricultural land is of very low site value. The more remote it is from the towns, the more infinitesimal becomes the unimproved value. I take the case of Denmark, a country largely made up of peasant farmers and small holders. They have had national taxation of the unimproved value of land since 1923, on all land, urban and rural, apart from the improvements. They imposed a national tax of one-third of a penny upon it in 1923. On 31st March, 1926, they pased a Land Values Rating Act, putting a local tax on land values with a view to reducing local income tax.
In 1929 they went much further. Mr. Dahlgaard, who had charge of the Measure, said that the object was to take all rates off houses and other buildings, and to make the rates a charge on land values. Putting the rates and the taxes together, they amounted to something like 2d. in the £on the capital value, though in some of the rural areas it is larger, for reasons into which I may not go. That scheme of taxation has had a prominent place in the programmes of the small tenants and smallholders of Denmark, particularly the "Housemen." who number 80,000 in their associations. It 1623 is worth repeating the principle upon which their association is founded:The land to the man who uses it. The land value to the people who create it.They stand strong behind it to this hour. They find that they gain by having the rates and taxes lifted from articles of consumption, houses and furniture, and tools and machinery, etc. If it would not weary the House, I would like to read an early manifesto of theirs. They said:The smallholders, therefore, do not ask for any favours in the way of taxation. We do demand the earliest possible removal of all tariffs and taxes levied upon articles of consumption, such as food, clothes, furniture, buildings, stock, tools, machines, raw materials and the products of industry, as all these burdens (often increased by fiscal protection) are pressing with an unjust weight upon labour and the small home. In place of these taxes we demand, for the provision of revenue for public needs, the taxation of land value which is due to no person's individual labour, but arises from the growth and development of the community, reaches enormous figures, especially in the large towns, and is appropriated as an unearned gain by private speculators who have no title to it, instead of being paid into the public treasuries of the State and municipal authorities. The taxation of land value would not burden labour but, on the contrary, cheapen land and make it easier for every man to obtain his own home.One objection I have to the Bill is that it is not applicable to Scotland. Evidently Scotland is treated as a foreign, country in connection with the Bill; but as I have cited examples in other foreign countries, perhaps it would be in order for me now to make a reference to Scotland. Taxation of land goes very far back in Scotland. In 1281, Alexander III levied a general land tax to provide for the marriage of his daughter. His valuation of that year was known as the valuation according to the old extent. In the time of Robert Bruce, the first Parliament ever held in Scotland took place at Cambuskenneth Abbey in 1326. King Robert the Bruce, who was a very advanced man, proposed that all the nobles and the landholders should produce the titles by which they held their holdings. Some of them objected. They said that it was one thing to fight for Robert Bruce at Bannockburn, and another thing to produce their titles. We are told that some of them put their hands on their swords and said that it was by that title that they held their estates. Probably they never said a much truer thing. In reply to the 1624 hon. Member for Basingstoke I would say that we claim a much more ancient title on behalf of the people, a title as old as human right itself. He quite rightly spoke about the obligations of property and of people as a whole; but if people, and especially the poorest of the people, are to exercise their obligations, you must put them into a position in which they are able to do so, as well as to claim their rights.
As a further example of the toll that is levied by landed monopoly in this country I need hardly give to the House figures with regard to the railways, as they are well known. All the great railways had to pay many thousands of pounds per mile for the land through which they pass.
I would give one quotation from Henry George, who has already been referred to, and in which he said:Every blow of the hammer, every stroke of the pick, every thrust of the shuttle, every throb of the steam-engine pays its tribute to this monopoly.We see this process going on in regard to our primary necessities. Loch Katrine, which was referred to here last night, is the principle source of the water supply of Glasgow, which paid £79,000 to begin with to the Duke of Montrose for the lake. With consequential charges that figure became £108,000 for Loch Katrine itself. One might suppose that having bought a lake one had bought something of the shores of it, but the day came when it was announced to the Corporation that the landowners wanted to feu or build on the shore of the lake. We could never have buildings round the shores of a lake which was to give us our water supply; so, at that time—it was a species of blackmail—we paid £8,000 to the Duke of Montrose, £8,000 to the Earl of Ancaster and £1,000 to the Laird of Glengyle. It might be supposed that, having bought a lake, we had bought the water in it. By no means. We had to pay £10,000 for the water rights of Loch Katrine, for the gentle rain from Heaven falling upon the place beneath.
With regard to street improvements, I will give one illustration only, though I could give many. In the City of Glasgow there was an improvement, the whole story of which will be found in the "Glasgow Herald" of 10th October, 1926. At one of the busiest places in 1625 Glasgow, which some of my hon. Friends will know, at the corner of Union Street and Argyle Street, it was desired to widen the pavement just a little, and a strip of land was bought from Boots, the Cash Chemists. I do not know what they charge for their medicines, but they certainly charge for their land. You buy it by the square yard in the City of Glasgow. We bought 94 square yards at a cost of £25,000, which works out at £1,300,000 an acre. I am not blaming the Cash Chemists; I am not blaming the people who sold it. As a matter of fact, they were making only an inconsiderable profit on the price they had paid for it. But I would put this point in answer to what was suggested by the hon. Member for South East Essex, that it was not some enterprising individual who created the value of that land; and I would ask why Boots or any other owner should be able to charge that price—
§ Mr. Macquisten
You can destroy the whole business of a shop by taking away a bit of land, just as the Merchant of Venice was to be destroyed by taking a pound of flesh from his body.
§ Mr. Barr
The very opposite is true in that case. It has greatly improved their premises. The street previously was congested, but now it has been set back, and they have a fine view. I am sure that they were a consenting party, and that they have done much more business since that improvement was made. Why have they been able to do that? It is because of what the great City of Glasgow has done. There you have over a million people crowding together and requiring shops, warehouses, dwelling houses and so on, and these have been made possible by the tramway system, the water supply, and everything else that makes Glasgow a leading commercial city. That is my answer to the last speaker, who asked how all this was related to Socialism. By taking one penny in the pound of capital value for taxation or rating, you are only taking for the community as a whole the wealth that the community itself, and no individual, has created. We grant that this is a minor Measure, but when you reach the stage of taking all the community-created wealth for the community, then you have the Socialism which the hon. Member could not relate to what we are proposing.
§ Notice taken that 40 Members were not present; House counted, and 40 Members being present—
§ Mr. Barr
I am greatly indebted to the hon. Gentleman opposite. He has given me a much larger audience than I had before. I was speaking at the moment of street improvements, and of the vast toll that public authorities have to pay in making those improvements. I want to reinforce my argument by repeating the passage, which has often been quoted, from a speech of the Prime Minister himself. The Prime Meister has great experience of civic affairs, and in the course of a speech which he made at Manchester on 18th October, 1927, he said:When you want to cut a little hit 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 every yard you snatch for the need of the community.I could not quote a better expression of our case.
There is only one other subject to which I desire to refer, namely, the subject of housing. The hon. Member for South-East Essex sought to belittle the effect of these land charges on rent. I would answer him by referring to the Royal Commission of which I was a member, and which found cases in the City of Glasgow where, in single-apartment houses, the charge for the land itself, apart from all other things, was at the rate of £3 15s. per single-apartment house, and in one case it was as much as £5 16s. In the case of one large housing scheme in the City of Glasgow—the Lang-lands Road scheme—the Corporation paid at the rate of £968 per acre for the land, which was 579 years' purchase of the 33s. 9d. at which that land was entered on the valuation roll. If the scheme we propose were adopted, land would be forced into the market and would become cheaper, and housing would be facilitated.
Many authorities have been quoted to-day, and references have been given going back a considerable time, but this question of the common ownership of land goes back as far as human history itself. In ancient Israel, the land was portioned out on the principle that it was a great national asset, in which every family in the land had its possession. It was portioned out equitably. But, no matter how equitably it might have been 1627 portioned out, a man might fall into distress and be forced to part with his bit of land. In such a case, however, he could not part with it for all time; he could not sell the rights of his children and his children's children in it. He could only part with it up to a given year, which was called the year of jubilee, when the land once more reverted to the State, and, with the strong hand of the State, was redistributed equitably among all the families of Israel, the idea being that every new generation should start out with something of equal substance, with equal hope and with equal opportunity. Behind all that lies the principle which was finely expressed by the hon. Member for West Middlesbrough, that land is never to be counted like an ordinary article of commerce, of which a man can say, "That is mine; I made it with my own hands; I can do with it what I will". On the other hand, everyone was taught in Jewish history—hon Members can read it for themselves—that they were only here for a little while, that they were sojourners, mere passers through, never to count anything, and least of all the land, their own. They were taught that they had not a freehold but a usehold of the land. I do not think that in the land laws or in the literature of any country there is anything more beautiful than the passage in which that is expressed thus:The land shall not be sold for ever; for the land is Mine; for ye are strangers and sojourners with Me.
§ 2.16 p.m.
§ Mr. Hutchinson
The hon. Member for Coatbridge (Mr. Barr) has described with a great breadth of knowledge and experience, which hon. Members on all sides of the House will admire, what he conceives to be the disadvantages of the present methods of rating and taxing land. I was hoping that the hon. Member would proceed and indicate that part of the Bill which he considers gives effect to the principle for which he contended. I thought it was unfortunate that the hon. Member who moved the Second Reading curtailed his observations at the request of his friends before he had an opportunity of dealing with the Bill itself, and of indicating how this Bill gives effect to the principles for which hon. Members opposite are contending. I can find nothing in the Bill which will transfer the 1628 burden of local rating from the shoulders of the persons upon whom it now rests to the shoulders of anyone else.
Clause 4 deals with persons who are to be liable for rates. The effect of it is that in the case of an unoccupied hereditament rates shall be chargeable and recoverable in the same manner as rates leviable according to the rateable value. I cannot anywhere in the Bill find any provision in the case of an occupied hereditament which transfers the burden of rates away from the occupier. If hon. Members who support what has been described as the principle of the Bill are under the impression that the effect of the Bill is to shift the burden of rates, they will be very much disappointed with the result, if this Bill ever becomes law. The hon. Member for West Middlesbrough (Mr. K. Griffith) has said, "Well, it is a good thing that this Bill has been introduced, because it is going to give us an opportunity of discussing the principles of the rating of site values." I would like to offer one or two observations on the general principle. In the first place the Bill proposes to introduce in our rating system an entirely new feature, inasmuch as it is proposed to assess a value which is a purely notional value and is not something which exists in fact at all.
The principle of our rating law hitherto has been that the rate is levied upon some advantage which the occupier is actually enjoying, and that the rate represents, not some sort of penalty, but services which are provided by the rating authority to the hereditament. I know that hon. Members opposite cannot be expected to agree to that principle, and I shall not try to persuade them. But what I do desire to submit is this: What the Bill proposes to do is to assess a value which has never actually been realised. The House must not suppose that the reason why rating law in the past has always proceeded by assessing an existing value has been because that was in pursuance of some definite or designed scheme. The reason why rates have always been assessed upon realised value in the past is because that is the only practicable method of assessment. This novel principle which the Bill seeks to introduce, of assessing a value which does not exist and which indeed may never exist, is something which in practice is likely to prove beyond the wit and ability of man.
1629 The House will recollect that an attempt was made in a Budget introduced by the right hon. Member fog Carnarvon Boroughs (Mr. Lloyd George), when Chancellor of the Exchequer, to give effect to this principle of assessing the notional value of the land. What was the result? The Reversion Duty between the years 1910 and 1921 yielded £278,527. There was returned by the Inland Revenue Authorities, by reason of the fact that it had been charged in error, a sum of £233,847. The Increment Duty during the same period yielded a sum of £641,057, and there was returned a sum of £428,509. The point to which I call attention is that that sum was returned because it had been wrongly charged. The undeveloped Land Duty during the same period produced £412,906 and there was remitted a sum of £153,504 which had apparently been wrongly charged. The point I wish to make is this: The result of that experiment, of attempting to tax the unrealised value of land, shows very plainly that it is an impossible task to make a valuation upon that basis at all. In the case of each of those duties the result was that the assessments which had been made were not assessments which could be supported and the bulk of the duty had to be returned to the payers.
Let me give the House an illustration of the difficulties and of the injustices to which this method of attempting to value something which does not exist is going to give rise. Take the illustration given by the hon. Member who seconded the Bill. He drew attention to an area of land which he knows where the owner told him that some little time ago the land was worth £75 an acre, and that to-clay he had sold it for £400. The hon. Member described the advantages which were claimed by the owner for this land: namely, that it was ripe for development, that it was near a bus service and that the rates of the local authority were said to be low. Suppose that, under the proposals of the Bill, that land had been rated upon its site value, and that for some years after it had acquired a site value the owner of the land had been paying rates based on the undeveloped value of the land. No doubt, the factors upon which he insisted when he came to sell it—the bus service, the fact that it was ripe for development and the low local rates—were all factors which the rating authority would take into 1630 account when they came to assess the site value.
Now it is quite true that the community can give, but it is equally true that the community can take away. The omnibus services can be discontinued and the local authority may put up their rates. Again, the local authority may have to acquire adjoining land for the purpose of constructing, let us say, sewage works, which is not going to improve neighbouring land. They may acquire an adjoining site for erecting an electricity generating station; or it may be that they might acquire a large area in the vicinity of the land for the purpose of developing a housing estate, which will mean that the undeveloped area will only be considered in the market as an area for development of a different kind.
§ Mr. Hutchinson
Certainly. I am suggesting a number of things that might happen. What are you going to do in the case of a ratepayer who for some years has paid rates on land on the basis of site value, when the site value is reduced by something of the kind I have described? Is he to go back to the town hall and say: "Give me back the rates which I paid on my improved site value, the advantages of which I have never had and will never have now"? If the hon. Member will look in the Schedule he will find that it deliberately accepts this principle that an assessment may be based upon site value which will never be realised. Paragraph 5 (g), of the Schedule provides, in the proviso.that where by or in pursuance of any Act or by any agreement provision is made that a restriction on user shall become operative when any buildings, erections or works on or in a hereditament cease to be thereon or therein, the restriction shall not be deemed to have become operative at the date when the annual site value of the hereditament is ascertained for the purposes of this Act unless the buildings, erections or works have ceased to be thereon or therein.Assume a restriction against industrial user imposed under a town planning scheme. The restriction does not prevent the owner going on using his hereditament for industrial purposes until such time as he desires to cease to use it for that purpose. But when that time comes, all the buildings, perhaps, are taken down or user ceases, he cannot re-develop 1631 without the permission of the town planning authority. The effect of that will be that, during the period when the premises are being used for industrial purposes, he may pay for improved site value, although he never realises that improved site value; and when the time comes for user to cease the town planning restriction becomes operative, and he never realises the site value upon which he has been assessed.
Hon. Members on the other side who have supported this Bill have all supported it on the ground that they desire to transfer the burden of rating from the shoulders of the occupier to the shoulders of the owner of the land; but you will find that the Bill does not do it. What conclusion is the House to draw from that? The reason why this Bill does not make provision for shifting the burden of the rates from the occupier to the owner is, not because hon. Members have got any sympathy with the owner, but because they cannot, and nobody can, devise any practical method to deal with the principle they desire to put into effect. The hon. Member who proposed the Bill wants to do a certain thing, but cannot devise a Bill which will give effect to it. That is the real weakness of this Bill.
Let me deal with some of the consequences which are likely to follow from this Bill if it becomes law. Hon. Members on both sides will agree that the areas where you have got improving site values are the areas on the fringe of development. It is precisely in areas of that kind that you find a very large number of hereditaments occupied by small owner-occupiers or by small tenant-occupiers. I invite the House to consider the position of that very large class of person who will be affected by Clause 4. It very often happens that in an area of that sort the unimproved value of the site, that is to say, the site value, is much greater than the improved value, because you have upon the site small buildings which were put up before the neighbourhood changed its character. The one thing that the landlord desires to do, if he can, is to get possession and demolish the buildings, and to redevelop the site. There are many hereditaments on the outskirts of London, and no doubt on the outskirts of all large towns where that is the case, and I desire to draw the atten- 1632 tion of the House to one or two examples of the results of this Bill in such an area.
The effect of this Bill upon the occupier in a case of that sort is that he will find that the assessment, which will be greater than the assessment on the improved value, will be made upon the value of the site. That means that the burden of rates which he has to support will be increased, because the rateable value upon which they are levied is to be increased by the Bill. Let me give the House one or two instances of that particular type of property. Take the case of the shopkeeper who is occupying leasehold shop premises in a developing urban area. There are many of them in my constituency. He has acquired in those premises a goodwill which is taxed, but not rated. He cannot move from those premises and go elsewhere, although it often happens that the site value of the shop is much greater than the value of the improvements. If the landlord could get possession of the shop he would redevelop the site tomorrow, and he will redevelop it when the lease drops out.
§ Mr. Hutchinson
The right hon. and gallant Gentleman says that it is a good thing, too, but I invite him to consider the position of the shopkeeper during the remainder of his lease? He is going to find his assessment put up beyond the point at which it stands at present. The burden of rates upon the small suburban shopkeeper is to-day very great indeed. Under this Bill he will be faced with the alternative either that he must close down his business or that he must pay higher rates. Take another class of occupier—the occupier of the leasehold dwelling-house. He may find himself in precisely the same position. The neighbourhood has changed, perhaps an omnibus service has come into the neighbourhood or a tube station has been opened, and the rating authorities say that the value of the site is improving, as it may very well improve, and often does improve beyond the value of the buildings. What is his alternative to be? He has either to pay higher rates, because the new assessment is to include assessment upon the improved site value, or he has to leave his home where he has been living for many years and find another home somewhere else.
1633 I will give one more illustration of the type of occupier who will be penalised by this Bill, Take the position of the occupier of a dwelling-house which is still controlled under the Rent Restrictions Acts. It is the fact—and I do not think that hon. Members opposite will dispute it—that in many cases, where you have working class dwelling-houses controlled under the Rent Restrictions Acts, the site value far exceeds the value of the development, because the land is worth so much more than the buildings which are at present upon it. That happens over and over again. In my experience, I can think of at least two or three illustrations where that has actually happened. What is the position of the tenant going to be? It may be that he is not a rated occupier, but in that class of property, under the Rent Restrictions Acts, the tenant is nevertheless liable for the increase in the rates which the landlord has to pay.
The effect of this Bill, if it is ever passed into law, will be to make an addition to the rent of every controlled tenant of the rates calculated on the site value of the hereditament. I have endeavoured to draw the attention of the House to the great hardship which will be caused to tenant-occupiers in the improving urban districts, but there is another class of occupier in whom I am very much interested—the owner occupier, who is purchasing a small house under a mortgage. Whether the increased rate that arises from site value is in the end to be paid by the landlord or the tenant occupier, in the case of the owner occupier, there is no doubt about his position, where his site value has improved, as it has in many of the suburban districts around London where changes are going on very rapidly, and site value is bound to improve; for example, it may be that the neighbourhood has become suitable for shops. The owner occupier has chosen his house as his home, and does not want to leave it and find another home somewhere else. The only alternative under this Bill would be that he would have to pay increased rates.
When one finds that a Measure has been introduced into this House which does such an injustice as this to a very large section of the population, can the House say that such a Measure should not receive further consideration? If it is not possible to give expression to the principles of the hon. Members who 1634 support this Bill without doing hardship of this kind to a class of occupiers who are already over-burdened by rates, surely the whole of this experiment with our rating laws ought to be dropped. The hon. Member who proposed the Bill quoted a well known passage from Carlyle:On with it. Glorious bankruptcy. That will teach statesmen wisdom if nothing else.If this Bill ever becomes law, it may mean the bankruptcy of hundreds of small owner-occupiers and misfortune to hundreds and hundreds of small tenant-occupiers of shops and dwelling houses. That is where the bankrupty is coming. I ask the House to reject this Bill, which will be a very great hardship to a very large, widespread and deserving section of the community.
§ 2.45 p.m.
§ Mr. Silverman
The hon. Member who has just addressed the House will perhaps forgive me if I do not attempt, in the short time I have at my disposal, to deal with all the points that he has raised. I would suggest to him two things. One is that if he reads the Bill a little more carefully, and reads it on its own merits, divorced from any preconceived notions, a great many of his difficulties will disappear. The second thing is that those difficulties which do not disappear are eminently fitted to be debated on the Committee stage, to which I hope this Bill will attain, rather than in a Second Reading debate. When I listened to the hon. Member's speech it came as a shock to me that he should represent the constituency of Ilford, because I have in my hands particulars of a case taken from his own constituency. I assume that North Ilford is included in his constituency. It is a recent instance, and I quote the facts as given in the "Evening Standard," which is not a newspaper usually favourable to this side of the House. It appeared on 19th August of this year. There is a word in the headlines that I hope will attract the attention of the hon. Member who moved the rejection of the Bill. He talked about what might happen in Essex under this Bill. The headlines of the article in question are,The Tube Brings Land Boom to Essex.That is a streamer headline across the whole of the page. The second headline, in big block letters, says,£900 Bungalow Built in 1923 sold for £10,500.1635 That is in Ilford, in Essex. Another headline wasDemand for shops sets prices soaring.What causes the demand for shops and sends prices soaring? Only that there are more demands for shops than there are sites to accommodate the shops. Do people make demands for more shops in the wilderness, or do they want to put up a greater number of shops in those places where the community is increasing? Here is a bungalow built 14 years ago for £900 being sold for £10,500. Is there any escape from the inference that that increase in value is purely and entirely a communal value which ought to be a communal asset? I know that there are hon. Members who are more adept in Parliamentary debate than I am, and that if there were time a whole group of them would come forward with all sorts of doubts, ifs, buts and hesitations.
§ Mr. Silverman
I am making assertions, and I invite the House to say whether the inference that I am making is fair, namely, that the increase in value is a communally-created assets which our system allows to remain in individual hands.
§ Mr. Hutchinson
Will the hon. Member show me any passage in this Bill that deals with that problem?
§ Mr. Silverman
I do not want to take up too much time. The hon. Member will learn how I propose to deal with the case if he will not make incursions into that time. That is not a communally-created value; it is mine. I understood that the hon. Member was not agreeing that the difference between the £900 and the £10,500 was a communally-created value which the community ought to own. If we agree that it is a communally-created value and the hon. Member's only difficulty is that the Bill does not take it for the community, then we can put our heads together and devise a better Bill that will do what he and I apparently want to be done. If, however, he does want that communally-created value to remain in individual hands, he must not complain about the Bill because it does not take it away.
1636 My point is that this procedure is going on everywhere in the county where you have a large community extending its boundaries. I do not represent in this House any part of the City of Liverpool but I have lived most of my life in Liverpool and am a Member of the City Council and of its estate committee. In Liverpool the same thing obtains. Only a few years ago the Corporation found it necessary to repossess itself of a little spot of land in the heart of the City, which the Corporation had parted with some time before for quite a moderate sum. When the Corporation wanted to buy it back Liverpool had to pay L400 a square yard for that piece of land. That plot has become famous in local history as "golden corner."
On the outskirts of Liverpool, what do we find? We find a developing community developing land, most of it in the possession of some of the biggest landed proprietors in this country. Every now and again those landowners make a proposal to the estate committee. They say; "We will make you a present. We will give you a bit of our land. We do not want any money for it. We impose no conditions. All that we desire is that you shall build a road there. In return for building the road there we will convey to you free the land required to build the road." Build a road in an undeveloped area on those conditions. One does not need to look that gift-horse in the mouth. The teeth are veritably dropping from it. They say, in effect: "Build the road and we will give you the land gladly, and then we shall reap the benefit of the enormously increased value of the land that we still retain on either side of the land we gave to you in order to build the road."
I do not want to deal with these matters in great detail, because there is not time, but let us see the Bill in its proper association. Complaint is made that the Bill does not go far enough; that it is only a small thing. We have been told that it is only adoptive and that there will be chaos because some local authorities will adopt it, and others will not. I understand, and I have authority for the statement, that no fewer than 600 local authorities have petitioned His Majesty's Government from time to time for just such powers as we want to give them in this Bill. Is anyone complaining that we are not forcing this down the throats of the local authorities who do not 1637 want it? Is that the complaint against the Bill? Would there not have been a greater complaint if we had chosen to force it down the throats of the local authorities who do not want it? If it be true that 600 of them want it and that the others do not, what is the objection in principle to allowing these 600 to have the powers they wish to have? The Mover of the Amendment said that we are taking away from Parliament functions what rightly belong to Parliament. Since when has the question of local rates been a function of Parliament? Never in the history of this country. They have always been administered by the local authorities on general principles, and if we choose to give them the power they want to have under the Bill, what is the complaint?
What are the other complaints? One is that it is only gradual, that in the first five years only a quarter is to go on the annual site value, and after that another quarter. Some hon. Members have complained that this is too little, and others that: there is no guarantee that at the end of 10 years it will not be more. Perhaps we have done the wiser thing, that in the case of a new principle it shall be introduced gradually, and operated by people who believe in it. We believe that the results of the experiment will be of such advantage to those who adopt it that those who have not been able to see the advantage by the light of reason will be compelled to do so by the force of example. That is why we do it gradually, make it permissive and why a proportion of the tax is graduated over a period. The hon. Member who spoke last said that he did not understand how improved site values came in. The answer is that they do not. The hon. Member has not read the Bill. There is nothing in it about improved site values, nor about transferring the onus from the occupier to the owner.
On the contrary, the purpose of the Bill is to retain the present rating principle of charging the rate on whoever is in beneficial occupation of the land. That is the present principle. We propose to preserve it, and to charge the rate upon whoever is in enjoyment of the beneficial value of the land. But we say that we will not charge you upon that portion of the beneficial value of the land which you yourself have created; the existing rating system does that, and we propose to relieve you from it. What we propose 1638 to charge you upon is that portion of the beneficial value of the land which is created by the community and not by you but which you enjoy, and we say that this is a fairer and more equitable system than to say that you shall make a bigger contribution to local rates because you have a bigger family and need a bigger house, or because you are enterprising and have added to the value of your land, or because you are go-ahead and want to create some value in the community. For all these the present system imposes a penalty from which we propose to relieve you. In conclusion let me read some words.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 value passed a Second Reading in this House. Six hundred municipalities have petitioned in favour of it, and I suggest that the Government have no right to drop this tax."—[OFFICIAL REPORT, 5th June, 1934; col. 873, Vol. 290.]I see that the Parliamentary Secretary recognises the quotation. He proposes to indicate the views of the Government on this Measure and he it was who used the words which I have quoted from the OFFICIAL REPORT of the proceedings of this House. I quite recognise that he was talking about a somewhat different thing, but it was something which in itself was a bigger and a more fundamental proposal than that contained in this Bill. This is a simple and modest Bill. It does not force anything upon anybody. It does not do anything in a hurry. It says, let those who want to do it do it, and do it gradually, without upsetting too suddenly the existing system. The Parliamentary Secretary was in favour of the more fundamental, deeper and bigger thing, and vigorously opposed the dropping of the tax. I am certain he will not have a single word to say which will dash the hopes of the promoters of this Measure and that, at long last, with the hon. Members assistance and backing in the position of greater influence which he now occupies, the Bill will get a Second Reading and facilities in Committee, and that we shall bring to an end the hopelessly chaotic and morally unjust rating system which has kept back development in this country for so long.
§ The Parliamentary Secretary to the Ministry of Health (Mr. Bernays)
It will be convenient, I think, if I intervene for a few minutes to indicate the attitude of the Government on this Measure. The hon. Member for Nelson and Come (Mr. Silverman) has asked us to consider the Bill in the right perspective. What we have to do is to consider the Bill in its existing shape, and I do not remember a Debate in this House where the actual Bill under discussion has been less in evidence than it has been this afternoon. I agree with the hon. Member for Burslem (Mr MacLaren) as to the importance of the issue he has raised. In the circumstances of the present day our system of local taxation clearly merits careful consideration, and no one will complain of the time which has been spent on the subject this afternoon. The hon. Member has never made any secret of his views on this question and I am sure we all congratulate him upon his luck in the Ballot and also on his luck that when he made that grand quotation from the speech of the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George) that right hon. Gentleman was here to listen to it.
The hon. Member will not claim that the solution he has in mind is in any way novel. Everyone recollects that the proposals for land valuation and taxation were the central feature of the Budgets of 1909 and 1931, and in both cases there was a suggestion that the system proposed should be made available, in part at least, for local purposes. Apart from these legislative attempts, the proposals have been thoroughly reviewed and examined by a Royal Commission and by a Departmental Committee. In both cases the majority view was against the proposals. It might be of interest and might assist the House in making up its mind on this Bill if I summarised the reasons for which the majority came to that conclusion. They considered that the claim to absolute justice made on behalf of the system could not be substantiated.
§ Mr. Bernays
The Report was made in 1914. They did not consider that there would be fewer inequalities under the land value system than under the present 1640 system. They argued that, as rates are an annual impost to meet current expenditure and have to be paid out of the annual income of the contributor, it was reasonable that they should depend upon an annual value rather than upon a capital value. Any change, they argued, would lead to some shifting of the burden, but in their view there was no reason to suppose that that would be in the direction of placing the burden on shoulders more able to bear it than under the present system. They argued further that the partial introduction of a new system would involve the maintenance of two systems of valuation, namely, that of the annual letting value and that of the site value, and that that would mean an increase in the cost of the actual valuation, as well as that of making and hearing objections. There were, of course, powerful arguments on the other side. The whole subject presents an opportunity for a grand Debate, and the question is almost infinitely arguable.
I am interested to find that apparently I have a past upon this issue. My hon. Friend the Member for West Middlesbrough (Mr. Griffith) has elevated me this afternoon, for the first time in my life, to the dignity of a politician whose speeches can be quoted against him. I was sure that was going to happen when I saw my hon. Friend the Member for Dundee (Mr. Foot) come into the House with a volume of the OFFICIAL REPORT in his hand, when I saw it being handed along that bench and when I saw, as it went along, beaming smiles, like sunshine as it spreads along an autumn cornfield—before the corn is cut. When I was getting a little sustenance, and saw the name of my hon. Friend on the indicator, I rushed into the Chamber, but apparently I was a little too late. However, what is it all about? I understand that what the hon. Member quoted was my peroration, but I am interested in the remarks made by the right hon. and gallant Member for Rye (Sir G. Courthope), following on my peroration. I apologise for quoting those remarks, for I am a modest man, but I have to quote them in order to develop my argument. The right hon. and gallant Member for Rye said: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 1641 increment values. It is not."—[OFFICIAL, REPORT, 5th June, 1934; col. 875, Vol. 290.]My speech was upon increment values; but this Bill has nothing whatever to do with increment values. I was very glad to hear the hon. Member for Nelson and Collie quote my remarks again, because they sound very much better, three years afterwards, out of the mouth of the hon. Member for Nelson and Colne, than when I made them myself. I stand by every word in that speech. I have nothing to apologise for, and nothing to withdraw. That is more than hon. Gentlemen on that Bench can say about their speeches in 1934. Does the hon. Member for West Middlesbrough challenge me on that?
§ Mr. Bernays
I anticipated a lapse of memory on the part of the hon. Gentleman. My reference is to a certain vote which hon. Members on that Bench gave on 30th July, 1934, in support. of the Labour party's Vote of Censure on the Government for their first tentative proposals for rearmament, a vote from which they ran away afterwards.
§ Mr. Bernays
The Prime Minister of the day came to this House and asked for a vote of credit for armaments and the party opposite refused to give it, and whatever arguments may be put one way or the other those are the plain facts of the situation. I was led into that argument by the point which hon. Members attempted to make about my inconsistency. Let me now come back to the speech of the hon. Member for Burslem (Mr. MacLaren). He made many amusing quotations from a speech of the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George). That speech was made, I think in Leeds, about 1911. Since then, conditions have changed. Something has been done to meet some of the more cogent criticisms of the land taxers, and changing circumstances have altered the force of other of their arguments. Take the objection against the present rating system, that it penalises improvements. The hon. Member instanced the case of the man who 1642 built a workshop. He said that in consequence of that improvement, the man in that case would have to pay larger rates. But the workshop means larger profits and those profits must increase the ability to pay. Even setting aside that argument, conditions have altered since 1911 to this extent, that productive industry has now the benefit of derating. The hon. Member for Burslem began by describing the Derating Act as an iniquitous Measure and there were cheers from hon. Members opposite at that description. Then the hon. Member apparently forgot what he had said and went on to state that the principle of the Bill was conceded by the Derating Act. I do not know how those two arguments can be squared.
§ Mr. MacLaren
The point was that the Government conceded then, that industry was suffering from the dead-weight of rates, and conceded derating, but the viciousness of the derating machinery was that it derated the properties but allowed the landowners, the rent-receivers, to stand free and reap the benefit when the leases fell in.
§ Mr. Bernays
The hon. Member will not deny that there has been some relief to productive industry by the Derating Act and that it hardly deserves the adjective of "iniquitous" which he has applied to it. The argument used to-day which most appealed to me, was the argument that local public expenditure is partly devoted to objects which have the result of increasing the value of land in the locality. That is true of some types of local expenditure, but there again, there has been some change in the last quarter of a century. Legislation, in that time, has gone some way to secure contributions from the landowner who benefit. Let me give one or two instances of that. If betterment can be shown to be due to a town-planning scheme, 75 per cent. of it can be recovered by the local authority under the Town and Country Planning Act. Somewhat similar provisions have been included in local improvements Acts, and it is quite common now in general legislation to provide that if a person claims compensation for damage done by work under the Act, any enhancement of the value of the land following on the Act belonging to the claimant is to be set off against the compensation. I think that is true of the 1643 Development and Road Improvement Funds Act, 1909, and of the Road Improvement Act, 1925, and the principle now applies also to works of public health under the Public Health Acts.
The hon. Member for Burslem rightly laid stress on the importance of roads in connection with land values, and, of course, that is a most common result, of the value of land being increased by the making of a road, but there again the position has been somewhat altered by recent legislation. Under the Restriction of Ribbon Development Act, 1935, a landowner in future may not obtain any increase in value at all because his access to the road may be denied him by the highway authority. I think that is a development of the situation which one ought to take into account. I put these suggestions forward, not as unanswerable arguments, but as facts which should be taken into account when hon. Members come to make up their minds as to how they should vote on this Bill.
In conclusion, I would come for a minute or two to the actual details of the Bill. I apologise for doing so. I do not think the hon. Member for Burslem, in his admirable speech, which lasted 55 minutes and which was not, in my view, a minute too long, ever actually mentioned the Bill itself.
§ Mr. MacLaren
As it was, I had to apologise to the House for speaking so long; otherwise I could have gone on for another hour.
§ Mr. Bernays
I note what the hon. Member says. The details of the Bill I cannot deal with in the compass of what is traditionally a short speech from this Bench on a private Members' day, but I would mention two objections, with one that was driven home by my hon. Friend the Member for South-East Essex (Mr. Raikes), in his admirable speech. The provisions of Clause 7, I understand, would not apply universally, but would be adopted at the discretion of a rating authority. Surely such a proposal would put all property owning and building development into a great state of uncertainty, with serious effects on the building industry and thence on the unemployment problem. It may be that the feature of adoption was essential to a private Member introducing a Bill of 1644 this kind—I quite understand that—but that only reinforces the Government's case that this subject is far too vast to be dealt with by private Members' legislation, and in any case local option in the matter of rates is surely a very difficult principle to defend. If you are putting in one area two sets of rates upon the sites of houses, you might well have a most undesirable drift of population from one area to another.
I see also in Clause 9, Sub-section (4), that railways are to be exempted. I can understand the difficulties with which the promoters were faced in devising machinery for ascertaining the site value of railways, but the exemption of railways is surely a serious flaw in this scheme. Railway stations are built upon some of the most valuable land in the country, and, with their running lines, they constitute a most valuable hereditament. That is true of practically every rating area in the country. Since under the Bill site value rates may amount to as much as 25 per cent. of the total rates during the first quinquennium, 50 per cent. in the second, and 100 per cent. thereafter, the Bill is, in effect, a measure for the total exemption of railways from rates. Railway shareholders will heartily support such a proposal, but I doubt whether it will have the same enthusiastic support from other members of the community. I note with interest that this exemption of railways from rating is accompanied by a return of agricultural land to rating. My hon. Friend the Member for Ilford (Mr. Hutchinson) in a most eloquent speech made many vital criticisms of this Bill, and I shall be very interested to hear, as I am sure the House will be, the right hon. and gallant Gentleman the Member for Newcastle-under-Lyme (Colonel Wedgwood) answer them. For myself and for the Government I will only say that, for the reasons I have given, I hope the House will deny a Second reading to this Bill in its present shape.
§ 3.22 p.m.
§ Colonel Wedgwood
I hope it will not. It is rather unkind of the Government to put up the hon. Member to say that. Before he opposes this Measure the next time I hope he will learn that if a man in this House cannot change his mind he has a tied house, and that the more people change their minds in this House from 1645 one year to another the better it will be for democracy throughout the world. It is no slur upon a man that he has once said a sensible thing, and it should not be brought up against him when he is less sensible. Rather should he be commended for having given way to persuasions that are too strong for him. This Bill has been laughed at to-day, in default of any other argument, because it has not been explained to the House in detail. If ever there were a Bill introduced on a Friday afternoon that need not have been explained in detail, surely it is this one. There have been three occasions on which I have introduced the same Bill under the Ten Minutes Rule. It has been introduced roughly every year, either under the Ten Minutes Rule or on other occasions since I have been in the House.
This Bill is an old-stager, well understood and appreciated from every point of view, even from the point of view of the landlord. I would like to call the attention of the House to an earlier occasion on which it was introduced. In 1905 we had the House of Commons full of all the patriotic spirit of Toryism. The Liberals then constituted a small party. Into that House came this old-stager, explained in full. That Bill differed from this one only in one particular; instead of being optional it was compulsory. It dealt only with municipalities, however. In the 32 years which have elapsed since then the advocates of this Measure have seen the advantage of making it optional. The chief advantage of that is that it will transfer most of the speeches, such as we have heard this afternoon, to local council chambers, where they can be, more properly made. This proposal, before it is adopted anywhere will be debated thoroughly with local knowledge in each municipal council, n each county council, and if by chance any of those councils are free enough in their ideas to adopt it, we shall then have an example by which other towns and counties can judge whether this reform is a maker of prosperity or whether it is a perpetrator of the grossest injustice.
In all these questions of local rating a pound of practice is worth a ton of theory, and therefore we make this an optional Bill. The London County Council will take it on, and I imagine that Liverpool will take it on. Liverpool has a strong Conservative city council, 1646 and yet I think there is a chance there. I notice that the Bill of 1905 was seconded by a Conservative Member for Liverpool, and that one of the tellers for it was also a Conservative Member for Liverpool. That Bill was carried by Conservative Members voting for what they believed would be in the interests of their localities. That Bill was carried then by 202 votes to 112 in a Conservative House, and I do think we might carry this one this afternoon. After all this is something which has been discussed ad nauseam. There are two overwhelming arguments in its favour—a change such as we are proposing would be both expedient and just, and if we did not believe it to be just we should not support it because it is expedient. I put justice first.
The arguments in favour of this Bill have been explained for 40 years, and even for longer than that, because the first Royal Commission on the subject sat in 1885. The Parliamentary Secretary quoted the one Commission in whose report he could find certain passages against this proposal. He did not quote the whole of that Report, which in most parts is overwhelmingly in favour of it.
§ Colonel Wedgwood
I think there were a majority and a minority Report. He was quite right to quote those sections in the majority Report which could be used against the Bill, but why was it that in 1905 this Measure was supported in a Conservative House of Commons? In the first place, because it was obviously expedient to cease to penalise by heavy taxation—and rates are a heavy local tax—the houses and the factories of this country. How was it that originally we got cheap and plentiful food in this country? By taking off the taxes on food. How did we make this a great free producing country? By taking the taxes off production. Now we can make housing cheap and plentiful by taking off this overwhelming taxation from houses, because it is a crushing taxation, amounting very often to 50 per cent. of the cost of production of the house.
At the same time as you are operating your scheme in favour of the better housing of the working class—although I do not know why we should limit better housing to the working class—you have a 1647 tax which is penalising to as much as, and sometimes more than, 50 per cent. of the cost of every house you build. That is obviously a tax which you should remove if you want cheap and plentiful houses. Even from the point of view of expediency the removal of the tax would be a way of getting your houses without subsidy. The subsidy goes into the pockets of the landlord. By the natural effect of economic laws, take off your tax, and you get things cheap.
We are approaching a possible recession in trade, yet here is a system of local taxation which encourages unemployment. Every time a shopkeeper, driven, I admit, by the desire to make better profits, puts a decent front to his shop, improving the look of the street and benefiting the whole community by making a better shopping centre, you would think that his neighbours would stand him at least a drink, if not a dinner. Instead of that, the only people who call upon him are the assessors. They say: "You villain, you have been improving your property again. I saw you. You have been employing labour in improving this town." The shopkeeper is fined for doing it by his assessment being pushed up. Any sort of improvement, whether it be urban or agricultural, results in increased taxation, punishment and penalty for the man who improves the property. It should be obvious to us all that anything which tends to encourage people to improve their property benefits the whole community, not only in the creation of the improvement but in the employment of people in useful work instead of in useless work, or being on the dole.
§ Colonel Wedgwood
We shall have to improve the Income Tax as well. If you improve your income, the Income Tax goes up too. It should be apparent to every hon. Member that by hampering the production of wealth the present rating system hampers employment. Therefore if we can make a change and raise the same amount of money by a system which does not penalise wealth, so much the better, and that is what is proposed in the Bill. When the period has run through and all the rates are on land values, the town which adopts this plan 1648 will be able to develop houses, factories and street improvements without penalising individual citizens who make improvements. The examples of Sydney and Melbourne have been already cited. Sydney adopted this system in 1895 and has now had about 40 years' experience. It raises every penny of taxation for every purpose, including water supply, on the undeveloped site value. The result is that Sydney's population has doubled since the change was made and now is about 1,500,000. The area of the city is the size of London.
In Melbourne, although you have the development of an ideal system of individual ownership, the penalising economic effects of this tax upon built-up land have held up development. Melbourne, 40 years ago, was very nearly as large as Sydney. It has not adopted this plan, but continues to raise its local taxation, not, as we do here, upon the annual value, but upon the capital value of the land and the buildings together; and, while Melbourne has developed, the increase in its size and prosperity has been nothing like that of Sydney. In New Zealand, too, the system is similar to that which we propose. There is optional rating of land values, and in two cities the rating is upon land values, while in the other two it is on the annual system such as we have here. There the question whether they shall rate on land values is not decided in the Council, but by a plebiscite in the district; but I think hon. Members opposite will agree with me that it is better that that sort of thing should be explained and thrashed out in the Council than that it should be decided by a plebiscite. The remarkable thing is, however, that there are a great many areas, both rural and urban, which have not adopted the land value system of rating, but which still continue in the old way—
§ Colonel Wedgwood
These arguments from the Dominions never appeal to hon. Members opposite. None of the districts which have adopted land value rating have gone back to the old system. In South Africa, which I know best, the rates are levied, in some cases entirely on land values, as in Johannesburg and Bloemfontein, and in others on the capital value 1649 of the land and buildings separately, as in the case of my old town of Ermelo. In other cases, like Cape Town and Durban, the system is the same as we have here. There, too, the system is optional, and can be adopted by those towns that desire it. I may add that the system in Johannesburg was adopted in Lord Milner's time as his idea of the best method of raising local revenue in that town. I need not refer to Canada and all the rest, but this system is well known throughout the Dominions. In most cases it is optional in the locality.
I have shown, I hope, that it is expedient; I have still to show that it is just. There is no doubt that, if you levy a rate on the site value, not only will it relieve the hereditaments which are improved above the average, but it will fall very severely indeed on the owner of unbuilt-on land and land that is improved far below the average. In this Bill we are trying to make it easier, to make the change lighter, by spreading it over 15 or 20 years, but, of course, you cannot make an omelette without breaking eggs, and you cannot get the benefit of free development unless you raise the money in another way.
The chief complaint of hon. Members opposite is, naturally, that we are not raising it in another way from the whole community, but are raising it in a special way from the owners of land values. If we had proposed to raise it from the whole community, there would have been no objection anywhere, but there is objection because we are raising it from the owners of land values. We are doing that because we believe that the value of land everywhere is measured by the benefit done to the owner of that land by the community. The mere presence of the community creates a value. If you opened a new Tube and no one went to live near the end of it, there would be no rise in values. It is the presence and the needs of the community that send up values. If the population of Ilford instead of doubling every five years was halved, the land values would fall one-half. If the population of this country dwindled to 5,000,000 the land value would be one-seventh only of what it is to-day. The value of the land is the creation of the community, and the maintenance of that value depends upon the continued occupation and dwelling of the community in a neighbourhood. You could not have a 1650 better measure of the contribution a man should make to the community than to take as the standard the benefits that the owner of that spot gets from the community.
§ Mr. Hutchinson
How does the Bill propose to obtain anything from the owner of occupied hereditaments?
§ Colonel Wedgwood
Certainly it does propose to do so. The owner-occupier pays a rate as now. We are not making any change in the case of the present occupied dwelling. The occupier pays; the owner-occupier pays; the tenant pays. But take the case of the owner-occupier first. Every owner-occupier, such as was described by the hon. Member for Ilford (Mr. Hutchinson), who owns and occupies very poor shop premises on a very valuable site will pay more than he pays now when the change is complete; but the ordinary householder whose land value is very small and whose improvement is considerable will find himself paying less when the change is complete. In the case of the £900 house on a plot worth £500, the proportion borne by improvement of land value is very great. Therefore the relief he will get on the improvement will be more than the new rate levied upon him in respect of the land value. Is that clear?
§ Mr. Hutchinson
I was inviting the right hon. and gallant Gentleman to say how this Bill seeks to recover anything from any owner who is not an occupier. I appreciate the position of the owner-occupier.
§ Colonel Wedgwood
The tenant of a house on an annual lease pays the rates at the present time. Where that house is worth a considerable amount and the land value is small he will benefit by the remission of the rates from the house and by the placing of the rates on the land value. Where any property is improved above the average the tenant-occupier will pay less in future under this change than before. Take the case of the tenant of bad premises on a valuable site. That man will find himself paying more and he will ask, "Is it worth it?" In the interests of the community we want that valuable site used for the purpose for which it is most needed, not for an old tobacco shop, say, but for five-storey premises. It is in the interests of the community that people 1651 who occupy a shack on a site needed for very valuable buildings should be induced to clear out and let someone who wants to make better use of the land make use of it. There, too, from the point of view of expediency I have nothing to say against the Bill.
Take the case of a man who has a 21 years lease. I refer to the case of a man who has only an old shack on a valuable site. If it is improved below the average, he will not have anything to pay; but if it is improved above the average, he will have to pay more. Under the Bill, it may be 20 years before the complete change is made. The complainants will be few and hard cases will be a minority, but there is no way out for protecting that man who has a lease, and he has got to pay it, but it does not affect in the least an ordinary man on an annual lease. The man on an annual lease has a lesser burden under the change. If his rates are less, he may very well be asked to pay more—if the landlord can screw more rent on the house, which is decontrolled, he may well have to pay more rent because he pays less rates. He is still at the mercy of the landlord to that extent. But if he is asked to pay more in rates under the change than he pays at present, will not the landlord be at his mercy, and not he at the mercy of the landlord?
Under this scheme you are making it unprofitable and unseasonable to hold up land for building, and you are taxing land and making less land idle; and, as the number of houses increases, owing to taxing them and stopping the holding up that goes on at present, you will have more houses on the market, and the landlords will not be able to get such high rents for the houses which are in the market at the present time. The hon. Member for South-East Essex (Mr. Raikes) pointed out under this Bill empty houses would be rated. What would be the effect of rating empty houses? Obviously they would not remain empty.
§ Mr. Macquisten
I know of cases where people have taken the roofs off empty houses to avoid paying rates. They have destroyed hundreds of houses.
§ Colonel Wedgwood
Empty houses on which every six months the landlord will 1652 have to pay will not tend to remain empty. The value of house property will come down, the opportunities of living in a decent house at a low rent will go up. Neither the occupier nor anyone else can have reason to complain of this, except the owners of unbuilt-on land outside the surroundings of the towns. How far are we justified in levying taxation today? At present, every piece of idle building land which is ripe for use, every piece of under-used land, agricultural as well as urban, every piece of land which is not being used for the purpose it is best suited for, is creating unemployment. Every time hon. Members see a notice "Building land for sale" I wish they could see not the land lying idle, but the men in the building trade standing idle. We say it is not in the public interest that a man should have the power of creating unemployment, and be protected by the State in doing so. The right of depriving men of their right to work is an immoral privilege, and by making this change, by putting for the first time, the burdens of the rates on the owners of land held out of the market, we are not doing that which is unjust, but we are providing the first instalment of real justice. We are making it no longer profitable. We are exempting from taxation no longer those people who create a shortage in houses, in labour and in the opportunities to live.
Behind this Bill is not only expediency and justice, but a profound moral principle that we have no right to protect the privilege which creates poverty. An hon. Member opposite gave details of the effects of this Measure as far as railways are concerned, and I make him a present of his argument in regard to land values, but we are right in stopping the privilege to create unemployment. What is the use of putting a rate of this sort upon railway companies? They will not employ more people because they are paying the rate. They will not reduce their tariffs, their freight charges or passenger fares if you put this rate upon them, but if you put it upon undeveloped land, landlords will sell us their land cheaper, and it will enable us to have houses and factories. The railways will not do anything. Goodness only knows that at the present time they manage to pass all the rates on to the community in every case.
§ Sir Robert Tasker
Does the right hon. and gallant Gentleman want to put more burdens upon the railways?
§ Colonel Wedgwood
I have no desire to put any more burdens upon the railway companies. I am a shareholder myself. The best men in this House have stood up for the railway companies, and why should we not? There is one point with which I have not dealt but which hon. Members opposite have raised, and that is the question of agricultural land. This being an optional Bill, I do not imagine that county councils will adopt it everywhere, though some of them may do so. How will that effect the ordinary person of the countryside? Hon. Members should know by this time perfectly well, if they go into their constituencies at all, that the chief complaint against the De-rating Act is that cottagers and small people are now paying much heavier rates and the farmers are paying much less. Farmers' houses are rated at a lower rental than that which some of the cottagers have to pay. That Act has given rise to the injustice of putting these heavy rates upon the village labourer and small shopkeeper in the countryside. Their rates have gone up, and the rates of others have gone down. We ought to rectify that to some slight extent by reducing the present rates of these people, who, we all agree, are paying too much. We know perfectly well that the charge upon site value, whoever may pay it on the first occasion, must rest ultimately upon the landowner. Therefore, even in the country areas we are acting expediently in relieving the burden upon the wage-earners and placing some portion of it upon those people who, though they are mere agricultural landowners, possess land which is being tilled and cultivated through the expediency of the rates. I do not believe that there is an hon. Member in this House who would oppose me on the main principle of this Bill.
§ Colonel Wedgwood
I recollect vividly going to a Privy Council meeting, and the only two Privy Councillors who went down on that occasion were myself and Lord Macmillan. Lord Macmillan, always desiring to pick other people's brains, said, unwarily, before we had got out 1654 of London: "I wish you would explain to me the taxation of land values." The journey took about an hour, and by the end of that time the poor man was completely converted, but he said: "It will never come to pass. Vested interests are too strong for you. There are too many people who own land and have the privilege of creating unemployment." I do not believe that in the long run the people of this country or of any country are influenced in the very least by what they possess.
There has never been a time when I have been more interested in land values than I am now. We are not influenced by what we have got or by what our families have got. We are influenced by the question of what is just and what is expedient for increasing the prosperity of Britain and its people. It is on these grounds that I appeal to the House to give the Bill a Second Reading. This same Bill was carried 35 years ago in a Tory House, as Tory as this is now, because they knew that it was true. One hundred and twelve members voted against the Bill, but if one looks at their record one finds that about three-fourths of them lost their seats at the next General Election. We are not so close to a General Election this time, but we shall bring up this question year after year until the Opposition sinks to 112 and those 112 lose their seats.
§ Mr. MacLaren rose in his place, and claimed to move," That the Question be now put," but Mr. SPEAKER withheld his assent, and declined then to put that Question.
§ 3.58 p.m.
§ Mr. Macquisten
The argument was used by the hon. Member for Coatbridge (Mr. Barr) and the right hon. and gallant Member who has just spoken, that all value is created by the community. That is true. All value is created by the community. I remember the Duke of Atholl once asking the late Alexander Tire what was the value of a Lord Advocate on the top of a Welsh mountain. No value whatever. The hon. Member for Coat-bridge is one of our most eloquent preachers in Scotland, and always has a crowded church. Is it the community that makes him an eloquent preacher? Of course it is. He is indebted to the community there. It is the community that makes the value of the solicitor, the 1655 barrister, or any other professional or business men. That principle does not therefore apply only to the ownership of land. The supporters of this Bill rely upon a fallacious argument. A Member of Parliament is elected by the community. We are all brethren one with another, and we are all dependent upon each other. That is no reason why we should back up this crack-brained legislation which has been going on in other
§ countries for over a generation, and has been a complete failure in every place where it has been tried. We are told that people hold land for its development and we are asked why should we have unripe land. Why should we have unripe legislation of this sort, which gives economic indigestion to the community?
§ Question put, "That the word 'now' stand part of the Question."
§ The House divided: Ayes, 118; Noes, 141.1657
|Division No. 27.]||AYES.||[3.59 p.m.|
|Acland, R. T. D. (Barnstaple)||Griffiths, J. (Llanelly)||Parker, J.|
|Adams, D. (Consett)||Groves, T. E.||Pethick-Lawrence, Rt. Hon. F. W.|
|Adamson, W. M.||Guest, Dr. L. H. (Islington, N.)||Price, M. P.|
|Alexander, Rt. Hon. A. V. (H'lsbr.)||Hall, G. H. (Aberdare)||Quibell, D. J. K.|
|Ammon, C. G.||Hall, J. H. (Whitechapel)||Ridley, G.|
|Anderson, F. (Whitehaven)||Harris, Sir P. A.||Riley, B.|
|Attlee, Rt. Hon. C. R.||Harvey, T. E. (Eng. Univ's.)||Roberts, Rt. Hon. F. O. (W. Brom.)|
|Banfield, J. W.||Hayday, A.||Robinson. W. A. (St. Helens)|
|Barnes, A. J.||Henderson, A. (Kingswinford)||Salter, Dr. A. (Bermondsey)|
|Barr, J.||Henderson, T. (Tradeston)||Sanders, W. S.|
|Batey, J.||Hills, A. (Pontefract)||Seely, Sir H. M.|
|Bellenger, F. J.||Hopkin, D.||Short, A.|
|Benn, Rt. Hon. W. W.||Jagger, J.||Silkin, L.|
|Broad, F. A.||Jenkins, A. (Pontypool)||Silverman, S. S.|
|Brown, C. (Mansfield)||Jenkins, Sir W. (Neath)||Simpson, F. B.|
|Burke, W. A.||John, W.||Sinclair, Rt. Hon. Sir A. (C'thn's)|
|Charleton, H. C.||Jones, A. C. (Shipley)||Smith, Ben (Rotherhithe)|
|Chater, D.||Jones, J. J. (Silvertown)||Smith, E. (Stoke)|
|Cluse, W. S.||Kelly, W. T.||Smith, Rt. Hon. H. B. Lees- (K'ly)|
|Clynes, Rt. Hon. J. R.||Kirby, B. V.||Smith, T. (Normanton)|
|Cave, W. G.||Lansbury, Rt. Hon. G.||Sorensen, R. W.|
|Daggar, G.||Lathan, G.||Stephen, C.|
|Dalton, H.||Leach, W.||Strauss, G. R. (Lambeth, N.)|
|Davidson, J. J. (Maryhill)||Leslie, J. R.||Thorne, W.|
|Davies, S. O. (Merthyr)||Macdonald, G. (Ince)||Thurtle, E.|
|Day, H.||McEntee, V. La T.||Tinker, J. J.|
|Debbie, W.||MacNeill, Weir, L.||Viant, S. P.|
|Dunn, E. (Rother Valley)||Marshall, F.||Walkden, A. G.|
|Ede, J. C.||Mathers, G.||Walker, J.|
|Edwards, A. (Middlesbrough E.)||Maxton, J.||Watkins, F. C.|
|Edwards, Sir G. (Bedwellty)||Messer, F.||Wedgwood, Rt. Hon. J. C.|
|Fletcher, Lt.-Comdr. R. T. H.||Montague, F.||Whiteley, W. (Blaydon)|
|Foot, D. M.||Morrison, Rt. Hon. H. (Hackney, S.)||Williams, E. J. (Ogmore)|
|Frankel, D.||Morrison, R. C. (Tottenham, N.)||Williams, T. (Don Valley)|
|Gallacher, W.||Muff, G.||Wilson, C. H. (Attercliffe)|
|Gardner. B. W.||Nathan, Colonel H. L.||Windsor, W. (Hull, C.)|
|Garro Jones, C. M.||Naylor, T. E.||Withers, Sir J. J.|
|George, Rt. Hon. D. Lloyd (Carn'v'n)||Noel-Baker, P. J.||Woods, G. S. (Finsbury)|
|Greenwood, Rt. Hon. A.||Oliver, G. H.|
|Griffith, F. Kingsley (M'ddl'sbro, W.)||Paling, W.||TELLERS FOR THE AYES.—|
|Mr. MacLaren and Mr. McGhee.|
|Albery, Sir Irving||Burgin, Rt. Hon. E. L.||Duckworth, Arthur (Shrewsbury)|
|Aske, Sir R. W.||Castlereagh, Viscount||Duckworth, W. R. (Moss Side)|
|Balfour, G. (Hampstead)||Cayzer, Sir C. W. (City of Chester)||Duggan, H. J.|
|Balfour, Capt. H. H. (Isle of Thanet)||Cazalet, Thelma (Islington, E.)||Duncan, J. A. L.|
|Barrie, Sir C. C.||Channon, H.||Edmondson, Major Sir J.|
|Beamish, Rear-Admiral T. P. H.||Clarry, Sir Reginald||Ellis, Sir G.|
|Beauchamp, Sir B. C.||Colman, N. C. O.||Emrys-Evans, P. V.|
|Beaumont, Hon. R. E. B. (Portsm'h)||Conant, Captain R. J. E.||Everard, W. L.|
|Beit, Sir A. L.||Cooke, J. D. (Hammersmith, S.)||Fildes, Sir H.|
|Bennett, Sir E. N.||Cox, H. B. Trevor||Fleming, E. L.|
|Bernays, R. H.||Croft, Brig.-Gen. Sir H. Page||Fremantle, Sir F. E.|
|Blair, Sir R.||Crooke, J. S.||Furness, S. N.|
|Bossom, A. C.||Cross, R. H.||Gluckstein, L. H.|
|Boulton, W. W.||Crowder, J. F. E.||Graham, Captain A. C. (Wirral)|
|Briscoe, Capt. R. G.||Cruddas, Col. B.||Grant-Ferris, R.|
|Brocklebank, Sir Edmund||Davison, Sir W. H.||Granville, E. L.|
|Brown, Col. D. C. (Hexham)||De Chair, S. S.||Grimstow, R. V.|
|Brown, Brig.-Gen. H. C. (Newbury)||De la Bère, R.||Guest, Lieut.-Colonel H. (Drake)|
|Browne, A. C. (Belfast, W.)||Denman, Hon. R. D.||Harvey, Sir G.|
|Bull, B. B.||Drewe, C.||Haslam, Henry (Horncastle)|
|Heneage, Lieut.-Colonel A. P.||Nicholson, G. (Farnham)||Southby, Commander Sir A. R. J.|
|Holmes, J. S.||Nicolson, Hon. H. G.||Spears, Brigadier-General E. L.|
|Howitt, Dr. A. B.||O'Neill, Rt. Hon. Sir Hugh||Stanley, Rt. Hon. Oliver (W'm'l'd)|
|Hulbert, N. J.||Orr-Ewing, I. L.||Strauss, H. G. (Norwich)|
|Hume, Sir G. H.||Palmer, G. E. H.||Stuart, Hon. J. (Moray and Nairn)|
|Hutchinson, G. C.||Peake, O.||Tasker, Sir R. I.|
|Joel, D. J. B.||Pilkington, R.||Taylor, C. S. (Eastbourne)|
|Kerr, Colonel C. I. (Montrose)||Plugge, Capt. L. F.||Thomas, J. P. L.|
|Kerr, J. Graham (Scottish Univs.)||Ponsonby, Col. C. E.||Touche, G. C.|
|Kimball, L.||Radford, E. A.||Tufnell. Lieut.-Commander R. L.|
|Levy, T.||Reid. Sir D. D. (Down)||Wakefield, W. W.|
|Looker-Lampson, Comdr. O. S.||Reid, W. Allan (Derby)||Wallace, Capt. Rt. Hon. Euan|
|Loftus, P. C.||Robinson, J. R. (Blackpool)||Ward, Lieut.-Col. Sir A. L. (Hull)|
|Lovat-Fraser, J. A.||Ropner, Colonel L.||Ward, Irene M. B. (Wallsend)|
|MacAndrew, Colonel Sir C. G.||Ross, Major Sir R. D. (Londonderry)||Warrender, Sir V.|
|M'Connell, Sir J.||Royds, Admiral P. M. R.||Watt, Major G. S. Harvie|
|McCorquodale, M. S.||Russell, Sir Alexander||Wayland, Sir W. A|
|McEwen, Capt. J. H. F.||Samuel, M. R. A.||Wells, S. R.|
|Macnamara, Capt. J. R. J.||Sandeman, Sir N. S.||Whiteley, Major J. P. (Buckingham)|
|Macquisten, F. A.||Sanderson, Sir F. B.||Williams, C. (Torquay)|
|Margesson, Capt. Rt. Hon. H. D. R.||Selley, H.||Williams, H. G. (Croydon, S.)|
|Mayhew, Lt.-Col. J.||Shaw, Major P. S. (Wavertree)||Windsor-Clive, Lieut.-Colonel G.|
|Meller, Sir R. J. (Mitcham)||Shaw, Captain W. T. (Forfar)||Winterton, Rt. Hon. Earl|
|Mellor, Sir J. S. P. (Tamworth)||Sinclair, Col. T. (Queen's U. B'lf'st)||Wise, A. R.|
|Mills, Major J. D. (New Forest)||Smiles, Lieut.-Colonel Sir W. D.||Young, A. S. L. (Partick)|
|Mitchell, Sir W. Lane (Streatham)||Smith, Bracewell (Dulwich)|
|Moore, Lieut.-Col. Sir T. C. R.||Somervell, Sir D. B. (Crewe)||TELLERS FOR THE NOES.—|
|Munro, P.||Somerville, A. A. (Windsor)||Mr. Raikes and Mr. Donner.|
§ Question proposed, "That the proposed words be there added."
§ It being after Four of the Clock, the Debate stood adjourned.