§ Motion made, and Question proposed, "That this House do now adjourn."— [Mr. Grimston.]
§ Mr. Stokes (Ipswich)
I know that I should not be in Order in continuing the discussion just ended, but it so happens that the point to which I am going to refer is the very one which the Lord President of the Council has skirted round in the concluding remarks he has been addressing to the House. I have given specific notice to the Chancellor of the Exchequer —I regret he has found it impossible to be present, but I understand that the Financial Secretary to the Treasury is here—to raise the issue of speculation and the wrongful, to my mind, racket going on in rent and land sales at the present time. I gave notice, in Questions last week, of two specific instances in my own constituency.
§ It being the hour appointed for the interruption of business, the Motion for the Adjournment of the House lapsed, without Question put.
§ Motion made, and Question proposed, "That this House do now Adjourn."— [Mr. Grimston.]
§ Mr. Stokes
The first refers to a farm outside my constituency, the rent of which was fixed, after the outbreak of war, at £26. It was a mean agricultural land, but a speculator came into the market and bought it for £3,600, thereby only obtaining on his money something in the order of 14s. per cent. In another case, the rental was £126 net, and the land was bought up by a foreigner for £10,000. The return on that money was something of the order of 1 per cent. The Government have told us that they have taken control of the land. I fail to see where they have done that, and wherein they have adequately protected the farming community and the urban community from the evil results of this form of speculation. The contention may be that these people want the land because it is a sound investment. I have no shadow of doubt about that. It cannot be that they are buying this land at such a high price merely for the monetary return to be obtained from its agricultural value, 1 per cent. or less. The evil for the town of Ipswich is that when the town wants land 1218 after the war, we are going to be held to ransom by people who have purchased the surrounding countryside. I could quote cases from all over the country, but it is not necessary. Every Member who is interested in the subject is aware of cases around his own constituency.
There are two points to which I wish to call attention. The first is the evil of speculation. Here is the second: I have pursued the Chancellor over a period of time trying to get him to agree that any increase in rent shall be subject to Excess Profits Tax. The Lord President of the Council has just told us that the Government are seeing that there is equal sacrifice. While it may be true that some people with very high incomes are now taxed at 19s. 6d., no steps are taken to prevent the landlords from benefiting from enhanced rents. The answer given to me the other day was that the Minister of Agriculture had taken the necessary steps to prevent the sitting tenant being forcibly ejected. That is true in some cases, but another evil arises to which I will refer in a few minutes. The answer was an evasion of the whole point. It is not only private individuals who are guilty in this matter, but the Crown itself. Here is a case where the opening words in an auctioneer's advertisement are:A great opportunity for investors, speculators and others. …This was the caption on behalf of the Crown. The property was:an attractive freehold property in its own grounds. …It is a thoroughly bad example for the Government at this stage to be advertising their property for sale by a practice generally to the disadvantage of the nation. May I explain for the benefit of anybody who does not understand, some of the pernicious effects of the absence of Excess Profits Tax under the present system? While it is true, as far as land is concerned, that a landlord purchasing land cannot eject a sitting tenant, that is not the case of the landlord with a sitting tenant. He can, and does, browbeat the tenant to pay a higher rent rather than pay away the profits which he, the tenant, now gets from stabilised prices in Excess Profits Tax to the Government. The effect of it, with the price regulation, is that it must surely in the end lead to that very vicious spiral which we all seek to avoid. The 1219 effect of putting up the rent is that the farmer in the end must insist upon higher prices, the effect of which will mean that higher wages will be wanted by the workers, and so the merry-go-round goes on and we merely achieve what we set out to abolish.
Another objection which I have to the practice which is going on widely all over the country is that people who have never had the slightest interest in agricultural land are taking advantage of the present position and buying up land at high values merely for the sake of finding a convenient funk-hole for their money and so putting themselves in a more secure position at the end of the war than they otherwise would do, having regard to the fact that many of us expect that the devaluation of money is absolutely certain and inevitable. I do not see why they should be allowed at the present time to take advantage of the national emergency. It is said—and I have also heard the Minister of Agriculture say it—that the present sitting tenants are protected. I have a complete case here, which I have referred to the Chancellor of the Exchequer and which he has promised to investigate, of a farmer in Berwickshire. It is a dairy farm which was up till quite recently let at £260 a year. The landlord, on the expiration of the tenancy, gave notice to the sitting tenant that the rent would be increased to £423. That is exactly where the subsidy on milk goes; it goes straight into the pockets of the landlord the moment he can get an opportunity to put up the rent. It is ridiculous of the Chancellor of the Exchequer and the Minister of Agriculture to think that the sitting tenant or the farmer is protected by the steps they have already taken.
§ Mr. Stokes
I am coming to that in a minute. I have three short suggestions to make, and I know that the right hon. and gallant Gentleman the Financial Secretary does not want to reply. He has told me that, owing to unforeseen circumstances, he has only just had notice of the facts. He will admit that it was not my fault, but I am hoping to extract the faithful assurance from him that, although when I finish he will not reply fully to the Debate, I have his complete sympathy and that he has now become 1220 a convert to the taxation of land values. If I succeed in that, I shall not grudge the fact that the answer is so short. It will give others an opportunity of rubbing in the point I have endeavoured to put forward. My hon. Friend the Member for Burslem (Mr. MacLaren) has reminded me that every commodity in the country except land is now more or less controlled. It is true that the Government can take such land as they require at a certain valuation, but they pay good hard cash for it. It is no use their saying that they are paying fair prices, because I can quote literally thousands of cases where they are paying prices which are altogether abominable, and are merely pouring away the wealth of the country into the pockets of people who have hitherto done nothing to deserve it. In fact, the Minister of Agriculture, when introducing his Bill the other day, said it was necessary simply because landlords had run out on their duty to the nation and that the only way was to buy them out, so penalising ourselves with debt for their lack of citizenship.
I want to suggest that the Excess Profits Tax be charged on all increases of rents, and that there should be no sales above pre-war valuation. The Government now claim that when purchasing land they will not pay more for it than a valuation—which was never taken—of 31st March, 1939. Exactly how they will operate that I could never understand, and no Minister of the Crown has even had the decency to try and explain how it will be operated. How can they operate a valuation which was never taken? There should be some sort of equality of sacrifice and determination that we will not allow people to buy up land in the way they are doing now. I also suggest that Regulations should be introduced to prohibit the sale of agricultural land, except for genuine agricultural purposes. This is the sort of thing that is happening. This case relates to a place called Saltoun, in East Lothian, where farms have been farmed by one family, on a tenancy, for some 82 years. The owner of the land never took the slightest interest in it except for the purposes of the shooting rights to enjoy himself, and lived away down in Wales. Now he has decided that he would like to farm the land, and take advantage of the stabilisation of prices and the war profits that are to be made as the result of this fixa- 1221 tion of prices and the Regulations which the Government have introduced. He may know nothing about farming himself, but he has evicted the whole of the tenants. I do not call that effective control of the land, and I fail to see how the Lord President of the Council can do so, however far he likes to stretch his very elastic imagination.
In conclusion, I want to say that we are now talking about the conscription of women, and I ask this question in connection with the land. Are we to conscript women in order that they, their children and their husbands shall fight to defeat Hitler and then return to land which is held up against them for ever? Are we fighting this war for the landlords, because that would appear to me to be the case? It is quite time the Government introduced legislation both to deal with rising rents and to prevent speculation in the purchase and sale of land at the present time. Unless they do so, we shall be faced with a continuation of a practice which is wholly pernicious and unfair and quite contrary to the spirit of equality of sacrifice about which we hear so much— a practice fundamentally unsound and morally wrong.
§ Mr. Tinker (Leigh)
I want to reinforce the remarks made by my hon. Friend the Member for Ipswich (Mr- Stokes), because I was present when Questions were put to the Chancellor, and I am surprised that this kind of thing should be allowed to go on in time of war. We lead our people to believe that no excess profits are being made, yet we are told this is going on and that the Chancellor does not seem to have power to stop it. If that is so, we should ask the Chancellor to see that he gets hold of some of these excess profits. When people have bought some of this land and there is any question of taking some of it over at the end of the war for the country, they will say, "I bought this land, and I am entitled to a return on my money." It would be a sound argument for people who had invested money to say, "I have expended so much money on land which I thought was of value. I was allowed to do it, and, therefore, I am entitled to repayment of my purchase price, with some profit."
Although it may not happen during the war, I look forward to the time when the State will own the land. That is what 1222 we are fighting for. We are not fighting so that at the end of the war landlordism will be able to put its hand on the lives of the people. If we allow the state of affairs which my hon. Friend has described to go on, it will mean that the State will be almost entering into a pact with these people and saying to them, "We agree with what you are doing and we will see that you will not lose on the bargain in the end." I trust we shall be able to get some assurance from the Financial Secretary. If he cannot give us an assurance, the matter will not rest where it is. We are not going to agree with the Government conscripting human life to defend property and land and at the same time allow this kind of thing to go on. We are expected to defend before the people what is now happening, to tell them that the country is in danger and that they are fighting for their lives and existence, and yet at the same time, landlordism with all its vast influence is to go on. People are to fight to save the land and others are to get the profits from it. That has to be stopped. The Government had better be warned that we will not rest until some change is made in that system. If persuasion will not bring about that change, we shall have to alter our ways and challenge everything that comes from the benches opposite until something is done.
§ The Financial Secretary to the Treasury (Captain Crookshank)
I do not wish to be discourteous to the House, but I am afraid my reply must in the nature of things be rather brief. The vista which was opened up by the hon. Member for Ipswich (Mr. Stokes) is one that no doubt could be discussed at great length, as it has been in the past and presumably will be in the future. Unfortunately, my right hon. Friend the Chancellor of the Exchequer could not be present, and I am at a double disadvantage in that it appears that the Lord President of the Council made some reference to these topics during the time I was in attendance on the Chancellor at the very meeting which prevents him from being here. Therefore, I do not know what has been said here, and I have to be rather careful, because in this matter as in all others the Government's heart beats as one.
The hon. Member has raised this matter before at Question Time, and from long experience in the House I think that 1223 what is really intended on a short Adjournment discussion arising out of a Question is that the Minister who answered the Question should expand the reply which he gave rather than embark upon something quite different, such as a discussion of the taxation of land values, which the hon. Member, not at all surprisingly, brought into his speech. The hon. Member will remember that, with two or three other hon. Members who hold the same views, he came to see me in a deputation on that subject about a year ago. We had a very friendly talk, and all that he said received the consideration which I promised at that time, although he will be the first to agree that there has been no visible result up to now. There may not be for a century or more; at any rate, it will not be at this moment.
As I understood the Questions that were asked and what the hon. Member has said in his speech, he is really perturbed by the fact that it may be possible for someone or other to sell some of his land at a larger price than it stood at when he bought it, or inherited it, or when it was previously valued, and that no Excess Profits Tax is charged on the transaction. I think that is really the background. We will deal with the matter in two stages— first of all in the case of selling, and, secondly, in the case of a rental charge being increased. The hon. Member was good enough, and I noted it with pleasure, to make some reference to the powers with which my right hon. Friend the Minister of Agriculture has recently clothed himself to prevent a sitting tenant being turned out. This power came into force only within the last month.
§ Captain Crookshank
Of course, in regard to sitting tenants in ordinary holdings, there is a whole mass of legislation already on the Statute Book which is not affected. This is a case of a sitting tenant where there is a purchase now, and the Minister has taken power to deal with that. To that extent the position has been changed compared with the position in September when my hon. Friend first raised the matter. Therefore, he can, if he likes, take some credit for it, although there are other people who would also take credit for having brought about this desirable result. On the question of a 1224 sale, the broad distinction with regard to the Excess Profits Tax is this: It is not the same thing to be a person whose activities in life are to deal constantly in the buying and selling of land, for which purpose certain organisations exist. There is a distinctiveness between such a person and a person who engages in selling a piece of land which he already possesses —in other words, the difference between a dealer in land and the seller of a small parcel of land.
§ Captain Crookshank
Perhaps I have not made myself clear. There are certain people whose business it is to make these transactions, who have a regular organisation for the purpose, and others who just sell a piece of land off their estate. It is the difference between the business of a person who is always buying and selling Georgian teapots, and the hon. Member finding a Georgian teapot in his cupboard, which has been left him by his greatgrandfather, and taking it to Christies' to sell it. I imagine that there is the same sort of thing in regard to land. If a person's business is to buy and sell land, and there is an organisation for the purpose, that person is liable to Excess Profits Tax. That is different from the case of a man who sells a parcel of land and who is not subject to Excess Profits Tax.
§ Mr. Stokes
Will the Financial Secretary define the business or trade of a landlord? What is the trade or business of a landlord? Is it selling and buying land?
§ Captain Crookshank
I am not dealing with the trade and business of a landlord, but the trade and business of buying or selling land, where the Excess Profits Tax obviously comes in. When it comes to an individual selling a parcel of his land, then that transaction is not within the present scope of the tax. After all, the Excess Profits Tax is on the Statute Book, and we have to administer it as passed by this House. I am merely trying to expand the reply which my right hon. Friend the Chancellor of the Exchequer gave to the hon. Member. Of course, there may be borderline cases, and, for all I know, the cases quoted in this Question may have been borderline cases, but there I am in this difficulty that, by a very long process, which I should be the last 1225 to wish to break, either in this or any other matter of the same kind, the confidentiality of a particular taxpayer's position is quite secure, and it would not be right for a Treasury Minister to answer on behalf of the Inland Revenue what tax this or that seller of land paid. If we once started disclosing in this House the tax position of individuals, that would be a very grave error. [An HON. MEMBER: "Of judgment."] Not only of judgment. I was thinking of the point of view of getting in the tax, which is even more important as far as the Inland Revenue is concerned. The tax position of anyone, whether a Member of the House or not, must be kept in any circumstances a confidential matter.
§ Mr. Silverman (Nelson and Colne)
Is the right hon. and gallant Gentleman not aware that this is the only country in Europe which takes that view or has ever taken it, and that in some parts of the world the Income Tax lists are as much open to inspection by the public as rating and valuation lists?
§ Captain Crookshank
That may or may. not be, but there is a great deal to be said for our system. We are a great country, and the fact that other people deal with these matters in another way is no reason why we should. Up till now that has always been a confidential matter between the tax-gathering section of the State and the individual taxpayer, and I am not going to make a breach at this time of day. With regard to the particular cases quoted by the hon. Member, I would not tell him, even if I knew, but the general proposition is that Excess Profit Tax is payable when it is a case of someone who deals in land professionally but is not payable when it is an individual transaction.
§ Captain Crookshank
Rents are in very much the same position. If the letting of land is on such a scale as to constitute a trade or business, say a property-holding company, under Excess Profits Tax law, Section 12 (4) Finance (No. 2) Act, 1939, 1226Where the function, or the main function, of an incorporated company or society is the holding of property, the holding of property is in itself deemed to be a business.It follows, therefore, that such a company which has its properties let is within the scope of the charge. On the other hand, an individual landlord who has property let to tenants would not normally be regarded as carrying on business by reason of his ownership of property, and that is where the distinction comes between the two. The hon. Member says— and for all I know there may be a lot on his side of the argument—that this is an exceptional case which ought to be dealt with differently, and indeed during the Debates on the Excess Profits Tax we have had that aspect put from other points of view. I have been dealing with this tax since it first came within the purview of the House—and there were Amendments suggesting that the tax should cover increased profits in professions, excess income, and even the case where employees and workpeople were getting more than at a standard date. Up to now neither have the Government been willing to father Amendments of that kind nor, if they did, has the House as a whole shown any desire to adopt that line. I do not know what the future may hold, but, seeing that so far the Excess Profits Tax has been deliberately restricted to trades or businesses—and that is the case, whether it is agreeable to the hon. Member or not—it is impossible to bring within its scope what he would like to do, and that is the casual sales of parcels of land where there has been, as he says, an enhanced value coming into the seller.
§ Captain Crookshank
No. The hon. Member goes round and round. I thought I had made it clear that the trade or business of buying and selling land—
§ It being the hour appointed for the Adjournment of the House, Mr. DEPUTY-SPEAKER adjourned the House, without Question put, pursuant to the Standing Order.