HC Deb 15 June 1944 vol 400 cc2221-9

(1) The following Rule shall be substituted for Rule 7 of No. V in Schedule A:—

(a) Where tax is charged upon annual value estimated otherwise than by relation to profits, the following provisions shall have effect:—

In the case of an assessment upon any house, building or land, the amount of the assessment shall for the purpose of collection, be reduced

(i) where the owner is occupier or chargeable as landlord, or where a tenant is occupier and the landlord has undertaken to bear the cost of repairs, by a sum equal to the amount of the authorised reduction hereinafter mentioned; and

(ii) where a tenant is occupier and has undertaken to bear the cost of repairs, by such a sum, not exceeding the amount of the authorised reduction, as may be necessary to reduce the amount of the assessment to the amount of rent payable by him:

Provided that the amount by which an assessment is reduced shall not, in the case of an assessment exceeding the amount of forty pounds, be less than it would have been if the amount of the assessment had been forty pounds.

(b) Where the amount of the assessment is less than the rent by a sum greater than the authorised reduction which would be allowable if the assessment were in the amount of the rent, after deducting from such rent any outgoing which shall by law be deducted in making the assessment, this rule shall not apply.

(c) The authorised reduction for purposes of this rule shall be—

(i) Where the amount of the assessment does not exceed forty pounds A sum equal to one-fourth part of the amount of the assessment.
(ii) Where the amount of the assessment exceeds forty pounds but does not exceed fifty pounds Ten pounds.
(iii) Where the amount of the assessment exceeds fifty pounds but does not exceed one hundred pounds A sum equal to one-fifth part of the amount of the assessment.
(iv) Where the amount of the assessment exceeds one hundred pounds Twenty pound s together with a sum equal to one-sixth part of the amount by which the assessment exceeds one hundred pounds.

(2) In paragraph (1) of Rule 8 of the said No. V in Schedule A for the references to one-eighth part arid to one-sixth part of the values there shall be substituted references to the authorised reduction.

(3) This section shall, unless Parliament otherwise determines, cease to have effect on the fifth day of April, nineteen hundred and forty-nine.

(4) Section twenty-eight of the Finance Act, 1923, and section twenty-seven of the Finance Act, 1942, are hereby repealed.—[Mr. Turton.]

Brought up, and read the First time.

Mr. Turton (Thirsk and Malton)

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

I must apologise for the length of the Clause but the object is to avoid legislation by reference, and it includes a great deal of what is already in Rule 7 of Schedule A. The present position, which we regard as unsatisfactory, is this. Where you have land and an agricultural dwelling house or agricultural buildings, the repairs allowance is one-eighth of the annual value. Where, however, you have houses which are not in the same assessment as land, the allowance varies from one-fourth to one-sixth, dependent on the annual value, in the way set out in the Clause. I submit that it is wrong that an agricultural house should have a lower repairs allowance than a house that is not let in connection with land.

Let me give three examples from my own experience as a landowner. I can think of a cottage which is let at £8 a year, which is what we regard as a statutory rent for a labourer's cottage, and a similar cottage let with three acres of land, where the rent is not £8, but £10. The repairs allowance for the cottage let by itself, to an agricultural worker, is £2 a year; the repairs allowance for the cottage let with an acre of land, the same cottage, where you also have the obligation of the landowner in regard to the land, is only £1 5s. That seems a ridiculous anomaly. Think of a house let at £100 a year, and then think of the same house with 50 acres added at £1 an acre. Under the present law the repairs allowance of the house standing by itself is £20, but directly the 50 acres are added, the allowance comes down to £18 5s. There is not a large amount of money involved but it is an unjustifiable anomaly, especially at present, when we are most anxious to bring up to date the standard of dwelling houses and agricultural buildings. If you do not give the repairs allowance you do not get the same standard of maintenance.

I have, on many occasions, heard hon. Members say how necessary it was to bring up the standard of repairs and miantenance in the villages. They realise that one of the reasons for it is that directly you connect any dwelling house with agricultural land you have a substantially lower repairs allowance. The answer that may well be put is that this is remedied by Rule 8, because the landowner can prefer a maintenance claim claiming a larger amount than the repairs allowance if it has been expended. That claim is based on the average expenditure of five years. I think that answer substantially meets the position of the large landowner but not that of the small man. In many villages you have one man owning one farm, a couple of cottages and a shop. That type of owner does not go in for the tremendous amount of legal difficulty involved in a maintenance claim but works on his repair allowance. So it means that the small owner of property is at a serious disadvantage compared with the smaller man who only owns town property. I think, to-day especially, it is more costly to repair property in the countryside than in the town. For one thing the great factor in getting repairs done at all is transport and, if your local builders have to go from farm to farm and from cottage to cottage for long distances, the cost of repairs mounts up tremendously through the cost of transporting the workmen, if you are able to get them, whereas a man owning three cottages in one village has not that difficulty.

May I deal with another part of the Clause, concerning the question of repairs to land? This concession of a repairs allowance was given first by Sir William Harcourt in 1894. At that time I think people had a different view about land from what they have to-day. They did not realise how much repair work has to be done to keep land in condition. In fact in 1894 the drainage scheme of 1860 had given the land a fairly new drainage system. To-day all those drains are, or should be, cleaned out, which is a proper maintenance charge but a very costly one. It has gone up by 100 per cent. since 1914. The maintenance charge connected with gates has gone up by 100 per cent. since the beginning of the war. Fencing and limber charges have gone up by 40 or 50 per cent. since the beginning of the war. There is also the upkeep of roads, which has gone up by an even greater percentage owing to the difficulty of getting the stone and the labour. There is, therefore, a good case for seeing that the repairs to land are the same as repairs to buildings. They have to be done and, if they are not being done this year, they will have to be done next year, therefore there is no argument against delaying this concession.

Although I represent an agricultural constituency, I have always desired that agriculture should not have to seek favours of the Government but should be dealt with pari passu with industry. This is a glaring case where the farmer, the landowner and the farm labourer are all affected. They are being placed at a disadvantage as compared with other industries. This Committee should remedy that. I listened to the Debate on the last new Clause, and I heard my right hon. Friend assuage my hon. and gallant Friend who moved it by saying that the new depreciation allowance would deal with that position. May I anticipate any similar defence to my case, by saying this? It is true the Chancellor is giving a depreciation allowance of 2 per cent. to both industry and agriculture—and may I say how grateful all industries are for that?—but let us first remedy this anomaly, because if the Chancellor gives a depreciation allowance of 2 per cent., added to the present repairs allowance, it will benefit industry more than agriculture.

There is no reason, so far as I can see, why an agricultural labourer's cottage should not have the same repairs allowance, whether it is let in connection with land or not. I hope that as many agricultural labourers as possible will have a field or two let with their cottages, because it is a great draw to the agricultural worker to have a few cows that he can tend in his spare time. It is what we have in the area where I live, and I would like to see it all over the country, but this repairs allowance is one of the bars to that happening. Is there any reason why a farm house that is let with land should not have the same repairs allowance as any other house of similar annual value in the country? I commend the new Clause to the Committee and hope it will clear up an anomaly that has existed since 1894 owing to different Amendments to Finance Bills.

Mr. Colegate (The Wrekin)

My hon. Friend has put the case most clearly. I should like to emphasise that the whole of the agricultural community are anxious that agriculture should be put on the same basis as other industries and that these anomalies should be ironed out. I do not think there can be an answer to my hon. Friend's argument about the different treatment between a house not used for agriculture and a house that is used for agriculture. Some people may boggle at the idea that land needs to be repaired. There exist certain people who tell you that God has given the land. He may have done, but He gave it in the form of bog, wood and so forth. The land as we know it in this country for agricultural purposes is not merely a manufactured article, but a highly manufactured article, and it has to be kept in repair from year to year and often at shorter intervals. It must be kept up, and the repair of the land is one of the most expensive that has to be done, especially in connection with drainage. It is urgent that this anomaly should be cleared away at this time. It is a very small concession and the total amount of money involved is not appreciable in a national Budget of this size. It will put a little piece of injustice right and will enable the agricultural industry to be put on the same basis of efficiency as regards its buildings and land as industry in general.

Mr. Benson

I welcome the speeches to which we have just listened. The idea that agriculture should be put on the same basis as industry, is something that I have advocated here for a long time. For years I have been suggesting that Schedule D should go, and that the right of the agriculturist to dodge backwards and forwards, between Schedule B and Schedule D, should be abolished. I have, however, never before heard any suggestion that the agricultural interests were prepared to support me. Moreover, I understand now that they are prepared to give up the concession that all rates on agricultural land shall be paid by somebody else other than agriculturists, and that they shall be put on the same basis as industry and pay 25 per cent.—

The Temporary Chairman

The hon. Gentleman has gone far enough in his illustration.

Mr. Benson

I was only welcoming the change of heart in agriculture. If I can be assured that the change of heart is real, I am willing to support the new Clause.

Major York (Ripon)

May I support the new Clause, particularly in relation to one thing which my hon. Friend the Member for Thirsk and Malton (Mr. Turton) has said? It is a small amendment to the Income Tax law and will help the small owner and the man who does not use the maintenance claim. If the larger owner who puts in a maintenance claims gets this concession, it will mean that the Treasury will be no worse off because the amount that is deducted under the new Clause will not be deducted under the maintenance claim. As regards the case put forward by my hon. Friend that the new Clause will remove an anomaly, I think that my hon. Friend the Member for Chesterfield (Mr. Benson) has the support of most Members of this side. We want to see agriculture put on the same basis as other industries both as regards labour and materials and the general running of the industry.

Mr. Assheton

The Committee knows, I think, that I am as anxious as any one to improve the conditions under which agricultural landowners can adequately maintain their property, but I feel that the hon. Member for Thirsk and Malton (Mr. Turton) has put forward a proposal which is really not necessary. It is sometimes forgotten that this flat-rate allowance is automatic and that, whether or not money is spent on the repair of property, the flat-rate allowance is allowed as a deduction. There is a certain lack of principle in that, and I should not be anxious to see that lack of principle extended. It may be necessary to allow what exists to be continued as it is, but by far the most sensible plan is that under which the actual amount of expenditure on repairs is the amount which is allowed as a deduction from income. The present law allows that. My hon. Friend admitted that by making a maintenance claim the owner of agricultural property can obtain what he spends on the average on maintenance over a period of five years. The difficulty he felt was that the smaller owner was handicapped because he did not perhaps have quite as much experience in filling up the necessary forms and did go to the trouble of making a claim of this sort to the Income Tax inspector. I cannot help feeling, however, that it would not be the wish of the Committee that we should extend a privilege which really has a certain lack of principle in it.

The other point which my hon. Friend made was that land was treated differently from houses. That is true enough. You get a smaller percentage allowance for land together with buildings than for houses alone. It is clear that the reason is that there is only one Schedule A Assessment for both the land and the farmhouse. If there were a large farm the assessment of which was perhaps £500 a year, it would be rather ridiculous to bring that into the same category as a small house in the town.

Mr. Turton

Is my right hon. Friend suggesting that if you have a house and land worth £500, you would not expend over £100 on repairing the buildings and the farm?

Mr. Assheton

Not at all. What I am suggesting is that when there is a single assessment both for land and buildings that there may be a great deal of land and not many buildings, or there may be not much land and a great many buildings. It is therefore inappropriate to suggest that you should apply the one-sixth rule to them. In some circumstances it might be desirable and in other circumstances it would be undesirable.

Take, for example, a farm which has 1,000 acres of sheep run attached. The amount of expenditure on that farm might not be nearly as much as in the case of a farm which had, say, Too acres attached to it but was used for milk production and the buildings on which were very extensive. I ask the Committee to accept the view that it is much more reasonable that the present system should obtain, and that is that the amount of money spent upon the particular farm and buildings, averaged over a number of years, should be the amount to be deducted from the income. I do not think there is any sort of grievance here for landowners, either small or great. Although there are several observations which I hope to make on the other Clauses which will help my hon. Friend, I ask the Committee not to accept this Clause.

Mr. Turton

I am surprised and disappointed. Although I have a great admiration for the debating powers of my right hon. Friend I do not think he has acquitted himself well. He said that he did not like this flat rate allowance and therefore would not extend it. In agricultural villages, small houses with an acre of land attached have this small repair allowance. I am not arguing in favour of the big estate-owner; he can look after himself. It is not right to say that all men can make up maintenance claims. I would ask the Chancellor or the Financial Secretary whether the Inland Revenue find that the small owner, the man who owns one house or two or three cottages, ever troubles to make out a maintenance claim. If they do, my proposal is unnecessary, but to the best of my knowledge and belief that is not done. Those men are at a disadvantage against the rest of the community and I should have thought that, either now or later, the Chancellor of the Exchequer might put that anomaly right.

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