NEW CLAUSE.—(Estate Duty on farm working capital.) (Hansard, 15 June 1944)

§ Mr. Colegate
I beg to move, "That the Clause be read a Second time."
This new Clause owes its origin, almost entirely, to the Labour Party. I made a speech about this time last year, with regard to Estate Duty on agricultural estates, and the hon. Members for North Battersea (Mr. Douglas) and East Stirling (Mr. Woodburn), who has unfortunately just left the Chamber, reproached me bitterly. They never answered my case; they could not, except by some suggestion about limited liability companies which showed that they did not understand what a limited liability company was, and why it served certain purposes. The Financial Secretary knows more about that than I do. The second point of their reproach was that the matter would have been very different had it only proposed relief from Estate Duty on the working capital of the farmer, particularly the occupier. Well, I am willing to learn, and here I am with this Clause. I think I am showing a model, which might be followed in many respects when we offer advice to the other side.
I have taken their advice. Now let me see what the case is—because it would not have been recommended from that side if it had not had a good case behind it. The case is that there has been a great revolution in agriculture. It is going on now; and we are recommended from every quarter to put more capital into agriculture. Agriculture is under-capitalised in this country, and very large quantities of new capital are required. It was one thing when you ploughed with a pair of horses on heavy land: it is a very different thing when 2288 you buy one or more of these great tractors, and the same thing applies in other directions. The whole of modern agriculture is becoming, as it should, in my opinion, a heavily-capitalised industry. What are we to do about it?
This is where the Treasury appears in a Jekyll-and-Hyde capacity. First, there is Dr. Jekyll—such a charming person. He says, "You must put more capital into agriculture. I am going to give you cheap capital, so that you can borrow money, and buy this machinery." That is Dr. Jekyll—we all know what a spendid fellow he is. Then he turns round, and, in the form of Mr. Hyde, says, "Do not take any notice of that fellow Jekyll. Sell your farm stock, sell your tractors, if you cannot pay; and if you are an owner-occupier we will make you pay something on the farm which you have inherited, as well as on the farm stock." Look at the injustice. On the agricultural land you have a specially low rate; would you pay the specially low scale for the farmer's working stock? Not a bit of it. That is put on the higher scale. What an anomaly. For the land, the rate may be almost half what it is for other things, but the owner-occupier pays on the farm stock, on the seed, on the stacks, the full rate. What do they say to the owner-occupier? They say, "We are going to tax you in three ways." First, they take his land. He is given a specially low rate; I cannot talk about that, because I have an Amendment down which has not been called, so I should be out of Order. Next, they take his other property. On that they charge him a higher rate. On his farming stock they also charge him a higher rate.
Not only that, but there is that dreadful word, which, if you are concerned with Death Duties meets you sooner or later—aggregation. All this is aggregated for the payment of the Death Duties. What is the result? Although you are allowed this lower rate on your land, you pay the higher rate. It is almost unbelievable, but I am sure the Committee will accept it from me. You pay a higher rate on the stock, because you have been successful, especially if you have made the mistake of buying your own farm, as many a tenant farmer has been forced to do. It is aggregated. Whereas the farmer might have paid 6 per cent., 7 per cent., 8 per cent. or 10 per cent.—that is a sort 2289 of figure you pay on 100 acres—they say, "No, wait a minute; you are going to pay 15 per cent. on farm stock, because we are going to aggregate that with all your other property and your land." That is Mr. Hyde, taking away the farm capital, damaging the farmer, just at a moment when he has inherited his farm; and all Dr. Jekyll's fair promises, all this idea of putting new capital into the industry at a wonderful low rate, disappears.
Of course, we all know that my right hon. Friends the Chancellor and the Financial Secretary have a great deal of sympathy with this. They constantly say that they have deep sympathy with the financing, generally, of agriculture. Let us have, not only words, but a little encouragement for the actual farmer. I should think nothing would give more pleasure to the Chancellor and to his officials than to do something to get into being this new high capitalisation of agriculture, and unless you do highly capitalise agriculture, it is going to have no future at all. It depends on high capitalisation, and high wages for the worker, and you cannot pay high wages for any workers, in any industry, unless that industry is highly capitalised. Therefore, I plead with my right hon. Friend for a few words of encouragement on this subject. I make an appeal, not merely to his well-known interest in agriculture, but to his own great financial and business acumen, which will make him realise, better than I can, the advantage of a highly-capitalised agricultural industry, and its effect on the wages in that industry and on the prosperity of the country.

§ Mr. Tinker
Will the hon. Member discover for us Dr. Jekyll and Mr. Hyde?

§ Mr. Colegate
I am delighted. My hon. Friend has got one of the most delightful experiences in front of him. They are characters in a masterly story by Robert Louis Stevenson—

§ Mr. Tinker
I know that, but who represents them in this Committee?

§ Mr. Colegate
In this Committee, it is the Chancellor, at one moment full of the milk of human kindness, and at another moment Mr. Hyde, and not quite all we think.

§ Mr. Turton
I think there is one further argument we may use. In industry, the life of the business is in the hands of a 2290 company which escapes Estate Duty. In agriculture, this Estate Duty is coming down on the tenant-occupier, and, therefore, if we go on capitalising farms, as I hope we shall do in future, this Death Duty is going to be a very great burden on agriculture in the future. If you take the instance of an area of land, which is laid down for forestry, it escapes Death Duty entirely until it is sold. It seems reasonable that if, instead of laying down land to forestry, we keep it in agriculture, Death Duty should not be paid on the farming machinery or plant, or on the herd of dairy cattle, until they are sold. I hope the Financial Secretary will give us some promise that, either in the present financial year, or perhaps next year, he will be able to make some concession towards machinery and plant in agriculture.

§ Mr. Assheton
The hon. Member for The Wrekin (Mr. Colegate) is always very persuasive, and has made a splendid speech attacking Death Duties as such. I am bound to say that, had I been here in 1894, I should have voted against them, but here they are, and we have got to make the best of them. I understood the hon. Member to say that farmers, as such, should be exempted from a tax which falls upon all other sections of the community.

Hon. Members
Oh.

§ Mr. Colegate
I did not suggest that. All I asked for is working capital.

§ Mr. Assheton
Well, then, that the working capital of the farmers should be specially treated in this respect. There is really, as the hon. Member must recognise, a fatal snag in his proposal. What would people interested in other businesses, for instance, in manufacturing businesses, say? My hon. Friend the Member for Thirsk and Malton (Mr. Turton) suggested that farmers as a rule were in business on their own and were not conducting their businesses through limited companies. That may well be, but there are hundreds of thousands of other people up and down the country in business on their own, and not conducting their businesses as limited companies who are in exactly the same position. It is just as hard for the owner of a small business to pay Death Duty on working capital as it is for the farmer. 2291 When a man inherits a farm he has perhaps to sell a horse or a plough, but it is just as hard on a manufacturer if he has to sell some machinery. That is a fault of the system, but we have the system, and I am sure that my hon. Friend would not think it possible to make an exception in the case he put.

§ Mr. Loftus (Lowestoft)
I am very disappointed at the answer given by my right hon. Friend. He compared agriculture to any other kind of business. Most other businesses are carried on as limited companies. If the great industries of this country, every few years, had to sell off pieces of plant to pay Death Duty, industry would not be efficient and would be in a hopeless state. Agriculture is the biggest industry in the country. We all realise that it has been starved of capital for generations, and that if we want to reconstruct our country after the war, we must have a prosperous agriculture and the capital to put into it. Therefore, I suggest that this industry is of a different type from any other and deserves special treatment. It may be answered, Why should not agriculture go into a limited liability company? The prospect fills me with horror. Finance has already done enough damage to the soil of the Dominions and in America in creating deserts. The one thing I would not wish to see is agriculture made the financial pawn to be used for gambling on the Stock Exchange, exploiting the soil to the utmost, taking plenty out and putting nothing in, paying big dividends and selling the shares at a big profit, and then leaving useless shares and a devitalised soil.

§ Colonel Clarke
I intervene to make one other point in favour of the Clause. I hope it will be recognised what a great increase there has been in the amount of working capital necessary for a farmer to-day. A few years ago, a dairy farmer would require only two milk pails, two bowls and a stool, and to-day you have to have a milking machine, sterilising plant and a lot of things you did not have before, including tractors, and particularly tractors with caterpillar wheels, which are very much more expensive and stand higher in taxation than horses. It is the same all the way through, and, from that point of view, the Clause deserves more consideration.

§ Mr. Colegate
My right hon. Friend was not quite fair about the similarity between industry and agriculture. His own Department provided cheap capital or offered cheap capital to farmers; they did not do that to industry. As a matter of fact let us be honest with ourselves about this difference between agriculture and industry, It is too late for me to go into detail but right through Income Tax, industry has to be treated on one basis and agriculture has to be treated on an entirely different basis. I gave the illustration of cheap credit as an example. [An HON. MEMBER: "The Trade Facilities Act?"] The Trade Facilities Act was condemned by everybody and was brought to a hasty and untimely end. I would just say this. I would not like my right hon. Friend to close his mind on this subject. It is part of a very much bigger subject, the whole future of agriculture, and I would beg him to keep as open a mind on this subject as is possible to anyone connected with the Treasury. I hope, also, that we shall have an opportunity some time to argue this at fu'; length, because it is a most important subject. Having made those remarks, I ask leave to withdraw the Clause.