AGRICULTURAL RATES ACT, 1896, ETC. CONTINUANCE BILL. (Hansard, 12 August 1901)

*THE SECRETARY FOR SCOTLAND (Lord BALFOUR OF BURLEIGH)

My Lords, the Bill which I ask your Lordships to read a second time to-day has for its object the continuance of the Agricultural Rates Act, 1896, the relative Scottish Act, and the Tithe Rent-charge Act, which was passed in 1899. The real point involved in this Bill is the propriety of renewing these Acts for a further limited period. The two Acts passed in 1896 were limited to a period of five years, but it was not then supposed, and there was not the slightest suggestion made, that the policy involved in those Acts should, after a period of five years had elapsed, be altogether dropped. The period of five years was fixed in the hope that the Royal Commission which was then appointed to consider the subject of local taxation might be able to report during that time, and also in order that a comprehensive policy on the whole subject 400 of local taxation might be fully considered. I see that some complaints have been made as to the length of time over which the Royal Commission, of which I had the honour to be chairman, extended its deliberations. I am sorry that disappointment has been caused in the matter, but I venture to say that, having regard to the intricacy of the questions referred to that Commission, to the great mass of detail involved in the due consideration of them, and to the composition of the Commission, it is not at all surprising that a period of five years elapsed between the issue of the Commission and its Report. The Commission was composed of fifteen gentlemen, of every one of whom it may be truly said that he had his time already very largely taken up. Many members of the Commission were salaried to perform other duties, which must, in the nature of things, have the first call upon their time; there was, in fact, hardly a single member who was not in the position of being paid to discharge other duties which made very great calls upon his time, and to which he was obliged to give precedence over the work of the Commission. But I can assure the House that no undue delay took place, and that we did our very best to expedite the preparation of the Report-Now, my Lords, so far as the majority of the Commissioners are concerned, we spoke with no uncertain voice as to the desirability of continuing the Rating Act. I will read three or four lines from the Majority Report— Under existing circumstances, therefore, we see no alternative but for the present to provide for the deficiency arising from the classification of agricultural land in the manner proposed, as to the equity and propriety of which we are practically unanimous, by means of grants out of moneys provided by Parliament.' It is for the purpose of carrying into effect the continuance of the Acts, as recommended by the Commission, that this Bill has been introduced. The unanimity of the Commissioners on this point goes further. Although not the whole of the Commission are in favour of the principle of the Agricultural Rates Act exactly as it stands, almost every member is agreed that the half-rating of agricultural land, not for a time, but permanently, is a thing which is fair and 401 right so far as it affects the agricultural occupier. The whole matter is undoubtedly one around which a great deal of controversy has raged. There has been an immense amount of party feeling invoked, and if I desired to make a controversial statement to-night, which I do not desire to do, I should say that there had been in my opinion an amount of misrepresentation—almost malicious misrepresentation—in regard to this subject which exceeds any I have previously experienced. But, my Lords, I prefer to make a simple statement of the case as it appears to me in favour of the policy which is involved in this Bill.

I submit that the case for the Bill is, on its merits, absolutely overwhelming. I suppose everyone now agrees that the test of the fairness of any method of raising money for public purposes, whether by rating or by taxation, ought to be based mainly upon two considerations (1) the ability of the person who is charged to pay, and (2) the benefit which he receives from the objects for which he is asked to pay. There are two very distinct questions involved in this matter. There is, first, the question between owners of property which is now liable to rates, and those who enjoy property which is, generally speaking, not rated at all; and there is also the question between owners of rateable property inter se. I do not say it is so, but even if you start by assuming that it is fair that all the revenue now raised for local purposes should be raised exclusively from the occupiers of real property, then there comes the question between those occupiers whether the test which the law at present enacts as to their ability to pay is in itself a fair test. About this I venture to say there will be no controversy; as originally devised, the system of rating in England was intended to cast the burden on all classes of property. The theory which underlay the well-known Act of Elizabeth, upon which the whole system of local rating was founded, seems to have been that the rates were an object towards which each member of the community should contribute according to his means. Attempts were made from time to time to give effect to that Act, but from various circumstances, which I cannot 402 on this occasion go into in detail, but which will be found fully stated in the first Report of the Commission, it became the custom only to levy the rates in respect of real or, as I shall call it, immovable property in a parish; but that custom never had any sanction from Parliament nor from the law courts. It was, however, found impossible in practice to carry out the law, and in 1840 an Act entitled the Poor Rate Exemption Act was passed, in the preamble of which certain words from the Act of Elizabeth were cited, and the enacting clause of which contained the following sentence— It shall not be lawful for the overseers of any parish, township, or village to tax any inhabitant thereof in respect of his ability derived from the profits of stock in trade or any other property for and towards the relief of the poor. The effect of this Act was to relieve from liability to local rates all property other than the real or immovable property situated in each parish. When first passed this Act was only to remain in force for one year, but it got into the Expiring Laws Continuance Act, and there it has remained ever since. I think few people will dispute that the effect of this has been to cast a burden which is unfair in proportion to what it really ought to bear on immovable property; at any rate, I think I am safe in saying that it does not lie with those who were relieved, or the successors of those who were relieved in 1840, to complain of any such measure as the one now before the House.

Let us go a step further. If it is assumed—and I think it will be generally agreed—that the ability of the individual to pay is one of the main foundations for establishing the justice of any tax. I think that the present method of testing the ability of each ratepayer to pay is almost ridiculous. It falls with exceptional severity on two classes—the occupier of agricultural land and the owner of tithe rent-charge not separated from the benefice. The farmer has the misfortune to use in the course of his business a larger relative amount of real property than any other class of ratepayer, and if he is rated upon the full value of his holding he certainly pays upon a test of his ability which is entirely 403 fallacious. I need not go into figures to prove this to your Lordships. The injustice on the clerical tithe-owner is as great, or perhaps even greater, as that on the occupier of agricultural land. The value of the property of the clerical tithe-owner is very easily ascertained, and it is valued, if I may use the expression, up to the hilt, to an extent which is not the case with any other class of property. Compare his position with that of a solicitor or a doctor, and you will find that the clergyman pays all the rates which the solicitor or the doctor would pay on the value of his residence, he pays all the Imperial taxes which the solicitor or the doctor would pay, and in addition he pays for purely local purposes an income tax of 2s. or 3s. in the £ on every pound of his income. Even if he is a clergyman of the Established Church, which some people would like to disestablish, he is, I venture to think, entitled to justice, and but for the Act passed in 1899, which placed him in the same position as the occupier of agricultural land, he would be, in my humble opinion, getting a very scant measure of justice indeed. That really is the case, on its merits, for the Bill, which I ask your Lordships to read a second time.

Before I sit down I should like to glance at one or two of the objections which are frequently urged against the policy involved in the Bill. One of the commonest objections is that the Agricultural Rates Act gives the least relief to the land which is least able to bear the burden of rates. To a certain extent this is true; but it is true to a much smaller extent than is admitted by those who urge the argument. It usually happens that the rate in the pound required to meet the local burdens in the least prosperous counties is, partly owing to the low valuation, greater than in those counties where the land is more productive; in other words, the rural rates in the £ in the richer agricultural counties are much smaller than in the poorer ones. As a rule in the richer counties the rates do not amount to more than one half of the rates actually levied in the poorer parts of some of the eastern counties of England, and of some of the Welsh counties. If, therefore, the rates 404 upon land which is valued at 10s. per acre amount to 4s. in the £, and those upon land valued at 20s. per acre only come to 2s. in the £, it is obvious that the relief afforded by the Agricultural Rates Act is a shilling per acre in each case; it is improbable that the objection with which I am dealing can really be substantiated to anything like the extent which is sometimes supposed. There is another fallacy which is sometimes urged against this Act. It is said—and this argument appears in the report of two of my colleagues on the Local Taxation Commission (Sir Edward Hamilton, and Sir George Murray)—that the amount of the grants in certain counties and unions is unfair as compared with the population. That is, if I may venture to say so with all respect to the distinguished gentlemen who signed the Report, a statistical fallacy. No proper test of the equity of these grants can be got by taking the population, because the method of distribution has nothing to do with the inhabitants generally. The purpose of the Act was to redress the inequality which clearly existed between the agricultural and non-agricultural ratepayer, and to draw such a conclusion or make such a comparison as I have indicated is obviously erroneous. The case of Old ham and Rutland has been frequently quoted, but the county borough of Oldham contains an infinitesimal quantity of agricultural land. Therefore, if you compare the amount which the county of Rutland gets, and the population of that county with the amount which Oldham gets and the population of that borough, you can, of course, make out a certain case against the Act, but one which proceeds upon an entirely fallacious basis.

Then it is urged that there is an injustice between town and country, and this is attempted to be proved by comparing the gross amount of rates levied in town and country respectively. The average country rate is said to be 2s. 3d. in the £, and the average rate in the towns and cities to be 6s., 7s., or 8s. in the £. But there are two fallacies involved in that comparison. The first is taking the average rate. It is no consolation to the ratepayer in a poor agricultural district, paying 4s. in the £, 405 and there are such cases, to be told that the average agricultural rate is only 2s. 3d. in the £. Then again, the rates levied in the towns and cities include a great many services which are rendered by the municipality to the inhabitants—services which are not and cannot be rendered in agricultural districts. Several towns and cities were referred to in the debate in another place. I will only take one of them—Sheffield. The rates in Sheffield are 7s. 10d. in the £, but only 1s. 6½d. of that sum is raised by the guardians, while no less than 4s. is raised for sanitary purposes, and other beneficial services. What is true of Sheffield is true of the county boroughs generally. Of the rural rate of 2s. 7d. or 2s. 8d. in the £, which I believe to be nearer the truth than the average of 2s. 3d. referred to, at least 1s. 9d. is raised to meet charges for poor relief, asylums, main roads, and police. Therefore, to make a comparison between the town and country rates it is necessary to analyse the gross amounts, and to eliminate in each case those rates which are not applied to the onerous services. The same fallacy was stated in another form by no less distinguished a person than Sir Henry Fowler. I should be the last person to accuse Sir Henry Fowler of intentionally misrepresenting any case which he puts forward—I know him to be absolutely incapable of doing such a thing—but the figures which he quoted involve in another form precisely the same fallacy which I think I have exposed. He said that the agricultural ratepayer paid 2½ millions on a rateable value of 24 millions; while the other ratepayers in the country paid 37½ millions on a rateable value of 151 millions. But in the second case there are included heavy charges for beneficial expenditure, such as streets, sewerage, and lighting. Out of the 27½ millions said by Sir Henry Fowler to be paid by the urban ratepayer no less than £10,000,000 were for these services alone, and there is also expenditure on such matters as libraries, parks, baths, and removal of refuse, which must be subtracted from the total, but the precise amount of the sums spent on these things is not easily ascertainable. I hope that the period for which these Acts are now to be extended will be long enough 406 to enable a comprehensive reform of local taxation to be undertaken. But I know well—perhaps I may say, without conceit, that few people know better, after the work I have been engaged in during the last five years—that the task will be by no means an easy one. The questions involved are full of debatable points; but it is most desirable in the public interest that such a reform should be undertaken, and I only wish that it were possible to approach it with less manifestation of party spirit than is displayed in these matters. I beg to move.