HL Deb 06 July 1905 vol 148 cc1264-93

Order of the Day for the Second Reading read.

LORD KENYON

My Lords, the object of the Bill which I have to ask the House to read a second time this evening is, I think, very well known to your Lordships, but I should not be acting with courtesy to the House if I did not say a few words upon it. Its object is to preserve the continuance for four years of the Agricultural Rates Act, 1896, the Tithe Rent Charge Rates Act, 1899, and two Scottish Acts of a similar nature. In short, the effect of this Bill is to relieve the occupiers of agricultural land, and the clerical owners of tithe rent-charge, from one-half of the local rates, and to supply the deficiency by an annual grant from the local taxation account out of sums paid to that account from the proceeds of estate duty derived from personal property. This policy was extended to tithe rent-charge attached to benefices in 1899 to carry into effect the second Report of the Royal Commission on Local Taxation. These Acts were renewed in 1901, the principle being that both the occupiers of agricultural land and clerical rent-charge owners had paid more than their fair share to the local rates.

The principle is not a new one. It was recognised by Parliament in the Public Health Acts with regard to rates for sanitary purposes, in which case both those classes of people were exempted from three-fourths. The Report of the Royal Commission on Agriculture pointed out the unfair position of the agricultural occupier, but did not consider it feasible to relieve him to the extent of three-fourths, to which extent he had been relieved before. It was felt that if this were the only change it would result in a heavy charge on the other ratepayers, and therefore a grant from local taxation account was made equal to one-half the rates, and that amount was based on the rates paid in the year preceding the passing of the Act. That fixed grant still remains the same, and amounts altogether to about £1,300,000. In the case of the tithe rent-charge the course pursued is a little different. In that case one-half of the total amount of the rates is paid by the owner and one-half on demand by the Commissioners of Inland Revenue, through the surveyor of taxes. This is not a fixed grant, and has risen from £105,000 in 1900–1 to £125,000 in 1903–4, showing a very large increase in rates in the country. The Scottish Acts involved in this Continuance Bill are the Agricultural Rates Congested District Act and the Burgh Land Tax Relief Act, 1896, and the Local Taxation Act, 1898.

I do not think it is necessary for me to discuss the principle of this Bill. Your Lordships are mostly landowners and thoroughly understand it, and I think you will agree with me that it has done a great deal to relieve the people whom it was hoped it would relieve. There were many arguments against it when it was first introduced in 1896, but I think it is obvious, from the manner in which this Bill has recently passed through the other House, that those arguments were not altogether founded on fact. It was also admitted in the other House that unless some readjustment of local taxation could take place it was necessary to continue this Act. The Government had hoped to pass some measure for the readjustment of local taxation; but, had no other reasons prevailed, the state of the Exchequer would not have allowed of that. Sufficient time, however, has not been at the service of the Government to enable them to pass such a Bill. Last year they did give an earnest of their wish to do something in this respect by introducing a Valuation Bill, but time did not permit of the passing of that measure, and other, perhaps more important, things took its place. I beg to move the Second Reading of this Bill.

Moved, "That the Bill be now read 2a."—(Lord Kenyon.)

EARL SPENCER

My Lords, I take no exception to the speech which has just been delivered by the noble Lord in charge of the Bill, but I feel it necessary to explain the course which I intend to pursue, as it may appear to your Lordships somewhat inconsistent. I am not going to oppose the Second Reading of the Bill or to in any way impede its progress through your Lordships' House. At the same time I do not agree with the statement of the noble Lord that the course pursued in the House of Commons in regard to this Bill showed that there was no foundation for the arguments which were used at the outset when the measure was first introduced in 1896. I take an entirely different view. I oppose most strongly the mode of action of the Bill, and I maintain that, since the Act has been at work, the arguments which were used against it when it was first introduced are proved to have been perfectly valid, and I think stronger reasons could now be urged against the Bill than were put forward at that time.

Now, why is it that I and others with whom I act are opposed to the principle of this Bill? It was originally introduced as a temporary measure pending a general revision of the system of rating. It was on that account that the Bill was passed. It was renewed in 1901 because it had been the law then for five years, and it was felt that it would have been exceedingly unjust to those ratepayers concerned if suddenly this measure, which gave them very considerable assistance, was withdrawn. For the same reason I feel at the present moment that it is necessary that the Bill should be again renewed, but I still object to the principle. I admit at once that it is necessary that in the matter of rating and valuation there should be sweeping changes. There are a great many anomalies and inequalities in the system which now prevails, but this measure is what I call a piece of patchwork. It extends to one particular class; and though that class, I quite admit, with other classes, has a claim to consideration if a general measure were adopted, its claim for relief is not so strong as that of other classes.

Take the case of agricultural land. You will find that much larger relief is given to those who are able to bear the rates than to those less able to bear them, and anyone who refers to the very able Report of the Royal Commission over which Lord Balfour of Burleigh presided will find ample evidence to the effect that between rich and poor agricultural districts the greatest inequality and unfairness provails. There was evidence given by, I think, a Rev. Mr. Davies, showing that the Act worked exceedingly unevenly. He said he knew of accommodation land which was rented at £4 per acre being relieved, a case which probably needed no relief, and I maintain that a case like this should not be held in the same proportion as land which was rented at 5s. an acre. And if we compare the rates in towns and in agricultural districts the comparison is very striking indeed. You cannot possibly contend that agricultural districts require the same assistance as urban districts.

It is assumed that the burden on agricultural land has increased very much. I admit that it has to a certain degree, and I will explain why I admit it presently. But if you take the rates on agricultural land in the year 1817 and compare them with those in the year 1891, you find this—that whereas the burden borne by land in 1817 amounted to £6,733,000, in 1891 it had come down to £4,260,000; whilst, with regard to houses and other property, in 1817 the rates amounted to £3,366,000, and in 1891 to £23,500,000. Those, I think, are very striking figures. They may vary now to some extent. We had evidence before the Royal Commission that the rates had greatly increased since 1891 and 1892 and I quite admit that; but I have taken some little pains to examine assessments and rates on property which I know in my own neighbourhood and in different counties in England, and I am sure that what I have said as to no great increase in the hereditary taxation of land will be found to be the case. Where there is no extra rate, such as a sanitary rate or a special rate for a new road, it will be found that the rates within the last twenty years have not varied very much.

But if you look at the other rates you will find that they have increased to an enormous extent. The details of this subject are voluminous; it would be difficult for even the most skilled statistician to make them clear to your Lordships, and I shall not, therefore, attempt the task. I am quite ready to admit that if you take the hereditary rates, which I call the pure poor rate, the county, borough, and police rate, and the highways rate, they have increased from nearly £11,000,000 in 1817 to £23,212,276 in 1900. That is a very heavy increase. Further, we have the addition of the education rate in rural districts, and I believe I am not overstating it when I say that in a great many counties the education rate has already increased to something like 7d. in the £and when they deal with secondary education the rate will go up to 1s. That state of things is, I think, a very serious one. This increasing burden in rates shows the absolute necessity of redistributing the rates and putting them on a fair and equitable footing.

I am not one of those who say that agricultural land should not be considered in that redistribution. I certainly think that agricultural land should be taken into account because there has been some unfairness with regard to the mode of rating, as has been very well expressed in the Minority Report of Sir Edward Hamilton and Sir George Murray. I will venture to read to your Lordships what they say— We think it fair to draw a distinction in favour of property used for agricultural purposes, because there is little doubt that on the whole its rate able value is considerably higher in proportion to the ability of the occupier to pay than in the case of any other occupation. That I believe to be perfectly true. I have heard it said that the Agricultural Rates Act has been unfair, because instead of benefiting the tenant it has benefited the landlord. I think it has been conclusively shown that rates on economic principles must fall on the landlord. In every calculation as to rent rates are taken into consideration before the rent is fixed. No doubt there are cases where the rent is not revised for a long time; sometimes it is that the landlord is too poor to do it, sometimes it is that he is unwilling to do it; and if there is a great increase in the rates, then I admit it falls very unjustly on the tenant. But on economic grounds I maintain that rates are paid by the landlord, and in a general measure I deny that it is right to exclude the landlord if it is shown that he bears an undue share of rates.

I have said enough, I think, to show that this Bill works exceedingly unevenly and that it causes great dissatisfaction, not only among agriculturists themselves, who find their neighbours, also in agri- culture, receiving much greater advantage than they do themselves, but it causes just complaint amongst urban ratepayers, whose rates have so enormously, and, I venture to think, unduly, increased. The amount involved in this Bill is a very large one; it comes to an addition of very nearly a penny to the income-tax, and all to relieve one special class. I find, according to Returns, that rates generally have increased more rapidly since 1891 than at any previous period. The Commissioners in their Report state that they have increased at the rate of about £1,500,000 a year, and when we take into consideration what the education rate will now be, I think your Lordships will agree that the matter is a very serious one, and one which ought to receive most careful attention. I shall not go into the interesting but intricate question as to the enormous alteration in the proportionate value of land to houses. There is also the question of some of these rates being remunerative. That, too, has to be borne in mind. There is no doubt that some of the rates are remunerative, and, therefore, cannot be said to impose an undue burden. There are, notwithstanding, very serious anomalies in the present system, and there have been in the past even greater anomalies.

Take the question of valuation. I had some years ago considerable experience in this matter, having twice been chairman of a union assessment committee when making a union assessment, and twice chairman of a county rating committee which made a new county rate assessment. Your Lordships are, of course, aware that there are two rates in a country district—I am speaking now of rural districts—there is the poor rate and the county rate. In old days the poor rate and Poor Law assessment was the rate and assessment for the levying of all taxation, whether for the relief of the poor and other work belonging to the Poor Law, or for the county rate but that, happily, was altered. It had been the case for many years that different unions had a perfectly different standard of valuation. Each union tried to have a lower standard than its neighbour. Fortunately, an Act was passed enabling the county to have its own valuation.

The counties then had their own county rate, and the first thing that was done in my county was this. We brought all the unions together, and compared their assessment with the income-tax assessment, and this secured a uniform standard throughout the county. The old system caused great injustice to railways. I recollect, as chairman of quarter sessions, hearing an appeal from a railway company which complained that, as several unions were assessed at a very low figure, and not at the same standard on value as the railways, the railways paid an undue amount to the county rates. But this anomaly still exists, that the county never assesses individual farms; they only assess the unions and parishes. In this way, therefore, you have now a county rate collected with the poor rate. It is not unfair to a parish, because parishes are all at about the same standard of value, but it is collected very often on a totally different standard from that which would obtain if the county had valued each separate holding. That is an anomaly which ought not to exist any longer.

In some counties I understand that the variation in the standard still exists. I have even heard of towns choosing to have a low standard, with this result, that they did not diminish their expenditure, but when their expenditure was as high as their neighbours they had a much higher rate; and I have heard of people who were about to settle in a town refusing to go there because the rates were so high. That difficulty has arisen owing to the town wishing to have a low standard of assessment instead of a fair standard. I think one of the most important things with regard to the whole of this subject is that there should be one valuation fixed for all kinds of assessment. There should be the same valuation for the income-tax, for the county rate, and for the union and district rate, and in that way the complications to which I have referred would be avoided. I know that this is not an easy thing to do.

The noble Lord referred to a proposal of His Majesty's Government in the Speech of last year to pass a Valuation Bill.

LORD KENYON

It was introduced.

EARL SPENCER

I think on three or four other occasions Bills have been promised and attempted, but have always failed. I quite admit the difficulty of dealing with this matter, but it is essential that it should be taken in hand.

I come to another point. The cry has always been that real property has paid more in proportion than personal property, and at different times considerable relief has been given by Government. It began in the time of Sir Robert Peel, in 1846, and the estimated relief to rates that he proposed amounted to something like £341,000. Then came the Police Act of 1856, brought in by Sir George Grey under a Liberal Government, and next came the relief in 1874, proposed by Sir Stafford North cote. In 1877 Mr. (now Viscount) Cross made a very important proposition, which was carried out, whereby local prisons were transferred from the local authorities to the State. Next there was the grant of £250,000 in respect of dis-turnpiked roads given by Mr. Gladstone's Government in 1882. Then came very large and important changes made by Mr. Goschen when he allotted certain taxes for the purpose of local relief.

In this way there has been an enormous increase in Exchequer contributions. In 1879–80 Government contributions amounted to £2,733,846, and in 1899–1900 to £12,249,083. These grants were at first always given on condition of certain payments being made to different authorities. Some of those have been swept away by Mr. Goschen's proposal, but a considerable number still exist, and I maintain that that is not a sound principle of financial administration of local bodies. They have a mandate to pay over to certain unions particular sums, and these deal with salaries of teachers, school fees, fees for the registration of births and deaths, pauper lunatics, and the cost of union offices. These are, I understand, the only ones now left. The police is a different matter, because there the counties pay a large sum out of the rates. I think this principle is not a sound one. It is not a sound principle that representative bodies should be forced by precept or mandate to pay certain sums when they have no control whatever as to the distribution of those sums.

These abuses have been to a certain extent diminished, but they still in some measure exist. With regard to Mr. Goschen's great Act, I cannot help thinking that, rather unexpectedly probably to the author, this system of payment has worked exceedingly ill. The sums have increased enormously, but they have confused all the accounts. Nobody, unless he is perfectly versed in county affairs, would be able to wade through a balance-sheet of a county with regard to Exchequer contributions and all these different sums without the greatest difficulty. In the counties there is confusion, but there is confusion also with regard to the Exchequer accounts because these sums are paid out. The money raised by taxation is not available for general national expenditure, and a very abstruse calculation has to be made by eliminating what is paid to the counties out of public revenue before you can really arrive at what the national revenue clearly is. Therefore, I submit that this system, particularly since the Agricultural Rates Act has been passed, has left both the national finance and local finance in a state of terrible chaos.

The question of compounding of rates is another matter which I think ought to be considered. No question has created more difficulty in Parliament and elsewhere than the question. I remember hearing a brilliant speech from my great leader, the late Mr. Gladstone, on this subject in the House of Commons. He defended the compounding of rates on this ground, that it was eminently convenient in the collection of rates that one person instead of a great many persons should pay the rate, and he argued that it distinctly came out of the rent of the cottages or houses. Economically my right hon. friend was, no doubt, quite right, but in practice I am sure that hardly any householder, either in towns or villages, in respect of whose dwellings the rates are compounded, ever thinks that in the rent is included the rates, or makes any remonstrance of extravagance or over- expenditure. It is, I admit, a difficult subject, but I feel that it is one of the greatest possible importance.

It is very necessary that all electors should be made to take an interest in, and feel responsibility for, public expenditure, and if hundreds of thousands of people do not know how much of their rent goes towards rates, I think it is a very serious matter indeed. A curious instance was brought to my notice recently in the case of the borough of Holborn. Figures were collected a little while ago by that borough showing that more than a quarter of the sum paid in rates in Holborn was paid by companies which had no voting power whatever, and that, on the other hand, more than half of the registered voters paid no rates at all. Therefore, the people who pay the rates do not vote, and the people who do not pay have votes. Direct taxation is the best way of showing electors where there is good government, and on that ground I wish sincerely that something could be done by Act of Parliament to alter the present system.

One of my reasons for urging a general Act for the redistribution of Exchequer contributions, and putting rates on a different system, is that I want to avoid the patchwork legislation which is continually being proposed. We have this Act, which of course we must now carry for the reasons I have given, but we have continually other Acts—Acts of great importance—proposed, which, if carried, would only add to the patchwork and make confusion worse confounded. There are many friends of mine who think the taxation of land values a just and easy thing to do. I to a certain extent agree, but I recognise that there are great difficulties in regard to that question. It will have to be considered, and considered very carefully, but I want it to be taken into consideration not alone as this Bill has been, but in conjunction with a general scheme revising the whole system of rating. I am not going to propound the remedies which have been put forward in the great Report of the Royal Commission. I use the word "great" advisedly, for I believe it is one of the most valuable Reports ever submitted to Parliament, and ought to be the foundation of future rating and valuation Acts. There are many things to be considered, and the whole subject should be taken in hand and dealt with.

The present position with regard to rating and valuation—I might even say with regard to taxation, though that goes rather beyond the scope of this Bill—is most unsatisfactory. It encourages peddling and tinkering with the question, and to that I have the greatest possible objection. What we require is not separate and individual steps, but a comprehensive, for-reaching, and equitable measure. The present Government had their opportunity to carry such a Bill; they had a gigantic majority in another place; they have a still more gigantic majority here, and yet they have not dealt with the subject even after the able Report of the Royal Commission which they themselves appointed. The noble Lord said there were two reasons why His Majesty's Government could not deal with the question. One was that the Exchequer was not very full at this moment, and that it required an overflowing Exchequer to deal with it. But does it? It is not so certain that we require great additions to the grants from the Exchequer. What we want is a fairer and better redistribution of the grants. With regard to time, I cannot help thinking that the time at the disposal of the Government is very much under their command, and I certainly cannot congratulate His Majesty's Government on the way they have used the time which they had at their disposal in another place. I do not wish to say hard things, but they seem to me to have wasted the time there, and if they had managed things with more judgment they would have had time to deal with this and many other important subjects. The task of redressing what is wrong and unjust in the matter of rating is, as I have said, a difficult problem, but, though it may take much time and great labour, if it is done it will repay the time bestowed upon it by any Government.

LORD BALFOUR OF BURLEIGH

My Lords, after the reference which has been made by the noble Earl I think your Lordships will not be surprised if I desire to say a few words on some of the aspects of the questions which have been brought before us to-night. The noble Earl, I think, used very fully the traditional liberty of this House in matters of debate when he made the speech we have just listened to upon the Second Reading of what is, after all, a very humble little measure—a speech covering, if not the whole field, at any rate a very large portion of the whole field, of local taxation. As to very much of what the noble Earl said towards the latter part of his speech there will be no disagreement on this side of the House. I think he made some very wise and statesmanlike observations on the question of compounding. I entirely concur with what he said. I believe the practice of compounding, however comfortable for the local authorities, however easy as a matter of collecting the rates, is entirely vicious in principle, and ought to be, if not altogether abolished, which believe is impossible, at any rate confined within very much narrower limits than it is. And for this reason. Many of those who pay under the system of compounding do not know, and have no means of knowing, for what they are paying. They are apt to think that because the sum that is collected from them by the landlord is larger as time goes on the whole of that increase is increase of rent due to the rapacity of the landlord, and, owing to the fact that they have no means of having it divided for them, they get a very false idea of the real cause of their increased contribution; and I think one of the most salutary reforms which you could carry into effect would be to make it a necessary incident of the system of compounding that the demand note should render it easy for the person who has to pay to distinguish between what is paid in rent and what is paid in rates, so that he would see, as each year goes on, that the increase in what he has to pay is not wholly rent, but is, to a large extent, on account of increased contribution to the rates.

There were some complaints in the earlier portion of the noble Earl's speech about the method in which this matter had been dealt with by the Government during the last ten years, and a part of his complaint was that the Act had been introduced in the first instance as a temporary measure, and had been so continued during the last nine or ten years at three different intervals. I cannot help thinking that in making that complaint the noble Earl was oblivious of the real history of how this grievance has risen. The original basis of the contribution to local rates, especially the poor rate, was that it should be a contribution according to the ability of the person who had to pay. The well-known Act of Elizabeth provided that it should be according to the ability of the inhabitants, and personal property was technically liable to contribution for the poor rate, and was, in many instances, obliged to pay down to the year 1840. In 1839 a decision was given which brought the matter to a crisis, and in the following year an Act was passed as a temporary measure exempting personal property from the payment of rates. I think it is, at any rate, some palliation of what the noble Earl thinks is an offence in this case, when we recollect that the Act passed in 1840 for one year as a temporary measure has found its way into the Expiring Laws Continuance Bill, and has been renewed ever since that time, always ostensibly for one year.

Even that does not exhaust the whole case, because 1840 was, as your Lordships, of course, know, before the repeal of the Corn Laws, and the grievance was intensified by that repeal, of which I am not going to complain; but, as a matter of historical fact, the grievance to the landed interest was intensified by the repeal, because out of what they then had they were more able to pay even the larger contribution which the noble Earl has indicated. He gave some figures which, as quoted, are rather misleading. The noble Earl said that in towns and urban districts the quantum of the rates is very much larger than in agricultural or rural districts. That, as a sweeping general statement, is undoubtedly true; but before you can make a proper comparison of the burden which is borne, not only by the rural ratepayer as distinguished from the urban ratepayer, but as between different classes of ratepayers in rural and urban districts, you must bear in mind, when you talk of an urban rate of 8s. or 9s. in the £as against a rural rate of 4s. or 5s. in the £that the urban rate in almost every case includes a very great deal more than the rural rate does. In these days of municipal enterprise, as to which I make no objection, in such matters as water, gas, and so on, the ratepayer, in the urban district is getting a great deal more for the money which he pays, and a great many beneficial services are discharged, for him by the local authority which, if they were not discharged for him as a communal charge spread over the whole of the county, would have to be done by himself at greater expense. Therefore, if you are going to compare the burden borne by rural and urban ratepayers' you I must take care that you compare like with like, and you must eliminate, when you are making a comparison between the gross burdens borne, everything in the nature of a beneficial rate.

So much, then, for the question whether the urban or rural ratepayer is more entitled to relief from the Exchequer. If I understood the noble Earl rightly, he made it a part of his case against this policy—not against this Bill, but against the policy—that in 1817 a sum of £7,000,000 was drawn from the landed I interest in the name of the Poor Law, and that now it had come down to £4,000,000. Nothing could be more misleading than to state the broad figures like that, because the question is not what was paid as a total contribution, but what the levy per £ was. I should be very much surprised if it is not the case, comparing the ability to pay with the revenue upon which it was paid, that the £7,000,000 of 1817 was probably felt to be less burdensome than the £4,000,000 of the present day. It was made a point also that at the same time as the gross contribution from land had fallen the gross contribution from houses had risen. Well, just look at the relative proportion in valuation between houses and land at the beginning of the last century and now.

EARL SPENCER

I specially said there had been a very great difference in proportion between the value of land and the value of houses.

LORD BALFOUR OF BURLEIGH

If the noble Earl once admits that, surely his whole generalisation falls to the ground, because the gross amount that you levy from any class of property cannot be compared fairly unless at the same time, in a matter of this kind, you estimate also the gross amount of the property from which it is drawn and the ability of the owner of that property to bear the burden. The noble Earl also made a considerable point of the number of different efforts which had been made to relieve the local ratepayer at the expense of the national taxpayer. With regard to that part of the noble Earl's speech you must be careful to remember that all these attempts are not accumulative. You must remember that under some of the statutes the contributions were in substitution for those which had gone immediately before.

The noble Earl commented, not a bit too strongly, on the complication of the present system. I agree that it is almost bewildering in its confusion. I should be sorry to say, after five years of study, that I thoroughly understand it; but I am quite sure of one thing, that when there is a change, when there is a reform of the whole system of local taxation, the noble Earl will be living in a fool's paradise if he thinks it will not necessarily involve an increased contribution from the Imperial Exchequer to local rates. And it is on that ground, I believe, as much as any other, that the Government have shrunk from dealing with the matter. If there had not been a great expenditure recently in South Africa, I believe this question would have been dealt with; but you may depend upon it that, though you may say you want fairer and better distribution, the noble Earl will find that those from whom anything is taken will vent their displeasure upon their representatives, and through their representatives upon the Government, and that those who get the benefit under any system of reform will, if they do not sit quiet, simply say they have not had enough, but ought to have more.

It is, in my opinion, impossible to over-estimate the difficulty, complexity, and far-reaching ramifications of the question which has been touched on to-night. I am sure if the matter is fairly considered you will find that during the last two or three years there has not been an opportunity for comprehensively dealing with the whole question. The noble Earl touched upon the increase in the rates, and incidentally upon matters in connection with that. I venture to say that when you do deal with this matter, what you will have to do will be to endeavour to reconcile local control and local management and yet to get a fair contribution from the Imperial Exchequer, and to secure that that contribution is paid in such a way that it will not be, as it has sometimes been in the past, taken to be a premium on local extravagance. What you have got to do, in my humble opinion, is to look in this direction. At the same time you must find out what part of the charges which are laid upon the local ratepayer involve matters of national policy. There is a national policy involved in having a sound poor rate and in having good education, and, taking those two things as an example, you must endeavour to combine efficiency with economy, and you cannot get rid of local control. Yet it is not fair to penalise those parts of the country which are efficient in the matter of poor rate and education. Anyone who will turn to the pages of the Report of the Royal Commission will find a scheme drawn out, to which I have appended my name, which I derived from one or two of the best known local administrators of taxation in England, which will be worthy of a certain amount of study.

The noble Earl alluded to the question of valuation, and in that I venture to think he touched the real root of what is necessary to do first. You must have an efficient system of valuation, and I hope noble Lords from England will not be offended with me when I say that in Scotland we are at least half a century ahead of England in this matter, because we have a valuation up to date renewed every year; whereas in England—I elicited the fact from a witness who gave evidence before the Commission—in some country parishes a new system of valuation has not been introduced for thirty years. The noble Earl was right when he said that what you have to aim at is one valuation for Imperial, county, and parish purposes. We have got that in Scotland, but in England you have various authorities pulling against one another. One of the reasons for the Tithe Rent Charge Act, which has been very much commented upon at various times, is this, that by the continual failing to keep the union assessment, which greatly depends on the action of the parish overseers up to date, the tithe rent-charge owner, who is always rated up to the hilt, because the value is known, has from time to time been put in a relatively unfair position as compared with other ratepayers. That is a fair thing to remember when you are dealing with a Bill which is extending relief to that particular class of ratepayer, whose case for relief was proved more fully than any other case I have ever had to deal with.

We believe there never was a greater injustice perpetrated upon any class of ratepayer than upon the agricultural ratepayer when he had to pay his rates upon the full valuation of his farm. One witness who came before us gave detailed figures which proved to our satisfaction that in the parish with which he was connected the agricultural ratepayer paid about 15 per cent, of his income in rates, and that no other ratepayer paid more than 5 per cent. Those who were using property for manufacturing purposes were not paying more than 15 per cent, on what was probably their income. That was a very grave injustice, which the agricultural interest could not bear, and one which it was perfectly right to relieve them of, and this relief must be continued to them until a general comprehensive reform is undertaken. When that may be in our present political conditions and with the difficulties of it, I am bound to say I dare not forecast; but this I do say, that I do not envy the Government, from whichever political Party it is drawn, which has to undertake the task, but if ever there was a case which ought to be decided, not on Party lines, but on sound business lines, it is this question of rating. I suppose it is hopeless this year, but I hope whoever is in power next year, whether it be this Government or any other, will make a real effort to deal with the question of valuation, because that is a necessary prelude to any reform of local taxation, and that question, I think, would not be nearly so complicated as the reform of local taxation itself, for it could be done, and largely done, by giving power to local authorities who are competent to do it, and who ought to be entrusted with it.

EARL CARRINGTON

My Lords, I am not going to presume to take up the time of the House on this subject, but I should like to be allowed to call attention to two sentences that fell from my noble friend who moved the Second Reading of this Bill. The noble Lord expressed the great desire of the Government to undertake the question of readjusting local taxation, and a great many reasons were given why that was impossible. We have been told that there was not enough money in the Exchequer and not enough time at the disposal of Parliament. But I suppose there is one more reason why this great subject has not been taken in hand, and that is the promise of Mr. Balfour not to overburden his supporters with too much legislation. I must say I rubbed my eyes with astonishment when I heard my noble friend opposite, who is such an authority on agriculture, say that this Act was brought in the interests of the occupiers and had done a great deal to relieve those persons whom the Government had hoped it would relieve.

May I, for one moment, call the attention of the House to the Bill itself? Lord Balfour calls it a very humble measure. I do not know whether it is such a humble measure after all, for it seems to raise the whole question of the incidence of rating. This humble measure, which we are asked to renew for four years, represents a tax on the whole community of about £1,250,000 annually. I should have thought, in the present state of affairs, that that was a somewhat serious matter. Farmers' rates, I have always understood, are calculated at something like 2s. an acre. If you take them all over England you would find that the average rates of tenant farmers are about that sum. Half of that, therefore, is equivalent to a reduction in rent of Is. per acre—namely, 5 per cent. Considering what tremendous reductions—30,40, and 50 percent.—have been made in rents all over England in days gone by, I do not think that that is, after all, such a very great boon to the tenant farmer as some would think. Rents have been stationary since 1896, while, as my noble friend the Leader of the Opposition, in his most masterly exposition on the subject, has pointed out, rates have gone up very considerably.

I should like to put before the House the position of a man like myself, who is entirely dependent upon land, and who looks upon land-owning from a business point of view. Supposing a man has 25,000 acres of land, a reduction of Is. an acre means on that land £1,250, which is paid by the whole community at large. If you wanted to put the tenants in the same position, you would either have to give them a temporary-reduction of 10 per cent., or you would have to make a permanent reduction yourself of £1,250 a year; but though the rates, as the noble Earl behind me has said, have gone up, yet the rents have remained stationary, and the tenant farmer in 1905 is practically in the same position as he was in 1896. I cannot see that he is in any better position. Mr. Henry Chaplin, who is understood to be an agricultural authority, told us that his opinion was that in all matters of this sort the benefit must ultimately go into the landlord's pocket. He went on to illustrate this remark by saying, "The higher the rate the lower the rent; the lower the rate the higher the rent." And the strange thing to me is that in this great historical House, which we have been told owns over one-third of the land of England, we are asked to agree to sanction the continuance of this Bill on the ground that it is a measure in the interests of the tenant farmer. But what I think, if I may say so, stranger still, is that the vast majority of the tenant fanners believe that such is the case, and think that this Act was introduced and intended to work for their benefit, and for their benefit alone.

LORD HENEAGE

My Lords, I thought the old argument that the farmers did not get the benefit of the Agricultural Rates Act was exploded. This is the first time I have heard it for many years, but, even if it was the fact that they did not get the whole of the benefit of the Act, one thing is certain—their rates have largely increased. Nobody can deny that the effect of the Education Act has been to increase the burden on agricultural land. I did not rise so much to deal with an exploded contention as to follow out an argument used by Lord Balfour of Burleigh as to the false assumption drawn from the figures quoted by the noble Earl the Leader of the Opposition. It is quite impossible to deal with wholesale figures with regard to rates, either in towns or in the country. In the first place we must remember that if the total amount of rates from agricultural land is less than it was a certain number of years ago, rents have gone down at least 40 per cent., and, therefore, the basis of the rate charge is less but, over and above that, there is not the same amount of agricultural land in this country as there was at that time. Thousands of acres have been taken away from agricultural districts, and added to town districts, and there is considerably less agricultural area now in which rates can be levied than a few years ago.

But then we are told: Look at the way in which the rates have increased in towns. That, as Lord Balfour said, cannot be dealt with until it has been analysed. In the first place, a great many of those rates are not what we should have called in old days bona fide rates; there is a good deal of the commercial aspect about them; and, in the second place, railways and other great businesses contribute very largely to those rates. But do they contribute in the same way as agricultural districts do? Farmers have to pay, not only on their houses, but on their land. They have to pay on what we may call their raw material; but large manufacturers pay comparatively very little in respect of the large incomes which they make. I recollect serving on the committee of a chamber of agriculture a good many years ago, and we found that one of the chief firms in Lincoln, who turned over at least £60,000 a year, was paying exactly the same in rates as a farmer in the same district who was only farming a thousand acres. Therefore, it is, as has been said, impossible to take these figures wholesale.

LORD MONKSWELL

My Lords, I should like to say one word on the Second Beading of this Bill, chiefly from the point of view of the large towns, and of London in particular. I was a little surprised to hear from the noble Lord who has just sat down that the tenant farmers apparently got the whole benefit of this Act, my noble friend behind me having previously quoted Mr. Chaplin to the contrary. I think it is a little unkind of the noble Lord so freely to contradict Mr. Chaplin. For my part, in a matter of this kind I prefer to take the authority of Mr. Chaplin to that of the noble Lord; and I would mention this in support of Mr. Chaplin's contention, that in the House of Commons a large number of Amendments were put down with a view of enabling the tenant farmers to get the benefit of this Act, and those Amendments were opposed by His Majesty's Government, and were not passed.

I wish to say a word on the question of the rates as they affect agricultural land only. The unfairness, as it seems to me, in this Act consists in this, that a county which has been fairly prosperous in agriculture and has not felt the necessity of this Act, gets an enormous benefit from the Act, whereas another county, in which it is most desirable, perhaps, that some such provision as this should be adopted, does not derive much benefit from it. In those places where it is most wanted they get the least benefit from the Act. I do not suppose any noble Lord will deny that if there was any county in England that required this Act it was Essex. Contrast with Essex the county of Devon. There has been hardly any agricultural depression at all in Devon, but we know that the agricultural depression in the county of Essex has been extremely severe. But, under this Act, Devon gets £17,000 and Essex only £14,000. That is to say, the county which requires it most gets less, and the county which does not require anything gets most. If you go further into this matter and analyse the condition of Essex, you find that where the land is poor and the valuation low the amount that is obtained out of the Exchequer is extremely small. And, therefore, it seems to me an extraordinary way to benefit agriculture to introduce a Bill of this kind. With regard to London, we think that we have a very great grievance indeed. London only gets £3,067 out of the whole sum; but what does London pay towards it? It is calculated that London pays at least one-fifth towards this £1,300,000; that is to say, London pays considerably over a quarter of a million for the benefit of agriculture, whereas it only receives a paltry £3,067.

LORD WELBY

My Lords, I think the opponents of this Bill would find it possible to show that this measure itself is at once an anomaly and an injustice. For a long time past it has been argued on all sides that the present system of local taxation works in a cumbrous and unfair manner, and both urban and country ratepayers have joined in remonstrating with the Government upon the continuance of the present system and have asked for a reconsideration of it. I rise rather to draw your Lordships' attention to the injustice which has been wrought to the urban ratepayer by the method adopted by His Majesty's Government. For a very long time the cumbrous and defective manner in which the present system of local taxation has worked has been before His Majesty's Government. As long ago as 1896 the Government admitted the injustice, not only in respect of the landed section of the ratepayers, but also in respect of the urban, because when the Agricultural Rates Act was first introduced the Prime Minister in this House admitted the claim of the urban ratepayers to relief and said Her Majesty's Government would have been only too glad, if it had been possible, to include the urban ratepayer in the relief they were giving to the agricultural ratepayer That, I think, shows that so high an authority as the late Lord Salisbury fully admitted the claim of the urban ratepayer.

A Royal Commission was at the same time granted to inquire into the whole subject, and the natural course, I should have thought, would have been for the Government to have waited for the Report of that Commission and then have introduced a Bill dealing with the whole system, which they acknowledged required revision. Instead of that they chose one section, a highly-favoured section—that section of the ratepayers who are particularly supporters of His Majesty's Government, and gave them a large measure of relief from the Exchequer amounting now to £2,500,000 a year as long ago as 1896. The Royal Commission reported in 1901, and here we are in 1905 with the grievance of the urban ratepayer admitted quite as fully as that of the agricultural ratepayer, yet the agricultural ratepayer has had preference given him and has been relieved for ten years, while the urban ratepayer is still in the same condition as he was before the Royal Commission was appointed. I venture to think that is a very great injustice to the urban ratepayer. Various speakers have given reasons why His Majesty's Government have not dealt with this question; but is it a reasonable excuse for not passing a measure of justice to the whole body of ratepayers in the country to say that you are waiting for a full Exchequer and we are groaning under £25,000,000 of war taxation; am does not that really mean putting the question off to the Greek Kalends? In the meantime the grievance of the urban ratepayer is left utterly redressed, while this unjust preference is given to the agricultural ratepayer.

I was surprised to hear Lord Heneage describe the contention that the tenant farmer did not benefit by this Act as exploded. I think the noble Lord alone has heard the explosion. I hardly know a person who does not admit, at all event that it is a very grave question who dot really benefit by the Act. I will take perhaps a higher authority on the question than Mr. Chaplin. When the Bill was before Parliament Sir Michel Hicks-Beach declared, upon this very point, that he could not agree wit some of the speakers who had said the land owner would not benefit. S Michael Hicks-Beach said— It will be a benefit to the farmers certain at first, probably for the whole time of operation; but when fresh tenancies are created, especially in the present state of the market, as between landlord and tenant, if the change should be more in favour of the landlord than at present, then no doubt, I think, it is admitted the owner of the land will have the advantage.

LORD HENEAGE

I beg the noble Lord's pardon for interrupting him. I was speaking from the experience of the last eight years during which the Act has been in operation. I say that on the expiration of that period rents have not been raised and rates have gone up.

LORD WELBY

I think the noble Lord generalises in too dangerous a manner. Before we accept that statement we have to inquire into a number of points. This Bill acts particularly hardly on the urban ratepayer in this way. There are two sets of ratepayers, namely, the agricultural ratepayer and the urban ratepayer. Both of them, it is admitted, have a claim to relief. To the agricultural ratepayer relief has been given, but it has been refused to the urban ratepayer. Now comes the way in which a double injustice is done to the urban ratepayer. Not only is relief refused to the urban ratepayer, but he has to pay an enormous sum for the relief of his more fortunate brother, the agricultural ratepayer. This double injustice arises thus: The urban ratepayer is also a taxpayer, and as a taxpayer he pays his share of the grant from the Exchequer to the agricultural ratepayer. I take the case of London. It is, of course, very difficult to calculate the burthen thus cast on the citizen of London, but the best calculation I have seen makes the contribution from London ratepayers under the Agricultural Rates Act equal to a sum varying from £380,000 to £450,000 a year. That is, I maintain, a double injustice. Not only to the London ratepayer is the relief which has been given to his more fortunate brother refused, f but in addition he is taxed to the extent of between £380,000 and £450,000 a year towards the relief of his fellow-sufferer.

LORD HERRIES

My Lords, noble, Lords seem to me to found their arguments with regard to the person on whom the advantage of this Act has fallen on the prophecies which were made at the time the Act was first introduced. I should like to ask, first, has the rental in the agricultural districts increased since the Agricultural Rates Act passed, and secondly, have the prices of agricultural produce gone down since that Act was passed? If anything, the prices of agricultural produce generally are higher now than they were in 1897; and I am also under the impression—I should like to know if it be true—that the rental agricultural districts is, if anything, lower than in 1897. If that be the case, then I submit the advantage which has been received from the Act has gone into the pockets of the tenants and not into the pockets of the landlords.

With regard to the contention of the noble Lord who has just sat down, would point out that agricultural rate payers have frequently to pay large sums of money for the benefit of the towns I could give an instance of a farmer occupying 850 acres and paying a rent o over £600 a year, who has to pay for the lighting of a town two miles off because he happens to be in the same parish In the same way, if the sanitary arrangements in the town are improved he ha to contribute. As a matter of fact, h has to pay more than the occupiers in the town. So I think it is hardly fair to say that the agricultural ratepayers been relieved at the expense of the urban ratepayers. I rose, however, to point out that the question as to whether the benefit has gone into the pockets of the landlords or into those of the tenants easy to decide. You can, by looking at the rental of land in the country and ascertaining that it is, if anything, lower now, and by taking account of the fact that the price of produce is higher that in 1897, fairly decide that the benefit received from the Agricultural Rate Act has not gone into the pockets of to landlords. It certainly has not-gone in the pockets of the landlords in the count in which I reside, and I have no doubt other noble Lords could give a similar experience.

THE SECRETARY OF STATE FC FOREIGN AFFAIRS (The Marquess of LANSDOWNE):

My Lords, I have sufficient audacity to venture upon controversy with the noble Earl opposite or with my noble friend Lord Balfour of Burleigh as to the details of a subject which they themselves admit to be so complicated that, with all the study they have given to it, there yet remains much about which they cannot speak with certainty. With a great deal that fell from the noble Lord in his most interesting speech I think many of us on this side of the House would agree. We all share his aspiration for a comprehensive and scientifically perfect measure for the adjustment of local taxation, such as that the necessity of which he suggested during the course of his remarks. But I, was struck by the fact that throughout his observations, and, indeed, throughout the observations of other noble Lords, very little was said against the Bill on the Table of your Lordships' House, although a good many comments were made on the conduct of His Majesty's Government in dealing with the question with which that Bill is concerned.

The noble Earl, at the outset of his speech, told us that he took exception to the principle of the Bill, but I confess I did not detect in what he said to your Lordships any attack upon what I conceive to be the principle of the Bill. The principle of the Bill is merely this, that it is desirable, pending further legislation and as a temporary measure, to continue to certain classes of ratepayers the relief which they have enjoyed during the last nine years. Against this principle not a word, so far as I have been able to judge, has been said during the course of this debate. On the contrary, I think it has been admitted by the noble Earl, as it was by the Leader of the Opposition elsewhere, that it was inevitable, in the present circumstances, that a Bill of this kind should pass into law. The essence of the noble Lord's argument was this, that the Bill, necessary though it may be, is an imperfect measure, the passing I of which will leave behind it certain inconsistencies and anomalies which shock', the noble Lord's mind. Well, my Lords, we are not here to pretend for a moment that this Bill is a scientifically perfect measure. I take it, on the contrary, that everyone will admit that the Bill will leave certain inequalities between urban and agricultural ratepayers, or again, between different classes of agricultural ratepayers. That is not contested. But the question is whether your Lordships desire to pass a Bill such as this, an admittedly imperfect Bill, or that there should be no legislation at all. That question has been answered by the noble Earl, who has given to it the only answer which can be given.

In this Bill we have done the best that can be done to deal provisionally and temporarily with this difficult question, and it is no argument to say the Bill is a patchwork Bill. A Bill of this kind must, of necessity, be a patchwork Bill. The noble Earl took exception to the argument of my noble friend Lord Kenyon, who gave your Lordships some explanation of the Seasons for which the Government had found it impossible to present to Parliament during the last few years a comprehensive and perfect measure such as the noble Earl desires. My noble friend said, to begin with, that such a measure could not be provided unless the condition of the Exchequer were such as to make it easy for the Government of the day to furnish the necessary financial ways and means. To that the noble Earl objected that this was a mere question of readjustment and that he could not see why any additional call on the Exchequer should be necessary.

EARL SPENCER

I do not think that I said that absolutely. I said that it need not be a condition.

THE MARQUESS OF LANSDOWNE

I accept the noble Earl's account of his statement; but being an ill-informed person on such matters I naturally turn for guidance on this subject to the Report which has been so often quoted during the debate, and what does that Report say? The majority, at page 32 of their Report, say that according to their estimate the additional grants to be provided would be the difference between £9,700,000 and £7,145,000. Their estimate, therefore, is that something over £2,500,000 would be required for the purpose. Turning to the Minority Report, I find another calculation which goes to show that the additional cost entailed on the Exchequer would be about £1,500,000. I think, therefore, that my noble friend was justified in saying that the condition of the Exchequer has to be considered before any Government could propose to deal with the question.

Then the noble Earl criticised the Government because they had not found the Parliamentary time necessary for the introduction of a complete measure. I would remind the noble Earl that it is not only the Government of the day that is responsible for the expenditure of Parliamentary time, and I cannot call to mind that during the last few years the Party that sits opposite to us has greatly assisted us in economising the limited amount of time at our disposal. But what is more important still, is that a measure of this kind could not be introduced unless we had, as a preliminary, dealt with the important and intricate question of valuation, and as to that the noble Earl is aware that the Government did make an effort, though not a very successful one. We did introduce a Bill which, if it had received more encouragement, we might have pressed further upon Parliament.

I desire to say one word upon another point which was raised first in the debate by my noble friend Lord Carrington, and afterwards by the noble Lord who sits behind him. My noble friend repeated in this House an argument with which we are very familiar on public platforms, which goes to show that in all cases of this kind, whenever Parliament affords any relief to the occupiers of land, that relief is at once intercepted by the owners. I believe that to be a great misapprehension. It is, of course, perfectly true, as Lord Welby told the House just now, that, from the point of view of the political economist, the removal of any burden from the occupiers of land must ultimately tend to increase the value of that land for letting purposes. That is an economic truth which I think will not be challenged. But is it the case that the passing of a measure of this kind affords no relief to the occupier? My noble friend Lord Carrington has told the House that he is a landlord of the landlords, and those who know him feel perfectly sure that he is a generous and indulgent landlord. But I would like to ask him whether in a case of this kind it would be his habit, supposing some slight relief were given to his tenants by the Legislature, immediately to call upon those tenants to add an equivalent amount to the payment they make to him in the shape of rent. I do not believe it for an instant, and I only suggest that my noble friend should impute to other landlords the same liberality and forbearance which he himself would exercise.

EARL SPENCER

What the noble Marquess says is perfectly true up to a certain point, but to my knowledge there are many landlords who would have had to make considerable reductions in their rentals if the Act had not passed.

THE MARQUESS OF LANSDOWNE

Well, there is only one way of solving this question that I can suggest to noble Lords opposite, and that is that they should ask the tenant-farmers of this country what they think. I will undertake to say that they will find that every tenant-farmer believes that the Bill is of some use to him, and would be extremely indignant if there was any idea of abandoning it. That is the practical contribution which I make to the solution of the problem, and I leave it to the noble Lords opposite.

On Question, Bill read a second time and committed to a Committee of the Whole House to-morrow.