HL Deb 02 July 1908 vol 191 cc902-28

Amendments reported (according to order).

THE EARL OF CAMPERDOWN

My Lords, the first Amendment standing in my name is to insert the word "yearly." That is a purely drafting Amendment. There are two similar Amendments following which are also of a purely drafting character.

Amendment moved— In page 2, line 18, after the word 'of,' to insert the word 'yearly.'"—(The Earl of Camperdown.)

On Question, Amendment agreed to.

Amendment moved— In page 3, line 4, after the word 'separate,' to insert the word 'yearly.'"—(The Earl of Camperdown.)

On Question, Amendment agreed to.

Amendment moved— In page 3, line 11, after the word 'the,' to insert the word 'yearly,'"—(The Earl of Camperdown.)

On Question, Amendment agreed to.

THE EARL OF CAMPEKDOWN

My Lords, my next Amendment is in Clause 4, page 3, line 26, to leave out from the word "say" to the words "Valuation Acts" on page 4, line 5, and to insert a long Amendment which I shall ask your Lordships to allow me to explain. The Amendment itself is an important one, and is intended to deal with the case of the man who unreasonably withholds land from building in, or in the neighbourhood of, a town.

I must be allowed to remind your Lordships of what occurred on May 14th, when we were in Committee. On that occasion my noble friend Lord Balfour of Burleigh had moved certain words which I proposed to omit, and your Lordships finally agreed to omit those words. It was pointed out that the result of that might be to leave entirely undealt with the case of the man who unreasonably withholds land from building. The noble and learned Lord on the Woolsack appealed to this side of the House. He stated that that was the result, in his opinion, of what we had done, and he said himself that he thought it was a very difficult case to deal with in view of the action the Committee had taken, and that he was not willing to attempt to find the words himself, because the Bill in its new shape, annual value having been substituted for capital value, was not such as he personally approved. It was replied from this side of the House that we did not wish in any way to support the man who could be proved to be unreasonably withholding from building land which actually at the moment was suited and required for building; and the noble Marquess the Leader of the Opposition, as well as others on this side of the House, said that if words could be devised they would be quite willing to give them their favourable consideration.

Since then this matter has been taken into serious consideration, and the result is the Amendment which I have now placed on the Paper. With regard to the first of the Amendments, your Lordships will observe that I have struck out the whole of the present definition and inserted a new definition. The new definition includes a good deal—in fact, in substance nearly all—of the Amendment of which it proposes to take the place, and I put it in that form for the purpose of making the Amendment more simple and more clear to the House, so that everyone could understand it merely by reading it. I thought that was preferable to putting down a series of small Amendments proposing to leave in certain parts and to leave out certain others. I propose to read my Amendment to your Lordships, and to comment briefly on the important words as I pass. I move to insert the words— 'Yearly land value' means such part of the yearly rent or value of any lands or heritages as is fairly attributable to the land alone, (1) divested of buildings, erections, or improvements of whatever nature on, in, or under the soil, woods, fixed or attached machinery, and work of drainage and of reclamation, making up, levelling, and the like, where the benefit thereof is unexhausted at the time of valuation. That was in the original Bill, and subsection (1) stands as it was. Then follows— (2) Subject to all building restrictions, servitudes, and contracts imposed thereon or existing in relation thereto. The words "subject to all building restrictions and servitudes," were inserted by your Lordships in Committee, and the additional words "and contracts imposed thereon or existing in relation thereto," I have been advised are necessary to be inserted. Now comes the important proviso— Provided that in the case of laud proved to be required in the public interest at the time of valuation for building or industrial purposes, and to be unreasonably withheld from use for such purposes, the yearly land value shall be estimated as if such land were in use for the purposes aforesaid. Your Lordships will observe that that goes a very long way—in fact, I do not know how it could well go further—in the direction of enabling land to be assessed, or, at all events, to be valued, which is being withheld unreasonably. The main difference, I think, is in the word "proved." We held—and, if my memory serves me rightly, the noble and learned Lord on the Woolsack agreed— that in these cases where it was proposed to assess a man on more than he received, the onus of proof should lie on the assessor and not on the man whose property was going to be valued.

The next word is "required." It is not sufficient that the land should be suitable. Acting on the principle which this House asserted in the earlier stages of the Bill, it is provided that the land must not only be suitable but must be required, and must be required at the moment of valuation. It is not enough to say, as the noble and learned Lord's Bill proposed, that we are simply to take the purchase value because the purchase value embraces everything, prospective as well as present. What we say is that it must be actually required at the time of valuation for building or industrial purposes, and it must be required in the public interest. By that I do not mean for public buildings, but that it is in the public interest that there should be buildings upon that land and in that particular district; and also it must be proved that the land is unreasonably witheld from us for such purposes. Surely before land is valued on this excessively high valuation it is right that the owner should be proved to be witholding it unreasonably, whether the question be one of price or anything else. The question as to what is unreasonable will, of course, rest in the hands of the ultimate Appeal Court, and it seems to me that that Amendment, as I have described it to your Lordships, goes a great length in the direction of redressing the grievance which is said to exist. I say "said to exist" because your Lordships will recollect that we on this side of the House do not believe that there were many of these people. What we say is that, if it can be proved that there are such, we have no desire to shield or shelter them; and it is for that reason, and for that reason alone, that we are willing to go beyond the rent actually being received at the moment. That, as I say, is the most important part of the Amendment, and it is to that proposal that your Lordships will, I presume, mainly direct your attention.

Now follow certain exceptions. These are necessary, because if you do not have any exceptions whatever from this rule it might be made imperative upon a man to build over every bit of land he possesses in the neighbourhood of a town. Take, for instance, the case of a villa which has an eighth of an acre round it. If there is a heavy assessment on site value the result will be to promote what everyone is agreed ought to be prevented as far as possible—namely, congestion. The exceptions, four in number, are— Land shall not be deemed to be unreasonably withheld from use— (1) which is maintained as an open space or recreation ground. I do not think any objection will be taken to that. It was recognised in the Scottish Bill, and I do not think it is necessary to trouble your Lordships in regard to it. (2) Which is required for the amenity or convenience of a dwelling-house. Those words, too, are to be found in the Scottish Land Bill of the present year, and they embrace such cases as I mentioned a moment ago of villas and other houses which have round them a quantity of land necessary for their amenity or convenience. It is a point which has been generally recognised in Scottish legislation. (3) Which is required for the preservation of any buildings of historic or architectural interest. I do not think it is necessary that I should trouble your Lordships on that point. The fourth exception is rather an important one— (4) The maintenance of which in its existing condition is for the general advantage of the community. That speaks for itself, and I do not think it is necessary that I should enlarge upon it. Then follows a proviso which appeared in the Bill when it was originally introduced and which we accepted in Committee— Provided further that where the assessor considers that any restriction, servitude, or contract"— the word "contract," of course, is new— Created after the passing of this Act has been created in order to defeat this Act it shall be lawful for him (without prejudice to the appeal to which any person aggrieved is entitled) to disregard such restriction, servitude, or contract. I think I have now fully explained the Amendment. The noble and learned Lord said he would give a very fair consideration to any words which met this difficulty. We do not deny that on paper, at all events, the difficulty exists, and we have done our best to meet it. I beg to move the Amendment standing in my name.

Amendment moved— In page 3, line 26, to leave out from the word 'say' to the words 'Valuation Act' on page 4, line 5, and to insert the words 'yearly land value' means such part of the yearly rent or value of any lands or heritages as is fairly attributable to the land alone; (1) divested of buildings, erections, or improvements of whatever nature on, in, or under the soil, woods, fixed or attached machinery, and work of drainage and of reclamation, making up, levelling, and the like, where the benefit thereof is unexhausted at the time of valuation; and (2) subject to all building restrictions, servitudes, and contracts imposed thereon or existing in relation thereto. Provided that in the case of land proved to be required in the public interest at the time of valuation for building or industrial purposes, and to be unreasonably withheld from use for such purposes, the yearly land value shall be estimated as if such land were in use for the purposes aforesaid. Land shall not be deemed to be unreasonably withheld from use; (1) which is maintained as an open space or recreation ground; or (2) which is required for the amenity or convenience of a dwelling-house; or (3) which is required for the preservation of any buildings of historic or architectural interest; or (4) the maintenance of which in its existing condition is for the general advantage of the community. Provided further that where the assessor considers that any restriction, servitude, or contract created after the passing of this Act has been created in order to defeat this Act it shall be lawful for him (without prejudice to the appeal to which any person aggrieved is entitled) to disregard such restriction, servitude, or contract."—(The Earl of Camperdown.)

THE LORD CHANCELLOR (Lord LOREBURN)

My Lords, I think it will be convenient for debate if I put the Question in the form "that the words proposed to be left out stand part of the Clause," and then afterwards put the Question "that the other words be there inserted." As this is practically a Second Reading as well as a Committee stage, it might be convenient that we should debate the matter on both those Questions. I think I ought to take part at once in the discussion upon the very interesting proposal of the noble Earl. The Amendment only deals with one part of the subject of valuation, which of itself is a small part of the whole subject of rating—a subject that has been before your Lordships already.

Let me just say, before going straight to the Amendment now before the House, that I think noble Earl has a little misapprehended what I think I have said. It is not mainly a question of the holding up of land that requires valuation I think there ought also to be the means of putting a special rate upon any increased value by reason of public expenditure, and also, which practically is the same thing, any increased value hereafter accruing annually from the growth of a city or town in which the land is situated. I am not going to enlarge upon that subject, but I mention the point in order to guard against misapprehension. There is also, in my view, a necessity for rating appropriately and according to the value land which is not built upon at the present time or not used for industrial purposes at the present time, and that is the sole point with which the noble Earl's Amendment deals. I will, therefore, confine myself to that point in the observations I shall offer to the House.

I must do the Amendment the justice of saying that it has been carefully considered and is skilfully drawn, and when I read it first I came to regard some portions of it with great satisfaction. The Amendment assumes that it is possible— nay, that it ought to be done—to rate the site value apart from the composite value of site and buildings together. That is, indeed, satisfactory, because that is a point upon which there was considerable controversy when the Bill in its earlier stages was before the House. At all events, the noble Earl now agrees with us that that can be done. Secondly, the noble Earl proposes to apply the provision to land other than building land—to land used for industrial purposes also. The noble Earl speaks of land— divested of … work of drainage and of reclamation, making up, levelling, and the like. Accordingly, he contemplates the possibility of applying a site value to land which is not building land but which is reclaimed land for example. I am very glad indeed to draw that inference from the Amendment.

In addition the Amendment proposes, and I think most justly, that restrictions on the use of land created after the passing of the Act shall be disregarded. That is a point as to which some objection has been taken, but the noble Earl, very wisely if I may be allowed to say so, admits that in the proviso at the end of his Amendment. Finally, my Lords, I notice with great pleasure that the Amendment provides that the yearly land value is to be estimated as if the land were in use for building or industrial purposes. That is a hypothetical valuation, and I am very glad it should be recognised that that is practicable; also, I am glad that it should be recognised that the proper valuation should be, not as it is, but as it would be, if it were put to a beneficial use of that kind, subject, I know, to limitations. Now those points do, I think, constitute a step forward towards agreement, if agreement be ultimately obtained, upon this subject. Unless certain principles are admitted agreement is impossible, and the noble Earl has made a considerable advance in regard to those four points.

But there are objections to this Bill, upon one of which I need not dwell for I did so at length on the last occasion. I refer to annual value. We fought that battle out, and the majority of your Lordships were hostile to the view of capital value. We remain of the same opinion as to capital value; but I will not go into that discussion again as the House is not likely to change its opinion. But that is, of itself, an objection which goes to the very root and foundation of the Amendment, and constitutes an insuperable difficulty in the way of His Majesty's Government agreeing to this clause. There is one other, it seems to me, fatal blot in the Amendment. The noble Earl proposes that there shall be a valuation only in the case of land— Proved to be required in the public interest at the time of valuation for building or industrial purposes, and to be unreasonably withheld from use for such purposes. That is diametrically opposed to the view which His Majesty's Government entertain in regard to vacant land. I do not think I have ever said anything about land unreasonably withheld, nor am I quite sure how you could determine this. The point I have endeavoured to put before the House is that there ought to be fair play between ratepayers within each rating area. If one man has built a house upon his land worth so much a year and the other man has not built a house, and for that reason receives only a nominal rent for his land, as between ratepayer and ratepayer, one of them has a value of £1,000, and the other a value of £1,500; yet one pays on £50 a year and the other on £3 a year. I ask your Lordships whether that is fair as between one ratepayer and another.

There is no complaint made in the sense of accusing a man of any criminal or immoral conduct in not building upon his land. That is not the ground on which this Valuation Bill proceeds, nor the ground on which ultimate rating is contemplated. The point is that these two people possess property of a certain value, and one is rated in reference to the real value of his property and the other is not. The reason that happens is that the basis of rating at the present time is what a property would let for, year by year, to a tenant. Of course, property which is not built upon and is let year by year to a tenant in a town will only bring its agricultural value, and it is because the annual use governs the value that the owner is not rated as he ought to be. The basis of our proposals, the whole pith of our contention, is that people should be rated in proportion to the value of the property they possess. That is entirely disregarded in this Amendment; there is to be valuation of land as if it were in use for building, that is to say, not agricultural value, but only where it is proved to be required for building and to be unreasonably withheld. That is penalising a man for doing what he thinks right in regard to his own property. A man of business might say he would reserve his land for probably five or six years, when its value would be increased, but it would be a strange thing to say that the value for rating purposes should depend upon whether he had acted in a manner the assessors considered reasonable. I venture to think that a more dangerous principle than that of taxing a man according to his conduct, for that is what it is, could hardly be imagined; and I do not suppose for a moment that the noble Earl intends any great development to be given to the doctrine of which the germ lurks in this Amendment.

The real point to be faced is this. Is the House prepared to treat this as a question of the value of property? The question as to what rate you are going to put on, and whether you are going to put the rate on the full rateable value does not enter into this Bill. The exemption of parks and gardens and amenities does not arise under the Bill. The question is whether the House will enable a valuation to be so ascertained that men can be taxed according to the real value of their property. It has nothing to do with whether they have acted reasonably or unreasonably. I might offer other criticisms upon the Amendment, but they would be minor criticisms. I say, in the first place, that the Government feel an insuperable objection to the substitution of yearly land value for capital value; and, secondly, our opinion is that people ought to be rated according to their property and not according to their conduct.

LORD BALFOUR OF BURLEIGH

My Lords, I should like to say a few words in regard to the comments that we have just heard from the noble and learned Lord. I was pleased to hear even the modified approval of some parts of the Amendment to which the noble and learned Lord gave expression. In my opinion, the noble Earl who has moved this Amendment took a wise and convenient course in putting down his Amendment as a whole, instead of a great number of small Amendments changing words here and there. In its present form the Amendment shows, in a connected whole, the real intention of my noble friend. If I may say so, I think the noble and learned Lord on the Woolsack failed to realise, or to let the House see that he realised, that a great deal of the phraseology of the Amendment is actually a quotation from the Bill. The noble and learned Lord commented, for example, upon the subsection which speaks of a site value "divested of buildings, erections, or improvements," and so on. The whole of that subsection is taken from the Bill as it stands.

THE LORD CHANCELLOR

I expressed my gratification at the acceptance of it. What I meant to do was to signify how pleased I was that we were agreed upon these things.

LORD BALFOUR OF BURLEIGH

I am afraid that comment is not quite right, because this subsection was not in the Bill as the Government draughtsman produced it to the other House of Parliament. The subsection was evolved about 4 o'clock in the morning in discussion in Committee between the two sides of the House, and, as a matter of fact, I believe most of those words were suggested by the Leader of the Opposition in the other House and accepted by the Government. I hope it will be acknowledged that the particular definition of land value is not conceived by the brain of the noble Earl, but is actually taken from the Bill. I regard that point as one of extreme importance, because that subsection is very much more favourable to the owner of agricultural land than according to the form in which it was introduced; and I would point out that, although the noble Earl is altering some words in the clause, he is not proposing any alteration at all in that subsection.

The noble and learned Lord on the Woolsack then said that the particular Amendment, however good it might be for a limited purpose, dealt with only one part of the larger question, and that so far as he and the Government were concerned they wanted, not only to deal with the question of the holding up of land, but to get back public expenditure, and to go dangerously near the acceptance of the doctrine of the taxation of the unearned increment. The noble and learned Lord shakes his head, but he certainly said that he wanted to get something back from the value which was got by the landlord owing to the growth of a city or town. That is the doctrine of the unearned increment and nothing else. If you are going to take parcels of land which have improved in value on account of the growth of a town, then you must also, I think, take some account of the parcels of land which have been diminished in value by the shifting of the population; in other words, if you are going to raise the question of taking some part of the unearned increment, you will certainly in fairness involve yourselves in the difficulty of having to judge when a man has made a bad investment from want of foresight and has lost his money. My position upon the point is that it is a mischievous thing to speculate in land near a city or town. I do not believe there is anything like so much profit made out of it as is commonly represented; but, if you are going to tax the unearned increment of land, why are you not to make a special tax or rate upon the unearned increment in respect of any other kind of property? That seems to me a perfectly inadmissible proposal, and, therefore I am not moved by the condemnation of the noble and learned Lord of this Amendment on the ground that it does not do anything to secure that object.

I turn to the question of public expenditure. That, so far as Scotland is concerned, falls entirely to the ground. I admit that in cases where leasehold is the predominant method of building, where it is not done by feu but by leasehold, and where, during the currency of the lease, an expenditure his been met out of the rates which are levied on the leaseholder, then under those circumstances there is a sort of case for taking back by means of a special rate upon property much improved by expenditure drawn from the leaseholder when it falls into the hands of the ground landlord. That, so far as Scotland is concerned, falls absolutely to the ground, because any rate for improvement upon suburban property falls not upon the occupier but upon the owner. I have examined the accounts of Edinburgh, Glasgow, and other large cities, and in the division of urban rates between owner and occupier, rates for improvements which add to the value of the land supposed to be held up are levied on the owner and not on the occupier; therefore, there is no ground for the allegation that the owner who holds up his land for a certain time and then puts it out for building does make a profit by public expenditure.

In two portions of the noble and learned Lord's speech he shed a tear over the excision of capital value. I do not want to labour the point. I am quite certain, as the noble and learned Lord himself is, he will not convert this House to rating upon capital value; but I would remind him that last autumn the late Prime Minister did not put the same amount of stress upon the question of capital value. There was a discussion in the Press between the right hon. Gentleman and myself as to whether I had personally taken a wise and fair course in advising that the Bill should be rejected last year, and the point that he took was that I was committed in my Report to rating upon capital value. I pointed out the fact that that was not the case. There is not one word of suggestion or support of rating on capital value in any part of the Local Taxation Commission's Report. The late Prime Minister did not stop there, for he said— Even if these proposals were all that you say of them, they would still remain matters for consideration in Committee. And the matters to which he referred were the adoption of capital or real value instead of annual value as the basis of assessment.

The fact of the matter is that the real difficulty in which we are placed in regard to this Bill is that very different and diverse accounts of it have been given by members of the Government when they have been speaking outside Parliament. The noble and learned Lord says that it is fair to take into account the value of one man's property and that of another; and the instance he gave was just the instance which I humbly submit to the House is the one which shows the extreme inexpediency of rating upon a value which might be got if the land was put up for the purpose but which there is no intention of getting. The noble and learned Lord gave us the instance of one man having built over his land while the other had not; in the case of the acre of land not built over, the man would be rated at about £3; whereas the other person would be rated on the annual revenue he was obtaining. But if you carry that to its logical conclusion and rate every open space in or near a town or city at a figure which it might produce if put to other purposes, you will take the very worst possible step for encouraging the policy of maintainng open spaces. You will make it so tremendously expensive to do it as to put it absolutely beyond the reach of, the average man, and instead of spreading buildings over a large area with open spaces, which is the wisest and most healthy policy, you will tend to the production of what are called "skyscrapers," to the piling of one storey on to another so as to save the rating upon the site value. That is perfectly obvious and cannot be denied.

The grievance that is pleaded from time to time by those who support the rating of land which, as they say, is unreasonably held up, is this—that people are waiting on for a value which at the present time it would not produce. If you carry the noble and learned Lord's policy to its logical conclusion it really means the rating of every piece of land which ten, fifty, sixty, or 100 years hence might be exposed for building purposes. I quite agree—I have said so before, and I say it now—that if there are places which are surrounded by buildings and which are being unreasonably held up, then it is quite fair to penalise the owner to the extent of rating him upon what he might get for it. The noble and learned Lord on the Woolsack may say that that is rating on account of conduct. I see another way of achieving the object; I cannot develop it now, nor would it be germane to this Bill; but it is impossible—at least it is most unfair—in my humble opinion to rate upon what the land might be supposed to fetch.

The noble and learned Lord said that there is nothing in this Bill as to the quantum of the rate, that it does not arise under this Bill, that nothing is said as to the means which are to be taken or the amount of the rate. That is where I complain of the position in which we are placed. Other Members of His Majesty's Government have said what they mean. They say that they are going to transfer, and that the object of this Bill is to transfer, the whole of the rates on to the land value. That has been said over and over again. I hold in my hand some twenty-four or twenty-five speeches of the Solicitor-General saying that very thing—that the object of this Bill is to transfer the whole of the rates on to the land value. Now it is not reasonable—I go so far as to say it is not fair—for one member of the Government to hold out those expectations to people in the country, and for the noble and learned Lord to say that that is not in the Bill and, therefore, we are not to consider it in dealing with this Bill. As prudent men we are obliged to consider the objects and motives and ideas which have been put before the people of this country as the policy of His Majesty's Government, and it is because of those speeches, because of that definite statement of policy, that we are as cautious as we are in accepting the principles which we think are aimed at.

The noble and learned Lord says you should rate each man according to the property he possesses. That is not the test for rating at the present time. It is the test for death duties; it is the test for anything that can be laid on the capital value of property all round; but the whole idea of the rating system from the time of Queen Elizabeth in England, and from a very few years later in Scotland, has been not the question of the value, but the question what it produces. You are rated upon what you put into your pocket from all rateable subjects. If you are going now to revert to rating on capital value on one class of property, and in the case of one owner of property alone, you are accentuating an injustice which has been a scandal for the last forty years. For when you relieved personal property, stock in trade, and so on, you did not give an adequate contribution to those who are over-burdened by the existing rates; and if you go back, in regard to this one class of property, and that class of property alone, to capital value, you are accentuating an injustice of which, I believe, all wise reformers of local taxation are desirous of getting rid.

I will say nothing now about the small Amendment which I propose to make to this Amendment, because owing to the form in which the noble and learned Lord on the Woolsack has put the Amendment, that matter does not arise at this point. Although the Amendment may not go the whole length which the Government desire, it is really an honest and skilful attempt to get at the one grievance which has been most paraded about the country, and I hope the House will accept, on general lines, the Amendment as moved by the noble Earl.

THE MARQUESS OF LANSDOWNE

My Lords, I was glad to hear the noble and learned Lord on the Woolsack commence his observations by a cordial acknowledgment that my noble friend below the gangway had made an honest attempt to deal with a problem which the noble and learned Lord himself has told us is an extremely difficult one. I can assure the House that my noble friend's Amendment does represent a sincere effort on his part, and on the part of those whom he has consulted, to deal with this question.

The noble and learned Lord complains of my noble friend's proposal because it deals merely with a part of the subject with which His Majesty's Government desire to deal in the Bill upon the Table of the House. We are quite alive to that fact. We have endeavoured to deal, not with the whole of the scheme of His Majesty's Government, but with one particular feature of that scheme upon which throughout our discussions noble Lords opposite have chiefly dwelt—a point on which it did seem to us that a hard case might arise for which it was desirable that some provision, at all events, should be made. I refer to the case of the site owner who, for mistaken reasons, chooses to withhold from building land clearly capable of being turned to that purpose at the moment. It was pointed out to us, again and again, that the site owner who so withheld his property committed a double injustice upon the community—in the first place, by retarding the development of the city in the neighbourhood of which the land was situated; and, in the next place, by escaping a part of the burden of local taxation which ought equitably to fall upon his shoulders.

That is the case with which my noble friend desires to deal, and we are certainly very reluctant to go a step further. We feel very strongly, indeed, that if we do go further, if we do admit that this Bill is to be framed not upon the basis of yearly value but upon the basis of capital value, we let in at once the whole principle of taxing people upon property from which they do not yet derive any advantage, and open the door for the commission of a very flagrant injustice. My noble friend who sat down a moment ago spoke of the danger of admitting speculative values. May I mention to your Lordships a case illustrating that danger, of which I became aware very lately? It arose in the outskirts of London. A new railway was being made, and it was anticipated that property in that particular region was likely to increase greatly in value and to be rapidly built over. The owner of a large estate in that neighoburhood sold fifty acres of this land at £1,000 an acre to a syndicate. That was, I believe, only a few years ago, and I am told that at this moment not one single acre of the fifty has yet been built over. That shows how completely the shrewdest judgments are liable to go astray in thus anticipating the course of events.

We have never believed that this withholding of building sites was taking place to any appreciable extent. It is so much against the interests of the site owner to withhold his land. He is so likely to outstay his market that we do not believe the thing takes place very frequently. But, assuming that it may take place, that there may be such cases—and remember that during these long discussions no leading case has yet been produced—we are willing to deal with the matter to the best of our ability. Now, are the precautions taken in my noble friend's Amendment exaggerated precautions? The noble and learned Lord pointed out that the Amendment leaves the grievance of the ratepayers unredressed. I am not quite sure that that is entirely the case. But, be that as it may, can we really say that the stipulations contained in my noble friend's clause are unreasonable from the point of view of the ratepayers?

May I endeavour to point out to the House the manner in which this clause will operate? In the first place, it will be necessary to show that the land is wanted, and that it would be contrary to the public interest that it should be withheld; and, in the next place, it will be necessary to prove that the owner is acting unreasonably or perversely in withholding it. I ask your Lordships to consider the definition given in the four subsections that follow of what constitutes unreasonableness. I think my noble friend is quite right in placing words in his clause showing, for the guidance of the Court, what is meant by unreasonableness, because I do not think it would be fair to the Court to leave it without guidance in a case of that kind. Land is not to be deemed to be unreasonably withheld from use it if is— Maintained as an open space or recreation ground. Do noble Lords opposite suggest for a moment that the site owner is unreasonable if he withholds land in order to provide a recreation ground or open space? I think it will be very difficult, considering the proclaimed views of His Majesty's Government, for them to maintain that the reservation of land for a purpose of that kind is unreasonable, or that the person who so reserves it deserves to be mulcted for his conduct. The next condition is that the owner shall not be mulcted if the site is— Required for the amenity or convenience of a dwelling-house. I daresay that many of your Lordships have had an opportunity of reading the Government's Town Planning Bill. The whole essence of that Bill is that an endeavour should be made not to crowd buildings upon a site but to distribute them reasonably and in a manner consistent with the health, comfort, and well-being of the people who live upon the site. Then I need not dwell upon the reasonableness of the owner who retains land— For the preservation of any buildings of historic or architectural interest. I think both political parties are deeply committed to the policy of doing nothing which shall diminish the beauty or prevent the public enjoyment of buildings of which it can be said that they are of historic or architectural interest. The last condition, which is a very widely-drawn one— The maintenance of which in its existing condition I for the general advantage of the community— speaks, I think, for itself. You have only to turn it round. Are you prepared to say that you wish to impose a special rate upon the person who desires to keep his land in its existing condition for the general advantage of the community? I take it that that is a proposition which will not be challenged. I say, then, that these seem to me to be most reasonable stipulations, and those who sit round me will certainly support my noble friend in his endeavour to obtain the addition of these words to the Bill, believing that by thus amending it we have shown that, reluctant as we are to admit the principle of rating on prospective value, we are ready to admit it in this one case and under the very necessary precautions upon which my noble friend desires to insist.

THE SECRETARY OF STATE FOR THE COLONIES (The Earl of CREWE)

My Lords, I hope noble Lords from Scotland will forgive me when I say that the debate on this Amendment is more interesting than any Amendment could be which dealt merely with Scotland, because it is concerned with a very great principle which is applicable to the whole of the United Kingdom. The noble Marquess who has just sat down said that my noble and learned friend on the Woolsack had complained that the noble Earl's Amendment dealt only with half the question. My noble and learned friend did not complain, but he was bound to point out the fact, for this reason. It is obvious, of course, that we cannot oppose this Amendment, because it is an improvement, so far as it goes, on the Bill as it was left before by your Lordships; but it was necessary for my noble and learned friend, in consequence of that fact, to point out that we did not regard it as satisfying all the conditions which we desired to satisfy. It is perfectly true, as my noble and learned friend said, that this does only deal with half the question. It deals with the question to some extent as between the landowner on the one hand and the would-be occupier or land speculator, as the case may be, on the other; but it does not deal with the fair incidence of the rate as between ratepayer and ratepayer.

It is, I think, important to notice what exactly is supposed will happen under this suggestion of the noble Lord; and I should like to say, in passing, that I also entirely recognise that this is a most careful and honest effort on my noble friend's part to deal with this side of the question. It is stated that laud which is unreasonably held up is to be rated. What exactly is "unreasonably held up"? Take the case of the two plots which have been so often mentioned—one built upon, and the other not. Somebody, I suppose, goes to the local authority and says that he would like to acquire this vacant plot for purposes of building; and, if the assessor is satisfied that he ought to have it, it is then to be rated as though it were built upon. But the owner may say, "This gentleman is not offering enough; he is not offering my price." Are you going to fix the price of land by the act of the assessor?

THE EARL OF CAMPERDOWN

No the Court.

THE EARL OF CREWE

It seems to me that the result will be that the assessor will have to decide whether the price offered is a reasonable one, in which case it will be rated at the full building value; whereas, if he thinks it unreasonable, the land escapes rating except at its agricultural value. I wonder whether that is a result which has been altogether contemplated by noble Lords opposite?

THE EARL OF CAMPERDOWN

It is intended to be decided by the Court of Appeal.

THE EARL OF CREWE

Price-fixing, even by the Court of Appeal, is surely rather a novel suggestion. The logical outcome, I think, of the noble Earl's proposal would be compulsory purchase, and that, I imagine, is a result from which noble Lords opposite would surely shrink. The noble Lord, Lord Balfour of Burleigh, returned to the charge about annual and capital value. I must say once more that, in my opinion, the difference is not between annual and capital value, but between actual value received and some hypothetical value. What is the process in this instance? The land is to be rated on the rental which it would fetch if it were covered with buildings. What is the difference between taking that imaginary rental and calling it annual value, or capitalising it and calling it capital value? I confess I cannot see what the difference is; but the noble Lord has, as my noble and leaned friend says, made a great advance by accepting the possibility of contingent or hypothetical value in certain cases, although, I admit, in only limited cases. The noble Lord, Lord Balfour, said that capital value was unknown in rating, though it was applied to death duties. It is not applied to death duties in these cases. The owner of this particular kind of land escapes also in the matter of death duties, because, unless I am greatly mistaken—I am speaking only from memory—death duty is only assessed on thirty years purchase, if that is the figure, of the actual rent received at the time.

VISCOUNT ST. ALDWYN

Land forming part of an agricultural estate cannot be assessed for death duties at more than twenty-five years of the assessment to income-tax, but that does not apply to building land or to land of the class we are talking of.

THE EARL OF CREWE

But, as a matter of practice, where land forms part of the neighbourhood of a town it is not valued at more than its annual value. At least, that is my impression. The restrictions placed by the noble Earl on the operation of his clause do not, as my noble friend said, form a very material part of this Bill; they form more properly part of a Bill dealing with actual rating, but as the noble Marquess has alluded to them I will just say this. Proposition number two is one which, taken in a certain sense, would, I imagine, meet with general agreement; but, of course, the term "amenity" is a very large one. The term might possibly be taken to mean a view over an extensive prospect of country, and a good deal of land would thus escape which I think the noble Earl would hardly think ought to escape. Then with regard to the fourth exemption— The maintenance of which in its existing condition is for the general advantage of the community. As the noble Marquess pointed out, nobody would assent to the opposite opposition. On the other hand, I confess I do not know exactly what meaning is to be attached to the words. If the light and air argument were pressed to its utmost, it would be possible to say that it would be to the advantage of the whole of the existing community that no more land should be built upon. The terms, therefore, seem to me to be dangerously wide.

Lord Balfour used one argument which has become familiar to us in the course of this discussion. He said that and would be forced into the market, and that it would be to the interest of everybody to build sky-scrapers. Undoubtedly, if no restrictions were placed upon this power or upon the incidence of the rate it is perfectly true that there would be such a risk. But surely it does not pass the wit of man to discover a plan of the nature of that town-planning of which the noble Marquess spoke, by which allowance can be made in the matter of rating where land is laid out in the manner most suitable to the health of the people. I quite agree that it would be exceeding unfair if a man who placed only eight houses with gardens upon an acre was rated at the whole possible amount which the land might fetch if covered with one enormous skyscraper. But surely it does not pass the possibilities of legislation to meet cases of that kind, and to rate in such a manner as will not be in any way contrary to the public interest. As I have said, we are not going to oppose the insertion of these words in place of those already in the Bill; but my noble and learned friend has thought it necessary to draw attention to the fact that the alteration does not turn the Bill into a form in which we can regard it as a satisfactory measure.

LORD STANLEY OF ALDERLEY

My Lords, before the House disposes of this Amendment I wish to say one word of protest against the theory which seems to have been accepted both by Lord Balfour and by the noble find learned Lord on the Woolsack. There was an apparent competition for the copyright in the words "divested of buildings, erections, or improvements," etc. I think it is quite clear that in the Bill as it was originally introduced the Government intended this limitation to go back only twenty years, but it was made perpetual as the result of pressure in the House of Commons.

I think it is extremely important, when we are dealing with economic matters like taxation, that we should not confuse them with ethical matters. Our business is to see what is the property which is fairly chargeable to the burden of taxation, and to put taxation fairly upon it. The community has nothing whatever to do with what was the aboriginal and ancient cause of the improved value, and I think there is something to be said for a limited period of exemption under this head. But there can be no use in having a column giving the value of the land as distinct from the buildings as a matter of mere idle statistics; it must be intended to lead up hereafter to some differentiation of taxation which will put some special part on that which is thought to be the result of no human, effort of intelligence.

These ancient improvements which have developed the property have nothing to do, in a great many cases, with the present proprietors. The property has doubtless passed from hand to hand at the then value, and the purchasers have never anticipated that the Legislature would subsequently search into the original cause of the fertility and productiveness of the land. You may have a seaside resort with land possessing a considerable building value, but many of the original proprietors may have had to expend considerable sums of money in erecting wells to protect it, whilst other owners had their land so well situated as not to need this protection. That land may have passed from hand to hand, and to the person now possessing an eligible site it does not matter whether the original owner had to build sea-walls or not; and to rake back into ancient history to find out the various causes which have contributed to the present value of the land is, to my mind, perfectly absurd and unreasonable. The only question you have to deal with is the actual value.

In dealing with these complex rating questions, which will have to be taken in hand shortly, Parliament will find itself involved in immense difficulties if it attempts to trace back, possibly to the Dark Ages, the cause of the present value of land. Fancy such a thing being proposed in Holland. Who could go back to ascertain when the first dykes were made to keep out the North Sea? This proposal would act inequitably on property which has been in its present state for a long time, and which has passed from hand to hand at its then value without any reference to circumstances as to how it got that value.

On Question, "That the words proposed to be left out stand part of the clause," resolved in the negative.

THE EARL OF CAMPERDOWN

My Lords, the Amendment now before the House is "That the proposed words be there inserted," and as the noble and learned Lord on the Woolsack stated that these were to be regarded as two separate Amendments I will address to your Lordships one or two words with regard to what has passed. I quite admit that the words which I now propose to insert deal only with a very limited part of the Bill. They do not profess to deal with the question as a whole. The noble and learned Lord said that he regarded this as a Second Reading question, and he certainly did proceed to act upon that, because, if I may say so with all deference, a great proportion of his remarks were not addressed to my Amendment at all but to the general question as to whether annual value or capital value was the better system of rating.

The noble and learned Lord observed that he was glad to see that I accepted certain principles of prospective valuation. I wish to put in a caveat to that. I put down these words because I was dealing with what is said to be a very great grievance. I believe it is a grievance that exists much more on paper than in any other form, and even if this Amendment were to come into force I expect your Lordships would find that there would not be half so many proceedings under it as a great many people would lead us to believe. But I wish to say, once and for all, that I object altogether to the system of rating on capital value, because it includes prospective value. The noble and learned Lord on the Woolsack told us in Committee that he did not propose to rate upon prospective value. He would, however, rate on the saleable value; and he cited a case of a person who would give £1,000 for a piece of land. But when that person gives £1,000 for that piece of land, does he not buy the future as well as the present? Is it conceivable that anybody could be so foolish as to give £1,000 for a thing which was fetching £2 an acre unless he had in his mind some idea that, either by laying out a great deal more money or something of that sort, he would make it worth much more hereafter. As a matter of fact, when a man buys land he buys it as a whole for all time; and I am utterly unable to understand the noble and learned Lord when he says that he proposes to rate on capital value and yet does not propose to include prospective value. I beg to move my Amendment down to the word "community." That will leave the proviso, to which Lord Balfour proposes to move an Amendment.

Amendment moved— To insert the words 'yearly land value' means such part of the yearly rent or value of any lands or heritages as is fairly attributable to the land alone, (1) divested of buildings, erections, or improvements of whatever nature on, in, or under the soil, woods fixed or attached machinery, and work of drainage and of reclamation, making up, levelling, and the like, where the benefit thereof is unexhausted at the time of valuation; and (2) subject to all building restrictions, servitudes, and contracts imposed thereon or existing in relation thereto: Provided that in the case of land proved to be required in the public interest at the time of valuation for building or industrial purposes, and to be unreasonably withheld from use for such purposes, the yearly land value shall be estimated as if such land were in use for the purposes aforesaid; Land shall not be deemed to be unreasonably withheld from use: (1) which is maintained as an open space or recreation ground or (2) which is required for the amenity or convenience of a dwelling-house; or (3) which is required for the preservation of any buildings of historic or architectural interest: or (4) the maintenance of which in its existing condition is for the general advantage of the community.'"—(The Earl of Camperdown.)

THE LORD CHANCELLOR

My Lords, I thought I had avoided the controversy as to prospective value, but as the noble Earl has referred to it, let me answer him. I think prospective value ought not to be taxed, but present value should be taxed. If a farm is worth £1,000 to-day and will sell in the market for that sum, that is its present value. One element may be that hereafter it will produce more, but what I mean by present value is what a man will give for it in the market.

On Question, Amendment agreed to.

Amendment moved— To insert the words 'Provided further that where the assessor considers that any restriction, servitude, or contract created after the passing of this Act has been created in order to defeat this Act it shall be lawful for him (with but prejudice to the appeal to which any person aggrieved is entitled) to disregard such restriction, servitude, or contract.'"—(The Earl of Camperdown.)

LORD BALFOUR OF BURLEIGH,

who had given notice to move to amend this Amendment by leaving out the words "the assessor considers" in line 1 of the proviso and inserting the words "it appears," said: My Lords, the proviso which I propose to amend is taken verbatim from the Bill as it stands, and as the noble Earl has omitted the whole of the clause from the Bill, I am obliged to put my Amendment down as an Amendment to his Amendment. The proposal in the proviso is perfectly right and I support it, but I do not think that if there is an appeal taken, it should be upon a point of whether the assessor "considers" a thing, but on a question whether it is the fact that it exists. I suggest that if you pass the proviso as it has been moved by my noble friend, the only question for the Court of Appeal would be what the assessor considers. The assessor might take all sorts of extraordinary views; for my part, I do not care a row of pins what the assessor considers; what I want to know is what is the fact. I think my words safer, and I ask the House to accept them.

Amendment moved to the proposed Amendment— To leave out the words 'the assessor considers' at the commencement of the proviso, and to insert the word? 'it appears.'"—(Lord Balfour of Burleigh.)

THE EARL OF CAMPERDOWN

I have no objection at all to that Amendment.

On Question, Amendment to the proposed Amendment agreed to.

LORD BALFOUR OF BURLEIGH

I now ask your Lordships to agree to a consequential Amendment to substitute the words "the assessor" for the word "him" in the proviso.

Amendment moved to the proposed Amendment— To leave out the word 'him,' and to insert the words 'the assessor.'"—(Lord Balfour of Burleigh.)

On Question, Consequential Amendment agreed to.

On Question, Amendment, as amended, agreed to.

Bill to be read 3a on Thursday next, and to be printed as amended. [No. 121.]