HL Deb 09 July 1908 vol 192 cc14-20


Order of the Day for the Third Reading read.

Moved, "That the Bill be now read 3a.—(Lord Herschell.)


My Lords, before we absolutely part from this Bill I should like to make a few observations in regard to the history of it, both before its arrival in this House and during its passage through this House. I venture to think that your Lordships' House has grave reason to complain of the whole course of action taken in regard to this measure by His Majesty's Government. It was first, I think, put forward mainly to get rid of the alleged grievance resulting from the undue holding up of land supposed to be ripe for building. But it contained a very great deal which went far beyond what was necessary for achieving that, in my humble opinion, laudable object.

I am satisfied in my own mind—I cannot, of course, state it with absolute certainty, but that is how it looks according to the evidence—that the underlying object m the minds, at any rate, of some members of His Majesty's Government was either to commit this House to the acceptance of very far-reaching principles in the matter of reform of taxation, or else to use the rejection of this Bill as a counter in the game of agitation against your Lordships' House, an agitation which had somewhat more prominence given to it last year than during the present year. I venture to say that the whole subject of local taxation, and in that I include our whole system of taxation upon land, is one which is second to none in importance; but it is a most intricate and difficult subject and demanded most careful and almost judicial treatment. But from the first, from the moment when the Bill was introduced, members of His Majesty's Government spoke with very different voices in regard to the objects that were being aimed at.

As at first introduced, it was, in my humble opinion, one of the most crude and ill-considered Bills that have ever been thrown on the Table of either House of Parliament. It was amended, with very inadequate discussion, during its passage through the other House in the small hours of the morning, and it reached this House last year in the concluding hours of the session. Your Lordships, under the guidance of the noble and learned Lord, Lord Robertson, refused to accept the Second Reading of the Bill last year; and, in my humble opinion, the House was amply justified in taking that course. That was not, at any rate, the view last year of the late Prime Minister, because, in addressing a meeting of his supporters on 5th October in Edinburgh, he placed this Bill and the Small Holdings Bill in the very forefront of the effort to raise an outcry against the constitutional exercise by this House of its legislative functions.

The words of the late Prime Minister, speaking in October, were these— The Land Values Bill, which did no more than throw upon the local authorities the simple duty of valuing the land apart from the buildings upon its surface, was incontinently rejected, and I say this rejection was a piece of arrogance and high-handedness which marks the extreme pretensions of the House of Lords. That was at the commencement of the autumn campaign. Whether that agitation realised all the anticipations of noble Lords opposite is a matter for them to consider; but on 12th February this year the Prime Minister had rather changed his view. Speaking then in the House of Commons he said— It is to gratify Lord Lansdowne's view that there was no precedent for passing such a Bill within twenty-four hours of the Prorogation, which I admit is a reasonable one, that we re-introduce both of these Bills in the earliest days of the session. If our action last year having regard to the circumstances under which it was taken was reasonable, it would have been more dignified—I think, also, more wiseo—to have said so in October at Edinburgh rather than have waited till the end of the agitation.

The Bill came back to your Lordships in exactly the same form as that in which this House rejected it last year; but in the meantime, in the course of the agitation which was pursued in the recess against this House, the Bill was held up in the country as an enormous reform, as a great alteration of the whole basis on which local taxation was to be imposed; and it was promised over and over again in definite words, by more than one member of the Government that all the rates were to go upon the land as valued under the provisions of this Bill. The provisions of this Bill for valuing land a e in my humble opinion, open to a good deal of the animadversion which was passed upon them by Lord Stanley of Alderley, who spoke upon the Report stage; and I venture to say that the idea of putting all the rates in Scotland, both of the owner and the occupier — that was stated in terms—upon land values as defined by this Bill could only be adequately described, as it was described by the noble and learned Lord on the Woolsack the moment his attention was called to it, as— the most unmitigated nonsense. It is because of these very different versions of the Bill that I think this House has grave reason to complain of the course which has been taken in regard to it.

There remains the point of the substitution of capital value for annual value as the basis of valuation and of subsequent taxation. No one can deny that that is a wholly new idea; nor can it be denied that, so far as our existing system of valuation is concerned, it is an absolute revolution. I will not labour this point. But in England, from the time of the Act of Elizabeth, the criterion of valuation was what the hypothetical tenant would give, and in Scotland tin; annual rent, if that annual rent was fixed for not more than twenty-one years; and in both these cases the object in view was to test, however roughly, the ability of those interested in the subject to be rated. I put it to the House, and I state fearlessly that there has never been any adequate discussion, either in Parliament or in the country, by a Commission or other form of inquiry, in which this proposal to substitute capital for annual value has been threshed out in all its bearings; and I venture most respectfully, but as strongly as I can, to say that capital value cannot possibly afford any such criterion of the ability of the owner to bear taxation.

If it is the case that the land can be let with a covenant for immediate building, it is immaterial which basis is chosen; but it land which is not ripe for immediate building and has only a prospective value were to be rated on capital value it would not only mean an immensely heavier burden, but it would very soon have the effect of rating all the value out of the subject altogether. Capital value, however you ascertain it, and a percentage taken upon it, would give, and must give, a result far in excess of the real annual value. I should have thought it was a commonplace in economical discussion that taxation which falls on capital in the strict sense must, diminish the sum of the community's wealth, and that if you use capital value of property as the basis of taxation you cannot avoid trenching on the accumulated resources of the nation; and I suggest, as a second difficulty, that capital value is not really a fair test as between owner and owner, because some forms of capital give to the owner a much lower return than other forms. If you are to gauge for local purposes fairly, as between men and man, his ability to bear taxation, you must do it mainly on what he puts into his pocket and not on what it is supposed he owns. You have relieved—and, as I think, rightly relieved—personal property and stock - in - trade from local rates; but if you have relieved that form of capital value, surely it is an aggravation of the injustice to rate land on its capital value and to rate it alone amongst all the subjects which are now liable to rating.

I certainly acquit those members of His Majesty's Government who have spoken for themselves in this House of any complicity with the doctrines of the late Mr. Henry George, but beyond all question some friends of the Government accept, those principles and have avowed their intention of rating and taxing landlords out of existence. I venture to say that if we had accepted this Bill as it was brought to this House it would have been pleaded against us, with more less force, that we had in fact gone some way in accepting those doctrines. What is the use of ascertaining capital value if you are not going to rate, upon it? If you are going to rate upon it you are accepting those principles, while if you are not going to rate upon it you are putting a great burden upon the local authorities to ascertain that which is to be turned to no real account. Rating on capital value would be one of the surest means of affording the opportunity to those to whom I have alluded of carrying out their object.

I venture to say that if we are to go forward on this path, if we are ever to change the basis of local rating from annual to capital value, it should be done only after the fullest, fairest, and frankest discussion, and on the responsibility of the Government as a whole, speaking with one voice, after taking Parliament fairly and fully into their confidence and after laying the whole of their scheme before Parliament. An endeavour should not be made in this fragmentary form to commit us to principles which, in my opinion, would be most mischievous, and would aggravate any injustice and unfairness in the system of local taxation as it exists at the present time.


My Lords, your Lordships might think it disrespectful on my part to the noble Lord who has just spoken if I said nothing in answer to his criticisms, and I should be very sorry to be thought to show him any disrespect. But I think I should lie regarded as tedious if I were to enter again into the subject of capital as against annual value. The Bill has been discussed at every stage during two successive years, and I think we have got about as far as we can get. I hope, therefore, I may be excused if I observe some brevity.

The noble Lord again seems to think that I rest my defence of this Bill solely on the ground that some land is held up. I will not say more than this, that I have repeatedly disclaimed that restriction. The second point which the noble Lord made was that rating ought not to be upon capital value but upon annual value. In one sense the two things may be the same. As my noble friend Lord Crewe has pointed out, you can always ascertain the capital value by multiplying the annual value by so many years purchase. Similarly you can always deduce from the capital value what the annual value would be by assuming that a certain percentage fairly represents a proper percentage on the capital. If you give me the true value, that which would be given in the open market to-morrow, I do not care whether it is put in the form of capital or annual value. Therefore it is, if I may say so, to elude the whole point of the distinction to dwell simply upon the difference between capital and annual value. The annual value as we now know it represents the annual value of the use. The use governs the value, and that is what I think is unfair to the other ratepayers.

The noble Lord had two apprehensions. He seemed to think that the Bill constituted an attempt to induce this House in some subtle way, without knowing it, to assent to the principles of the late Mr. Henry George. My Lords, we should be bold men indeed, if we thought we could make any approach towards the principles of Henry George by any amount of persuasion in your Lordships' House. For my part I have no sympathy at all—I have already expressed my view—with the doctrine of transferring all rates to the land. Then the noble Lord seemed to think we were animated by another motive—that of finding some ammunition for the purpose of fighting your Lordships' House on this Bill. I may say, frankly, that I think this Government has not been very handsomely treated by your Lordships' House; but, at the same time, is it not possible to suppose that the public interest and the desire to remedy a grievance, the existence of which has been admitted by the noble Marquess the Leader of the Opposition in the course of these debates, may have had something to do with the introduction of this Bill?

The real truth is that the Bill imposes no taxation whatever. It is a Bill which proposes to have a valuation of site value as opposed to that of the buildings upon it, and the Amendment which was supported by the whole of your Lordships on the Opposition side of the House accepted that principle. After all, His Majesty's Government represent the people of this country for the time being, however unworthily, and is it not fair—I hope your Lordships will excuse a certain amount of frankness on my part on this subject—is it not fair that you should look at our Bills and assume that it is just possible that we may have some fair object in view and not an ulterior one? We feel that we are not credited with having any good intention in regard to legislation that we bring forward in your Lordships' House; but I will say no more about it.

We have had enough discussion already upon this Bill to show that the subject is of itself extremely difficult and complicated. No one knows that better than the noble Lord himself, for he was the chairman of the Royal Commission which investigated the matter. Judging from the inexplicable criticisms that I see in the newspapers and also, if I may say so, that I hear in debate, I think that the subject has not yet been thought out by a good many people who oppose it. What is at the bottom of this Bill is fair play to all the ratepayers and not robbery of anybody. The Amendments your Lordships have introduced are such as I am afraid make the Bill one which cannot possibly work if passed, and which has very little prospect of passing at all. All we can do is to put forward our proposals, and if they are rejected by your Lordship's House to commend them to the sense of the country.

On Question, Bill read 3a, with the Amendments, and passed, and returned to the Commons.