§ THE EARL OF PORTSMOUTH rose to ask His Majesty's Government whether, in view of the fact that recent decisions have been given by the Referees against the Commissioners of Inland Revenue in important test cases where questions of principle arising out of the administration of the Finance (1909–1910) Act, 1910, were being raised, they will give instructions that the service of the provisional valuations now being made under such Act be postponed until the questions at issue in the cases referred to have been disposed of in the High Court, and the correct basis for making the valuation finally ascertained.
§ The noble Earl said: My Lords, in putting this Question to the Government I think it will be necessary for me to say a very few words of explanation. The subject is a very complicated one, and in the course of the few remarks that I shall make it will be my object to deal with the matter in language devoid of technicality. It is perfectly clear that this is not an occasion on which it would be suitable or desirable, and in any case it is not my intention, to dwell upon the merits or demerits of the Finance (1909–10) Act. All that I will say in regard to it is to remind your Lordships that under that Act a valuation has to be made of all the land in the United Kingdom, and for the purposes of this valuation certain values have to be ascertained and set out in the provisional valuations which have to be served upon an owner. It is beyond controversy that this is an Act for the purposes of taxation, and that consequently the valuations should be reliable valuations and should be made upon a uniform and an intelligible basis.
§ Under the Act itself there are various forms of value. The Act defines the full site value as the value of the fee simple of the land if sold at the time in the open market by a willing seller, divested of buildings, of timber, and of fruit-trees. Lately two very important test cases have been decided against the Commissioners of Inland Revenue by the Referees. One of those cases is known as the Norton Malreward case in the county of Somerset, and the other is known as the Chels case in the county of Hertford. In those cases it was decided against the Commissioners of Inland Revenue that in 1066 arriving at the assessable site value for future taxation deduction should be made, in the interest of the owner, first for the tenant's improvements and for the tenant's Unproved cultivation, fealties, and unhausted manures. That appears to be very reasonable, for as your Lordships are well aware an owner has to pay for these matters under the Agricultural Holdings Act. It was also decided by the Referees that in arriving at the assessable site value, the value to be arrived at should be ascertained as though the grass had been divested from the land valued. I do not pretend to interpret what the precise meaning or force of that may be, but presumably it means that. in the opinion of the Referees, grass land to be of any value is the product of expenditure on the part of either the owner or the occupier, and therefore should not be made liable to assessment for the purposes of taxation under the assessable site value.
§ What is the position of affairs now? It is this, that we have had these two test cases derided by the Referees. If the Government or the Commissioners of Inland Revenue say that they will abide by the decisions of the Referees, then I maintain, I think with reason, that all future valuations should be governed by the principles decided upon by the Referees; but I presume that the Government will appeal to the High Court against the decision of the Referees. What I want to put to the Government is this. This is not a matter of controversy or of Party politics; it is a question of reason and of justice in the administration of the Act. It surely is very unreasonable and unfair to continue the service of these provisional valuations when they may be upset or altered at any time, and when the owners upon whom they are served do not really know the principles upon which the valuations have to be made. Under the Act sixty days have to elapse from the time when the provisional valuation is served upon the owner. The owner is required within those sixty days to appeal or to send in amended figures; but if he fails to send in amended figures or to appeal, the figures originally settled by the Commissioners are to stand as final in the Doomsday Book.
§ I do not think that this is a question exclusively or even principally affecting larger proprietors or men of means; they 1067 have expert advice, and I presume that in most cases the result of the uncertainty that now exists is this, that they have in all cases generally appealed against every valuation that has been sent in. But your Lordships are fully aware of the fact that there is now an increasing number of small owners of land, because one of the results of recent legislation has been that large estates are being broken up. It does seem to me especially hard upon the smaller men that they should have these provisional valuations served upon them and be put to considerable expense, perhaps, in obtaining professional advice in order to check the valuations, when the valuations may be completely upset by further appeals when the questions are taken to the High Court. In the circumstances I cannot myself imagine that anything would be lost as regards the progress of I he valuations were the Government to agree, if they wish to appeal, to take the matter to the Appeal Court as soon as possible, and that in the meantime they would not serve any further valuations. For surely it is not unreasonable to ask that the owners should be allowed sixty days from the time that the decision is given and the principles upon which the valuation is to be made arrived at. I hope that the Government will appreciate the very great inconvenience and inequity which exist under the present condition of things, and that the noble Lord who will reply on behalf of the Commissioners of Inland Revenue may be able to meet what I think is a very reasonable request in a conciliatory, and I hope in a satisfactory, manner.
§ THE PAYMASTER-GENERAL (LORD STRACHIE)
My Lords, I am sure the noble Earl will not think me wanting in courtesy if I do not follow him into the many arguments as regards the way in which this valuation has been made. Be himself has said that this question is sub judice; and therefore it is very desirable that we should only deal with the actual facts at this particular moment. First of all I will give the noble Earl an answer to the Question as is stands upon the Paper, and deal afterwards with what he said by way of explanation of his Question. Notice of appeal is being given against the decisions to which the noble Earl refers, and unless and until they are absolutely confirmed by the Courts they do not involve the abandonment in any 1068 particular of the basis on which valuations are at present conducted. It is not, therefore, proposed to suspend the service of provisional valuations on account of them. Arrangements will, however, be made to ensure that owners who, for the preservation of any rights they may claim, give notice of objection to provisional valuations on account of the adoption of principles called in question by the decisions, shall be put to as little trouble as possible in the matter.
The noble Earl said that it is unreasonable in the circumstances to continue to serve the valuations. First of all, sixty days have to elapse from the time that the provisional valuation has been given to the man whose land is to be valued. During those sixty days the man, if he feels himself aggrieved by the valuation, has the opportunity of consulting and appealing to the local valuation office and of seeing whether they cannot come to an agreement. But if they cannot come to an agreement in the sixty day and the matter has to proceed, there is a further step which the noble Earl did not mention—that is that notice is served upon him that within thirty days the case will go to the Referee. During those thirty days the door is still open for the parties to come to an agreement or to arrive at some figure of compromise.
§ THE EARL OF PORTSMOUTH
How are you to be able to form a valuation, or come to any compromise, when you do not know whether such a thing as the grass is to be included or not?
§ LORD STRACHIE
What we propose to do is this. Until the Courts have given their decision finally as to whether the Government's contention is right or not—namely, that land should be valued with the grass upon it—we do not propose that the whole of the valuation should be stopped. It would certainly be unreasonable to say that all provisional valuations should be entirely stopped during that time. On the other hand, it would be perfectly reasonable to say, until the decision of the Court has been given, that where the owner makes objection that the basis is wrong because a decision has been given by the arbitrator in the case of Norton Malreward in the county of Somerset to which the noble Earl referred, the assessment to which the owner objects— 1069 not the whole of the valuation but only the particular point—ought to be reserved. Where the claimant takes that line the valuation will be suspended and those points reserved till the Courts have given their final decision on the question. But in cases where the owner has taken objection to the price that has been put upon his land for other reasons than the point which is pending in the case of Norton Malreward, then we consider it perfectly reasonable to go on with that part of the case.
§ THE EARL OF PORTSMOUTH
May I ask the noble Lord whether that also applies to the question of tenant right and improved cultivation?
§ LORD STRACHIE
Certainly. I was only dealing with the instance of the grass, because we had all in mind the case of the grass as being much more important. The other, of course, is a smaller matter, but my undertaking would also equally apply to the other cases. What I say shortly is this. Until the Courts have decided what is the law upon this particular point which is now uncertain owing to the decision of the. arbitrator in those cases, no final decision will be made with regard to the valuations. But, on the other hand, we shall go on making the valuations provisionally, reserving all those cases which we think are in doubt. It would not be reasonable to cause the enormous delay that would be involved by not dealing with cases where an owner does not wish to appeal except only in regard to items which are in controversy. Then as to poor men being put to expense, I would point out that they would be put to no more expense in this case. than they are put. to at the present moment. They would have to give notice if they objected, and the same procedure would apply. They will be in no worse position than they are at the present moment. That being so, I cannot see why the noble Earl should object to these valuations being served upon them. If they are not served, it only means delay. We have done all we can in undertaking that cases which are in doubt shall not be adjudicated upon or decided until the Courts have given their final decision on the point which has been raised.
THE EARL 0F CAMPERDOWN
Might I ask the noble Lord a. further question? It is this. Some provisional valuations 1070 have, either per incuriam or for some other reason, been allowed to pass. Some of the points which are now before the Courts may affect those valuations, and I would ask, Will those valuations in future be revised according to the ultimate decision of the Court, or will they be enforced in their present form? If they are not revised, your valuation will not be a fair valuation at all, because one portion of the country will be decided on one set of principles of valuation and another part of the country upon another set of principles. And unless it is understood that all the valuations are ultimately to rest upon the final decision of the Court, it is a direct inducement to all landowners to object to the provisional valuation. Of course, the Chancellor of the Exchequer is very anxious to push on with his valuation. Many of your Lordships know, I know myself, of cases in which persons have objected to the provisional valuation simply because there are points which are in dispute, with regard to which they are afraid, if they were to assent, that they would be assessed on the principle as it now rests. I should be much obliged if the noble Lord could answer that question.
§ LORD STRACHIE
I do not think that this case is going to make any difference as regards landowners objecting. If my memory does not deceive me, I think I remember reading in the public Press that the Land Union had advised landowners always to object in order that they might wait and see if something turned up. In this case something has turned up, and we do not know what is to be the end of it. The noble Earl asked what is going to happen in cases where the landowner is satisfied with the valuation, either when it was first made or through compromise with the officers who made it. When they have arrived at a mutual arrangement, the noble Earl asks "Will that be reopened?" That, of course, will have to be a matter for consideration after this case has been decided. That seems to me the only possible course that we can take at the present moment when the whole matter is sub judice.