HL Deb 06 March 1913 vol 13 cc1493-7

LORD BALFOUR OF BURLEIGH rose to ask His Majesty's Government whether, having regard to the conflict of opinion which exists as to the fair value of the interest possessed by the holders of the various classes of licences for the sale of beer, wines, and spirits in Scotland, the Government will institute an inquiry for the purpose of eliciting the facts and obtaining an impartial judgment on the questions involved.

The noble Lord said: My Lords, the Question of which I have given notice is a very simple one, and it is not necessary for me to preface it by any lengthy remarks. I only wish to state in advance that I have no desire on this occasion to say anything which would renew any controversy on the matter with which the Question deals. My point is this, that a knowledge of the actual facts is absolutely essential for any fair consideration of the questions which are involved in temperance legislation. It is of interest to those who hold licences; it is of interest to those who are advocates of what is known as disinterested management; and it is certainly not less of importance to those who are anxious for a vote of the people as to taking away licences altogether, for I am certain that unless you give fair terms to licence-holders you are not likely to get an intelligent people like the Scots to take away what is really, in a fair sense of the term, a property.

I certainly do not put it as high as to call it a vested interest, but nobody who has looked into the facts can deny that there is an interest which has to be recognised by money value. It has grown up with the knowledge of all concerned; it has been for the advantage of the public that it should grow up, because it has arisen from the fact that it is of importance to the public that licences, especially when held by private individuals, should be held by persons who are reputable and who make a proper use of the licence given them. The more proper the use they make the more firm is their tenure by the common practice of many years past, and therefore it is distinctly of advantage to all concerned that that interest, however it may be described, should be recognised. There is no doubt that it is recognised by the State, because on transference of a licence by the death of the holder the State steps in and takes Duty. I asked some time ago whether we could get information about what was done by the Inland Revenue authorities on these occasions, and there has been placed on the Table of your Lordships' House a Paper, Cd. 6528, in which three instances are given—one of a grocer's licence and two of public-house licences; but from the bare statement of facts you cannot tell what is the real value of these licences. You do not know the facts; you do not know how the calculation was made; and therefore, although there is established the fact that there is an interest, this Paper does not carry you very far in being able to understand the circumstances and to assess the real value.

If your Lordships refer to this Paper, you will see a case of a licensed grocer with a yearly turnover of £2,000 where the net profits were only £180, and the value of the goodwill is taken at £350, or just about two years purchase. There must be some extraordinary set of circumstances in that case. In another case given, with a yearly turnover of £3,800 the net profits amounted to £520, and the value of the goodwill was said by the Inland Revenue authorities to be £3,000, or, roughly speaking, six years purchase of the profits. That there is a considerable sum taken year by year by the Inland Revenue on such occasions as I am referring to is proved by the Return placed on the Table of the other House of Parliament in June of last year. It is a Return of all the licences issued to retail licence-holders, and the ascertained or estimated yield of the Duties taken upon them by the Inland Revenue. In that Return England, Scotland, and Ireland are separated, and in some cases there are special statistics given for Wales. Under the heads of on-licences, off-licences, and wholesale licences, no less a sum in one year, so I understand, than £326,000 was taken as the value of these licences. If that is so, it is quite clear that there is an interest which must be recognised, and all I plead for is that we should know the facts. Possibly some of us may draw varying inferences from the facts when we know them, but we must be much more in difficulty if we do not know the facts; and therefore without further preface I ask whether His Majesty's Government will institute an inquiry for the purpose of eliciting the facts and obtaining an impartial judgment on the questions involved.


My Lords, everybody must sympathise with the desire of the noble Lord, and if the inquiry which he suggests would lead to the facts being better known than they are at present the Government would make no difficulty about it, but I can assure him that it is absolutely impossible to get at what he wants in the way proposed. What is the value of a licence in Scotland? Undoubtedly it has a value. The noble Lord said that the Inland Revenue authorities place a valuation upon it when it passes at death. But what is that valuation? Section 7 of the Finance Act of 1894 says that it shall be "the market value," and this depends upon an infinite variety of circumstances. A man, fox example, who owns a licence in a house of which he has a long lease and which is in a part of tie country where perhaps there is only one public-house has something very valuable, because his expectation is a reliable one; but a man who has a public-house in a congested part of a town where there are a great many public-houses and where the magistrates are active and his hope of a renewal may be very doubtful, has something of very different value. His hope of a renewal may be worth very little in the market, and the Inland Revenue authorities take that into account. The market value, the principle on which the Inland Revenue authorities proceed, is something which can be ascertained and can be adjudicated upon only by taking the varying set of circumstances in each case into account.

The noble Lord desires to find some principle on which compensation should be given. Well, in the Minority Report of the Peel Commission such a principle was laid down for Scotland. It was pointed out in that Report that there was a great difference between Scottish, English, and Irish licences. In the case of Irish licences there is, I believe, a recognised right of renewal. As to English licences, although there is no legal right of renewal there is a customary practice of renewal, which is valuable. But in Scotland that customary practice is much more attenuated, and in the opinion of the minority on the Royal Commission it would be impossible to assess any legal value to Scottish licences, but they thought that justice would he done if five years' notice was given to the licence-holders. In the Bill which was before your Lordships' House quite recently the period of five years was inserted as the proper notice before the Bill came into operation, and that term your Lordships afterwards increased to ten years.

But the principle laid down in the Minority Report has no reference to the value of licences. When you come to the value of a licence there is absolutely no rule or fundamental basis which can be laid down except that which occurs in Section 7 of the Finance Act, 1894, to which I have referred, which is to look at each case at the "market value" and ask what any ordinary individual, in view of the tenure and nature of the property, would give for the particular chance of the renewal of the licence. The differences in the value of various licences are set out in the Return which was moved for by the noble Lord last December and which was laid on the Table of the House. There was a case in which the value of a grocer's licence was contrasted with that of a public-house licence, enormously to the disadvantage of the grocer's licence. Yes; but you cannot tell why the public-house had such a large value assigned to it unless you go into all the circumstances of the place in which it was situated, the tenure, and so on. The truth is that it is impossible to give an answer such as the noble Lord has asked for on any basis which depends on principle at all. The only answer that could be given is that the Inland Revenue authorities look at the particular circumstances in each case. Therefore if a Return such as the noble Lord has asked for were granted, it would be a Return which would furnish no information.