§ VISCOUNT NOVAR rose to ask His Majesty's Government whether it is the intention of the Government to terminate the policy of acquiring land in Scotland by for or purchase for the settlement of ex-Service men on the land; whether the alternative policy of the compulsory constitution of holdings under the Small Landholders Acts does not inflict on owners of land serious immediate financial loss, together with heavy liabilities in the future, from which owners of land in England are exempt; and if so, will the Government give the reasons for such differentiation; and to move for Papers.
§ The noble Viscount said: My Lords, I have put the Question which stands in my name because of the great extension given to the scope of the Scottish Small Landholders Act by the inclusion of ex-soldier settlement. The Act of 1911 was passed' to meet the demand for small holdings in normal times. As I think my noble friend opposite will agree, it was never contemplated or intended that it should be the method of settling soldiers on the land after a great war. To meet this demand three special Acts were passed in 1916, in 1918, and in 1919, under which 198 land for ex-Service men was to be acquired by purchase, feu, or long lease. In England it is so acquired, and In the event of an unsuccessful result the loss falls, as it should do, on the community. In Scotland the alternative system of compulsory leasing is available, under which the loss may fall on the landowner. The system of compulsory leasing adopted in the original Act, which was always, in my view, inequitable, is made far more so by the 1919 Act, which cancels all compensation for loss in capital value. This loss may be anything from five to ten years purchase.
§ I will give your Lordships a well-known and by no means extreme example of such loss —that of Ballencrieff, a detached farm extending to 590 acres, on the Murray of Elibank estates in East Lothian. The pre-war rental of the farm was £1,350. The sitting tenant offered £25,000 for the farm, or over nineteen years' purchase of the gross rent; but as neighbouring farms were selling at over twenty years' purchase the offer was declined, and the proprietor was negotiating the sale at a higher figure when the Board of Agriculture stepped in and took the farm in 1914 for small holdings. In 1918 Ballonerieff was sold and realised a little over £12,000, or less than twelve years' purchase of the gross rental. Thus, as a single holding, this farm could have been sold at the very least for £25,000 at pm-war value; whereas, after great expenditure by the Board on its re-equipment for thirty small-holders, it realised less than twelve years' purchase in 1918 on the top of the market. The owner's actual loss on the transaction was £4,500. To-day it would be £6,800; for, while he received £8,000 by way of compensation for equipment and depreciation, under the Act as now amended no compensation is given for depreciation in capital or in some sporting values.
§ It is obvious, therefore, that land taken by the Board under the compulsory leasing system may be reduced in value by one-third or more at a time when the wholesale dispersal of agricultural estates is rendered inevitable by pressure of Super-Tax and Death Duties, which, along with Income Tax added to rates and stipend, more than absorb any net-agricultural rental. When the Scottish Small Landholders Bill was submitted to your Lordships' House in 1908 and 1911, strong protest was made against the unfairness of the scheme to owners who found themselves deprived of the rights of proprietorship and 199 management, and yet saddled with large contingent liabilities for expenditure over which they had no control. This opposition was justified by results, and only a few months ago, in another place, the Secretary for Scotland promised, under pressure, to reconstruct the Scottish Board of Agriculture.
§ The efforts of the Board to settle soldiers on the land are, if possible, even less successful and more uneconomic than its earliest schemes; but up to now soldier settlement has been conducted on a purchase or feuing system and the loss has fallen on the whole community and not on the individual landowners. In 1919 £3,000,000 were granted to the Board for purposes of settlement. That money is virtually exhausted, and the Board's power to purchase or feu expired on December 31 last. It now shunts the burden on to a more helpless and unprotected victim, —who is found, as ever, in the individual landowner. The Board transfers to him the liability and loss to which the taxpayer will no longer submit, by bringing soldier settlement under the Small Landholders Act: which means that whereas in England ex-soldiers will be settled on the land through a local and central authority financed by public money, in Scotland the Board will be able compulsorily to lease land at its own valuation, select tenants at its own discretion, fix fair or unfair rents, remodel and erect buildings and equipment according to its own designs, and will then throw the whole ultimate liability for the compensation it awards to any tenant who fails to make good or throws up his holding, on to the unfortunate owner who, up to that moment, has been totally ignored.
§ Under the original Act owners had certain pecuniary safeguards, including a right of valuation by an arbiter if the claim exceeded £300; but these safeguards were swept away in 1919 when provision was being made for the settlement of ex-Service men on the land by purchase or feu, and the reversion to compulsory leasing finds the owner deprived of even this amount of protection. The Board takes the land and values it—a unique example in legislation of an owner being deprived of independent valuation or the right of appeal. Any stability that the Act ever possessed rested ultimately on the ability of the owner to compensate the outgoing tenant to the tune of hundreds or thousands of pounds, for any useless 200 expenditure he may have incurred. That ability no longer exists, and if the English squire is up to his neck in public debt, his Scottish brother is submerged in the same quagmire. His position is worse than that of the English owner. He pays half the rates which, in England, are wholly paid by the tenant. He pays the whole of the Church stipends and upkeep. His equipment, owing to climatic and other conditions, is more costly. His land, owing to inequitable Land Acts and longer tenures, is harder to sell, while the new occupying owner who has bought his farm is also being rated, stipended, and double Income Taxed into desperation. He will not view with equanimity the re-introduction of compulsory leasing which so gravely depreciates the value of land.
§ It has been brought home to us by the financial conditions of to-day that stability in values is the indispensable basis of prosperity, and the evil that has been wrought by Land Acts, more especially by the Small Landholders Act, is that it has destroyed stability in the value of land, and shaken public confidence in land as a subject of investment. Capital has been alienated from agriculture, and yet there is no industry in which its continuous inflow is more necessary. It may be that the financial circumstances of the country preclude land purchase for settlement. If so, feuing, compulsory or by agreement, is the right alternative, It is a very customary tenure in Scotland, and the fairest and most equitable manner of meeting the cost of schemes designed to discharge what is, after all, a national obligation to our ex-soldiers, and not one that a small and a ruined section of the community should be asked to shoulder.
§ Heavy taxation and the incredible increase in rates which has taken place since the war is crushing out the landowner, and heavily handicapping the agricultural industry. Already the financing of many of the schemes by which our Government is seeking to establish the new heaven and new earth promised by the Prime Minister has been put on the rates. The last straw is already loaded upon the back of the broken-clown agricultural camel. I wish to draw your Lordships' attention to the method by which the coup de grace is to be administered to that long-suffering animal. Also I would ask His Majesty's Government to explain why war liabilities in the shape of soldier settlement, borne by the community in England, should be imposed on 201 the landowner in Scotland. I would further invite the Government to institute an. Inquiry into the working of the Small Landholders' Acts, for the purpose of determining whether the feuing system, so well known in Scotland, is not in all circumstances the best, and indeed the only basis, on which to secure co-operation, economic stability and justice.
§ LORD STANMORE
My Lords, the powers of the Board of Agriculture for Scotland to acquire land by purchase or feu, and to hold land, are still operative so far as the congested districts are concerned. These powers are derived from the Congested Districts (Scotland) Act, 1897, and it is not proposed to terminate them. As regards other parts of Scotland, the powers of the Board to acquire land by purchase or otherwise were derived from the Sailors and Soldiers (Gifts for Land Settlement) Act, 1916, and the Small Holding Colonies Acts of 1916 and 1918, as amended and extended by Part I of the Land Settlement (Scotland) Act, 1919. The powers of acquisition derived from the last-mentioned Act and from the Small Holding Colonies Acts lapsed on December 23 last, but the question of the introduction of legislation to continue these powers is now under consideration, and it is probable that a Bill to effect this will be laid before your Lordships after Easter.
There is no reason to suppose that the compulsory constitution of holdings under the Small Landholders Acts inflicts loss on owners. The Acts contain ample provisions for compensation, not only when the holdings are created, but also in the event of the failure of schemes. Moreover, it is usual in the case of such schemes to purchase the buildings from the landowner, who is thus relieved of the cost of upkeep of buildings. It is not apparent, therefore, what heavy immediate or future financial losses are feared. The differentiation between English and Scottish land legislation has its origin largely in historical causes, and it has been recognised by successive Governments that the Scottish problem is one calling for special treatment. This applies particularly to the. Highland area, where the crofting or landholder system of tenure was practised long before it was formally legalised. Its application to the whole of Scotland by the Act of 1911 was the result of a long agitation in favour of land reform in Scotland.