§ Order of the Day for the Second Heading read.
THE PARLIAMENTARY SECRETARY OF THE BOARD OF EDUCATION (THE EARL OF ONSLOW)
My Lords, a short time ago my noble friend Lord Parmoor addressed a Question to me asking what the intentions of the Government were as regards valuation and rating reform, and on that occasion I informed him that we had in hand the draft of a Bill which it was proposed to circulate as soon as was possible to all local authorities concerned, with a view to ascertaining their views and observations thereupon, and also that we hoped to introduce a Bill on this subject next year. That procedure was adopted in order to carry out what was stated in the gracious Speech from the Throne. At the time I think I read to your Lordships the extract from the gracious Speech referring to the matter. It is proposed that this Bill shall contain permanent provisions in regard to the rating of agricultural land, but pending the settlement of the larger questions involved, we consider it necessary to remove at once part of the rating burden which now presses heavily upon agriculture. This, of course, is without prejudice to any subsequent review of the system of local taxation and Exchequer Grants.
I may perhaps be permitted to remind your Lordships that when introducing the Budget, on April 18 last, in the House of Commons, the Prime Minister mentioned that the assessment of agricultural and would be reduced from a half to a quarter from the beginning of the present financial year, and the Bill which I am laying before your Lordships to-day is to give effect to that undertaking. The proposals of this Bill are very simple. They are almost entirely financial and do not go beyond the statement which I have just made to your Lordships. As your Lordships are aware, at present agricultural land pays on proportions varying from one-half to one-quarter. To the 1177 general district rate the farmer contributes on a one-quarter basis, to parish councils and library rates and to lighting and watching rates, which are levied in some rural districts, he contributes on a one-third basis, and to all other rates he contributes on a one-half basis. The other rates are the poor rate, the county rate, the borough rate, so far as it is included in the poor rate, and t he highway rate, so far as it is levied separately.
The, effect of this Bill is that, in future, the farmer will pay in respect of agricultural land—I say "land" advisedly, because it does not include buildings—on the basis of one-quarter, neither more nor less in any case, and for every kind of rate I have mentioned. The only rates which are not included are certain particular rates which do not enter really into the general system of local taxation. Such rates are levied for the maintenance of sea walls, or embankments of rivers, or special things of that kind. I think those are generally under the charge of the Commissioners of Sewers and bodies of that sort, but for the general system of local taxation the farmer will pay one single rate on the basis of one-quarter.
If your Lordships will turn to subsection (2) of Clause 1 you will follow what I am going to say. There are certain large corporations and county boroughs who have consolidated their rates by local Acts, and the effect of those local Acts is that the Act of 1896 does not apply to those particular areas. In order to make the rules governing all rates the same this subsection has been inserted. It provides that the areas which consolidated their rates shall be governed by the same rules as those which govern the general system of rates throughout the country. Clause 2 provides for the manner in which the deficiency is to be made up. The present deficiency of fifty per cent. is made up by a fixed Exchequer Grant which is based on the deficiency which existed in the year 1896. It is not proposed to interfere in any way with this method of making up the deficiency of fifty per cent., but when this Bill becomes law we shall have an additional deficiency amounting to twenty-fifive per cent., so that there will be a deficiency of fifty per cent. "plus a deficiency of twenty-five per cent. to make up. The farmer will 1178 pay on a basis of one-quarter and the balance will be made up by another Exchequer Grant—a special Exchequer Grant.
We are not going to touch the one which was fixed in 1896. This additional Exchequer Grant will not be a fixed grant, but if will be adjusted year by year to meet the deficiency as the amount of the deficiency varies. It will be paid through the local taxation account from the Consolidated Fund and the machinery of payment will be carried out by the Minister of Health in this country and Wales, and by the Secretary for Scotland in Scotland. The machinery for it is provided for in Clause 3 to which I need not refer further beyond calling your Lordships' attention to the proviso to subsection (1) of Clause 3, which may appear a trifle complicated but is not so in reality. The explanation is that the maintenance of district highways in the majority of cases falls in urban districts upon the general district rate to which, as I have already mentioned, the farmer now pays only upon a one-quarter basis. Under Section 216 of the Public Health Act local authorities may transfer the liability for the maintenance of these highways from the general district rate to the separate highway rate, and to that the farmer at present contributes on the one-half basis. As they have this power, local authorities might transfer the charge from the general district rate, on which it is levied now, to the special highway rate, and if so they might create a large deficiency in the highway rate which would have a claim upon the Exchequer. This would not benefit the farmer in any way, because he already pays at the rate of one-quarter on the general district rate, but it would create a sort of artificial claim on the Exchequer, and the money would go entirely to the local authority and not to the farmer
Clause 4 simplifies the definition of agricultural land. There are several Acts which contain definitions of agricultural land, and which deal with rates. We have by this clause simplified them, and made the definition throughout correspond with the widest definition, which is that contained in the Act of 1896. I mentioned, at the opening of my remarks, that this Bill would take effect from the beginning of this financial year. 1179 Therefore there may be farmers who have already paid on the old basis, and they will be allowed to adjust the amount of their over-payment by a reduction from their next payment of rates. If that has not been finally adjusted at the beginning of next year the matter will be settled by a cash payment.
There art only two other clauses that I think I need mention. One ensures that if an arbitration takes place under the Agricultural Holdings Act of 1923 as regards rents, the arbitrator shall not take into consideration the reduction in the farmer's liability which is consequent upon this Bill. The other is to define exactly what is meant by allotments.
I come now to the Scottish clauses. Perhaps I may be allowed briefly to say that the Scottish clauses do for Scotland exactly what the English clauses do for England. There is only one difference, T think, of importance, and that is that the relief which is given in respect of rates levied in Scotland is given in respect both of agricultural lands and of buildings thereon. The rest of the provisions provide machinery for carrying this out. The net result is that farmers in Scotland and England will be on the same basis. The only other clause to which I need call your attention is Clause 15, the financial clause, which enables the additional grant for Scotland and England to be charged upon the Consolidated Fund.
§ Moved, That the Bill be now read 2a.—(The Earl of Onslow.)
§ EARL BEAUCHAMP
My Lords, we have heard, as we always do, a lucid and competent account of the provisions of this Bill from the noble Earl. It is one of a number of legislative measures which have been introduced by His Majesty's Government to deal with the condition of agriculture. I do not think we have any right to complain of the fact that these various measures have been introduced. It was difficult for the Government to have acted otherwise, but, without thinking of the other measures, it is not easy to realise exactly what is being done for agriculture at the present time. I can assure the noble Earl that there will be no opposition on our part to his desire to get this Bill through before the end of the month. I understand there will be real difficulties in Scotland if it does not receive the Royal Assent by that time.
1180 I hope the noble Earl will forgive me when I say that the first announcement he made in the course of his speech this afternoon does minimise the importance of this measure. He told us that the Government hoped next year to introduce a large and important Bill dealing with the whole question of rating. That Bill is being considered by a number of rating authorities, and, if their opinion is favourable, we may hope for a measure of this kind next year. It is evident, therefore, that in the present Bill we are not dealing with legislation which is likely to remain in force for a very long time, and the importance of this Bill is to some extent reduced.
The amount which will be given in relief to occupiers in this country will amount to something like £2,750,000. At the present time the Treasury gives a subsidy under the Agricultural Rates Act, 1896, of £1,300,000. With this subsidy the amount will be £4,050,000, while the general body of rural ratepayers will pay £'4,500,000. It is difficult to resist the conclusion mentioned in a previous discussion that to some extent, at any rate, a good deal of this relief in rates must find its way into the pockets of the landlords and that it will not find its way wholly into the pockets of the tenant farmers. Human nature is human nature, and it is evident that any landlord who has to consider the general position of the farmer and whether it is desirable in any given year, owing to the bad condition of agriculture, to reduce rents or not, must take into consideration the fact that the fanner receives more relief in rates than he used to receive, so that the necessity for reducing rents will become less obvious and imperative. In that way, at any rate, the relief will not stop altogether in the pockets of the farmers.
The present position under our rating legislation is certainly rather anomalous. There was a curious case in the County of Worcester the other day to which I should like to draw your Lordships' attention. There was a sale of one of the big houses in the county, and the new-owner turned the deer park, which had been used simply for deer, into a place for grazing a lot of farm stock. The result was that the astonished ratepayers found that they had higher demand notes—which seems somewhat of a paradox. The explanation, however, is perfectly simple. Under the Agricultural Rates 1181 Act the owner was only liable for half rates when the land was used for agricultural purposes as against full rates when the park was used for pleasure; and the deficiency, not being covered by a grant, had to be met by other ratepayers. That is one of the anomalies which I hope will be removed by the Bill, which the Government hope to introduce next year dealing with the whole position.
In some correspondence in a local newspaper I recently found an example of how this works in regard to two special farms. There were two farms, one of 210 acres, obviously not very good land, let at a rental of £120 per year. Deducting tithe and allowances the gross assessment for local rates was £88—namely, house and buildings, £25; land, £63. The second farm was one of sixteen acres, with a rent of £40 per year, assessed at £37—house and buildings, £10; land, £27. The land on both farms is poor, but the larger farm has about sixty acres of fair land. The rates on the larger farm are 5s. in the £, that is, 1s. 3d. per acre; on the smaller farm the rates are 7s. 4d. per acre. With a further rise of 5s. in the £, as no grant is available to meet the discrepancy, an additional rate of 9d. per acre is required on the larger farm but 4s. 3d. per acre on the smaller one. In other words, with every rise in the rate the small highly rented farmer is called upon to pay part of the rate of the larger farmer. That is another apparent injustice which I trust will be removed by the Bill we hope to see next year.
It is with some hesitation that I venture to refer to previous debates on this subject in your Lordships' House, and if I do so it is only to repeat once more my belief that of all those who are generally interested in agriculture the person most in need of help is the agricultural labourer. I am not convinced that because his wages rose at the time when the last Agricultural Rates Act was introduced the fact was really due to the introduction of that measure. There is no doubt that his wages rose at that time, but that it was due to the introduction of that Bill is a matter of argument, and I am not yet convinced that it was. The figures I have given your Lordships in regard to these two farms illustrate the fact that under our present method of rating it is not necessarily the farm which needs it most that 1182 is going to get the greatest measure of relief. It is another example of the procedure to which His Majesty's Government are somewhat addicted—namely, that of applying a flat rate. Just as they have applied a flat rate to houses, so here we have a flat rate with regard to land, and it would be better if some method could be devised by which the poorer land got more and the richer land rather less.
I am fortified in thinking that this is not perhaps the best way of dealing with the matter by a quotation from the evidence that was given by Mr. Pretyman, an acknowledged authority on agriculture, before a Commission which was set up, I think, about the time of the last Agricultural Rates Act. In giving evidence before that Commission and speaking of the Agricultural Rates Bill of 1896, Mr. Pretyman used these words:—I think it is a had method, because the relief is given to the land which is best able to bear the burden. That gets the most relief, and the land which is least able to bear the burden gets the least relief. That is inseparable from that form of relief, and that is one of the reasons, I suppose, why it is made only temporary.This "only temporary" measure has lasted from 1896 to the present moment. I hope that the temporary measure of this year will last only twelve months, or at the outside twenty-four months, and that is the chief reason why my noble friends and I are anxious to facilitate the passage of this measure through your Lordships' House.
There is, of course, as the noble Viscount, the Secretary for Scotland, knows, a very different and very difficult point appertaining to Scottish rating. That is naturally a subject on which no Englishman could speak in your Lordships' House without a great deal of temerity, and I am glad to find that I am fortified on this occasion by the presence of my noble friend Lord Pentland, who is better equipped than I am for dealing with this very technical and difficult subject. It is with a very real sense of relief that I leave it to him to treat of that particular portion of the subject. For the rest, I can only repeat once more that we shall be glad to give what technical facilities are necessary in order to secure the passage of this Bill before July 31.
§ LORD PARMOOR
My Lords, I should like to say a word upon this Bill. I am thankful for what the noble Earl has said when he repeated that, as was pointed out, I think, previously in answer to a Question which I put in this House, the Government were concerned with the pro motion of a general rating Bill dealing with all the numerous and complex questions which a general measure must raise. Such a measure will require fearless management and courageous treatment. I think the noble Earl has indicated that the Government are proceeding in the right direction by drafting that Bill and submitting it to local authorities in order that their criticism may be heard before the drafting is completed in its final form. I regard this Bill—to put the matter at its lowest—as a debt long overdue to agriculture and to the agricultural industry. I do not regard it in the light of something given to agriculture, but as the settlement of a claim which should have been dealt with long ago. T was a member of the Royal Commission which reported in favour of the Agricultural Bates Act, 1896—I regret to think how long ago that is. Nothing has been done from that day to this, and I think the noble Earl is quite justified when he says that we should regard this Bill as one step towards general rating reform, and that, so regarded, it may be justified both as regards its general principle and its details.
In 1896 the Commission considered the question whether relief should be given to the extent of three quarters—that is to say, whether the agriculturist should pay only on one quarter—the argument then being the same as that which the noble Earl has now indicated—namely, that under the Public Health Act agricultural lands are rated only to the extent of a quarter of their real rateable value. Perhaps it would be more exact to say that they are assessed at their true value, but they are rated at only a quarter of their assessment.
§ LORD PARMOOR
Yes, on the general district rate. I need hardly say that I am not going into the Scottish question. We all know that it is a difficult one. In England we have the full assessment and levy only a proportion of the rate. In 1184 Scotland they proceed in a contrary direction and have assessment of only a quarter of the value. I think that I should be prepared to discuss even Scottish rating with the noble Viscount opposite [Lord Novar,] but I do not intend to do so now
What happened with regard to the Act of 1896 to cause it to become out of date? A fixed sum was given to alleviate the agricultural industry, the farmers and wage earners alike, and today—the noble Earl will correct me if I am wrong—only £1,300,000 is given under the Agricultural Bates Act, 1896, whereas in the meantime the actual charges on agricultural land have increased enormously. In consequence, though that may have been a fair allocation in 1896, it has really become quite out of date, and does not give anything like the same alleviation as that which was intended when the Act was originally passed.
I may make one other observation concerning the Act of 1896. It is quite true, as has been pointed out, that when the Act was originally introduced it met with some criticism. But it was an Act introduced for a temporary purpose, and when the question of renewal has come forward each Party in turn has assented, and there has never been any question of its being removed from the Statute Book. One reason for this is, I think, that when the Act of 1896 was brought forward it was argued that the landlords would get the benefit. It has been conclusively proved, since that Act came upon the Statute Book, that there has been no rise in rents.
I agree with the noble Earl's statement that although practically simultaneously with that Act there was a small rise in agricultural wages, to the extent, I think, of a shilling a week, it would require a great deal more confidence than I feel to connect that rise in wages with the relief from rating. It appears to me to have been a casual occurrence, the two factors happening to come together and not in consequence one of the other. I wish to add—and I do not say this on my own authority, but on the authority of the Royal Commission on Bating—that when you are dealing with rating you can deal only with the alleviation of the person on whom the immediate incidence of the rate is to fall. In the case of agricultural land, that is the occupier. He may 1185 also be an occupying owner, but he is not rated as owner. No owner, as such, is rated in this country. There, again, our system differs from the Scottish system under which it is the owner and not the occupier who is rated.
I do not want to lay down any dogmatic principle as to whether the owner receives at any rate some portion of the benefit which in the first instance is given to the occupier, but when we considered that matter on the Royal Commission on Local Taxation many years ago we came to the conclusion that it was a most complex and difficult matter to determine who receives the ultimate benefit when you alter the incidence of taxation in any particular way. Theoretically, I think that economists will tell you that the ultimate benefit may, to a great extent, accrue to the landowner. We did not adopt that, view. Indeed, we distinctly rejected it and said that whatever the ultimate incidence might be it would depend on particular conditions and the play of complex considerations. If, therefore, we are ever to have a reform in rating at all, we must in the first place give the benefit to the occupier. There is no other way of doing it. If you are to say that because perchance the landowner may equally get a small proportion of that relief you are never to have reform in rating, you will at once prevent all chance of any such' general measure as has been foreshadowed in the remarks of the noble Earl opposite.
I wish to raise one other point with regard to this Bill. It is one of the reasons why I am strongly in favour of it. The provisions of this Bill are all in the right direction, in the sense that the relief does not come from contributions from other ratepayers, but from the National Exchequer, and I am sure that when the larger rating Bill comes to be considered the great factor must be the relief of the ratepayers from services really onerous and national. You are doing that in this Bill not to the detriment of any particular ratepayer whatever. It is common ground that agriculture is in need of some assistance at the present time, and I do not see why this Bill should be altered in any way when it is incorporated in the larger measure. I hope that other ratepayers will come in for benefit, but that is another question altogether.
1186 The noble Earl criticised the flat rate and referred to a speech of Mr. Pretyman as regards the relief of agriculture. I agree that as regards the relief of agriculture you might take into consideration the difference in prosperity between one agricultural property and another, but I am certain that as regards rating you must treat all properties on one principle. It would be unthinkable to rate certain premises on one principle because a prosperous business was being carried on there and other premises on a different principle because the business conducted on those premises was either producing a loss or else not making a profit. In rating reform you must deal with all properties on the same basis, and give them the same relief, whether a particular occupier who happens to be carrying on the business is prospering or not.
In addition to the general principle of the Bill I have looked into all the clauses so far as they affect England, and I should like to congratulate the noble Earl opposite upon his Bill in that respect. It does not appear to me to want any alteration at all. I sincerely hope that the Bill will not only be given a Second Reading but that it will be passed as it stands, so far as the English clauses are concerned. Then I think a very substantial reform will be introduced which will not injure other ratepayers, and which will naturally take its place in the larger Bill which the noble Earl opposite hopes to introduce next year. I hope he will be able to do so, for we have waited for twenty-three years, and the time has now come when the whole matter is ripe for legislation. I wish every success to the noble Earl in the Bill upon which he is engaged.
§ LORD PENTLAND
My Lords, I wish, if I may, to say a word upon the Scottish aspect of this Bill. That is all I intend to do this afternoon, but I am afraid I must disturb the harmony of the proceedings, which has been so marked, by declaring myself to be in the ranks of those who do not support this measure. The noble Lord who has just sat down has supplemented the statement of the noble Earl who introduced the Bill, but even now I do not think the situation as it exists is fully before the House. In 1896 the Agricultural Bates Act, which is now on the Statute Book, was passed, to pay half the rates of the 1187 occupier of agricultural land. In Scotland, as we have been reminded, the other system was used of reducing the assessment upon which the valuation was made and upon which the rates were levied. That assessment was reduced by five-eighths, so that the occupier pays only three-eighths now.
The Grant-in-aid which came from the Local Taxation Fund was fixed, as has already been said, upon the figures of 1896, and £1,323,000 for England and £180,000 for Scotland has had to be found ever since to meet the deficiency caused by the relief given to the occupiers of agricultural land. As the noble and learned Lord who has just sat down has pointed out, soon even that did not suffice. The burden now amounts to something like £15,000,000, so that the burden borne by other ratepayers to meet this relief given to the occupiers of agricultural land now amounts to £7,500,000, from which has to be deducted the Exchequer Grant amounting to £1,323,000. Surely the ratepayers, who have borne these burdens for all these years, deserve some thought and consideration. One would imagine that some relief is due to them, as they have borne these extra burdens, these growing and increasing burdens, during all these years.
The Government bring forward this Bill, not as a measure of rating reform but as a measure for the relief of agriculture. I am not so sanguine as the noble and learned Lord as to the probability of the Government bringing a comprehensive measure of rating reform before Parliament within the next twelve months. It is a very heavy undertaking, a very complicated and arduous undertaking, by whomsoever it is brought forward, and I am sorry not to be able to be so sanguine as previous speakers upon this point. In view of that fact it seems to me that this Bill will only add to the complications. It will not make it easier to undertake a comprehensive measure of rating reform.
Allusion has already been made to the circumstance that the Act of 1896 has been continued from time to time, and that no Government has been able to undertake its repeal or alteration. Governments of both Parties have found the same difficulty, and that difficulty was foreseen and predicted at the time of the 1188 passing of the Act in 1896, although the Act was passed for a term of five years only. Even so, no matter what legislation was undertaken, was it not indubitable that so soon as the Act was passed new interest would be created, new complications and obstacles would be raised, and that new adjustments would be necessary—that, in fact, the task of reform would be rendered more difficult and not more easy?
Then take this as a measure of relief to agriculture. In England the occupier of agricultural land is relieved of a further quarter of the whole rate, and so will only pay a quarter of the rates, all of which in England fall on the occupier. In Scotland, broadly speaking, our rates fall half on the owner and half on the occupier, and the occupier again gets relief of something like one-eighth of the rates which he pays. But there was an accidental omission from the speech of the noble Earl who moved the Second Reading as to what happens under this Bill in Scotland. For the first time direct relief is paid from the rates to the owner who occupies agricultural land. And there can be no doubt in the mind of the noble Lord who has just sat down that the rate must go to the owner of agricultural land, and not to the occupier. I think I am right in saying that; the Secretary for Scotland will confirm me. The owner-occupier is in another category. On the owner-occupier falls the whole rate as owner and occupier. But I am dealing only with the owner of land occupied by a tenant farmer. To him direct relief is given under this Bill.
I will not complicate the statement by going into the further intricacies of Scottish rating—it would not serve any purpose—but I do concur most heartily in the view expressed by the noble Earl. Lord Beauchamp, who spoke for the Opposition, that ultimately, in the long run, relief given to the occupier goes to the owner of land, either in increased rent or in increased capital value. I may be a doctrinaire, but there is weighty authority for that view. If I may point your Lordships to an illustration of the operation of that law, I will take what has occurred quite recently in connection with the Corn Production Acts. We recently discussed the Agricultural Credits Bill. The first part of that Bill is designed to give security to those who have lent money, on mortgage or otherwise, 1189 chiefly for the transactions which went on in regard to the sale of land to tenant farmers during the operation of the Corn Production Acts. Does it not bear out the contention that I am patting before your Lordships that during the time of guaranteed prices rents were maintained, that the guarantee tended to maintain those rents, and also tended to raise the capital value of such land as, during that period, passed from one owner to another?
This Bill is now brought forward to give further relief, in the way I have mentioned, to the occupiers of agricultural land. As the noble Earl, Lord Beauchamp, pointed out, it is not given with any discrimination. It is a considerable amount—£2,750,000 in England and Wales, and £480,000 in Scotland; and this money is to be distributed to occupiers of agricultural land in England and Wales, and similarly in Scotland to occupiers and to owners of agricultural land. There has been no detailed inquiry, and farming is treated as a whole. It is perfectly true that farmers have had difficult times to go through recently, but that does not carry with it, any confirmation of the assumption that all farmers have suffered equally, that all kinds of farming have suffered equally, and that all parts of the country have suffered equally.
At a time such as this (though I entirely recognise the difficulties of the Government, and the inheritance to which they have succeeded in a very complicated and distressing condition of public affairs) the first and principal obligation upon the Government is to exercise a vigilant control of the public purse; and to take £3,000,000 of money and distribute it in this fashion, with all the doubts which must exist as to whether it-will really effect the purpose in view, is a proceeding which, though it may not evoke much criticism at the present moment, is likely, when it is fully understood, to excite considerable feeling, opposition, and resentment. Look at the position of other industries. Look at the burden now lying, in consequence of the Act of 1896, upon the great urban populations and urban industries. This Act does not attempt, and does not profess, to give relief to those who have borne this burden for so many years. It applies to agriculture a further dose of a remedy which, I think, its warmest advocates can hardly say has, since 1896, availed powerfully to 1190 keep agriculture in this country at its proper level. And it seems to me very-unfortunate that further inquiry has not been possible and greater discrimination shown in the application of such moneys, so that we might have more confidence that their application would achieve the desired result.
There is one other point upon which, perhaps, the Secretary for Scotland would be good enough to enlighten us. Hitherto such measures as this, when applied to Scotland, have been embodied in separate Bills, and, as the House is aware, they have gone in another place before the usual Scottish Standing Committee. This procedure has been departed from in this instance, though I think discussion in that Committee would have enlightened us as to the real opinion of Scotland upon this Bill. I regard the Bill as rather an unfortunate and indefensible proposal on the part of His Majesty's Government.
§ THE SECRETARY FOR SCOTLAND (VISCOUNT NOVAR)
My Lords, in reply-to the last question addressed to me by my noble friend, I have to say that it was felt that, in view of the pressure of public business and other circumstances, the Bill dealing with agricultural rates could be introduced with more advantage as one measure. After the admirable statement made by the noble Earl who moved the Second Reading of the Bill, and the general character of the reception given to it on the other side of the House, I will confine my remarks to the Scottish clauses. Those of your Lordships who have read Mr. Asquith's confession in another place that, after representing a Scottish agricultural constituency for thirty years, the subject of Scottish rating was still a deep and impenetrable mystery to him, will probably not be disposed to listen to a discourse upon this intricate subject. I will endeavour only to deal with such of its technicalities as are affected and, one may say, simplified by the Bill before the House; because I think that my noble friend opposite will find that, so far from making the Scottish system of rating, complex as it is, still more so, it will greatly simplify the matters that will have to come before those who consider the drafting of a comprehensive measure of rating reform.
1191 Controversy has been focussed on the distribution of the relief to be given by the Bill to landlords in Scotland, and considerable use was made in another place of passages from former speeches of mine upon this subject. I suppose there are few veteran politicians who have not left scattered phrases behind them which they would not at least express differently today; but I think that any one giving a fair reading to those speeches will allow that they were all directed to securing a complete revision of the rating system, so as to ensure a fairer division of the burdens as between personalty and realty, and so as to place the great industry of agriculture on the same footing as other industries in the matter of rating burdens. I may have been too unappreciative of the assistance to be derived from a temporary relief of rates, knowing well that such relief would prove disappointing owing to the continual rise in rates, and believing that the only permanent way of securing equitable treatment for agriculture was so to widen the rating basis that an undue share of the burden of maintaining local and national services should not fall on one of the hardest pressed industries of the country. That was twenty-seven years ago, and it cannot be said that any reform of local taxation on a comprehensive basis has yet been undertaken.
We have had the monumental Report of Lord Balfour of Burleigh's Commission, on which only very limited action has been taken. The excessive burdens on agriculture have continuously increased, although the relations between Imperial and local taxation have been considerably modified since the Report of the Royal Commission in 1901. I am glad to say that the Government have undertaken to deal comprehensively with the whole subject of rating in the near future. Meanwhile, this Bill is directed towards assisting agriculture through a period of change and depression. In arguing the Scottish question both here and in another place, the mistake has been made of refusing to consider agriculture as an industry and, instead, to fasten on the landlord, to treat him as something apart and as so dissociated from agricultural production that burdens could be piled upon him without those burdens in the least affecting the prosperity of agriculture.
1192 After all, as some of your Lordships know, the landlord represents in agricultural terms the whole building equipment, drainage, water supplies, housing, roads, fences and their perennial upkeep. He also represents management, and those who will refer to the cost entailed on the Government for the management of small holdings held from the State will be able to appreciate what an expensive item that is. The rent received by the owner has long ceased to be more than a very small rate of interest on the capital expended on the land, and if all this capital were eliminated the soil would turn to prairie land. In the still unpeopled countries few people nowadays are willing to settle and take up unprepared land, to clear the ground and erect buildings. When the Government do all those things the cost to them is about £1,000 per settler even in a country like Australia where, owing to the fine climate, the sketchiest of buildings alone are necessary. The Commonwealth and States of Australia have already spent about £40,000,000 on settling ex-soldiers, and will spend many more on settlement schemes which they have in hand.
Now, what such Governments are doing in those countries has been done hitherto by the private owner in Great Britain. If he is overwhelmed by unfair public burdens he will no longer be able to play his part in providing and maintaining equipment, and there will be a growing deterioration of agriculture and a crippling of the industry. It is not surprising, perhaps, that a townsman who has never had any connection with landward industries save when it comes to collecting fees for law pleas, land transfers, and mortgages, should be unable to understand the co-partnership of landlord and tenant, even though to deny the existence of this partnership is on all fours with the Socialist contention that all wealth is created solely by labour. But many even of the farmers who have purchased holdings did not realise what was the cost of upkeep and replacement and what the total burdens of taxation would amount to. I have been told by a ci-devant tenant that he had not had enough sympathy for me when I was his laird, and there is no doubt that many of the new owner-occupiers are alarmed at their position now that they have to provide the whole capital for their industry, and they are realising 1193 in a way in which they never realised before the unfairness of a system which throws upon their industry the maintenance of many services, national as well as local. The old land system has broken down under the accumulated weight of growing taxation, and it is of immense importance to the country that the new and growing system of owner-occupier should be, given a fair chance, because if he goes our whole agriculture goes with him.
It has been contended in another place that the position of the occupying owner should be ignored and that he should be treated as a dual personality to be overrated in his capacity as owner and fairly rated in his capacity as occupier. His case reveals the dilemma into which critics of the Bill have been led; for they argue that as owner, providing equipment and fixed capital, he ought to be rated on an admittedly unjust scale, whereas he ought, as occupier and provider of the lesser and more movable capital, to be rated on a lower and fairer scale. Further, they arc led to contend that agriculture in Scotland should not be placed upon an equal footing with agriculture in England, and, consequently, that its products should be placed at a disadvantage in the market as compared with those of English agriculture.
The measure before your Lordships ensures that the new owner in Scotland will receive the same relief as his opposite number in England, and, as the outcome of the general relief which is given to the industry, the proportionate advantage possessed by the tenant or cultivating partner as compared with that which will accrue to the owner or equipping partner in their mutual undertaking, will not be altered. Originally, the rating burden was borne in equal shares by both. In 1896 relief to the extent of five-eighths was given to the tenant, and now, under the new Bill, three-fourths of the rate will be paid by the owner as against one-fourth by the tenant. The loss of rate is to be made good by a, Treasury Grant. Mr. Duncan Millar has condemned the Government scheme for giving further relief to the agricultural ratepayer—a line which I think was also pursued by my noble friend opposite—and he would like to see the new Exchequer Grant used to meet the existing shortage under the Act 1194 of 1896, which amounts to something like £500,000. But if the new Grant was appropriated to this purpose most of the money, in the case of county rates, would go to the owners. Taking a typical case, only fifteen per cent. would reach agricultural occupiers; other non-agricultural occupiers would take twenty-two and a half per cent., while owners would receive sixty-two and a half per cent., of which sum forty per cent. would go to agricultural owners. Therefore such a scheme could hardly be put forward as a practical alternative to the proposals of this Bill, assuming that the primary aim of the Government in giving the Grant is to reduce the present rating burden on agriculture.
The Government Bill does not stereotype the Grant in respect of the further rating relief now proposed to be given to agriculture. It may be said that in making this new Grant vary with the requirements of each year, there is an implication that the 1896 Grant should not have been stereotyped, and that, accordingly, there is some ground for claiming that the 1896 shortage should be made up to the ratepayers. But the answer to this is that rates are at present high, and that it if hoped, with some reason, that they may fall to a lower level, with a consequential fall in the new Grant. At the same time, the scheme of a variable, Grant has this advantage from the ratepayers' standpoint, that if, contrary to expectations, rates rise above the present level, the non-agricultural ratepayer is protected against the possibility of a new shortage.
Some of our critics base their case on the fact—my noble friend opposite called attention to this—that no Committee which has considered the subject of local taxation in Scotland has recommended the relief of owners. The Government have decided that the rates on agricultural land in England, which were reduced to one-half in 1896, should now be reduced to one-quarter. The Scottish agriculturist must, in equity, receive a corresponding measure of relief. The English relief is, of course, based on the whole rates falling on the farms being paid by the occupier, but I need not remind your Lordships of the fact that in Scotland half the rates are levied on the owner, and that does not reduce the burden on the agricultural industry by half. If it 1195 does, the English system is a mistake. It would not be good for us in Scotland to reduce the rating basis on the agricultural occupier below a quarter, for any greater exemption would unduly weaken the occupier's interest in economical administration. It follows that the equivalent Scottish Grant cannot be used to relieve the rating burden on agriculture unless the owner's rates are brought within the scope of relief.
Another important result of the scheme adopted for giving increased relief to the agricultural ratepayer is the simplification of the rating system that will ensue. I think I can reassure my noble friend upon that point. The outstanding rating grievance in Scotland at the present moment is caused by the fact that the supersession of parish school boards by county education authorities was not accompanied by a county rating system which would have given an equalised education rate throughout each county. The chief obstacle to that was that under the parish system the whole weight of the existing shortage under the Act of 1896 falls on the occupiers, whereas under the county system the greater part of the shortage falls on the owners. The present opportunity is accordingly being taken to equalise the rating basis of owners and occupiers by making the direct relief four-eighths in each case. This will replace the present lop-sided arrangement under which owners are rated on full rental and occupiers on three-eighths. Having done that, the agricultural occupier is then compensated for the increase of one-eighth in his rating basis by being allowed to deduct from his rent half of the rate levied on four-eighths of his rental, which leaves him with an effective rate payment on the basis of two-eighths of his rent.
Incidentally to this equalisation of the rating basis, the existing Grant, which is now earmarked to occupiers, is appropriated, equally along with the new grant, between owners and occupiers. The result will be an equal rate per £ on owners and occupiers under the parish system as there is already under the county system. The two systems will not even then be identical, as county rates are levied on gross rental while parish rates are levied on net rental. But the transition of the education rate to the county system will be greatly facilitated, and a reform which 1196 Mr. Millar and others greatly desire will thus be brought within reach. I ask your Lordships to pass this Bill, believing that its justification lies in the condition of the agricultural industry, which has now become so serious that further delay in carrying out some measure of justice in respect of the incidence of rating would have disastrous consequences on the rural prosperity of the country.
§ On Question, Bill read 2a, and committed to a Committee of the Whole House.