HL Deb 30 April 1929 vol 74 cc232-9

Order of the Day for the Second Reading read.


My Lords, I do not think it will be necessary to trouble you at any great length with an explanation of this Bill. It gives effect to the proposals made by the Government to ante-date the exemption of agricultural land and agricultural buildings from rates from October 1 to April 1. The cost of this will amount to about £2,100,000. The gist of the Bill is contained in Clause 1 (1) which completely exempts agricultural hereditaments from rates as from April 1. No one will ever have to pay any rates again on agricultural land or agricultural buildings. The rest of the Bill provides the necessary machinery for carrying this into effect. In order to explain that I think I should recall to the memory of your Lordships the Rating and Valuation (Apportionment) Act, 1928.

Under that Act a special list has to be prepared in each rating area of agricultural lands and buildings and of industrial hereditaments, such as would be affected by the Local Government Act. That list is prepared by the rating authority, which is the county district, and it is then submitted to the Revenue officer. If a property is included in that draft list and it is an agricultural property, it will be exempted from the payment of rates during the half-year; that is to say, that inclusion in the draft list is primâ facie evidence of the qualification of the property for exemption. But this draft list requires approval by the assessment committee and then, of course, there are appeals to Quarter Sessions and ultimate liability to pay rates will be determined by the list which is finally settled on October 1, subject of course to any possible decision on an outstanding objection. I think in most cases the draft list will be confirmed and the provisional right to exemption which has been obtained by inclusion therein will also be confirmed, but there may be a few cases which are not confirmed. In those circumstances the rates will have to be paid and arrears of rates will also have to be paid.

That, I think, makes clear the machinery by which the derating of agriculture will be accelerated. It shows, of course, that the income of the local authority will be decreased, and that will upset the estimate for the next half-year, so steps must be taken to meet the deficit caused by an acceleration of the Treasury grant to rating authorities. Clause 2 provides the machinery for that. These grants will be provided out of the Rating Relief Suspense Account and will consist of a sum equal to the amount of the difference between the sum receivable from the rates and the sum which would have been receivable if the Bill had not been passed: that is to say, the exact sum which they lose owing to rates not being paid. Of course, as rates are due before October 1, local authorities, and especially rural authorities, will be anxious that a sufficient sum may be forthcoming from Treasury grants to make up the loss sustained by exemption from rating. I cannot say exactly what proportion of the grant will be paid by any particular day, but I can give the assurance that local authorities will not be allowed to suffer financially because of this Bill. Provided the necessary particulars are furnished by the authority promptly and there is no unnecessary delay in furnishing them, advances will be made from time to time sufficient to enable them to meet their current liabilities.

There is one other small matter to which, I think, I ought to call the attention of your Lordships. Between April 1 and October I agricultural land or buildings may be diverted to some other purpose. A man may, for example, have land which he is using for farming, on which he has cattle, and he may turn it into a deer park. If he has rattle on the land it will be agricultural land and exempt, but if it is a deer park it will not be exempt. Or he may have a barn which is used for agricultural purposes and he may turn it into a garage or a dwelling house or something of that kind. Conversely, of course, a man may take land which is under deer and turn it into a farm or pasture land, or he may take a garage and turn it into a barn. In such cases, of course, the list on October 1 would obviously not be conclusive evidence of the character of the hereditament throughout the whole of the half-year. It may have been agricultural part of the time and non-agricultural part of the time. You must have machinery to decide this point, and Clause 1 (4) of the Bill provides for settling such questions by certifi- cates issued by the assessment committee. The other clauses are, I think, purely machinery clauses or explanatory clauses and I think I need not trouble your Lordships with any explanation of them.


What is Clause 3?


That is a provision by which the drafts which would be paid to authorities to meet current liabilities are to be taken as rates and not as grants for the purpose of calculating rates or precepts or apportionments which are to be calculated and founded on rates. Thus the calculation of the liability of two different districts for a common rate must not be subject to a deduction of the relief given by this Bill because that relief will be given to the rating authority and not to the spending authority; and therefore for these calculations the Bill provides that the relief should be treated as non-existent. The noble Lord knows that under the old agricultural exemption Acts money was paid to the spending authority—to the county council or the guardians, as the case might be. It will be paid to the rating authority, both under this Bill and under the Local Government Act, so that provision has to be made in the Bill to make it explicit that the new method differs from the former method. I beg to move.

Moved, That the Bill be now read 2a.—(The Earl of Onslow.)


My Lords, I am much obliged to the noble Earl for giving me an explanation of Clause 3, which I certainly read without appreciating the distinction which he quite properly draws between the spending and the rating authorities. I see that the clause is needed, and I think that it will carry out the purpose for which it is designed. Before I say a, word or two about the general purpose of the Bill, I should like to refer to Clause 2. There has been a good deal of financial discussion and argument as to whether the Rating Relief Suspense Account is sufficient to make provision for the future charges that may be made upon it. I do not want to go into that question to-day. It is a matter that has been raised and about which financial experts hold differing opinions. Have any special steps been taken to ascertain that this anticipatory grant can be paid without affecting the security of the Suspense Account as regards grants in the future? The noble Earl has told me that the amount will be a little more than £2,000,000. I think I am right in that.


Yes, £2,100,000.


What I want to know is whether calculations have been made as to the effect of this arrangement upon the Suspense Account and upon the meeting of grants in the future up to the time stated by the Chancellor of the Exchequer. Let me say one word as to the general proposals of the Bill. This is not an occasion, as perhaps some of your Lordships will be glad to hear, on which I intend to raise again the general rating question. I do not think that my arguments have been answered, but that must stand over as a matter of opinion There is one word of caution that I should like to say. This Bill is to anticipate the grant for the complete exemption from rates of agricultural hereditaments—that is, in the main, of agricultural land and farm premises, but not of farm houses. I should like at this last opportunity, to make one protest. I think that the exemption of agricultural lands, which have undoubtedly received large benefits from rating expenditure and will undoubtedly receive benefits in the future, is a wrong principle. Looking at it widely, it is owing to this expenditure that large portions of agricultural property have acquired a building value, and I think that to exempt a large class of property which undoubtedly has benefited and will benefit by rating expenditure is altogether a reactionary and wrong method of dealing with any question of rating reform.

We know that in some instances the amount that is withdrawn from the resources of the local authority is very large. It was pointed out that in some cases of existing local authorities in Scotland it was as much as 60 per cent.; but whatever the amount may be—for that is a matter of degree—can it be said, in the first instance, that agricultural land has not received and will not receive a considerable benefit from rating expenditure? If that be so, ought not the owners of that land to pay a proportion of the amount which other ratepayers pay, at least on the basis of benefits received? I know that the general principle that I have often contended for, that only beneficial local expenditure should be included in the rates, has not been followed. That was, of course, the reform proposed by the Royal Commission of 1901. But, quite apart from that point, so far as there is beneficial expenditure and so far as agricultural land has been affected by it, I can see no principle whatever under which the owners of that land ought to be exempted from payment for what is really benefit received.

I pass to two other questions. This Bill is spoken of as if it were to benefit agriculture, and so, in a certain indirect sense, it will. If rents are reduced to the tenants, that is a benefit to agriculture. But rates are not raised upon industry. Rates have the same effect as rent and, as a matter of fact, rent and rates are placed in the same category and have to be paid by the tenant of agricultural land. On the other hand, the agricultural owner will not, I admit, get the entire benefit at once. If the occupying owner, of whom we have heard a good deal, sells his property to-morrow, and the rates on that property in the past have been £50 or £100, the fee simple value of the property to him would be that sum, whatever it may be, multiplied on the basis of from 20 to 35 years. Everyone who has the smallest knowledge of compensation knows that the amount either paid by a purchaser to a landowner or paid to a landowner under ordinary compensation principles is based on the net income, and that the net income is always ascertained by deducting the amount under which he is liable under the head of payment of rates. I do not want to use a harsh term, but this will be very much like a gift to him of a large property to which he is not entitled at present.

There is one other matter to which I want to call attention. As I have pointed out, so far as unemployment is concerned this exemption from rating can make no substantial difference. I do not know whether the representative of the Ministry of Agriculture is present. I find that the number of persons employed in agricultural labour has lately decreased by the substantial figure of some 30,000. That is the latest return that I have seen. That has resulted, particularly in the poorer districts, from the conversion of arable into grass farming. On one occasion I gave your Lordships statistics, into which I do not want to enter again, but I recall a case within my own knowledge where nine labourers were employed upon an arable farm and, when that farm had been turned into a grass farm, only three men were employed. This Bill will not induce a change back from grass to arable, and cannot have the slightest effect upon unemployment. That is a very serious matter and has not, in my opinion, been adequately considered or dealt with. If a sum of this kind had been distributed under different conditions it might have had some effect, but here you give it to those who want it and to those who do not want it, to the poor land and to the rich land alike.

As was pointed out, occupation land is sometimes now let at a rental of £10 an acre, with the result that so small a benefit is given that it means only a few pence per acre, which cannot by any possibility induce a reaction back from grass to arable farming. I do not intend to re-argue a question which has already been argued here. We shall not, of course, oppose this Bill by dividing against it, because we realise that it is only an anticipation of a principle which, unfortunately as I think, your Lordships have already adopted.


My Lords, I want to ask my noble friend, before he replies, one question of which I have given him private notice. The Parliamentary Committee of the County Councils Association are concerned about Clause 2 of the Bill which relates to grants to rating authorities out of the Bating Belief Suspense Account. The noble Earl undoubtedly said that money was going to be paid and he recognised the difficulties of the local authorities, but I would ask the noble Earl if he cannot go a little further and give an assurance to the local rating authorities that some 80 or 90 per cent. of the money will be paid very shortly, say within a month's time from now. Otherwise, if the authorities are only going to be paid a small proportion, say in the middle of July, and then a little more in August, and some more in September, I know of my own knowledge that many local authorities will be put into great difficulty. In some cases they have already overdrawn owing to the enormous expenditure which they have incurred lately with regard to Poor Law, owing to the coal strike and other causes, and therefore this is a time when they can least afford to overdraw. If they cannot overdraw they will have to raise an extra rate, which is very undesirable, and therefore I would ask the noble Earl to give us an assurance that a large proportion of the money will be paid over by, say, June 1.


My Lords, I will not take up your time for more than a very few moments while I endeavour to answer the various questions which have been put to me. In regard to the arguments which were used by the noble and learned Lord opposite against the principle of the exemption of agricultural land and buildings from rates, I would remind your Lordships that this Bill really does not touch upon that principle. The principle was settled in the Local Government Act, which has now been accepted by Parliament and is on the Statute Book. We had lengthy and very interesting and illuminating discussions thereon, and very interesting speeches from noble Lords on the Bench opposite. This Bill merely accelerates the date when the clause providing for the exemption of agricultural land and buildings comes into operation under the Act of 1929, from October 1 next, when it would have come into effect, to April 1 last. Therefore the principle is not affected by this Bill. Then the noble and learned Lord asked me whether calculations had been made to see whether the Rating Relief Suspense Account would have sufficient money in it to bear this extra cost. Examinations have been made and there is, I think, no doubt whatever that the financial status of the Bating Relief Suspense Account is able to stand the extra charge upon it of £2,100,000.

Next I come to the question asked by Lord Strachie. It is true that he gave me private notice of his question, and I ventured to make a few observations upon it in introducing the Bill. I said that I could not say exactly what proportion would be paid, but I gave an assurance that local authorities would not be allowed to suffer financially by reason of the Bill, and that provided their needs are stated in sufficient time advances will be made to enable them to cover their liabilities. I think it would be undesirable to say what particular percentage will be paid by a particular day, but if local authorities understand that they will not be put in financial difficulty by the operation of the Bill I think that really is as far as I can go at the present time. I am afraid that if I gave actual figures and dates something might happen to postpone the payment for a day or two, and then it might be said that we were not carrying out our obligations. I hope, however, that the assurance that I have given will satisfy them and my noble friend.

On Question, Bill read 2a, and Committed to a Committee of the Whole House.