DERATING PROPOSALS.

HL Deb 23 January 1929 vol 72 cc746-84

LORD PARMOOR rose to call attention to the proposals on derating in Part V of Command Paper 3220, and to ask what calculations have been made:—

1. 1, Of any probable increase in agricultural prosperity or agricultural employment as the result of derating;
2. 2, Of the extent to which rates constitute a charge on depressed productive industries;
3. 3, Of the probable export of coal at lower preferential rates in favour of foreign producers;

and to move for Papers.

The noble and learned Lord said: My Lords, the Question which I have put upon the Paper is rather a long one and I do not think I need read it. It was drafted with great care and communicated to the noble Earl, Lord Onslow, who, I understand, will speak for the Government, in order that he might appreciate exactly what the points are which I desire to raise and what are the matters on which I desire to ask for information. I also gave full information to the representative of the Ministry of Agriculture, because a good many of the topics with which I have to deal are really agricultural questions. I regret that this matter could not have been brought forward at an earlier date, but the noble Marquess the Leader of the House knows that at his request my Question and Motion were postponed so that the debate on the constitution of your Lordships' House might be finished before the adjournment for the Recess. I find no fault with that because, so far as the Party to which I belong is concerned, we always desire to meet the noble Marquess in every way we can for the convenience of the House, provided, of course, that no great public interest is sacrificed. That was not the case in this instance.

There are one or two preliminary matters on which I should like to say a few words in order to compress as much as possible the real nature of my criticism. So far as I know no one denies the need of rating reform. That is common ground between all persons who in any way study either the rating question or what I may call the rating system. What I am going to say is that, although the rating system is unsatisfactory, the proposals of the Government show a wrong diagnosis of what the disease really is, with the result that they have produced a quack remedy, which, although of course in some respects it may be supported, will, in the aggregate, do much more to kill and paralyse the patient than it will to recover and refresh him. That is the real nature or backbone of the criticism I want to make this afternoon. I will not trouble your Lordships, and particularly the noble Marquess, who seems to think that by suggesting reiteration he answers us, though I do not think that is quite so, by going again into what I consider the fundamental basis of all rating reform which has been overlooked in this case: that is, to draw a proper distinction between matters of local interest which should be placed upon local expenditure and matters of national interest the expenditure on which should be placed upon the central funds. That will be found in the Report of every Committee and I should have thought that it was substantially common ground.

The first subject mentioned in my Question, which I want to keep distinct from the others, is the derating of agriculture. I think that ought to be considered by itself. In approaching this question, we have to recollect—and I do not think the Government have given due weight to it—that at the present time agricultural land and premises are exempted from 75 per cent. of what would be their ordinary rateable value ascertained according to the accepted principles. The remaining 25 per cent. is all that now remains for remission, and when we consider the possible benefit which agriculture may derive from this proposed scheme it is essential to keep that in mind. We are not considering the remission of the rating of agriculture as a whole. The time for that has gone by. All that is now suggested is derating as regards one quarter, no more, and that derating as regards one quarter implies exemption of agricultural land from all rating liabilities. That is the first point where objection arises. If you exempt agricultural land or any other rateable premises or here-ditaments, you of necessity permanently narrow the source of taxation. That is a necessary result and I do not think there is any Report on the rating system—I do not want to go into them—which does not say that there ought to be no exemptions at all, except such exemptions as now apply to churches and certain schools and places of that kind. It is not necessary for me to dwell upon this point, but if any one wishes to see the argument put in a way which appears to me to be unanswerable, I should advise him to read the evidence given before the Royal Commission by Sir Harry Poland, who, in his day, was the greatest of all experts on rating customs and rating laws.

I do not want to go into the question of finance. I have indicated that to the noble Earl, and I have taken all reference to finance out of the terms of my Question. But I think I may say that I have naturally had regard to the result of this finance so far as I can follow it, because it has been in a state of flux and doubt as regards my own County of Buckingham, which is an agricultural county. Of course, in a county of that kind, exemption of agricultural land means exemption of one of the great sources from which revenue can be obtained in order to meet local liabilities. Therefore I was not astonished to get a message from our County Council pointing out that the ultimate loss to Buckinghamshire would be £43,000. That is easily understood if you appreciate what is meant by exemption of agricultural land in an agricultural county. But I do not want to rely on that because changes are being made, and only the other day a fresh Paper was brought out on what is called Part VI. Therefore I pass away from any figures of that kind. It also has to be recollected that rates are not directly charged at all on the industry of agriculture. Of course various things are a charge in a sense, and rent is a very heavy charge, and rates are also a charge in that sense. But rates are assessed purely on the value of the land or premises themselves, and no account is taken of whether the particular industry, or the particular case, or the particular farmer is prosperous or in difficulties. That is a very important point when we come to deal with the claim put forward by the Minister of Health in this case.

It also, I think, results in this, that a very large proportion—I do not say the whole of it, but a very large proportion—of the ultimate benefit goes to the landlords. I know it is said that the remission of three-quarters of the rates has not up to the present led to the raising of rents. I dare say that this is so, though I doubt if it is universally true. In any case, it is really beside the point, because the owner may get as much benefit from a rate remission which enables his existing rent to be preserved as he could get by raising it. I was interested the other day to read the views of Professor Sidgwick which were given some years ago. He was defending the Bill of 1896, which first gave the remission of one-half the rates, and he said that he realised that it was a remission of which the owners would gain the advantage. He suggested that they were entitled to do so on the rather curious ground that they had never been recompensed for the repeal of the Corn Laws, and, since this had sent their rents down, they were entitled to such consideration as they could get under the measure of 1896. During a tenancy, no doubt, the advantage would go to a tenant, and that is one of the reasons why I am asking the noble Earl if any calculation has been made as to how much of this great remission will go to the owner in the first place. I can only say that in my own district farmers will not take leases, for the very good reason that they are afraid in the present condition of agriculture of being landed in a heavy loss, while, on the other hand, they know that they will not be disturbed, owing to the penalties involved, so long as they care to remain in their holdings. Ultimately, I have no doubt, the benefit of this remission will go to the owner to a very large extent.

Let me put one proposition in this connection. It is very familiar to me from my experience of compensation law. In compensation law, if you want to get the net rental, you have to make a deduction from the net amount equivalent to the rates charged. If, for in- stance, the landlord himself were paying the rate as an occupying owner, his property would be at once enhanced by the amount of the rates remission, multiplied by a proper figure in order to get the fee simple value of his land or whatever it might be desired to ascertain. Even where the land is let the same principle would be involved, though of course its realisation would be discounted during the time when the tenancies were in operation. Let me quote two or three words from the protagonist of this scheme, the Minister of Health. I will ask your Lordships to consider these words very carefully, because in this House we can usually approach a matter about which so many of us know a great deal in a business-like way. I want to suggest that we should approach it in a common-sense way. I am certainly the last person who would desire to say anything that could either promote unnecessary controversy or obscure what are, to my mind, when you really appreciate what rating means, simple issues. The Minister of Health, in supporting these proposals, said that our rating system had been subjecting our agriculture—he spoke also of industry, and I shall refer to that presently—to a slow process of strangulation. Does any person interested in agriculture really believe that this is other than a rhetorical and exaggerated statement?

I should like to give one or two figures, just to show to what extent this notion of the strangulation of agriculture by rates is an entirely false premiss. As I have said, some advantage may be obtained, but looking at it from a wider point of view I say without hesitation, first that the word "strangulation" is a gross exaggeration, and in the second place, that the proposed remedy, if it be applicable at all, will be of no value whatever. I see the noble Lord, Lord Bledisloe, in his place. I am not very fond of Sunday newspapers, but whilst I was abroad I read a letter of his in the Sunday Times on this very question. I have taken the actual words. He wrote:— I have never known the inherent condition of agriculture worse or its ultimate outlook more discouraging. That is after there has been a remission of three-quarters of the so-called strangulation by rates of agricultural land. If the remission of three quarters has left the inherent condition of agriculture worse and its ultimate outlook more discouraging than Lord Bledisloe has ever known, with all his experience at the Ministry of Agriculture behind him, it is inevitable that this small additional remission of the remaining quarter of the rates upon agricultural land cannot have the effect of relieving agriculture from strangulation. I am much more of an optimist than that. I do not believe in the strangulation of agriculture. I do not go nearly so far as the noble Lord, for I believe that there is a future for agriculture in this country. We are not being strangled, or if we are to any extent—I am talking as a farmer and an agriculturist—it is not due to rating, and the very small remission involving exemption from the final quarter will have little or no effect upon the future of agriculture in this country. That, as we know, is the view of the farmers. I do not know of any practical man who has any other view than that which I am now stating. I am glad to see that the noble Lord, Lord Clinton, is in the House to-night, because he has great practical knowledge of these matters, which is a great advantage in considering a scheme of this kind.

One of my questions to the Government invites them to give the statistics on which they postulate this strangulation of agriculture. If the noble Earl can give the figures on which that strangulation is postulated, I hope he will also give any calculations that may show that the remission of one quarter of the rates will have any effective value. I should like to give an illustration. When these matters were discussed in 1896, the noble Marquess, Lord Salisbury, will know very well that a leading agriculturist in the House of Commons in those days was Mr. Jeffreys, the member for the Basingstoke division of Hampshire. Mr. Jeffreys was very critical regarding the relief given in 1896, and I think he ultimately agreed with Sir William Harcourt that the greatest advantage that he could possibly say that a farmer would get would be that he would have a sovereign in his pocket with which to get a new bonnet for his wife for Christmas. I believe that this is about the extent to which the suggested remedy can possibly go.

Take as an illustration—no doubt a special illustration—the case of poor land. He said, and I think quite rightly, that you must consider the poor lands because in the poorer districts you find more need for assistance than in the richer districts. So he took land about which I know a great deal, and of which he said there was a large amount in his district—namely, the land let at 5s. an acre. He said how ridiculous it was to suggest that land of that kind could be substantially assisted by any readjustment of the rating incidence. Let me apply the same illustration. Land at 5s. per acre is only now rated at 1s. 3d., that is to say, it already has 75 per cent. reduction. That is not the whole story. In my own district the rates are only 5s. in the £, which is rather good, but that reduces the whole benefit which is derived from this rating scheme to between 3d. and 4d. per acre. Even if you take land at 10s. and go on up the scale, the result is infinitesimal as regards having any real influence upon the future of agriculture in this country.

I am not going into that to-day. I put it to anybody in this House who knows of the difficulties of agriculture, that you must go quite outside this rating question, to far larger considerations, and must introduce some really drastic reforms, if you are to put agriculture on a true footing, such as I wish it could be put on in this country. If you take a 100-acre farm, 3d. or 4d: per acre works out at only between £1 and £2 per year. Is that going to drag agriculture out of strangulation? I do not believe in the strangulation, but the remedy is ridiculous. It is not really discussable to say that you are going to help agriculture in a matter of that kind. I should like to take one other illustration, because it was often taken in the old days and has often been taken since. It is the case of accommodation land, let at £4 per acre. What did the farmers say? They said: "It is a gross injustice to take rating off land of that kind, which can well afford to pay, and not do much more general and generous reforms so far as we farmers are concerned." Therefore, as I have said, if anybody here believes that farming is being strangled by these wicked rates, I want to ask the noble Earl, and also the Minister representing the Ministry of Agriculture, the Earl of Stradbroke, whether they, or any business men in this House, believe for one moment that these proposals are going to produce a change from strangulation to health. I would like the noble Marquess to tell us his inward view on that topic, and I would like any one here who is interested in land and land management to tell us what is his view on that topic. As I have said, in the case of land at 10s. per acre there is 2s. 6d. left, which is a little more, but it is quite inadequate to have any substantial result.

Another point on which I would like to say a word or two is as to cottages. I suppose that most of us who are interested in land own some cottages. I own between fifty and a hundred—I do not wish to state the exact number—but in order to do what I can to raise the standard I pay the rates and do the repairs, because when I let them out to farmers or others to do the repairs I find that you at once get a less comfortable class of house. Is there the smallest difference whether a cottage is let to an agricultural labourer or to any one else? Not the smallest, and although there may be something in this bogey, it is not a matter which can really affect more than a sovereign or two, one way or the other, this question of agricultural depression.

Then let us take the other point of unemployment. Unemployment is a terrible evil, and indeed the greatest of all evils. Unemployment, so far as it is brought about in agriculture, is chiefly brought about by the transfer of arable land to grass land, and perhaps some of us here will recollect the great sermon of Bishop Latimer applied to that very topic; but it is utterly impossible that these sixpences and shillings should turn back to arable land one acre of what has been converted into grass land. To convert and make good grass land is an expensive process. Let me give an illustration, for it is much better to have facts than mere talk on matters of this kind. A farm of which I know, converted to grass, does not give full occupation to three men. Not long ago it was an arable farm and gave full occupation to nine men. How is this small concession going even to touch the question of unemployment in our agricultural districts? I want to say at once that it would be a terrible reaction if we touched in the least the question of the minimum wage. No one for one moment would wish the Agricultural labourer to go back or to lose the advantages which the minimum wage provision has given him.

There is one other consideration. Let us take agricultural land, which is really the subject matter of these rates, and not agriculture. Can any one say that agricultural land ought to be exempted from contribution to local services? I do not believe any one would say that. Why these agricultural lands, at any rate in the South of England, are nearly all gradually acquiring a building value, and why are they so doing? Of course it is of no use trying to develop them for building purposes without roads, sanitation, and all the other local expenditure necessary for a purpose of this kind, and I wish to say this: I have constantly advocated in your Lordships' House and elsewhere that owners of land in this country should not be submitted to exceptional treatment to their disadvantage. But if, on the other hand, you give them an advantage of this kind, an advantage that enables them to profit by the expenditure of other people, you must expect that those who now want fair treatment will be torpedoed by having brought to their notice what will be the certain effect of this Bill—namely, the increasing of the fee simple value of agricultural land to a very large amount indeed in the aggregate.

There is one other point. You cannot very easily separate rentals and rates. If rates go up, and the land is fairly treated, rentals will have to go down; if rates are diminished, and the land is fairly treated, rentals have a tendency to go up. That surely is a matter which no one would desire to push forward at the present time in our agricultural districts. We do not want to take away the great source of taxation for local expenditure; we want to increase it. The social demands are growing, and ought to grow, and this is not the time when agricultural land, as such, should be exempted from all charges. I should like to give one illustration from the Command Paper to which I have referred, and I particularly ask the attention of the noble Earl to this point, because it has been put to me several times, and I have not been able to find an answer. On page 26 you will see this statement:— …it is fair that water should continue to be paid for by the occupiers of de- rated properties on the same basis as other consumers where that is the case at present. What is the difference between common liability to pay water charges and common liability to pay all the other charges incidental to local taxation?

I entirely agree that the people who incur a liability of this kind, either by subscription or by water rates—it does not matter in the least which, any more than in London it matters whether you are dealing with a water company or with a local authority—ought to continue to bear that liability. What is the difference between that and other matters on which the owners contribute towards local expenditure? Why are they to be let off? They have jointly embarked, with others, upon these local improvements. They are getting the benefit as much as other people are. Why are they not to foot the bill in the same way that others do? Is the cottager to foot it, whilst they are relieved from it? Why is the poor man to pay—I do not say the owner is a rich man, he may be a poor man—but why is any man to pay if the owner, who gets the chief advantage from these local benefits, is, under the terms of this Bill, exempted from all payments in the future?

Therefore I urge that, so far as agriculture is concerned, not only is this Bill promoted on an absurd exaggeration about the strangulation of agriculture, but, in addition, if that were true, it gives no relief worthy of the name. Then, so far as the owner is concerned, I believe that every owner, if left to himself, would be only too eager to contribute his fair share towards local benefits, and certainly would not desire—I do not believe any of your Lordships would—to benefit at the expense of his neighbour. I am not here to-night to suggest what is the proper remedy, but I may say this, because I am a great believer in the future of agriculture: take the views of Professor Orwin of Oxford on land tenure, take the views which we have expressed from this Bench on many of the points in the land programme put forward by the noble Lord, Lord Bledisloe, take what my noble friend Lord De La Warr said the other day about rationalisation, and there is an ample programme for real reform and real change in order to place the broad acres of this country on something like their ancient prosperity and their ancient wealth.

The second point is industry. The effect of our rating system on industries is stated by the Minister of Health in still more drastic language than its effect on agriculture. This is what he says:— The effect of the inequitable rating system has actually involved in ruin some of our greatest industries. I should like to know what is the proof of that. I do not know that any of our greatest industries has been involved in ruin. Particular firms, or particular employers, may be, but I do not believe that any of our greatest industries has been involved in ruin as an industry. I should like to put against that view the view of the Minister of Labour. I must say that I do not think there could be a more depressing person towards hopes of improvement in our industries and agriculture than the present Minister of Health. That would not matter so much were it not that depression, for psychological reasons, often affects the actual matters themselves.

What I am going to quote is taken from the Summary of the Ministry of Labour for 1928, published in the Labour Gazette the other day. The statement from the Ministry of Labour is this—and it is extremely important that these matters should not be exaggerated in order to make a case for these rating proposals:— The sudden increase of unemployment which occurred in the second quarter of the year 1928 was not due to a general decline of trade"— it was not due, you will note, to the ruin of some of our greatest industries— but was confined almost entirely to six industries. He gives those six industries, not one of which has been ruined, though all of them no doubt have suffered from depression. But what reason is there, if they have suffered from depression, to attribute it solely or mainly to rating? I will take mining, because that is the industry he puts first. It is the most depressed industry there is. I do not deny for a moment that it is good to give relief to the mining industry; but that is another matter. Can any one say that the conditions in our mining districts are not to be attributed to much wider causes and conditions than are to be found within this comparatively narrow rating reform? Yet we are told that it is the want of rating reform that has already ruined that industry. I do not want to make this too much a political matter; but the Government have been in power for four years. Rates do not affect ruined industries either one way or the other, as a matter of fact. Why did they not intervene at the proper time, if it was necessary, so as to save the ruin to which they refer?

With regard to the mining industry, I should like to ask the noble Earl one question of a constructive character. I have not given him notice, so he may not be able to answer it. He must know, as this country contributed to the cost of the investigation, that machinery and works for the distillation of coal to obtain petrol have been carried to a very successful result particularly by the Badische Company in Germany. If we are to spend these huge sums that we are talking of, why not expend them in giving a fair opportunity of testing a system of this kind? I can go back to the days when I was at the Privy Council, and since that time a great advance has been made. I only throw that out because it shows, to my mind, not only that this rating reform is of no value in itself but, worse than that, that it diverts attention from matters which might bring real assistance to one of our most distressed industries.

I have stated before, I think, that the industries which are said to be strangled by rating are not rated at all. It makes no difference whether an industry is prosperous or not, rating is on the premises, and on the premises only, in which the business is carried on. One admits, of course, that it does affect an industry, but the industry itself is not rated one farthing. As everyone knows who is interested in rating questions, you carefully eliminate the profit and leave the profit of the industry to the Income Tax, and do not subject that in any way to local taxation at all. As is the case in agriculture, although perhaps more definitely, surely factories and business premises get full benefit from local expenditure. The men they employ get advantages in cottages, lighting, roads, sanitation, parks and all those things which are the real sources of local expenditure.

I want to ask the noble Earl how, in those circumstances, the reduction of rating to a quarter can be justified. We are dealing now, of course, not with de-rating but with classification, and I want to make that clear. Classification means that you classify premises to rating in accordance with the benefits they are likely to receive from local expenditure. It is carried much further and to a more artistic development in Scotland than in this country; but, so far as I have been able to ascertain, I can see no case where the principle of classification has been applied to factories or premises so as to make their charges for local expenditure lower than that of other people.

I do not want to keep your Lordships too long, but there is one other point I should like to make regarding those industries. Is it possible to defend the Government's proposal to give large sums from the Treasury, out of money contributed by other taxpayers, for the benefit of prosperous industries which are paying large dividends to their shareholders? I regard that as an impossible proposition. It is said that it is in accordance with principle. I think the answer to that is that if it is in accordance with principle—which I deny—it undercuts the whole scheme which the Government have brought forward. Just conceive what it means. I do not want to refer particularly to breweries or distilleries, but the aggregate amount involved is said to be something like £8,000,000. The noble and learned Lord, Lord Buckmaster, is not in his place, but he pointed out yesterday that we are in a condition of striving for economy in every direction. Who will justify the wasting of such a sum as a "dole," for that is what it comes to, to people who do not want it? It is a "dole"—

THE EARL OF ONSLOW

No; it is rating reform.

LORD PARMOOR

If it is rating reform it results in a "dole." What else does it result in? This rating reform is to apply to industries. I am much obliged to the noble Earl, and I will follow it out. The total amount involved is about £16,000,000 in regard to industry. On principle—I agree with the noble Earl that it has been put in that way—about half of that, about £8,000,000, goes as a "dole" to people who do not want it. What is that but a "dole"? You may call it rating reform or anything else, and under that name you may endow with State funds different varieties of people who do not want money, but it is nevertheless a "dole." It is to be regarded as a "dole," and it will be so regarded by the poorer people of this country. Take one of the mining districts: it is not only the miners, but every householder, every little local shopkeeper experiences the distressful poverty which exists throughout the district. What will they think of the proposal to give £8,000,000 from the national funds in order that rich shareholders may get further dividends? It is an enormous point, and is one which cannot be put aside lightly. It is not a thing of which it can be said that you must do it because of principle. There is no principle whatever involved in it. If there were, it would be an absolutely destructive criticism of the whole project of the Government.

I think that is all I want to say with regard to industry, and all I have now to deal with is the question of railway relief, or rather railway charges. The matter requires a little careful analysis in order to appreciate what is being done. A sum is being practically handed over to the railway companies in order that certain decreases in rates may be applied to traffic over their systems. That is nothing to do with rating reform whatever. It is a mere term to bring the question of rating reform into a transaction of that kind, and I will tell you why if I may. After the War the railway companies, and, I believe, all the local authorities—or practically all of them—agreed as to the fair rates to be paid towards local expenditure by the railway companies. There has never been one single appeal, I am told, on this point since that date. It has never been suggested, I do not think it can be suggested, that railways are paying more than their fair share, being rated on a system which has been in operation since railways commenced and which was thoroughly thrashed out before the Railway Commission. All the railway companies desire that the present system should be maintained. Every one who knows what has happened knows that the rating agreed upon was certainly not unfavourable to the railway companies.

As to the question of charges, which is also raised, I would point out that in the old days we had what is called maximum charges, and a very considerable power was vested in the Railway Commissioners. At the present time you have what are called settled rates, which can only be altered to a certain percentage either in reduction or in increase, but at the same time I think it is right to say—I speak here only of what I am told, and I think it is right—that about 90 per cent. of the railway rates now charged are called exceptional rates. But one most important provision is retained, and that is the Royal Commission has power over what is called undue preference, that power being preserved as a safeguard against the railways charging preferential rates as between one trader and another. The equality of charge is the result of a very old system. The common carrier in days gone by, long before railways were heard of, had to make fair and equal charges, and that rule prevails at the present time.

What I understand is done is that undue preference is legalised in order to give a preferential rate for the export of coal. That, I understand, is the effect of what has been done. What does that mean? It means two things. It means first of all that other coal owners are unjustly treated. We know the complaints which have been brought forward from the North Eastern counties. It means, too, that you give a bounty to the export of coal which will no doubt be used to produce commodities in competition with our manufacturers at home. That, in my opinion, is a tremendous step in the wrong direction. I want to ask this question: What are the expectations of increased traffic and what is the amount of coal likely to be exported for foreign works under this preferential scheme? That is an extremely important point. We recollect that in the old days—Mr. Gladstone was an advocate of it—it was suggested there should be a duty on coal because you were exporting the raw material which was part of the wealth of the country. Now you are going to export it, as I understand, in such a way that foreign countries, our competitors, will be assisted. That is the third portion of the scheme of the Government.

I only want to say this in conclusion. I do not believe in the pessimism which talks about the strangulation either of our industries or of our agriculture, and I do not believe it for this reason. I think our workmen are the best in the world, best in skill, best in ability, best in their patient energy, and as long as that is so we shall come back, with patience, to the position we occupied before the War. What we are suffering from now is not this small matter of rating. As M. Theunis said in his Economic World Report at Geneva, great as was the destruction during the period of the War, the losses to industry from the subsequent dislocation were greater by far; and what we had to do was to have patience, and with patience the civilised world might again have the industrial position which it had lost through disorganisation in war time. I beg to move.

LORD MELCHETT

My Lords, we have just heard one of the most amazing speeches it has ever been my lot to listen to. At the end of it I did not understand what it was that the noble Lord was really endeavouring to argue. I entirely disagree with his peroration. Being engaged in industry may I say that we shall certainly not regain our industrial position by patience: we shall only regain our industrial position by action. We can only get liberty of action by releasing the stranglehold which the rating system has on this country. Adapted as that system may have been to the agricultural conditions at the beginning of Queen Elizabeth's reign it is entirely useless for our present industrial system. Our conditions have radically and fundamentally altered. The noble Lord seems not to have understood the basic principle on which the Government Bill is based. He elaborated an extraordinary argument that rating had nothing to do with profit. He is quite right; that is exactly the mistake of our present system of rating. Rating to-day is part of your cost, because you have to pay whether you are making a profit or a loss. You are, therefore, adding continually to the losses in your depressed industries, you are adding to the debit side of their balance sheet automatically without any power whatsoever to those who are running industry to relieve themselves of the growing burdens. As the burden grows the industry becomes more and more depressed.

I am not in the least surprised at the strong view taken by the Minister of Health on this matter. I had the same picture before me, perhaps in a more intense form, when I was Minister of Health. If the noble Lord had seen the figures presented to me by the leading manufacturers of steel in Sheffield, which showed that we were imposing a burden—I am speaking from recollection—of nearly 10s. a ton merely by rates, and were asking them to compete in the markets of the world with people who, had no such burdens to bear, he would not be quite so optimistic, and would not suggest sitting down quietly and having patience, and quote the remarks of some gentleman who writes economic books for which I have no use whatsoever. Let me point out this. First of all your rating has been much too confined to begin with. The result is that you get a concentration of the burden not merely in a city but in those parts of a city in which industry is depressed.

Let me take, as an example, the steel industry. As it becomes depressed workmen go out of work. As they go out of work they resort to poor relief. As they go on poor relief the Poor Rate goes up, and the result is that you automatically increase the cost of your steel and, with this continual snowballing, the costs in industry mount higher and higher. You ought in such circumstances to have lower costs in order to compete in the world's markets. That is a system which the noble Lord apparently is perfectly happy and contented with. He suggests that the man who has to conduct industry must be satisfied that he is contributing to public expenditure, although at the same time his works are going into liquidation.

LORD PARMOOR

May I interrupt the noble Lord? I did not suggest anything of the kind. I said that in my view rating reform was absolutely necessary, but that this reform was on the wrong lines, which is a very different thing from what the noble Lord has said.

LORD MELCHETT

The noble Lord did not inform us what his rating reform was.

LORD PARMOOR

Yes, I did. I do not know whether the noble Lord was here, but I informed the House what it was, although I said I would not go into details. I said there should be a proper differentiation between national and local expenditure.

LORD MELCHETT

That does not deal with the question of principle at all.

LORD PARMOOR

Yes it does, it goes to the whole basis.

LORD MELCHETT

But it does not deal with the question of principle. A system of rating which automatically adds to the cost of production is one which must be an automatic burden on industry. If you abolished the present system of rating of property and had a municipal income tax as they have in Germany, you would not have this problem in this shape. But you have it now, and it is a very bad and a most disastrous one. The noble Lord spoke about mining. I cannot follow him there. With all his eloquence he draws first a terrible picture of unemployed miners and ruined shopkeepers, and the next moment he carps and cavils at any attempt to do anything whatever for that industry.

Why is that industry so depressed? It is because it has largely lost the export trade. Why has it largely lost the export trade? Because the Polish Government is giving large subsidies to the export trade and because the French Government has made special railway rates arrangements all over the North of France to meet the competition of British coal. What is the use of pretending that the British coal owner or the British miner can go on fighting competition which is backed, not by the coal industries of those countries, but by the whole force of those countries? What is the result? I am chairman of considerable coal companies, and what do we see already happening? I am glad to say we are re-opening pits now which we have had to shut because they were running at a loss. At the present time Cardiff docks are becoming once more full of ships waiting to be filled with South Wales coal. The spectre which has oppressed us of 280,000 men unemployed has not disappeared, but at any rate the position is improving. Is this the moment to come and tell us we must not export coal?

LORD PARMOOR

What I said was that this reform would not produce results.

LORD MELCHETT

But it is producing results to-day. The noble Lord does not seem to know what is happening. He may not be in the coal industry. To my misfortune I am, and I can tell him the results. Derating of coal mines is going to be an advantage and a very serious advantage to the coal industry. It will be an immediate advantage. What I would urge the Government to do is not to wait until next October but to begin earlier because there are such things as tendencies. The noble Lord alternates between two arguments. He first says the remedy is so small that it will make no difference, and on the other hand he says it is unfair to take away large sums from the taxpayer. He cannot have it both ways. If it is so small as to be useless there is no loss to the general body of taxpayers; if large, it must be a relief to industry.

I would like to say a word with regard to the incidental question of the successful turning of coal into petrol. I happen to know more about that subject than most people, and I would say, do not run away with the idea that in Germany that is yet a successful proposition. People are working here on that subject who will successfully solve the problem if it can be solved. But, solvable or not, it will always remain a very small proportion of the coal industry of the country, and will remain a very small matter compared with the much greater question of our mining industry. That derating of our mines will help that depressed industry is certain in the opinion of those competent to speak. There are such things as tendencies. Tendencies are of very great importance. Tendencies towards better times do encourage. It is quite possible that relief given here or there is not the sole or even the main factor. In many cases it will not be the main factor, but it is an assisting factor. You have so much in industry to-day that is just on the balance. Particularly in the colliery industry a matter of 3d. or 6d. a ton makes the difference between loss and profit, and encouragement brings new heart and new life into those who have for years been conducting the industries of this country under difficulties unprecedented in our history. It is not sufficiently recognised how difficult the position has been and there is not sufficient recognition of the efforts that have been made on all sides, both on behalf of the employers and the men, to maintain good industrial conditions. It is only fair and it is only reasonable that they should have held out to them some help of direct and immediate application.

There are many ways in which you can help to solve the problem, but here is one which seems sound in principle, which is relatively easy in carrying out and which will have direct and immediate results. I do not believe myself that the argument about distilleries and breweries, for what it is worth, will cut any ice at all. The noble Lord spoke about a "dole." A "dole" is something you give to people in necessity. How can you give a "dole" to people who are already prosperous? If you differentiate not merely between industry and industry but between particular people in an industry, that in truth would be a "dole." I have been attacked myself in reference to a company of which I happen to be chairman on the ground that we shall get relief we do not want. Is it suggested that there ought to be a new system of pains and penalties for prosperous industries, that bankrupt firms or companies in liquidation are the only people among those conducting industry who are deserving of public recognition and that profit paying is to be a subject of condemnation by the community? If so, that industrial supremacy which was once our pride will never be regained.

It is certainly not bankrupt concerns and concerns in liquidation which are going to restore our industries to their old place in the markets of the world. It would be illogical and most unfair and impossible to differentiate between industry and industry, and it would be still more impossible to differentiate between firm and firm. You must deal with the matter in a broad way. The Government Bill—to which I should give a much better title; I would like to call it the Greater Employment Bill because it is that which will result—is the only measure I have seen in recent times which will automatically lead to greater employment of the working population of this country. I am certain that the more it is understood the more it will receive support.

The noble Lord said a great deal about agriculture. I am a farmer myself. I do not say that I am a prosperous farmer, and I do not say that relief of rates is going to turn my deficit into a profit balance, but I am perfectly certain that the smaller farmer will benefit. The noble Lord spoke of land at 5s. an acre, but the value of agricultural land in this country, fortunately for the landlord, is not 5s. If the noble Lord took it at 30s. he would arrive at a different result. Surely it is no argument to say on the one hand that because the amount is small depressed industries should not be given that small amount, and on the other hand to say: "Look at what you are taking away and the burden you are putting on other people." It cannot be both.

To-day the tenant farmer has no fears for his security. Another point which I think the noble Lord overlooked is that there has been a very large increase in freehold ownership owing to farmers having bought their farms within recent years and having become their own freeholders. In those cases the relief will be, and must be, a direct relief to those engaged in agriculture. I do not suppose that anybody in this House or out of it would pretend for a moment that the remission of rates is going to re-establish our agricultural industry, but it all helps and, when you are in a position where a little more may enable a man to carry on and a little less may force him to sell out, surely any responsible Government in this country that can do something of this kind for the agricultural industry ought to be prepared to do it. I could not help wondering as the noble Lord was speaking whether his Party is preparing to enter the contest with the cry of "No rating relief for the farmer." Is that going to be the slogan by which they are to be returned to power at the next Election?[...] From my knowledge of farming constituencies—and I represented one for some years and know a great many others—I do not think that he will be asked to make this particular speech again during the Election. I have never found a farmer who would not take something and then ask for something more. To my mind the noble Lord has not been able to present a very convincing case. His arguments seemed to be mutually destructive and he left no very clear impression on my mind of the reasons for his belief that this measure will not help industry. Still less did he show in what way it was going to be detrimental to the best interests of this country.

LORD BLEDISLOE

My Lords, after the interesting, able and humorous speech to which we have just listened I should hesitate to participate in the debate but for the fact that the noble Lord opposite was good enough to make reference to an opinion that I expressed recently in one of our leading journals. Incidentally, I should like to say that the noble and learned Lord has almost staggered me with what appears to me to be a somewhat violent change of front since he and I once sat not far from each other on the back benches of the House of Commons. In those days the noble Lord was the greatest authority in another place upon the subject of local taxation, having sat and spoken with great ability on the Royal Commission on Local Taxation, and if I had been asked who was the protagonist for the agricultural community in the matter of the removal of rates I should have put the noble and learned Lord first. I quite admit that he made a distinction between rates levied for what he called national services and those levied for purely local services, but I never heard him suggest that the rates of one kind or another, or rates in the aggregate, were not an unfair burden upon the agricultural industry. I seem to have ringing in my mind a statement of the noble Lord to the effect that what was right in the days of Good Queen Bess was wholly wrong in these days, because in those days land and buildings represented about 90 per cent. of the whole wealth of this country, while in these days they represent only some 15 or 20 per cent.

The noble and learned Lord suggests first of all that the benefit passes ultimately to the landlord. I am one of those who admit, and have always admitted, that in theory, and as a matter of pure economics, there is that possibility, but I should like to ask the noble Lord two questions: (1), whether he can prove that any concession that has recently been made in the matter of agricultural rates has passed into the land- lords' pocket; and (2), whether, bearing in mind that the landowners in this country provide something like two-thirds of the whole equipment of the agricultural factory that is turning out such a miserably small output to-day, it would not be a very salutary thing if some measure of relief were provided, if only indirectly, to those who supply this equipment? The noble and learned Lord quoted an observation of the Minister of Health, which I had not noted, to the effect that agricultural rates were producing a slow process of strangulation. I should like to say candidly that I entirely agree with the Minister of Health. The noble Lord says that I have testified to the fact that agriculture is in such an inherently bad condition that it would be wrong to suggest that any remission of rates would make any difference. But I venture to say that the word "strangulation" suggests a lack of vitality, energy and enterprise, and this has undoubtedly been the effect of rates in the past. I pointed out, in the statement to which the noble and learned Lord referred, that where you have an endless and increasing quantity of food and other land products pouring into this country without any sort of restriction, this industry, which is in a condition of strangulation, finds it almost if not quite impossible to stand up against such unfair competition. That is the position that I adopted, and shall continue to adopt in relation to the agricultural community, whether the rates stand as they are to-day or are removed, as I hold that they ought to be removed, from this oppressed industry.

The noble and learned Lord opposite suggested that rates are not levied upon industry but upon land, and he went on in a later part of his speech to ask why such industries as those concerned with tobacco and brewing and distilling, which are admittedly prosperous, should be relieved from this imposition. The noble and learned Lord cannot have it both ways, and I would suggest that a proper test is whether the removal of this burden upon industry, through the premises upon which industry is carried on and also through its equipment, is likely to improve prosperity and employment within that industry. I venture to say in regard to the industry of agriculture, and also the industry of mining, with both of which I am very closely connected, that one of the first effects will be that there will be a new spirit of enterprise and hope on the part of those who conduct those industries, that more capital will come to be available to be placed confidently in the development of those industries and that more men are likely to be employed in them. The great burden, as the noble and learned Lord has pointed out, lies in the case of agriculture upon arable land rather than upon grassland. If the process of converting arable into grass is to be checked, surely nothing is more likely to bring about that result than the removal of the burden of rates, which is much more oppressive than it was before the War.

The noble and learned Lord opposite suggests that the burden is a comparatively small one so far as agriculture is concerned. I believe that before the War the average rates on agricultural land amounted to no more than from 2s. 6d. to 4s. in the £. There are many areas to-day upon which the rates upon farmland amount to 10s. and upwards. In the parish in which I farm—and I farm considerably more than 1,000 acres—I am having to pay to-day 16s. in the £. Is that a small burden for an industry to bear, especially when, as in the case of agriculture, that burden is laid on the raw material of the industry? I should like to give an illustration to your Lordships of such process of strangulation as the Minister of Health possibly had in his mind. About five years ago I was asked, on behalf of the Central Landowners' Association, to address the South Wales branch of that organisation at Haverfordwest, and I soon realised that the greater part of the land in that district was sadly needing the application of phosphates, preferably in the form of basic slag. I inquired of the members present why, when certain people in that district had set a good example in improving their land by such means, that example had not been followed, and I was told that the sole reason was that when the land had been enhanced in value thereby, the rates had been raised upon the land and the burden had become so serious as actually to deter enterprising farmers from improving their land in a manner which they admitted to be desirable.

There your Lordships have an illustration of how the present rating system, based as it is upon the so-called assessable value of agricultural land, has the effect of preventing the improvement of that land and the winning of greater wealth from the land. I do not want to say any more, except this, that so far from holding the view which the noble and learned Lord has expressed I for my part, speaking, as I think I am entitled to do, to some extent, for the industry with which I have been associated for the greater part of my life, say that of the many boons which the present Government have conferred upon the agricultural industry, I regard the derating of agricultural land as far the greatest, and as far more likely to bring about an improved position of the industry, if, and if only, there can be some check upon the appalling amount of land products now being poured into this country, to the almost certain ultimate ruin of that industry. I welcome the derating of agricultural land, and I am certain that the whole agricultural community will form the same view.

THE PAYMASTER-GENERAL (THE EARL OF ONSLOW)

My Lords, the noble Lord opposite has adopted, if I may say so, a somewhat unusual course in raising in this House a question which is really the subject of debate on the Committee stage of a Bill in the House of Commons. However, I think we may be grateful to him for two things at any rate, and they are the two speeches in support of the Bill to which we have just listened, by my noble friends Lord Melchett and Lord Bledisloe. Although we have had the advantage of hearing these speeches, which are, if I may say so, in the nature of Second Reading speeches on the Bill, it would not be quite consistent with our usual practice if I were to follow them at any great length in treating the subject in the same manner. Therefore, with your Lordships' permission, I will confine myself as far as possible to the Questions which the noble Lord has put upon the Paper, and to the one or two definite points which he has raised and upon which he has asked me to enlighten him if I am able to do so.

Upon the Paper there are three specific Questions. The first deals with the question of agriculture, and asks whether any calculations have been made as to any probable increase in agricultural prosperity or agricultural employment as the result of derating. This derating is no new thing. It is a very old subject. Indeed, Lord Bledisloe just now expressed surprise to hear the words which fell from the noble Lord opposite, as he said he had sat with him in the House of Commons, and remembered that at that time the noble Lord was an admitted authority on the question of local taxation. I would venture also to express some surprise at the words which fell from him, because he was a member of the Royal Commission which reported in favour of the Agricultural Rates Act of 1896, and he gloried in that fact, because in the debate in this House on the Agricultural Rates Act, 1923, he said that it was, "to put the matter at its lowest, a debt long overdue to agriculture and to the agricultural industry." He added that he did 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." So we had the noble Lord's emphatic support for the principle of derating of agriculture, both in his membership of the Royal Commission and also in his speech on the Bill of 1923.

Really this principle has been accepted by all Parties ever since 1896. Liberal and Labour Governments have been in power but have made no attempt whatever to alter the principle of derating of agriculture, and the reason is that such derating has been regarded by all Parties as equitable. By the Act passed by this Government the relief of rates to agricultural land was extended also to agricultural buildings, and so at the present time both operate to the extent of 75 per cent. By this Bill the relief is to be extended from 75 per cent. to 100 per cent., and so complete what I would venture, in the words of the noble Lord opposite, to call a debt long over due to agriculture. Is it not fitting that such completion of the relief due to agriculture should find a place in an Act of Parliament which is a comprehensive and carefully thought out measure of reform of local government in all its aspects, both financial and administrative? The Bill deals thoroughly and carefully with every point, with the object of bringing local government up to modern standards and modern requirements. I do not think that is the view which the noble Lord opposite took of the Bill. He emphasised the fact that he considered the financial provisions of this Bill as a "dole" and not as a reform in rating.

LORD PARMOOR

An industrial "dole."

THE EARL OF ONSLOW

My noble friend Lord Melchett asked whether it was a crime to conduct a business successfully. I do not think that the noble Lord, or anybody else, will say that it is a crime. But even if it be a crime to conduct a business successfully, is it a right and proper thing to inflict upon the person conducting it an unjust and inequitable rating system? Surely the first thing to do is to put your house in order, and bring your taxation system up to date, and that must be the same for every industry.

I come to another point, and that is the estimate of the benefit which may accrue to the individual owner, the individual farmer, or the individual labourer. We heard a great deal from the noble Lord about the great advantages which were going to accrue to the landowner in consequence of the derating of agriculture, although in another part of his speech he said that the amount of relief was negligible. However, he did say that there were great advantages coming to the individual landowner. This principle of the remission of 75 per cent. of agricultural rates has been in operation ever since 1896, that is, for 33 years.

LORD PARMOOR

It was 50 per cent. in 1896, and 75 per cent. in 1923.

THE EARL OF ONSLOW

The principle, at any rate, has been in operation ever since the Royal Commission recommended it. During that time has there been such a tremendous rise in rents? I am perfectly certain that there has not. If the remission of half, and then of three-quarters, of the rates did not increase rents, why should the remission of the whole increase rents? I think it has been admitted that it has not been the case in the past; why, then, should it be the case in the future? And you will find in the Bill a clause that provides that for the purpose of arbitration the remission of rates shall not be taken into consideration. I come to the question of the individual farms. I think it would be impossible to illustrate by figures the effect which the derating of farms will have generally speaking, because the conditions which obtain all over the country in regard to farms vary so tremendously. It would be impossible, even if you selected a large number of individual cases, to boil them down in such a manner as to give a statistical figure which might be generally satisfactory.

Now I come to the question of unemployment, which was touched upon rather briefly by the noble Lord opposite. If, as we at any rate believe, this measure in regard to agriculture will have a great effect in increasing prosperity, of course employment in agriculture will increase, and increase in the ratio of the prosperity of the industry. But if I cannot give figures illustrating the case generally, I can give certain figures as to the direct relief of rates on agricultural lands and buildings, and that amounts in the whole country to £4,300,000, which certainly is a substantial sum. In addition to that, the agricultural products receive benefits by the relief of rates to the extent of £800,000, and there will be incidental advantages by the reduction of rates on the factories which manufacture cattle foods, which will be derated by the provisions in regard to industry. The noble Lord opposite addressed a question to my noble friend Lord Stradbroke and myself, and I think to the noble Marquess also, as to whether we as individuals regarded this relief as advantageous to ourselves and our own property, and that question has been answered both by my noble friend Lord Melchett and by Lord Bledisloe in the affirmative, and very strongly in the affirmative. I do not know what other noble Lords' experience may be, but I have personally taken the trouble to ascertain how my small property will be affected, and I find that my tenants will certainly benefit not inconsiderably by the additional relief in respect of rates.

I come to the second question on the Paper in which the noble Lord asks me the extent to which the rates constitute a charge on depressed productive industries, and to what extent the proposed rating changes will give relief. I have here a list of trades and estimates of the amount of relief from local rates which they will obtain. There are sixteen industries, and they will be re- lieved of nearly £15,000,000. I could read the list out, but it is very long, and there is a lot of figures, so I would prefer to give a copy to the noble Lord, or to lay the list as a Paper.

EARL RUSSELL

Does it include the breweries?

THE EARL OF ONSLOW

Yes.

LORD PARMOOR

If you could lay it as a Paper then it would be open to everybody.

THE EARL OF ONSLOW

Quite so. Take these industries. Coal, it is estimated, is relieved to the extent of £3,100,000; engineering, £2,500,000; metal trades other than iron and steel, shipbuilding and engineering, £1,250,000; cotton spinning and weaving, £1,500,000. Let me first take the coal trade. The local rates vary very considerably between several districts. For instance, they are comparatively high in South Wales, where they amount to 7.17d. per ton. In Yorkshire they are just over 5d. a ton, and in North Derbyshire and Notts. 3.12d. a ton. But I will, if I may, place this Paper, which is a long series of figures, with the other and lay it on the Table.

LORD PARMOOR

I am very much obliged to the noble Earl. That is just what I wanted.

THE EARL OF ONSLOW

It is far too long to quote. The local rates paid per annum by the coal trade throughout Great Britain amount to £4,149,900, and the relief which the Bill brings about is £3,112,425, or roughly speaking 3.32d. per ton of saleable coal raised. Of the whole amount of saleable coal raised not all is commercially disposable. About 14,000,000 tons of coal raised goes hack into the collieries, and is used for working the mines, and another 5,000,000 tons is supplied to miners as free fuel; and so the relief on the coal disposable commercially is higher than the figure I have given, and amounts to just over 3½d.

Next I will deal with iron and steel. The total relief to the iron and steel trade is estimated at £550,000, but that only applies to the rating of the mills and steam furnaces. Taking the cumulative effect of rates on the price of steel one has to consider other factors as well, and I am rather laying stress on this point in regard to iron and steel because, although the cumulative effect of rates applies to practically all trades, it is particularly well illustrated in the case of iron and steel. The total effect on iron and steel of the local rates charged amounts to 4s. per ton of finished steel. Therefore, if the steel-maker were to control the whole of the sources of supply of the materials out of which he makes his steel, he would obtain the full benefit of something like 75 per cent., which would amount to 3s. per ton. In addition to that, there is a further benefit derived from the railway freight rebates on the materials for steel-making which comes to between 2s. and 2s. 3d. a ton of finished steel. Of course, if the steel-maker were to control the whole of his resources he personally would obtain the full benefit of all these reductions, amounting in all to 5s. 3d. per ton. If he does not obtain the full benefit, it will, be distributed among various people, so that in any case the total cost of production on the ton of steel will be reduced by from 5s. to 5s. 3d.

Now I come to cotton. It has not been possible to obtain sufficient figures to generalise to any detailed extent, but the total relief to the cotton trade is estimated at £1,500,000. In three or four instances where it has been possible to make careful calculations, it is found that the relief gives a reduction of between 2¼ to 2½ per cent. on the cost of production. These calculations have been made in regard to white shirting, prints, and grey cloth. In regard to engineering, including ship-building, the relief amounts to between £2,500,000 and £3,000,000, but the engineering trade varies so considerably that it is a little difficult to calculate an average percentage reduction on the cost of production.

I come now to the third part of my noble friend's Question, upon which he did not touch at any great length. The only point he made was that by giving this reduction in regard to coal you are making a present to the foreign consumer who will utilise that coal in the manufacture of goods which will be imported into this country and cheapen British industries. That, I think, is the point he made. That question has been very carefully considered, and it has been found—and I do not think this is controvertible—that the bulk of British coal sent abroad is used for purposes which do not lead to competition with British industries. The largest proportion of such coal is steam-coal for bunkering; substantial quantities are exported for foreign railways, electricity works and gas works, and only a relatively small proportion goes into general industry. Everybody admits, I think, that the export trade in coal is essential, and so it is right and necessary that we should do all in our power to stimulate that trade as much as we can.

The only one other question with which I need trouble your Lordships this evening is the specific point which was put to me by my noble friend in regard to paragraph (47) on page 26 of the Memorandum. He asked me what was the difference in regard to the water rate and other rates. The difference is that the water rate is paid in respect of something which is actually used by the ratepayer, while many of the other services provided by the local authority are not. The point is made clear when it is borne in mind that water is supplied in many cases by private companies. If the payment for water were now still made on rateable value, farmers would escape altogether and factories would pay only a quarter of the rates they now pay for the same service, unless, indeed, they were to obtain it through the meter, as I believe is done by many of them. That is the answer to my noble friend's question regarding paragraph (47).

I do not think I need trouble your Lordships at any further length. I am quite ready to place these two Papers with the figures at the disposal of the noble and learned Lord, and to lay them on the Table. At a later date in the Session we shall have ample opportunity of discussing these very interesting matters when the Bill comes before us. Therefore, with your Lordships' permission, I will defer any further observations on the noble and learned Lord's remarks until that time.

EARL RUSSELL

My Lords, it is true that there will be an opportunity later in the Session of discussing these proposals, but not, I fear, of discussing them very effectively in this House: that is to say, in the sense that we shall be able to take any very effective action upon them. The objects which the Government have in view, as stated by themselves, are no doubt entirely meritorious and are intended to commend themselves to the electors. Our objection is that they have chosen an entirely wrong method of attaining those objects and that the method of this very complicated Bill—so complicated that after several weeks of study and reading I do not know how many White Papers and Memoranda I cannot now profess to have more than a nodding acquaintance with it—is not the best and the most reasonable way of doing it.

The noble Lord, Lord Melchett, who followed my noble friend, asked whether it was a crime that a manufacturer should be prosperous. I think nobody thinks that or has suggested it. The particular kind of prosperity with which the noble Lord is associated is one, so far as I know, of an entirely beneficent character. It is a case of manufacturing things which are useful to everybody and which give employment to a great many people, and of manufacturing them under the most skilled conditions. It is not even subject to the observation that it is a luxury trade or anything of that sort with which he is connected. That, of course, is all for the benefit of the country. But the noble Lord then went on to talk about injustice being done even to prosperous trades, and he gave an example of a factory whose manufacture was depressed, whose profits were falling and whose rates were rising in consequence of unemployment in the district. That, undoubtedly, is a hardship. But there are other aspects of the matter. There are some of us on this side, and I think I gather from a discussion which took place only a day or two ago some on the other side in another place, who take the view that it is an injustice that public money—money, that is to say, which is taken from our pockets—should be given to people such as successful tobacco companies, successful breweries and successful industries with which the noble Lord who spoke was connected.

We cannot see why these people who are already making good profits should have those profits swollen by money which, in the long run, is taken from our pockets. The general taxpayer has to pay, and in all probability in the local districts the householder will have to pay in the end by means of an increased rate to make up for the derating that has taken place; because, although I gather from the public prints that the Government have for the moment satisfied, or shall I say quieted? the local authorities, there is still a strong feeling on their part that sooner or later the rates of all other people will have to go up to meet the deficiency. The one thing that the Government have been very careful not to pledge themselves to is that they shall suffer no loss by the derating. The Government have been most careful not to pledge themselves to that.

Then the noble Lord, who, I regret, is not now in his place, went on to talk about agriculture. With his universal knowledge he seemed very well informed even upon that subject, and he said that he was not too proud to take a "dole," that this small amount would go some way towards making the difference between success and failure in agriculture and would encourage employment, apparently, to some appreciable extent. I have here a report of a discussion which took place in 1923 on the Agricultural Bates Bill, and I find on that Bill observations were made by a gentleman called Sir Alfred Mond. I believe the same gentleman has spoken here to-night. He has, it is true, changed his Party and changed his name and, apparently, he must have changed his opinions because this is what he said. He was talking about the justification which was required for legislation of this sort, and he said— Otherwise, either in the form of rent or increased capital value, you are merely adding the subsidy to the capital value of the agricultural land of the country. That is one reason why I hope this Bill will be opposed with violence and vehemence by all those who object to national money being used in order to enrich one class of the community, a class which, though at present going through bad times, yet has for long had a good time. The noble Lord [Lord Melchett] would appear to have changed his opinions upon that point, because he now tells your Lordships it is going to be of great advantage to agriculture, and that he has not the slightest objection to taking the "dole." These transformations are interesting.

We have heard a good deal of discussion this afternoon about the effect upon export coal of the advantage which is given by railway rates, and about the reduction of the rating on collieries with the object of increasing the export of coal, a very laudable object no doubt, but if that is your object, why not do it directly by a coal bounty, as other Governments have done? Why not say you will give an export bounty on coal and have done with it? Everybody will then know what the money is being spent upon. There are methods by which the particular hardship, to which Lord Melchett referred, upon the depressed industries in depressed areas, due to people who come upon the rates on account of unemployment, could be removed. There is one very simple method by which that position could be met, a method which, apparently, has never occurred to the Government, which, at any rate, they have not adopted, and that is the method of making unemployment a national charge. If you put the whole cost of unemployment upon the national revenue you would then at once relieve this unfairness as between various districts. But the Government have not done that. They have, in fact, in the remarkable formula of which I believe I have attained a partial understanding, put the population on a very low basis for the unemployment factor.

The reason why we venture to think that these proposals are unwise is that they do not do justice and because such good effect as they have is attained in a roundabout way with many more effects which we think are worse. Whenever you decide to transfer a burden of any kind from one shoulder to another you always have a great deal of difficulty in the readjustment, and in this case primarily, of course, the readjustment would fall upon the local ratepayers. Provision is made that that shall not happen by the various arrangements which are made for distributing the block grants of the so-called new money, and that new money, as far as I can understand, is merely money taken from the Road Fund, which, anyhow, ought to have gone to roads. You are really creating more difficulties than you are solving by this very complicated measure. Apparently, in spite of the good intentions of the Government, neither the local authorities nor the farmers have at once acclaimed the boons which you have been offering them, and you have had a good deal of difficulty in pacifying them piece by piece by constant changes as you have gone along.

When one speaks of the unfairness of the rates upon a factory you have to ask, where, after all, does any injustice arise? The factory benefits by the lighting and by the police and by the upkeep of the roads which are essential to its maintenance, and it is no particular hardship that it should be rated for those things in accordance with its value; but, of course, it is a practical hardship when you have to pay these large rates when you are making no profits. The noble Lord suggested some method by which that might have been adjusted, by which it might have been made fair, but whether you are making profits or not, if you are doing the same amount of trade, if you are making full use of the facilities provided by the local authority in the way of lighting, watching, roads, sewering and so on, there is nothing unfair or unjust in your paying the same amount as other ratepayers, your neighbours, for them. We think, and I believe a great many people think, that the Bill contravenes all those principles, that the Bill which is going to come before us is really creating far more difficulties than it removes, and that it is upsetting the whole of the local finance of the country for very doubtful objects. We do rather deprecate the form of such legislation.

LORD JESSEL

My Lords, I always listen with the very greatest pleasure to any speech made by the noble Earl who has just spoken. He has told us that he finds it very difficult to understand the Bill. I am sure if he finds it difficult most of us will find it even more difficult, but may I recommend him, if he wants a very short synopsis of the Bill, to read the article in The Nineteenth Century and After by the Minister of Health. I think that there in a very short space he will be able to understand the principles of the Bill.

May I deal with his last point first? He talked about the factories and the rates. Surely there is a great difference between the benefits from the expenditure of rates received by a factory and by an individual? What advantage, for instance, is it for a factory to have education? Free education does not benefit the factories but the people in the factories who get the benefit of that education in their own homes. The same remark applies to various other services which do not benefit factories in the same way that they do the individual. I do not think it can be said that public companies get the same benefits from the rates as the individual.

May I touch upon another point? A good deal has been said both here and in another place about the apparent injustice of including the tobacco companies and the breweries in the benefits of the Bill. I do not myself happen to have any connection with the brewing trade, except that I am connected with a company in America which produces soft drinks. One must remember that breweries have not always been prosperous, and I do not know that at all times the tobacco companies in this country have been prosperous. A company may be prosperous to-day but may not be so fortunate a few years hence, and it does seem to me that it would be rather unfair because a particular company is doing well that you should deprive it of the benefits conferred under the Bill. I would point out, farther, that if these particular concerns become still more prosperous they will be employing more people, and it may be that they will be able to reduce the price of their commodities, which will be a benefit to everybody. I think that the Bill, now that it has been more generally discussed and is better understood, finds much greater favour with the public than some newspapers at one time thought would be the case. We do not see now those absurd criticisms which appeared on the first introduction of the Bill. It is now being recognised as a great measure of help for the industrial community and a great reform, long overdue, in the local government of this country.

LORD PARMOOR

My Lords, I only want to say a few words in reply. In the first instance I want to thank the noble Earl for laying on the table the Papers to which he has referred because they very largely give the information which I wanted and they will be extremely interesting to those who study this question, not from the point of view of making Party capital one way or another, but in order to see what is the real position as regards this so-called Derating Bill.

I am sure the noble Earl will appreciate what I am going to say. The Royal Commission was entirely opposed to de-rating, which is the equivalent of exemption. What they were in favour of, and what I have always advocated, is quite a different thing. It is classification, which has been carried much higher in Scotland than in this country. The reason why I supported remissions—they were not exemptions—in favour of agriculture was that they were entirely in accordance with the Scottish principle that agriculture and agricultural land should always be placed in the lowest classification. I believe that in every single case for years—ever since 1840 in Scotland—agriculture has always had the three-fourths remission which I have certainly personally advocated on every occasion. But there is great difference between classification and derating, and I will challenge the noble Earl—I do not do it in any antagonistic way—to find any passage in which I have advocated exemption. He will realise, if he reads the report of the Commission, that while exemption was entirely negatived, classification—I think the distinction is perfectly sound—was advocated. With reference to Lord Bledisloe—I am sorry he is not here now—it is difficult to protect oneself everywhere, but I most distinctly said that my objection to the Bill was on the ground of exemption of land from rating, which to my mind is wholly unjustified and cannot possibly be made good on any ground.

The only other point on which I want to say a word is with reference to Lord Melchett's speech. I am sorry he is not here at the moment. I think there could not have been a greater perversion of my argument than the words which he tried to put into my mouth. I do not think it is a very good way of answering an argument to pervert it first and then suggest the answer to the perverted argument. There could be nothing more inaccurate than to suggest that I think it a crime to carry on business successfully. I cannot imagine a greater perversion of an argument. The question is whether persons who carry on an industry successfully, and are entitled to every consideration, are further entitled to what I call a "dole" from other taxpayers. That is what it comes to. You are taking income Tax with one hand and with the other giving it as a "dole" to the prosperous shareholders. I believe the more it is considered the more it will be found that that is the position which will arise. It is not a Party point. Colonel Gretton, who has an interest in brewery concerns, stated that he objected to being given an advantage of this kind which he did not desire. He would prefer to be left alone. There was a Division on this point in another place. About that I say nothing.

There is one other matter to which the noble Earl referred, and that was that this discussion came on at the same time as the debate in the House of Commons. That happened entirely because, in accordance with the wishes of the noble Marquess the Leader of the House, I postponed the Question from an earlier date, when this difficulty would not have arisen.

THE EARL OF ONSLOW

I should have said the same thing even if the debate had not come on in the House of Commons. My objection was that we were really having a Second Reading debate in this House before discussion on the Bill had finished in another place. That was my point.

LORD PARMOOR

We are taking a discussion on a White Paper which has been issued. If we are to have an effective debate on this subject—a question of the greatest interest to most members of the House—there will never be another opportunity.

THE LORD PRIVY SEAL (THE MARQUESS OF SALISBURY)

There will be ample opportunity.

LORD PARMOOR

I do not think so. I know what these ample opportunities come to in the long run. I hope there will be opportunity to deal with what I may call the local government proposals, which will require thorough analysis. However, I do no wish to carry the matter further now. I thank the noble Earl for the Papers which he has laid. I am satisfied with them, and therefore I beg leave to withdraw my Motion.

Motion, by leave, withdrawn.

House adjourned at five minutes past six o'clock.