HL Deb 30 January 1930 vol 76 cc365-73

THE DUKE OF MONTROSE rose to draw attention to the principle of transferring land to the Commissioners of Inland Revenue in satisfaction of Estate Duty; and in particular to Section 56, subsection (1), of the, Finance Act, 1909–10, and to enquire whether the attention of the Chancellor of the Exchequer can be drawn to a further definition or extension of the same. The noble Duke said: My Lords, in rising to put the Question in my name I do not intend to trespass at any lengh upon your Lordships' time, but I feel that with the approach of the Budget, which is like a great Juggernaut Car, ready to roll us out flat, the time has come when we would do well to examine one or two points in the Finance Acts, and to see if there is any way in which impoverished and crushed landlords can meet their burdens. I should like to point out to noble Lords opposite that I said "meet their burdens," not "evade their burdens."

In the first place, I should like to draw attention to Clause 56 (1) of the Finance (1909–10) Act, 1910, which reads as follows:— The Commissioners may, if they think fit, on the application of any person liable to pay Estate Duty or Settlement Estate Duty or Succession Duty in respect of any real (including leasehold) property, accept in satisfaction of the whole or in part of such duty such part of the property as may be agreed upon between the Commissioners and that person. Now, what does that mean? I In brief, I take it to mean that a landowner could offer his land in payment of Death Duties. But there is a "snag" there, and the "snag" is contained in the words "if they think fit"—that is, if the Commissioners of Inland Revenue think fit. And I am credibly informed that the Revenue have decided that they will not think fit, except in specific cases referring to special pieces of land. For instance, I happen to know of a few fields near a great city, and they are desired for the purpose of forming an aerodrome. The estate to which those fields belong is under a settlement for Death Duty, and in this case I am told the Revenue authorities might accept those fields in part payment of Death Duties; but, as a general principle, to accept land from any owner in settlement of his Death Duties no, no, they will not see fit.

What I should like to know is what is the meaning of that subsection? Does it, or does it not, mean that it is a part of the policy of the Government to accept land in payment of Death Duties? What is the advantage to the Government if that subsection does mean that they will accept land? The representatives of the Government, the Minister of Agriculture and the Secretary of State for Scotland, have declared only recently that the policy of the Government is the nationalisation of land. Very well, then, why not accept land in payment of Death Duties as a beginning of that policy? How are the Government going to nationalise land except in two ways?—(1) by honest purchase; (2) by confiscation and robbery. I will venture to say that no Government on this earth could ever find the money to buy all the land in this country by honest purchase, and I should like to think that noble Lords opposite, even if they are volcanoes, would erupt violently if they were associated with a policy of confiscation or robbery. Therefore I say that by adopting the policy of accepting land in payment of Death Duties, they are making a beginning with a nationalisation policy to which they have declared themselves favourable. From the landlord's point of view, it is nothing revolutionary. The landlord has to meet his Death Duties. If he has to part with his land, what does it matter to him if he parts with it to find cash to hand over to the Government, or if he parts with it by transferring it directly to the Government? What does it matter to him who his successors are?

Then there is another benefit to the Government. If the Government were to accept land in payment of Death Duties, what a lovely opportunity to carry out all those schemes we have heard of for the benefit of the people! If they received a block of land in a town, why, they could clear the slums. If they received a block of land on the outside of a town, they could form a garden city and give employment. If they received a block of agricultural land, they could carve it up and develop small holdings; or they could start the other idea of letting land to farmers with fixity of tenure and at a fair rent determined by a land court. If on the other hand they had got a highland glen, what a chance to plant that smiling village in a highland glen which, they say, the rapacious landlords now hand over to American tourists and deer! What a glorious opportunity for the Government both to receive land and to give a practical illustration of all those lovely schemes we have heard so much about for the benefit of the people!

From the point of view of the landowner, the advantage is that he can transfer land in settlement of his burdens free of a great deal of the cost of advertising and a great deal of the cost of paying heavy commissions to agents. He will be free from having to pay interest on outstanding Death Duties because he cannot find a market for the land he wishes to sell. It would be a benefit, therefore, to the landowner in many cases, especially if he has not got behind him a long list of securities which he can realise on the Stock Exchange. What I would like to emphasise is that landowners have now the privilege of offering land to the Forestry Commission for afforestation purposes. We have the privilege of offering land to the Board of Agriculture for agricultural purposes. Why should we not be able to offer land to the Treasury for revenue purposes Therefore, what I ask the noble and learned Lord opposite is to give us a definite understanding of what this clause means and to tell us whether the Government will accept land from landowners in payment of Death Duties as a general principle.


My Lords, the subject so opportunely raised by the noble Duke and so ably presented to your Lordships' House, was debated years ago in another place on the occasion of the Finance Act, 1910, and upon other occasions also. The principle, as the noble Duke has stated, was then admitted reluctantly, but it was admitted. It has been allowed to remain a dead letter. But if the need for this form of alleviation was apparent then, how much more obvious is it now, whether from the point of view of owner or occupier, or of the industry of agriculture itself. Taxes on agriculture are excessive in their incidence as compared with taxation on other forms of industry and investment. To take a simple illustration, supposing a man with an estate valued for Death Duties at £100,000, possesses also £100,000 in War Loan. Thanks to taxes, and in Scotland a proportion of rates which were not removed as they were in England, and owing to the greatly increased cost of upkeep without any corresponding increase of rent and to the current capital expenditure in order to keep his arable farms in working order, his income is nil from land which, well managed—indeed the better it is managed the more likely it is to involve him in loss than in profit. He lives on anything he can earn and on his War Loan.

He may turn himself into a company to place himself on the same footing as other industries, especially as regards Super-Tax. Yet no estate can survive a couple of Death Duties. Hence forced sales, forced purchases, and forced loss of capital to agriculture, since the only hope of the owner is to get whatever remains of his £100,000 out of that industry. The occupier, deprived of the use of the owner's capital, is left to his own resources or to pay 5½ per cent. on an agricultural credit under the Act passed last year which he formerly got for nothing from his landlord. The question is not the maintenance of the large estate, but of its forced dispersion, under crushing taxation of unjust incidence and, far worse, of forced "bonding" of the estate in order to meet the Death Duties when sale is, as it is at this moment, virtually impossible; with the inevitable result of starving agriculture which is already on its last legs. I am no believer in Government ownership of land; far from it, except for afforestation. But if the Government must have their last drop of blood let them squeeze it out for themselves.

I have one suggestion to make which goes further than that of my noble friend. Works of art of historic or national interest are excluded as heirlooms from Death Duties. What more unique and priceless possession of national interest and of national beauty is there than you find amongst the ancestral homes of England, whose parks are so often the favourite haunts of the people? What will England be without them? They have taken centuries to create. They disappear from day to day already, and they will do so, and indiscriminately, by the hundred within this generation. Works of art jealously secluded are exempt, while the harpies of the Inland Revenue dismantle and destroy landmarks in English history, the joy and pride of the countryside, never to be replaced. It does seem incomprehensible why we should destroy creations of beauty which are seen by all, and nowhere else in the world, while we safeguard other treasures seen by few.


My Lords, great credit is due, I think, to the two noble Lords who have spoken for their courage in bringing forward at last the question of some mercy being shown to landed estates. We have all thought it very desirable that some such principle as that indicated by the noble Duke who asked the Question should be acted upon. We know, of course, that the matter has been discussed in another place; but surely the time has come, when as my noble friend Lord Novar said, estates are cracking up on every side, for something to be done to try to preserve a system which has been of undoubted benefit to our country in the past. It seems so grossly unfair that the State should say what is the valuation of any land or farm when two of the best valuers you can get will differ widely as to what they think is the proper value. Yet the unhappy person who succeeds to the property may have to bear a burden out of all proportion to the real value of the income which is to be obtained from that land

Are the people of the country happier to-day on account of the breaking up of those estates which has taken place all over this Island? I have not yet heard of anybody being more contented, or of any one who has been fired with a desire to obtain land which has been acquired under that system. The Death Duties at their present scale is a barbaric tax, and it is only fair that some attempt should be made, even at the eleventh hour, to do something to secure, I will not call it equity, but justice to those who are owners of land. One point was touched on by my noble friend Lord Novar, and it was this. The better kept the property is the greater is the disparity of the burden of taxation imposed by the Death Duties. The whole system is iniquitous. There would be some alleviation or logic in it if the land were to be taken by those who are so desirous of nationalising the land. Here is an opportunity of doing it on a comparatively fair and just system and I trust we may get some favourable reply from the Government Bench opposite.


My Lords, I should like to say that it might give rise to a rather interesting situation if the Inland Revenue were to take over land on the death of any person. My experience is that the value of land is generally put up to a very inflated price and it would be a very good thing for the landowner if the land were taken over at the price at which it is generally valued for Death Duties. I think most landowners cannot risk the expense of going to arbitration. About three or four years ago a member of your Lordships' House had the courage to go to arbitration and a. very large sum of what they claimed was refused to the Inland Revenue. The Chairman, I think, made the remark that he had never known a more monstrous waste of public money.


My Lords, the question that has been raised to-day is one of very great importance, and it has been presented to your Lordships in a most interesting speech by the noble Duke and supported with that wealth of knowledge for which he is well known by the noble Viscount, Lord Novar. I hope that your Lordships will exonerate me from any charge of temerity in, within ten days of taking my seat in this House, breathing the words "land nationalisation," but it is the noble Duke who has opened the bag and is responsible for the escape of the cat. I, however, will not take advantage of the latitude which is allowed by the procedure in your Lordships' House—a latitude which I very much appreciate after having been subjected to a stricter regulation—to enlarge upon the very much more fundamental principle which underlies this Question, but I will endeavour to confine myself to the specific point which the noble Duke has raised.

He quoted the Finance Act of 1910, and the appropriate section which deals with this particular point, and he very rightly pointed out that the "snag," as he called it, lay in the words "if they think fit." The year after the passage of the Act a Committee was set up by the Treasury to examine these particular proposals, and if your Lordships will allow me I will summarise the conclusions of that Committee. They said that land should be accepted in satisfaction of Death Duties only if it can be utilised for some public purposes; that the Commissioners of Inland Revenue have not the machinery or staff for the management of real property, and should therefore only act as the intermediary for the conveyance of land to other public Departments or authorities; and that where an offer of property is made under the provisions of the section, the Commissioners should submit the offer to any appropriate Government Department, and if that Department is prepared to enter into negotiation for the transfer of the property it should be put in touch with the applicant for the purpose of negotiating with him direct. These recommendations were accepted by the Treasury who authorised the Commissioners of Inland Revenue to give effect to them, and added that in all cases the property accepted should be transferred not to the Commissioners of Inland Revenue but to the public Department or authority who were to take it over.

The result of all this was that at first there were a number of applications for the transfer of land under the particular section, but in practically every case it was found impracticable to accept the land offered consistently with the principles laid down by the Treasury—the principles which I have just indicated. In only two cases, one in 1914 and the other in 1915, has the land offered been accepted, and at present the section is practically a dead letter, the applications under it having fallen to only four or five each year. The noble Duke has interested himself in this particular question for some time past. He raised it on June 10 (I think it was at an agricultural society's show at Strathdricks) and summarised his proposals in this way: I venture to say that if that arrangement had been in force to-day it would have handed over thousands of acres to the Government in payment of Death Duties, and the Government would then be free to relet the land to the sitting tenants without disturbance and at fixity of tenure and fixed rents. The noble Duke added: That is a suggestion I throw out to Mr. Ramsay MacDonald to think over when he lies on his back under the whin bushes at Lossiemouth. Unfortunately my right hon. friend has not had any opportunity since the General Election of reflecting on this subject in that posture.

But the matter has been raised in another place. On July 9 a Question was addressed to the Chancellor of the Exchequer. Mr. Hurd asked the Chancellor of the Exchequer whether his attention has been called to the offer of a Scottish Peer to surrender part of his estate in payment of Death Duties, and what action he proposes to take in the matter. The Chancellor of the Exchequer replied:— My attention hay been drawn to a suggestion made by a Scottish Peer that the Government should accept land in payment of Death Duties. As the hon. Member is aware, statutory provisions dealing with this subject are contained in Section 56 of the Finance (1909–10) Act, 1910; and I will consider whether it might be desirable in the public interest to make an extension of the present facilities for paying Death Duties by this method. The Chancellor of the Exchequer, in fact, gave a sympathetic reply and his attitude at present a sympathetic one. He desires this matter to be further investigated. As to whether this is the correct method of achieving the aim, which the noble Duke and we on these Benches have together in view, of land nationalisation, I am not prepared to say, but it would be in our opinion perhaps rather a slow method of achieving that desirable end. But I can assure the noble Duke that His Majesty's Government in no way resent this Question being raised. On the contrary, we are glad to be reminded of it once again in order that investigations may be proceeded with.