Sitting of 1 August 1913

Preamble
The House met at Twelve of the clock.

MR. SPEAKER'S ABSENCE.
The Clerk at the Table informed the House of the unavoidable absence of Mr. Speaker from this day's Sitting,
Whereupon Mr. WHITLEY, the Chairman of Ways and Means, proceeded to the Table, and, after Prayers, took the Chair as Deputy-Speaker, pursuant to the Standing Order.

PRIVATE BUSINESS.
Derby Corporation Bill,
Dover Harbour Bill,
Heathfield and District Water Bill, Southport Corporation Bill,
Lords Amendments to be considered upon Monday next.
North British Railway Bill [Lords],
Rochford Rural District Council Bill [Lords],
To be read the third time upon Monday next.
Ipswich Dock Bill [Lords],
Leicester Corporation Bill [Lords],
Reading Corporation Bill [Lords],
As amended, to be considered upon Monday next.
Ebbw Vale Water Bill [Lords](by Order),
Third Reading deferred till Monday next.
Bradford Corporation Bill [Lords](by Order),
Consideration, as amended, deferred till Monday next.
Gas and Water Orders Confirmation(No.1) Bill [Lords],
Local Government Provisional Orders (No.21) Bill,
Pier and Harbour Provisional Orders (No.3) Bill [Lords],
Third Reading deferred till Monday next.
Lanarkshire (Middle Ward District) Water Order Confirmation Bill,
Wemyss Tramways Order Confirmation Bill [Lords],
Consideration deferred till Monday next.
Electric Lighting Provisional Order (No.6)Bill [Lords](by Order),
Electric Lighting Provisional Order (No.7) Bill [Lords] (by Order),
Consideration, as amended, deferred till Monday next.

EAST INDIA REVENUE ACCOUNTS.
Ordered, That the several Accounts and Papers which have been presented to the House in this Session of Parliament relating to the Revenues of India be referred to the consideration of a Committee of the Whole House.—[Mr. Montagu.]
Resolved, That this House will, upon Thursday next, resolve itself into the said Committee.—[Mr.Montagu.]

ORDERS OF THE DAY.

  BUSINESS OF THE HOUSE.
  Mr. PRETYMAN: Can the Chancellor of the Exchequer say whether the Government propose to take any business after eleven o'clock on Monday?
  The CHANCELLOR of the EXCHEQUER (Mr. Lloyd George): On Monday, after the closing up of Supply, we will take the Bankruptcy Bill, Report; Bankruptcy (Scotland) Bill, Report; Education (Scotland) Bill, Report; Education (Scotland) (Glasgow Electoral Divisions) Bill, Report; Telegraph (Money), Report; and the Isle of Man (Customs) Bill, Committee.
  Mr. CASSEL: On the Bankruptcy Bill there are one or two important points arising, though they will not take very long.
  Mr. LLOYD GEORGE: The President of the Board of Trade is under the impression that an arrangement has been arrived at. Perhaps the hon. and learned Gentleman will communicate with us on the subject.
  Mr. CASSEL: An arrangement has been arrived at with the exception of two points, which will take a little time.

BILL PRESENTED.
  PUBLIC WORKS LOANS BILL.
  "To grant money for the purpose of certain local loans out of the Local Loans Fund; and for other purposes relating to local loans." Presented by Mr. MASTERMAN; to be read a second time upon Monday next, and to be printed. [Bill 299.]

REVENUE BILL.
Considered in Committee.
[Mr. WHITLEY in the Chair.]

REVENUE BILL.

  CLAUSE 1.—(Extension of Provisions as to Deductions for the Purpose of Increment Value Duty.)
  Increment Value Duty.
  Where, on an occasion for the collection of Increment Value Duty which is the transfer on sale of the fee simple of the land or any interest in the land or the
  938
  grant of any lease of the land, deductions are to be made for the purpose of ascertaining the site value of the land on the occasion, those deductions shall include—

  (a) where the occasion is the tranfer on sale of the fee simple of the land, a deduction of the amount (if any) by which the value of the consideration on any such transfer or grant is proved to the Commissioners of Inland Revenue (in this Act referred to as the Commissioners) to have been increased in consequence of any guarantee or financial assistance given by the vendor or lessor to persons erecting buildings or executing other works upon the land, or in consequence of any beneficial arrangements made after the thirtieth day of April, nineteen hundred and nine, for the purpose of facilitating the disposal of the land, or in consequence of any other action on the part of the vendor or lessor taken after that date; and

  (b) where the occasion is the transfer of any interest in the land, or the grant of any lease of the land, a deduction of the like amount, increased in accordance with the relation which the fee simple of the land bears to the interest transferred or the term of the lease granted.

  Mr. PRETYMAN: Would it be in order to ask the Chancellor of the Exchequer a question as to the course of procedure which he thinks it necessary at this stage to take on the Bill, or shall I put my question when the first Amendment is called?
  The CHAIRMAN: I think there must be some question before the Committee. I think the first Amendment to be taken is one of substance. The Amendment in the name of the hon. Member for Pontefract is not in order.
  Mr. BOOTH: I do not propose to move it.
  The CHAIRMAN: The second Amendment is to leave out "an" and insert "any."
  Mr. BOOTH: That Amendment is really consequential, but I and my hon. Friend decided not to move it, but the hon. Member for the Tradeston Division has an Amendment on the Paper, and lie might move it with it.
  The CHAIRMAN: Yes, that is so, to leave out "an" and insert "any," and the two could be taken together.
  Mr. PRETYMAN:I beg to move, "That you do report Progress, and ask leave to sit again."
  Merely to put myself in order, I formally move to report Progress in order to ask the Chancellor of the Exchequer, for the general convenience of the House, what would be the procedure on this Bill? I ask the right hon. Gentleman the Chancellor of the Exchequer is he prepared to give the Committee any indication of how much time he considers the Government will be able to allot to this measure, and what will be his view as to the Amendments on the Paper? They are very numerous, and I think it is desired on both sides of the House to obtain the material parts of the Bill without undue delay, and to facilitate the passage of such parts of the Bill as are agreed, at the same time retaining such reasonable facilities for discussion of other points as we have a right to expect. Perhaps the right hon. Gentleman will give us some indication of what will be the course of procedure.
  The CHANCELLOR of the EXCHEQUER (Mr. Lloyd George): I think my hon. and gallant Friend has consulted the general convenience of the House by his Motion and by inviting the Government to indicate what their position is with regard to the Bill. The members of the committee will remember that we were not very sanguine of being able to carry the Bill when the Prime Minister made his statement as to the course of business until the end of the Session, but there was a very general desire expressed on both sides that the Government should find time for the discussion of the measure, inasmuch as there were provisions which, generally speaking, were desired by Members sitting on both sides of the House. Since then I have received other representations, and no doubt other Members have also received representations, especially from builders and estate agents in different parts of the country, pressing that the Bill should be put through by the Government. It was decided, therefore, to give time for it; but, obviously, we cannot give very much time, and looking at the Amendments carefully, it would be quite impossible if they were discussed at any length, to find time to get the Bill through. And, therefore, I must invite the co-operation of Members on the other side of the House as well as Members supporting the Government, in
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  helping us to get the Bill. I should like to say this, at the beginning, that it is the intention of the Government early next Session to bring in a Revenue Bill dealing with other matters which we had intended to include in this Bill—Licensing and Death Duties, and one or two other matters of that kind which have to be dealt with.
  The Committee would like to know what our view is with regard to Amendments which we could accept. I went through the Amendments very carefully this morning with a view to accepting as many of them as I possibly could. Perhaps I might now indicate generally what we should be prepared to accept, subject to Amendments in form. The Committee will not expect me to bind myself at present to the exact form of the Amendments as put down on the Paper. As to Clause 1, in the main we accept the Amendments standing in the name of the hon. and learned Member for West St. Pancras (Mr. Cassel) and my hon. Friend the Member for the Luton Division (Mr. Cecil Harms-worth), which propose alterations as to what "occasion" shall include. I think that involves the acceptance of further Amendments down in the name of the same two hon. Gentlemen with respect to the words in the Bill as to any guarantee or financial assistance given by the vendor or lessor to persons erecting buildings or executing other works upon the land. I am not sure about the words of the Amendment, but in substance we propose to accept that Amendment. That means that we really accept nearly all the Amendments to Clause 1.
  Mr. PRETYMAN: What about proof to the Commissioners?
  Mr. LLOYD GEORGE: I am coming to that. I am afraid that we cannot possibly accept that Amendment, for the simple reason that I do not see how the Commissioners could deal with the matter unless a case is made out by the other side. After all, it is for the vendor or the estate developer to prove that he did finance the builder. The Commissioners cannot assume this unless the proof is furnished to them. Therefore I am afraid we could not possibly accept that Amendment. The same reason applies to other Amendments of the same character to Clauses 2 and 3. There are two Amendments down in the name of two hon. Members from Ireland dealing with Reversion Duty. We cannot accept either of these in the form in which they are drafted. They do, however,

  941
  represent an attempt to deal with a real grievance, and I would rather like to submit them to the Government draftsman with the view of arriving at some form of Amendment which would be acceptable. So much for Reversion Duty. I come now to Clause 11 ("Record of deductions for agricultural improvements"). As to this Clause, we accept the criticism passed during the Second Reading discussion, that thirty years perhaps is not a fair limit, more especially so far as drainage is concerned, and that therefore we ought to extend it. Our present view is that it ought to be fifty years.
  Sir G. YOUNGER: Not enough.
  Mr. LLOYD GEORGE: That is all I have to say at present. Inasmuch as it is not a valuation which it is proposed should be acted upon immediately, and inasmuch as it is a valuation which right hon. Gentlemen opposite may wish to use in future, all we want is a record of everything which Members of the House think it is desirable or necessary should be known in order to arrive at a fair basis of taxation. It is purely a record, and therefore if hon. Members on the other side of the House think that there are some other facts which ought to be officially ascertained with the view of deciding when the time comes what the basis of taxation should be, I am perfectly prepared to accept an Amendment which will constitute an instruction to the
  valuers to ascertain the facts. For instance, I do not say absolutely that there should be nothing recorded beyond fifty years. I should not object to any words being inserted in Clause 11, which would constitute an instruction to the valuers to ascertain the facts, so that they would be on record when the House comes to deal with the question of taxation, and if they came to the conclusion that fifty years is insufficient, these other facts ought to be recorded, so that it will not be necessary to make any fresh valuation.
  Mr. PRETYMAN: Is it necessary to make a valuation now?
  Mr. LLOYD GEORGE: You have to make a valuation. The valuation will take at least years before it can come into operation, and the sooner you begin to ascertain the facts the better. The same thing applies to the question of the full site value. Some of my hon. Friends want to ascertain the facts to enable that to be arrived at. A record can be kept of all these figures and facts.
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  I think there are two Amendments down which provide for the exemption of the non-Income Taxpayer with respect to Undeveloped Land and Reversion Duty. These we will consider. I think that covers the whole of the ground of the Amendments in substance.
  Mr. CHIOZZA MONEY: What about Reversion Duty?
  Mr. LLOYD GEORGE: I think the Amendments I have mentioned cover the whole ground. Whether there may be drafting Amendments or not, I am not prepared at present to say. My statement represents substantially the Amendments we are prepared to accept. I think, on the whole, we have met the criticism which was directed to the Clauses of the Bill by the hon. and gallant Gentleman (Mr. Pretyman) and others on the opposite side of the House, and which was directed also to them by hon. Members on this side as well. Unless the hon. and gallant Gentleman has something to say I hope we shall now be able to proceed with the discussion.
  Mr. PRETYMAN: I think it will be for the convenience of the Committee if I say a few words on the statement made by the Chancellor of the Exchequer and indicate our views. Although it is a little bit unusual to discuss Amendments in this way, I think I may say that at this time of the Session it appears to me that we are justified in doing it. I do not propose to go any further than the Chancellor of the Exchequer did in discussing these Amendments. We are very glad to hear that there is to be another opportunity offered next Session, but I noted the very careful and guarded language of the right hon. Gentleman. The expression he used was that the Government propose to bring in a Bill dealing with revenue early in the Session. This Bill was brought in early in the Session.
  Mr. LLOYD GEORGEindicated dissent.
  Mr. PRETYMAN: Yes, this Bill was brought in about three months ago, and I think before we can substitute that promise of the right hon. Gentleman for the opportunity of discussion under this Bill we would like the Chancellor of the Exchequer to give an undertaking that the Revenue Bill next Session will not only be brought in, but carried through at an early period, or a comparatively early period, of the Session.
  Mr. LLOYD GEORGE:I think so.
  Mr. PRETYMAN: The right hon. Gentleman thinks he can do that, It is very material. As to the position of the Government on this Bill, I think we may accept the Amendments on Clause 1 as satisfactory on the whole. There will have to be a short discussion on the question of the Improvement Commissioners. The Chancellor did not refer to Clause 2, which will involve some discussion. There are points arising on the Lumsden Judgment delivered yesterday by the Court of Appeal, connected with Clause 2, as to which we shall be bound to raise certain considerations before the Committee. On Clauses 4 and 5 there are Amendments which raise points which will have to be discussed as to Reversion Duty. The right hon. Gentleman will find that the Amendment which stands in the name of the bon and learned Gentleman the Member for Kingston is an Amendment of substance which goes to the root of the matter. It covers the point raised by the hon. and learned Member for Cork (Mr. T. M. Healy), and I understand that he will be prepared to accept the Amendment as one which meets the difficulty better and more comprehensively than his own. There will be a question of order arising on Clause 6 as to whether it will not increase the charge on the subject. That will be a matter which, when we come to it, will
  be put before you. As to Clause 11, I understand that I should not be in order in raising the point now, but I only desire to indicate to the House that I propose to ask you whether it is within the scope of the Bill. It does appear to me to be very inconvenient that a question which is connected with valuation, and has no connection with finance or revenue in any shape or form, should be introduced into a revenue Bill. The Chancellor of the Exchequer said nothing about the new Clauses which are down. In regard to one of them I am sure that the hon. Member for Ayr Burghs will feel that a pledge was given to the Committee that something must be done to remedy the position in regard to Clause 2 of the Revenue Bill of last year. I am glad to see that the Attorney-General assents to that, because costly litigation has now begun through the unfortunate blunder made by the House at two o'clock in the morning, and in the interests of private individuals, the trade, and litigants, we are bound to put the matter right and not to see this costly litigation continued. I take it that
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  this is a matter which is really agreed by both sides of the House. Therefore, I hope that the new Clause will be dealt with. As to the others, we must reserve the position until we see how long it takes to get through the Bill itself. I hope what has been said now will facilitate the passage of the Bill. The Chancellor of the Exchequer cannot expect that important points can go wholly undiscussed. It is the general desire on both sides of the House to get the Bill through, but, of course, no undertaking can be given on this side of the House that hon. Members will not raise points of substance which they have placed on the Paper.
  Sir RYLAND ADKINSmade some observations which were inaudible.
  Mr. T. M. HEALY(was understood to say): The Amendment to Clause 9 standing in the names of the hon. Member for Sleaford and the hon. Member for Kingston may be a preferable way of dealing with the matter which has been referred to by the hon. and gallant Gentleman (Mr. Pretyman). I was only attempting to deal with the Irish case, but this is the general case, and I shall be glad to hear a statement on the subject.
  Mr. LLOYD GEORGE: What the hon. and gallant Gentleman wants is an assurance that the discussion on the Committee stage of the Revenue Bill next Session will not be put off until towards the end of the Session. He cannot possibly ask that it should be taken before April. I do not know whether we shall meet early or late. The later the better, I should say, in the interests of Members, but as he knows very well the time is taken up so completely with financial business up to the 31st of March that no progress can be made with any Bill at all. What he wants is that when the Session is fairly fresh we shall have a discussion on the Revenue Bill. That I am prepared to undertake on behalf of the Government.
  Mr. JAMES HOPE: Will it take precedence of the House of Lords Reform Bill?
  Mr. LLOYD GEORGE: I think that I had better not enter into any controversial matters of that kind. I am afraid that it would not facilitate the progress of the Revenue Bill. In reference to Clause 9, of course, the Amendment in the names of the hon. Member for Sleaford and the hon. Member for Kingston must be dealt with, and also Clause 11. I should like to have had the Committee stage through to-day

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  if possible, and I promise this, that between now and the Report stage I shall be glad to meet not merely my hon. and learned Friend, but anyone else on either side who has got any suggestions with regard to that Clause, and to move an agreed Amendment on the Report stage. Inasmuch as it does not impose a charge on the subject, and as I conceive that the Amendment that my hon. and learned Friend is pressing for would rather have the effect of diminishing any possible charge, there would be no difficulty in inserting an Amendment of the kind on the Report stage if we get the Bill. If after consultation we could have an Amendment of that kind before the Report stage we would get a much better Bill, as a whole. I understand that my hon. Friend is the authority with regard to drafting an Amendment with regard to this Clause last year, and if there is an agreed Clause of this kind I am sure that the Committee, as a whole, would be glad to adopt it.
  Sir G. YOUNGER: I took advantage of the right hon. Gentleman's offer to see the Government draftsman, and I have put on the Paper to-day a Clause which I think will meet the point. Whether the Clause may be quite satisfactory I cannot say, because I have consulted no one whatever.
  Mr. T. M. HEALY(was understood to say): Can we have an assurance from the. Chancellor of the Exchequer that the Clause will remove the grievance to which I called attention?
  Mr. LLOYD GEORGE: I shall consider it between now and the Clause.
  Mr. DUNDAS WHITE: It would not be in order now to discuss the merits of Clause 11, but I would like the Committee and the right hon. Gentleman to know that there arc some Members on this side of the House and some on the other who hold strong views as to some Amendments along those lines and I venture to hope we will have the opportunity of discussing that Clause.
  Motion, by leave, withdrawn.
  Mr. DUNDAS WHITE(who had given notice to move at the beginning of the Clause, to insert the words: "From and after the passing of this Act.")
  For the convenience of the Committee, and in view of the general desire to proceed at once to the Amendments which have been outlined, my hon. Friends and
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  myself have decided not to ask the Committee to go into the merits of these Amendments. Accordingly I do not move.
  Amendments made: Leave out the words. "which is the transfer on sale of the fee simple of the land or any interest in the land or the grant of any lease of the land."
  In paragraph (a), leave out the words, "where the occasion is the transfer on sale of the fee simple of the land." [Mr. Cassel.]
  Mr. CASSELhad given notice to move to leave out the words "of the consideration on any such transfer or grant is proved to the Commissioners of Inland Revenue ["in this Act referred to as the Commissioners"] to have," and insert the words "from which deductions are made for the purpose of arriving at the site value of the land on the occasion, has."
  Mr. LLOYD GEORGE: I will accept that Amendment in another form.
  Mr. CASSEL: I think it would not read in the form suggested, and I had better move it as it is on the Paper. The reason for moving is this, that you are dealing with every occasion, whatever you start to, make a deduction from. I intend to provide that in addition to the deductions already provided by Section 25 (4), this new deduction shall be made. It is, I think, consequential on the original Amendment leaving out certain words.
  Mr. LLOYD GEORGE: The hon. and learned Gentleman will quite see what I want to safeguard. I think it is important that the onus of proof should be cast on those who say they have given financial assistance that has affected the value. I am not at all sure that the value "from which deductions are made" is proof to, the Commissioners. If I can find some way by which the Commissioners are safeguarded I shall be happy to accept the Amendment.
  The CHAIRMAN: It is not quite clear as it appears, and perhaps it would be better to put the Amendment in the form of leaving out the words "of the consideration on any such transfer or grant."
  Mr. CASSEL: I beg to move, in paragraph (a), to leave out the words "of the consideration of any such transfer or grant," and to insert instead thereof the words "from which deductions are made for the purpose of arriving at the site value of the land on the occasion."
  Amendment agreed to.
  Mr. PRETYMAN: I beg to move to leave out the words "is proved to the Commissioners of Inland Revenue ["in this Act referred to as the Commissioners"] to have," and to insert instead thereof the word "has."
  I move the omission of these words, although the Chancellor of the Exchequer has indicated his objection to the Amendment. I do not ask for any favour to one side or the other. I do not ask that those who claim these deductions should not have to prove them. All I ask is that both parties should stand on a level, knowing that these deductions, if properly claimed, will be allowed. The inclusion of the words has in practice created very great difficulty. Why are the Commissioners to be the judges? That is what I object to. The Commissioners are raised into the position of judges, which is not one that they really have. The effect of these words upon those against whom claims are made is very unfortunate, because they naturally feel that they have to prove their claims to the Commissioners, and the Commissioners may decide. I know that the decision is not final. But the words appear to me to be either mischievous or to have no object. I cannot see what is gained by their insertion. What the House said and desired to enact was that where these deductions could be properly claimed they should be allowed. It is purely a question between the Crown, Who may claim the duty, and the subject, who may desire that the duty should be reduced because he can prove certain expenditure. Why should it be necessary to insert these words at all? I do not see what good the words can do, unless the Commissioners have some other power outside that of being merely parties to a claim. What I understand the House enacted is that the Commissioners, on behalf of the Crown, are parties to a claim if that claim is contested, and that is all.
  Mr. LLOYD GEORGE: The onus of proof must be upon those who claim that the financial assistance they have negotiated has increased the price of the land. The only objection the hon. Member has to the inclusion of these words is that he thinks that somehow or other they give an undue bias in favour of the Commissioners. But if you omit the words the Courts will come to the conclusion that there was some special reason for so doing, because this Bill will have to be
  948
  read with the Act of 1909. In that Act the words "proved to the Commissioners" were always used in connection with claims for deductions. For instance, Section 25 (4) (b) says:—
  "any part of the total value which is proved to the Commissioners to be directly attributable to works executed or expenditure of a capital nature incurred.…"
  This is practically a part of that—
  Mr. PRETYMAN: In order to save time I will not press the Amendment if the Chancellor of the Exchequer will undertake to give consideration to Amendments which will be put down to the Revenue Bill of next Session dealing with the whole question of these words in both Acts. I do not ask him to say now that he will accept them.
  Mr. LLOYD GEORGE: I will do that.
  Mr. PRETYMAN: We can raise the whole question then.
  Amendment, by leave, withdrawn.
  Mr. CASSEL: I beg to move to leave out the words "by the vendor or lessor" ["financial assistance given by the vendor or lessor."]
  I should like to draw the attention of the right hon. Gentleman to another point which may affect the form of words to be adopted. The words I propose to substitute here are "any person interested in the land." But as the Clause is worded it may work serious injustice, as it will result in throwing the Increment Value Duty upon the purchaser in the case in question. As the matter stands at present the vendor is going to make the deduction. He has to pay the Increment Value Duty himself on the amount by which he has increased the value of the property by the efforts he has made or whatever it may be. In future it will be deducted by him, so that the site value will be fixed at a lower figure by that amount. Therefore, when the purchaser comes to resell, he will have to pay more Increment Duty, because he will pay on a difference increased by the amount of the deduction. Suppose the site value of a property is £1,000, and this deduction is £500. If a man sold the property, under the law as it stands at present, he would have to pay Increment Duty on £1,000. Under this Bill he will have to pay on only £500. But what about the purchaser? The site value, instead of being registered at £1,000, is

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  registered at £500, so that if the purchaser resells at, say, £2,000, instead of having to pay on £1,000, he will have to pay on £1,500. In the result the unfortunate purchaser has to pay on that very increase in the property for which he has paid the vendor. That is obviously an absurdity. Either you must adopt words here in place of "the vendor or lessor" or you must insert a provision that for the purpose of future assessments the Increment Duty on the amount of that deduction shall be deemed to have been paid.
  Mr. LLOYD GEORGE: Which Amendment is the hon. Member moving?
  Mr. CASSEL: I am suggesting alternative Amendments. If my first suggestion is adopted in a wide enough form, the later Amendment will be unnecessary. I think the words "any person interested in the land" are sufficient, because if those words are inserted the purchaser will also claim the deduction. I think I have here words wide enough to cover the case, and it would be well to amend the Clause in this way.
  Mr. LLOYD GEORGE: We have words here that go further than those of the hon. and learned Gentleman. We propose to amalgamate the words of the hon. and learned Gentleman and those of the hon. Gentleman behind me (Mr. Cecil Harms-worth). Perhaps the hon. and learned Gentleman will move the words, "or any person acting in behalf of or solely in the interest of such person."
  Mr. CASSEL: I will move them in that form.
  Question, "To leave out the words 'by the vendor or lessor,'" put, and agreed to.
  Mr. CASSEL: I beg to move, in Subsection (1), paragraph (a), after the words "financial assistance" ["financial assistance given by the vendor or lessor"], to insert the words, "by any person interested in the land or any person acting on behalf of or solely in the interests of any person so interested."
  Mr. LLOYD GEORGE: If the hon. and learned Gentleman thinks these words are insufficient, we will consider them on Report.
  Mr. PRETYMAN: We must have them in the past tense, or the Amendment at the end of the Sub-section—which I think is perhaps the most convenient form
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  although it is very difficult to express a decided opinion. It is quite obvious, unless this is put in the past tense, the matter goes even further than suggested by the right hon. Gentleman. If the person who is going to buy the property is to be subjected to the Increment Value Duty on the next transfer he will simply discount that in his purchase, and the difference will simply be this, that the vendor, instead of paying the Increment Value Duty to the Government, will have to pay it in respect of the less price for his property, and the Government will not get it until the next sale.
  1.0 P.M.
  Mr. LLOYD GEORGE: I will undertake that if these words do not carry out the object of the hon. and learned Gentleman and of the hon. and gallant Gentleman that we will deal with the matter on the Report stage. We have exactly the same object in view as hon. Gentlemen opposite. The point has got to be met, and if these words do not meet it I will accept others.
  Question, "That those words be there inserted," put, and agreed to.
  In Sub-section (1), paragraph (a), leave out the words, "the vendor or lessor" ["son the part of the vendor or lessor"], and insert instead thereof "any such person as aforesaid."
  Mr. CASSEL: I beg to move, in Subsection (1), to leave out paragraph (b).
  Question put, and agreed to.
  Question proposed, "That the Clause, as amended, stand part of the Bill."
  Mr. ROYDS: I would like to be satisfied that this Clause will not whittle down the rights of the taxpayers under Section 25, Sub-section (4), paragraph (b) of the principal Act on the occasions specified. It is a matter of considerable importance. I do not quite know why this Clause was introduced; it does not apply to the original valuation. I would like to ask the right hon. Gentleman if the Commissioners have not in fact already refused deductions. The paragraph of the Act that I have mentioned appears to be quite as wide as any of the words of this new Sub - section. Section 24 (4) (b) shows that matters personal to the occupier or other persons in the land shall be deducted. It seems to me very curious that the Commissioners

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  do not allow deductions for financial arrangements such as are suggested by this Section. I should like to know whether this Clause is introduced because the Commissioners have refused deductions of that kind. If the Commissioners have refused them they have taken a very narrow view of the construction of the Section.
  Mr. LLOYD GEORGE: I think the hon. Member has raised a point we must consider. I should not like to give an answer straight away, but should like to consult the authorities. We introduced this under very strong pressure from the builders, who were under the impression that the Commissioners did not allow this kind of financial arrangement. I will consider the point, and if an Amendment is introduced at all it would be an Amendment in the direction of reducing the burden upon the subject. It is evidently a matter for consideration on Report.
  Mr. PETO: I should like to ask whether it is not perfectly obvious that the words put in in line 19, "the more people who claim a deduction because of financial assistance the more certain you are to increase the amount of Increment Duty payable on any subsequent occasion." It seems to me the words put in do not meet the case at all.
  Mr. LLOYD GEORGE: If they do not meet the case, I have already given an undertaking that we shall certainly insert words which will meet the case. We agree with the hon. Member the case ought to be met.
  Mr. JAMES HOPE: Would the right hon. Gentleman, on Report stage, undertake to recommit in regard to this Clause?
  Mr. LLOYD GEORGE: Yes, if necessary.
  Mr. CECIL HARMSWORTH: I should like to thank the Chancellor of the Exchequer for his attitude towards the Amendments standing in my name. [HON. MEMBERS: "Speak up."] I gather from the assurance of the Chancellor, that these Amendments will be gratefully accepted by those on whose behalf I moved.
  Question, "That the Clause, as amended, stand part of the Bill," put, and agreed to.

  CLAUSE 2.—(Ascertainment of Increment Value where the Value of Buildings exceeds the Value of the Site).
  Where it appears to the Commissioners on any occasion for the collection of Increment Value Duty, which is a transfer on sale of the fee simple of land, or of any interest in land, or the grant of any lease of land, that the amount of the gross value of the land is more than double the amount of the full site value of the land, the site value of the land on the occasion, if the person chargeable with duty so requires, shall instead of being calculated under Section 2 of the Finance (1909–10) Act, 1910, (in this Act referred to as "the principal Act") be taken to be the site value of the land estimated as on that occasion in accordance with the general provisions of the principal Act as to valuation, with the substitution of the date of the occasion for the thirtieth day of April, nineteen hundred and nine.
  Mr. ROYDS: I beg to move, to leave out the words "that the amount of the gross value of the land is more than double the amount of the full site value of the land."
  It appears to me this Clause is the very kernel of the Bill and I think the Bill is introduced to carry out the provisions contained in this Clause. The Clause, as it stands, is not quite satisfactory. The need for the Clause is because claims for Increment Value Duty have been made where there has been no rise in the value of the land. I think it is hardly understood that the whole basis of Increment Value Duty was that it was only to be charged when there was a rise in the bare value of the-land after 30th April, 1909. But claims have been made where there was no rise in the value of the site, and these claims have been contested in the Law Courts. Such claims were made in the Lumsden case and in the Richmond case; in the Lumsden case it was a charge upon the builder's profits, and in the Richmond case it was a charge upon the profits of a private individual, where there had been no profit, but where there had been an actual loss. Both claims were made upon the ground that the properties were sold for more than they were worth, although in one case it was the builder's profit, and in the other it was an actual less, and in neither case had there been any rise in the value since 1909. That was admitted by the Government valuer as well as by the valuer for the

  953
  owner. The Chancellor of the Exchequer justifies the claim for Increment Value Duty in these two cases on the ground that the property had been sold in both cases for more than it was worth, and that the excess of price was in the nature of a fortuitous windfall. In neither case had there been any rise in the value of the land. These claims are, I think, only possible because of the White Paper instructions issued some time ago. By these instructions the valuers were empowered or directed in arriving at the value of property to disregard the price. The price was wholly divorced from their calculation, and it was in consequence of these instructions that it has been possible to make these claims at all. My opinion has always been, and is still, that if these White Paper instructions were withdrawn, there would be no need for this Clause at all, and the position would be far more satisfactory than if this Clause was adopted in the form in which it is put forward. And that we have good ground for taking that view is, I think, clearly shown by the judgment of Lord Justice Swinfen Eady, which endorsed in its entirety the line we have been taking.
  The CHAIRMAN: The hon. Member appears to be discussing the Clause as a whole. That can be done when we dispose of the Amendments. This Amendment proposes to leave out certain words "that the amount of the gross value of the land is more than double the amount of the full site value of the land." That is quite a small point.
  Mr. ROYDS: It appears to be a small point, and 1 really could not explain the effect of these words unless I led up to it by a short statement. I am not making that statement with any other purpose than that of enabling the Committee to 'understand the introduction of these words. It now appears from the judgment of Lord Justice Swinfen Eady that the Commissioners were perfectly wrong in taking another course and in issuing these White Paper instructions directing the purchase price to be disregarded. The figures that we are anxious to get are those of the bare value of the land. This White Paper enabled the valuer to disregard the price, and so we have had all this trouble. Had the Government not issued the White Paper instructions, or if they were to withdraw them, there would be no need for this Clause at all. At the eleventh hour they have introduced this Clause,
  954
  and the effect of it will be, if it is passed, that in the future the increment value will be collected as a matter of pure valuation, but it will not be payable unless there has been a rise in the value of the site. Unfortunately, this Clause, as prepared by the Government, only relates to what is called composite property, and it has to be of a particular nature and the gross value has to be double the value of the full site. That means that it will cover an average house and land, but not agricultural land or property with a house upon it where the house is not double the value of the laud. Therefore, a very great part of the land of the country will be excluded.
  The effect of the Clause will be that this pernicious system, which the House has never before sanctioned, of taxing land where there has been no rise in the value of the site, will be continued in regard to all land which does not come within the rule that the gross value is double the value of the site. The object of my Clause is to make this new provision extend to all land without regard to the comparative value of the gross and full site value. I should like to make it clear that the effect of this Clause will be that the increment will be assessed on the difference between the two values—that is, the original value and the value on the occasion. The price which the owner gets will have nothing to do with it. The owner may snake a profit or a loss. He may get a higher price or he may sell it at less than it is worth, but none of those facts influence the amount of the increment. A statutory defined benefit is being set up in this case. In the case of reversion the benefit is deemed to be not the cash that comes into the man's pocket, not the benefit 'which he actually receives, but a statutory defined benefit, which is very often a great deal less than the benefit he actually receives. The effect of this Clause will be that you are setting up a statutory defined increment and the Increment Duty to be paid will have no relation to the cash that comes into the man's pocket or his profit or loss on the transaction.
  This Clause will put a direct premium upon owners to exact as high a price for their property as possible, because if they sell for less they will have to pay on the value placed upon it by the Government valuer. If an owner of land sells a piece of land for a chapel or a school or institute at less than its full value, say,

  955
  for £300 when it is worth £500, he would be assessed on the £500, although he was willing to sell the land for £300 for this particular purpose. If this Clause is passed into law it will have that effect. It removes one grievance and it does confine the taxation to a rise in the site value of land. My Amendment extends that concession to all lands, whether it is composite property or not, whereas the Clause as inserted in the Bill confines it to composite property only and leaves it open to the Government to continue this irregular process of taxing land where there has been no rise in the value of the site. The House, I am sure, will desire to reinstate itself in the position in which it was when it authorised this tax upon a bonâ fide rise in site value. This Clause brings us back to that position, and the House has never sanctioned, and I hope will not sanction to-day, any taxation except upon a bonâfide rise in the value of land.
  The CHAIRMAN: May I point out that I do not think it is desirable to discuss the Clause as a whole on this Amendment?
  Sir J. TUDOR WALTERS: This Amendment is the very way to arrive at the unfortunate position where a landowner may sell land for less than it is worth. That could only be accomplished by accepting the Amendment of the hon. Gentleman opposite. The difficulty we are faced with in the Lumsden Judgment and in the matter of builders' profits is the difficulty of finding out the price that has been obtained for a composite property of land and buildings. If you sell merely land and take the price paid for the land, it presents no difficulty, because it does not require any dissection. It is a definite price, and the process of calculation is very simple, but the difficulty arises when you sell a composite property—namely, a house standing on a piece of land and you want to find out the value of the land. You find it out by a process of deduction. You take the price paid for the composite property and deduct the value of the bricks and mortar and you assume that the remainder is land. That is where the great hardship arises because that means all the profit and all the windfall in the sale of a house is brought into the site value and on that you have to pay increment. These words simply say that when you sell a house and land for a
  956
  certain fixed price instead of arriving at the site value by that complicated and unsatisfactory process of deduction you simply put this one question, what is the site of this house worth if divested of the buildings? You have it in the original valuation and you get it on an occasion, and, unless it has risen in value, you will not pay Increment Duty and not one penny will be attributed to the buildings. I think that the particular words the Chancellor of the Exchequer has adopted safeguard the matter of land. It is because of the exceedingly complicated nature of the Act that you must have some device of this kind. I am not putting it forward as ideal, but, having found it almost impossible to assess the increment on a piece of land on which there is a building when you have only the composite price before you, you must adopt some words of this sort and to omit the words as suggested would make nonsense.
  Mr. PRETYMAN: I agree to a certain extent with the hon. Gentleman who has deep knowledge of the subject, but he did not really deal with the point. Why should you draw the line at the case where the buildings are of greater value than the land? That is the whole point of the Amendment. The hon. Member has pointed out that these Amendments are caused by the extraordinary complication of the principal Act, and we are in a great difficulty in passing legislation of this character which must impose heavy burdens on the subject in the form of taxation quite outside the taxes imposed. We ought, therefore, to take care not to tax people we do not intend to tax. The Clause with these words in draws an arbitrary line. The owner of any composite property where the buildings are of higher value than the land upon which they stand gets a privilege conferred by this Clause, because if the sale price involves an increment he will have the alternative of asking that the land should be revalued, and of paying only on the difference between the original value and the value on the occasion. That privilege is not conferred on all composite property, but only on that particular kind where the value of the buildings exceeds the value of the land on which they stand. On what possible ground is that distinction made? I suppose that the Chancellor of the Exchequer will say that it is necessary to draw the line somewhere. I do not see why it is necessary to draw the line, or why the owner of any land with buildings upon it should not have the

  957
  right to claim this particular option which is conferred by this Clause. There are many trades and industries where the value of the buildings upon the land does not exceed the value of the land, and why those particular properties should be excluded from this benefit I fail to under-
  stand. Perhaps the Chancellor of the Exchequer will explain why he has thought it necessary to draw this line.
  Mr. LLOYD GEORGE: That is what I propose to do. I cannot follow the hon. Member (Mr. Royds) into what seemed to me to be a general dissertation, not merely upon this Clause, but also upon some of the difficulties outside the Clause altogether. The point is a very small one. I am asked, "Why should you draw a distinction between land where the buildings exceed a certain value in reference to the land and land where the buildings are beneath that value?" I want to safeguard this case: There is a piece of land which is valued at £50 or £100 an acre and is not worth more. The moment there is a public demand for it for a communal purpose and the county council buys it for the purpose of building a school, a charge of £900 or £1,000 is made in respect of the land. There are many cases of that kind. I have seen worthless pieces of waste land sold at extravagant prices purely because the community wanted the land for a public purpose. I do not see why, when you bring in a Clause for the purpose of protecting the builder against having his profit taxed, you should give the protection to the person who really spends no money upon the land. The difficulty in the case of composite property is to value the site of the building. It is difficult to say how much increment is due to the buildings and how much to the land. There was a danger that you might attribute an increase in the value of the land to what was really due to the skill of the builder as a salesman, and therefore, in order to protect people like Mr. Lumsden, we have introduced this Clause, but we do not want to let the other vendor of land escape. I agree that the hon. and gallant Gentleman put very fairly the argument which I would urge in answer to his criticism. I say that you must draw the line at some point or other, and I say that this is a very fair way of putting it. In the vast majority of cases this would really only be covering the case where the value of the building was insignificant in comparison with the value of the land.
  Mr. PRETYMAN: You are introducing an unnecessary complication. I quite take the right hon. Gentleman's point and that the House would not wish to exempt such a case. There would otherwise be no object in having an Increment Duty. It exists for the purpose of the case of a piece of land such as the right hon. Gentleman described which apparently has no great value and which is sold for a very much higher value. I venture to suggest, however, that his point is met by this ordinary fact referred to in Lord Justice Swinfen Eady's judgment. When land is sold at a certain price, unless there is some strong reason to the contrary, the fact of it having been sold for that price is absolute evidence of its value. Is it conceivable, supposing a man succeeded in selling a piece of land to a public authority for £1,000, and he was charged Increment Duty on the basis of that sale, that any Court would decide that £1,000 was not the value of the land? If it did, the public authority would be convicted of having committed an act absolutely contrary to their duty. If the public authority buys the land at a certain price, I believe any Court Would hold that that price is the value of the land. There is the protection.
  Mr. LLOYD GEORGE: Assuming Increment Duty is to be levied at all, then that is a fair case, and it is merely a question, of introducing words which will meet it. I cannot think of any better form of words than those I have suggested. But I cannot agree that you can leave it to be dealt with as a matter of ordinary interpretation. Suppose you have to value the land a second time, would any value say that, the site value had gone up from £50 to £1,000 in a year or so? Is it not the case that the landowner has taken advantage of the needs of the community to secure, a price which is out of proportion to the real value of the land?
  Sir F. BANBURY: The seller takes advantage of the demand in order to get his price.
  Mr. LLOYD GEORGE: I am not criticising the action of the vendor. I only say it is a case in which he should pay Increment Duty. Does the hon. Baronet deny-that?
  Sir F. BANBURY: I do.
  Mr. LLOYD GEORGE: Then the hon. Baronet is not in agreement with the hon. and gallant Gentleman who replied to me.
  Mr. PRETYMAN: I think the House is trying to legislate on a fiction. Market price does not mean value, and if you go into that region of hypothesis and begin to argue thereupon, if you begin to say the price may be one thing and the value something wholly different—and such a case might conceivably arise—you will do a great deal more harm than good by imagining such a case. A man will always get the best price he can, and, in the absence of any proof to the contrary, the price paid for a particular piece of land would be accepted in any Court of Law as evidence of the value of that piece of land. But that has nothing to do with the value of the adjoining piece of land. If a similar demand subsequently arose for the adjoining piece of land, it might fetch the same price or it might not. But we need not legislate for imaginary cases of that kind.
  Mr. LLOYD GEORGE: We have to safeguard ourselves in cases of that kind. Assuming that Increment Duty is to be levied, that is a case in which it should be paid, and I want to get some words into the Bill which will make it perfectly clear that in such a case the vendor is liable to Increment Duty on the difference between the recorded value of the land and the price which he gets for it. If the words I have suggested do not command the assent of hon. Gentlemen opposite, I am quite willing to accept any other words which will meet the case, but I cannot agree that it would be conclusive evidence of the value of the land, that £1,000 has been paid for it. Unless I get something clearer to make the man liable in such a case I must adhere to the words which appear here.
  Sir F. BANBURY: The right hon. Gentleman asked me if I approved of the Increment Duty. I was bound to give a truthful answer, and I said I do not approve of it. But that has nothing to do with the question now before the Committee. That question is that the gross value shall be determined by the price which is obtained for that niece of land in the open market, and my hon. Friend desires to leave out words in order that, instead of having a hypothetical value put on the gross value of the land, a value which merely originates in the brain of certain people who are sent down, what the land actually fetches shall be taken to be the gross value. That is the question at issue, I take it, before the Committee.
  Mr. LLOYD GEORGE: It certainly is not.
  The CHAIRMAN: I do not think the hon. Baronet can have read the Amendment.
  Sir G. YOUNGER: I only want to say I entirely agree with the hon. and gallant Member for Chelmsford that in the case which the right hon. Gentleman has put forward, where land is purchased for school purposes, if Increment Duty is to be levied at all, it is perfectly right it should be levied in that case. But why in the world should you put into the Clause words which, while restricting the advantage to the builder, will take away the advantage from other people. Why adopt a form of words which is going to restrict it to cases where the composite value of the property is not double the amount of the land value? It is ridiculous to use a form of words which will give the advantage to one and take it away from the other.
  Mr. CASSEL: It seems to me that the Amendment has been lost sight of in the discussion. What is the unit of the land? It depends on the accident of the amount of land which is included in one particular sale or lease. You may have a case where the land is sold in two plots. This Section would apply if the land was all sold in one plot, but not in the case where it was sold in two plots. It might apply if both plots were sold separately, but if they were sold together it might not apply because you would have more land, and the land and buildings together would not be worth more than the price obtained for the land. Suppose the unit is an estate under development with two or three buildings on it, and the larger part still undeveloped. If the whole unit was included in one sale, the gross value would not be more than double the site value. But if, instead of selling in one piece you sold it in two separate pieces on two separate occasions, then the one piece which had the building on it would get the benefit of the Section. It would depend on the mere accident of the quantity of land which happens to be included in one particular transaction. Surely that is unreasonable. We have had it clearly expressed by the Court of Appeal that the Act as it stands at present taxes builders' profits, and I submit that the right hen. Gentleman has to make it perfectly clear that in no case shall builders' profits be taxed and that it shall not depend on the

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  mere accident of the partition of land included in any particular transaction. I submit that this form of words would only be sufficient to exempt the builder from taxation in the case where the partition of land was so arranged as to work out that the composite property was worth more than twice the value of the land. As to the danger which the right hon. Gentleman apprehends in the case of the school to which he referred, I think that is imaginary.
  Mr. LLOYD GEORGE: Oh, no!
  Mr. CASSEL: I agree it aught to be subject to Increment Duty.
  Mr. LLOYD GEORGE: I had a case in my own county.
  Mr. CASSEL: I did not say these were imaginary cases. What I said was that the fear of the right hon. Gentleman that in a case of that kind the land would not be subject to Increment Value Duty, even if he accepted this Amendment, is imaginary. What is it the valuer has to say? He is asked to say what the property might be expected to realise. He knows that the land for this school has realised a certain amount. You imagine that a valuer goes down, and, knowing it has realised a certain amount, that he erroneously proceeds to say it may be expected to realise something quite different. That is really the imaginary danger with which the right hon. Gentleman is dealing. So far as these particular words are concerned, I think they are subject to the criticism that I pointed out in regard to the mere accident of the sale of a particular plot.
  Mr. LLOYD GEORGE: I do not want to dispute about mere wards, so long as the Opposition agree in substance. If the Opposition agree that the sort of case I have indicated is the fair subject matter for taxation, I do not want to have a dispute as to the mere form of words to be used for the purpose of meeting a case of that kind. I will promise this, that I will consider with my advisers, between now and the Report stage, whether some other form of words could not be adopted which would not be open to the objections hon. Gentlemen opposite have pointed out. I may say I have consulted them since the Debate has arisen, and I am told that hon. Members are not right in saying that in a case of that kind you would be safe under the new Clause in getting the Increment Duty on the basis of the price which has
  962
  been paid for the land. If that is the case, I really cannot let these words go until am certain of getting other words which meet the case better. If the hon. and gallant Gentleman will, with me, try to find some words between now and the Report stage, I shall be glad. If he is not satisfied, of course it will be open to him to press the matter further. I think I have met the criticisms quite reasonably.
  Mr. PRETYMAN: In view of the promise made by the Chancellor of the Exchequer, I advise my hon. Friend not to press the Amendment. May I remind the Chancellor of the Exchequer that it is not quite fair to say that because you want to catch a crow you must kill several pigeons?
  Mr. LLOYD GEORGE: I agree. What I want is to safeguard the pigeons, but I do want to get at the crows.
  Mr. PRETYMAN: His duty is to safeguard the pigeons, and the only condition upon which he should aim at the crow is that he does not kill the pigeon.
  Mr. LLOYD GEORGE: I agree.
  Mr. ROYDS: I am willing to withdraw my Amendment, but I understand I am not precluded from moving it again on Report stage if we are not satisfied.
  Mr. LLOYD GEORGE: I agree.
  Mr. ROYDS: I entirely agree that in the case he mentioned of land being sold at a higher price it ought to pay Increment Duty, and I do not think there is any chance of that land escaping the duty under the Amendment I have proposed.
  Amendment, by leave, withdrawn.
  Question proposed, "That the Clause stand part of the Bill."
  Mr. POLLOCK: I attach such great importance to this Clause that I hope I may say a word or two upon this Motion, and perhaps I am more likely to be in order than I think the discussion has hitherto been, because I am bound to confess that the caution, if not the ruling, that you, Sir, gave, seems to have been freely disregarded by the Chancellor of the Exchequer. My point is that if the Clause is necessary at all, why should it be limited in its scope? So far as I understand the Amendment which stood in my name as well as in that of the hon. Member for Sleaford (Mr. Royds), I cannot see why you want these words at all. I do not follow the Chancellor of the Exchequer's reason-

  963
  ing up to the present time. Granting that you want some Clause, why should the Clause only obtain in the case where you have got the amount of the gross value of the land as more than double the full site value of the land. I would remind the Committee of what Lord Justice Swinfen Eady has said in the course of his judgment, which is reported in the "Times" of to-day. He says:—
  "It seems strangely anomalous to require after a sale an ex post Facto valuation on what the land might (erroneously) have been expected to realise. I say erroneously, as unless the sum to be arrived at differs from the sum actually realised, there is no object in obtaining the valuation."
  Those words from a very learned judge call attention to the view that it would be erroneous, not merely in cases within the limited scope of this Clause, but in all cases. The judgment goes on to say:—
  "I can find no justification in the Statute for the contention that wherever the price realised is greater than would have been reasonably expected, the whole of the excess in price is to be deemed to be an increment in site value. I have only to construe the Statute by the language used."
  Therefore the whole subject ought to be covered by the Clause. Why do you want words which limit the scope of the Clause? It is on the ground that this Clause, which is designed to remedy a grievance, is framed in narrow language which only takes away a certain number of grievances where a particular ratio can be discovered, that I think the Government ought to have accepted the Amendment which my hon. Friend proposed. With regard to the undertaking given by the Chancellor of the Exchequer, no doubt we are grateful for it, but I desire to point out that if you are to have a Clause for the purpose of really remedying the grievance, you ought to sweep away the whole of the grievance and not make the Clause limited in its scope. If Lord Justice Swinfen Eady's reading of the Statute is right, it is necessary to go back in this Clause to the original intention of the framers of the Act, and do away with all the injustices, not only the injustices where a particular ratio is found to exist.
  Mr. CASSEL: There is an entirely separate point which arises in connection with this Clause. That is, what is to happen if the House of Lords reverses the decision of the Court of Appeal upon this point? I have been trying, with a wet towel round my head, to find out what the effect of the Clause will be in that case,
  964
  but have been quite unable to do so. It ought to be made clear that the effect of the Clause will not prejudice the appeal. The position at present is that the subject in that action has been mulcted in costs notwithstanding the fact that the interpretation put on the Act by the Courts was contrary to the express undertaking of the Chancellor of the Exchequer—so far so that he immediately produced an Amending Bill. In a case of that kind it is extremely hard that he should have to bear the costs and that the Amending Bill might prevent a reversal of the decision with regard to costs in the House of Lords. You have two points of hardship in connection with the costs, first that the subject was only putting the interpretation, which was the very interpretation of the Chancellor of the Exchequer, and when that interpretation is found to be not correct, he produces an amending Bill. In a case of that kind it is a matter of great hardship that the Amending Bill should prevent the subject from reversing the decision in regard to costs which has been given against him. I hope the right hon. Gentleman might be in a position to state that he would reconsider the decision, having asked for costs against the subject in that case, and that at all events he should not be prejudiced in any attempt to recover them or to reverse the decision in the higher tribunal.
  Mr. WHELER: I wish to ask a question which arises out of an undertaking that, the Chancellor of the Exchequer has given. He has already promised to consider on Report a question of great substance, and on the Clause before this he has given an undertaking to consider the matter on Report. Yesterday the Prime Minister could give no undertaking that the Bill would be considered next week at all, anyhow before eleven o'clock, and therefore if on every Clause we are going to have matters of substance put hack to Report, we ought to have some understanding that we shall know where we are and when the Report stage will be taken, because these matters will not be settled at once when they come up, and if they arise after eleven o'clock we shall be in a greater difficulty than we seem to have been already in the first two hours of to-day. If every Clause is to be referred back we shall have a very large Report stage, and if the Bill is passed we ought to have some understanding as to what time will be allotted for that purpose.
  Mr. M'CURDY: I rise for the purpose of making clear, if possible, what is the matter that is to be settled. The discussion seemed to me to proceed almost entirely apart from the Amendment, and sinless it is made clear chat the matter is which is going to be considered, the matters which have arisen under discussion or the matters which arise purely on the Amendment, there is obviously ground for misunderstanding and dispute when we come to the Report stage. In arriving at the increment value of land on a composite subject there are two methods. One is to take the sale price on the occasion as a criterion, subject to deduction, and the other is to have a fresh valuation. As I understand, it is agreed by hon. Gentlemen opposite that so far as the bare land is concerned the method of the principal Act of taking the sale price as a criterion is a satisfactory working method, and it is not desirable to interfere with it. I raise this point because the Amendment we are discussing proposes to abolish that practice in the case of bare land as well as in the case of land and houses. I understand that what hon. Members opposite desire is that so far as composite properties are concerned, the artificial limitation in this Clause, that to valuation where the buildings exceed the value of the land, should be swept away, that the Clause should apply to all composite properties but not to bare land, and that subject to some safeguard being found, the case of a composite property which has been sold at a monopoly price should be protected.
  Mr. PRETYMAN: That is not quite the point. I quite see that if you put in the limitation that any composite property should be exempt someone might put a little bit of a building on the land which would take it out of the category. We want to legislate for this on sound commonsense lines and our view is not to draw a hard and fast line as to whether the buildings are worth more than the land, or by using the words "composite property" to encourage people to get round the Clause. We say by this Amendment, by allowing anyone to claim this you will really cover the case because, of course, the bare land is covered by the ordinary law, but where a man sells a composite property the difficulty arises in allocating the difference in price between land and buildings. This Clause would meet the difficulty in the wrong way. The difficulty does not arise because the Courts have ever held that
  966
  price and value are different. By this Clause you are trying to deal with a difficulty which does not exist. The Courts have never said, and I do not believe they ever will say, that in the absence of some distinct proof to the contrary, if a piece of land, with or without a house on it, has been sold at a certain price, that price is not its value. I do not believe it will be said unless there is some extraordinary reason, which I cannot at present imagine, which makes the case quite utterly exceptional. All we say is that you do not want to alter your test. All you want to do is to give everybody, without exception, the opportunity of proving that the value of the bare land is not greater at the time, or is only to a certain extent greater than it was on the original occasion. What we say on that is that only composite property will escape, and that the man who is selling bare land will come under the. Statute, because he will have no ground for saying that the price which his land fetches is different from its value, whereas the man who has got a composite property, however small or however big, the buildings upon may be, may have a ground for saying that the price which the land fetched does not represent the value of the bare land, because the building upon it was a feature in the value. If it was a poor little building it would be a very small percentage, if it was a large building, or a house, such as is conceived here in this Clause, it would be a very large percentage, but in any case him, and him alone, you automatically protect. You seek for limiting forms of words, you seek to draw a hard and fast line here and there, you never will trust a Court of Law to take a common-sense view, and if you leave the thing to the common-sense view of the Courts of Law, instead of trying to draw up rules and regulations which only confuse the Court of Law and put everyone to work to try and get round them, and leave the thing to work itself out, because the owner of the composite property is the only one who can take such a course, the whole difficulty will disappear.
  The ATTORNEY-GENERAL (Sir Rufus Isaacs): There is nothing in this Clause which would prevent a litigant from getting his costs if he succeeded in reversing the judgment. I cannot find any words which give the faintest justification for that suggestion.
  2.0 P.M.
  Mr. PRETYMAN: Will the right hon. Gentleman answer this point? The Clause will not prejudice the question of costs, but will it prejudice the case before the House of Lords?
  Sir RUFUS ISAACS: Certainly not. The House of Lords will consider the case upon the law as it then stood and not as it is at present.
  Question, "That the Clause stand part of the Bill," put, and agreed to.

  CLAUSE 3.—(Relief of Land from Increment Value Duty while it is Being Developed.)
  (1) Where on any occasion for the collection of Increment Value Duty it is shown to the satisfaction of the Commissioners that land is being or has been developed by or for the purpose of the erection of new buildings; and

  (a) that suitable buildings of a value at the rate of at least five hundred pounds for every acre of land used for or in connection with the buildings or exceeding twice the full site value at the date of the occasion of the land so used have been erected on the land, and that the erection of those buildings was commenced within five years before the date of the occasion; or

  (b) that within five years before the date of the occasion sums at the rate of at least two hundred pounds per acre or exceeding the amount of the full site value of the land have been spent on making suitable roads or sewers on the land, or otherwise suitably preparing the land for development,

  any Increment Value Duty which would but for this Section be collected by the Commissioners on that occasion in respect of the land used for or in connection with the buildings, or the land which has been prepared for development, as the case may be, shall be remitted, and for the purposes of the provisions of the principal Act as to the collection of duty shall be deemed to have been paid.
  (2) Any person who has so erected buildings or spent money as aforesaid, may apply to the Commissioners for a certificate of exemption under this Section in respect of the buildings erected or money spent and the Commissioners, if they are satisfied that the applicant is entitled to such an exemption, shall grant him a certificate accordingly, showing on a plan
  968
  prepared to their satisfaction by the applicant, the land exempted and the time for which it is exempted.
  Mr. PETO: I beg to move, in Subsection (1), to omit the words "it is shown to the satisfaction of the Commissioners."
  The Commissioner's duty under this Clause is quite different from what it was under the other Clauses. In paragraph (a) it has to be proved that suitable buildings have been erected. Then it goes on to say that they are buildings of at least £500 per acre and so forth, and if these words "shall to the satisfaction of the Commissioners" are left in it appears to me that the Committee will be, in fact, setting up a fresh building authority. I do not think the Commissioners are the proper people to decide whether buildings are suitable. They are built according to regulations which vary in different localities. As far as London is concerned they are amply safeguarded under the Building Acts and the by-laws of the London County Council, and they are either suitable or not suitable, according to whether they are in accordance with the laws and by-laws. As to the question of the actual value of the buildings, that introduces a very serious trouble for anyone trying to get the benefit of the provisions of this Clause. It means the production of documents, bills of costs, plans and builders' estimates and all those things, in order to prove to the satisfaction of the Commissioners what is the character of the buildings to be erected. It seems to me it is a question where the onus ought to lie upon the valuer and not upon the person who is claiming exemption. Everyone knows what a difficult business it is to claim a comparatively simple exemption from Income Tax, and if these complicated questions as to site value and as to these houses being worth at least £500 per acre, and still more of there being suitable in some mysterious manner to the satisfaction of the Commissioners, have to be proved before the Clause can be put into operation it will very seldom be found to offer any practicable relief to anyone.
  Sir RUFUS ISAACS: The question itself must be decided, and you must have a tribunal from which to obtain a decision, and I do not really sec how we can accept another tribunal than the one which is suggested, and if you leave out those words the burden must be placed on somebody.
  Mr. PRETYMAN: There is an appeal under the Clause in the original Act.
  Sir RUFUS ISAACS: There will be an appeal in the ordinary way.
  Mr. PRETYMAN: The words are different in this Clause from those of the Clause in the Act.
  Sir RUFUS ISAACS: There may be perhaps a little difference in the language, but I confess that it had not occurred to me that there was any doubt. The only reason why I put in the safeguard was in reference to a point which it occurred to me might raise a doubt. I do not think that there is any doubt about it, but if there is, I will make it clear.
  Mr. PRETYMAN: You will put it right?
  Sir RUFUS ISAACS: Yes.
  Sir ALFRED CRIPPS: The view has been expressed here, and it is also expressed in the Memorandum, that the Clause is intended to relieve the land from increment Value Duty while being developed. I think that is a reform which is most necessary in the terms of the original Act. But the value of it is to be entirely taken away by the insertion of these words, "to the satisfaction of the Commissioners," coupled, as they must be, with the subsequent matters in the Clause. Suppose it were a Clause for the relief of land from Increment Value Duty while it is being developed, that would be a very simple Clause to frame, and you need not bring the Commissioners in at all. You bring them in, and you give them powers in order to limit the general application of Clause 3. When we look to those limitations we see that they practically take away a very large part indeed of the benefit of the whole Clause. The complications introduce, in my view, unnecessary expense, whereas a Clause of this kind ought to be perfectly simple. Why should you not have a Clause of this kind, that while land is being developed it is barred from any Increment Value Duty? There is no reason why you should not, have such a Clause. Directly you introduce these limitations as regards expenses and as regards the number of hundreds of pounds spent, what is the result? You want to know if the land is to be relieved from Increment. Value Duty for a certain number of years, but the whole matter is left in uncertainty, and, the very time when you want security is at the commencement, when the owner is making up his mind as to whether he will develop it or not. If he wanted to borrow money he could not get it, because he
  970
  could not say whether he was secured from the Increment Value Duty, which depends upon the character of the buildings and the number of hundreds of pounds that have been spent. I think the provision of so much expenditure per acre is essentially a wrong one. The best development is where you get the largest amount of surrounding land. What you want is a large open space left in connection with a building for the purposes of light and air. It is in that direction that all modem social improvement has gone as regards building requirements in connection with town development. This proposal is entirely reactionary. Why should a man not have this relief if, in proportion to the land he is going to develop, he spends a comparatively small sum on buildings, and snakes provision for open spaces. On both of these grounds I maintain that the words "to the satisfaction of fie Commissioners" ought not to be introduced at all. You ought to give this relief in the general form which alone is valuable for his purpose. The question of suitability is not one for the Commissioners at all. The main point is that you should not bring in the Commissioners here, but leave it as a business matter between the parties. Let every man know what is the privilege to which he is entitled, in order that he may know from the commencement what, his position will be, and how he ought to make up his mind in developing the estate. We want to restore security, and to do so in this case I think the increment should not be calculated in the way proposed by the Government.
  Sir GEORGE YOUNGER: This appears to be a complicated matter. We have restrictions to deal with at present in connection with the Town Planning Act.
  Mr. PRETYMAN: On a point of Order. I do not think we should press the Amendment as to the Commissioners. We are debating the second Amendment, and I think we might put ourselves in order if we would first of all dispose of the Amendment before the Committee, and not deal with the question of suitability which, though a material point, is different from the other.
  Sir A. CRIPPS: From my point of view, I wish to get these words out of the Clause altogether. I do not want any discretion left to the Commissioners. If the land is

  971
  in process of being developed, I do not see that the Commissioners should interfere at all.
  The DEPUTY-CHAIRMAN (Mr. Lyell): It is perfectly obvious that we cannot discuss the question of leaving out the Commissioners without referring to the other question. The hon. Member is bound to take that into account while discussing whether the words with reference to the Commissioners should be retained in the Clause. If the hon. Member desires to withdraw his Amendment, of course, the other Amendments will then be moved in turn. I am quite unable to separate the various subjects. I cannot rule that the hon. Member is out of order on this Amendment in making a certain amount of allusion to the question of suitability.
  Sir G. YOUNGER: I do not wish to travel into a general discussion on this point. What I say is that we have quite enough of interfering authorities in this matter without having another introduced. In all these town planning schemes nowadays you have got an authority to deal in deciding how a particular estate is to be developed and the ground laid out. In this particular case you are giving the Commissioners the right to interfere even with a scheme of that kind. They might come in and say, "We do not think your scheme suitable. We do not think your buildings are of suitable value." Who are they that they should think about these matters? They have no business to interfere at all. If an estate is being developed, the work is being done in the way the present owner thinks proper. It may be that he wishes to have houses on the ground, or he might wish to have factories. Why should the Commissioners come in at all in the matter? I agree with my hon. Friend (Sir A. Cripps) that Increment Duty should not be charged in the way proposed. I certainly think the proposal that the Commissioners should be entitled to interfere ought to be obliterated altogether.
  Mr. C. BATHURST: It. is clearly impossible to decide that the Commissioners are the proper authority to deal with the matter unless we know what is going to constitute suitability with respect of buildings. We already get in the country districts serious overlapping in all sanitary matters, and we will have still further overlapping by the bringing in of these Commissioners to decide a question in which, as a rule, they will be in no way concerned. I do not in the least know
  972
  what the word suitability means, and I propose presently to put a question to the Attorney-General on the subject. But assuming that suitability brings up the same considerations as now come before district councils, it will lead to overlapping if these matters have to be brought before the Commissioners. As a local administrator, I warmly support the Amendment.
  Mr. JAMES HOPE: Why is it that in each of the first three Clauses of the Bill a different expression is used? In Clause 1 you have "is proved to the Commissioners," in Clause 2 you have the words "it appears to the Commissioners," and in Clause 3 you have the words "it is shown to the satisfaction of the Commissioners." If there is no difference in substance, it would surely be better to have the same language throughout, because it is that sort of thing that may lead to great complications. With regard to appeals, is it absolutely certain that an appeal will not be taken through having these different forms of words? On referring to Section 33 of the principal Act, I find that it lays down certain grounds upon which an appeal is possible. Are these questions covered by the words "it appears to the Commissioners," and "it is shown to the satisfaction of the Commissioners"? If it is clear, it is satisfactory enough that an appeal is to be allowed, but surely these differences of expression leave some doubt as to whether there will be the right of appeal.
  Sir TUDOR WALTERS: I wish to have a point made clear about Clause 3. Is the Committee to understand that under this Clause the Commissioners are to have any say in the matter of the laying out of land? Are they to have any discretion to say, "You are not laying out the land properly. It is not in accordance with the Town Planning Act." If that is so, they certainly ought not to have these powers. If the powers in the Clause simply mean that the Commissioners are t) be satisfied that this is a bonâ fide expenditure of money for the development of the estate, that is quite another matter. It would not be right that any individual should have the benefit of this exemption from Increment Duty by a sham laying out, or by building some house or houses that just came within the limit prescribed here without seriously intending to develop the remainder as a building estate. I hope that the Attorney-Generat

  973
  will take care that this Clause only means that the Commissioners, if satisfied by figures submitted to them that this sum of money has been expended and that it is a genuine building estate and that genuine building development is taking place, will not then be able to disallow the claim made by reason of any abstract theories they may happen to hold as to how a building estate should be laid out, but that the Commissioners should have power to deal with any ingenious attempt to evade the conditions prescribed, so that persons in order to escape payment must fulfil the requirement of the Act.
  Sir RUFUS ISAACS: I entirely agree with what my hon. Friend the Member for Sheffield (Sir Tudor Walters) has said. Taking the Clause as it stands, I should have thought that it was not open to the other construction which has been suggested. Certainly there is no intention of leaving to the Commissioners the deterinination of the plans of the development of an estate, and there are no words in the Clause which suggest that. All the Commissioners have to satisfy themselves upon, and all they have to determine under Clause 3, is whether land is being developed for the purpose of erecting new buildings, but not how it is being developed or laid out.
  Mr. PRETYMAN: Suitability.
  Sir RUFUS ISAACS: That is an entirely different point from that which the hon. Member has discussed. There are conditions laid down in (a) and (b) undoubtedly, but I say at once that there is nothing in any of those conditions or in any of the words in (a) or (b) which would give the Commissioners the right to interpret how land should be laid out. Certainly it is not the intention. I have not any doubt whatever. If the hon. and learned Member for South Bucks tells me on consideration that he is really in doubt about it, I can only say that I cannot see any room for doubt of any sort. When we come to discuss the suitability of buildings, that is a different point. I am quite prepared to discuss it now. I quite bow to your ruling that it was not out of order to discuss it, but it makes this difficulty, that we are discussing this question and at the same time the difficulties which will be created by the conditions of (a) and (b). I quite understand that it may be necessary to take the whole matter as one, and that that may be the more convenient way of
  974
  dealing with it, but we cannot discuss it twice, particularly having regard to what has taken place. Certainly the word "suitability" does not give them any right to do anything of the kind suggested. All that is intended by the introduction of the word is to guard against the very class of case to which my hon. Friend referred of a pretended development, and not a real development, entirely for the purpose of getting the benefit of the exemption. Everybody knows very well in these matters that if you were simply to say that the land is being developed, and that no Increment Value Duty should be collected, that would be open to many methods of evasion. The object of putting in these words about suitability of buildings is to provide against that. There is no intention whatever of interfering with buildings. All that is intended is to prevent the erection of temporary buildings merely for the purpose of saying that the land is being developed and should be exempt. That is the whole point. That is the question the Commissioners will have to declare upon. The tribunal that is to determine is the matter which we have to confine ourselves to at present. As I have already intimated, this would be subject to appeal. If there was any doubt about it on consideration—I do not think there is—I will take care that there is a provision that the right of appeal shall apply in this as in other cases.
  Mr. JAMES HOPE: Is there any difference in the verbiage employed in the two Clauses?
  Sir RUFUS ISAACS: I see no difference between saying "proved to the Commissioners" or "shown to the Commissioners' satisfaction."
  Mr. PRETYMAN: Will the right hon. Gentleman agree to having the same words, "where it appears to the Commissioners," as in the previous Clause? Courts of Law would have to find some reason for those differences. Why should we create artificial difficulties? We have put in these words, "where on any occasion of collection of Increment Value Duty it appears to the Commissioners," and the other part should follow exactly the same lines.
  Sir RUFUS ISAACS: I have no objection to having the same words as given in the earlier Clause, "where it is proved

  975
  to the Commissioners." I quite a useful addition, and do that.
  Mr. CAVE: I am not quite satisfied that we are putting in the right words in substitution. With regard to what the hon. Member has said, notwithstanding the hon. and learned Attorney-General, I think that the effect of the Clause, even with the new words, would be to give the Commissioners the right to interfere and express an opinion upon the suitability of buildings. The suggestion is that this would give them power to interfere or refuse relief where there is no bond fide building. At present I think this Clause does much more than that. It is left to them to say, if they think right, "Though you are spending so much on the buildings here, we do not think that the buildings are suitable." That surely is a matter, as the hon. Gentleman has said, upon which the owner or the builder is the best judge, and nobody else ought to have a right to interfere in that question in which they are really not concerned. We are discussing whether the Commissioners have to be satisfied or whether somebody
  else, the referee, has to be satisfied. As this Clause stands, the Commissioners have to have proved to them first, that building is going on; second, that buildings are being erected of a certain value; and third, that those buildings are suitable, and I think that the suggestion would not meet the objection of the hon. Gentleman opposite. I feel great doubt whether, as the words stand, there would be any effective appeal, because where it is said, "shown to the satisfaction of the Commissioners," no Court of Appeal would say it was shown to their satisfaction if they said it was not. I rather think that the same criticism might apply to the words which the Attorney-General proposed, "proved to the Commissioners," because they can always say it is not proved to their satisfaction. I should much prefer the second form of words.
  The DEPUTY-CHAIRMAN: I think we are getting to a Debate on alternative words, and that it would be more in order for the hon. Member to withdraw the Amendment which is at present before us.
  Mr. PRETYMAN: Is not this Amendment, a necessary precedent to inserting the words proposed? We desire to take these words out, and if that is done it will then be competent for us to decide what words are put in their place.
  The DEPUTY - CHAIRMAN: The Amendment originally moved was to take the words out altogether and to put nothing in at all. If that is withdrawn, then I think an Amendment might be moved on the question of alternative words.
  Sir A. CRI PPS: On the point of Order, if the Amendment were withdrawn the present words would stand, and, therefore, no alternative words would be introduced. In answer to what the learned Attorney-General said on the general point as to which he appealed to me, if I would repeat my view, on consideration I would like to say this: The object aimed at, as the hon. Member for Brightside (Sir T. Tudor Walters) stated, is to ensure genuine development, which I agree is a proper thing, but to ensure that words ought to be introduced at an earlier stage, such as "is being, or has been bond-fide developed." When you come to the question of buildings you introduce the word "suitable," and it appears to me to be impossible that that word would not have a much wider signification. Therefore, I suggest to the Attorney-General that, in order to carry out what he has sketched, the best way is to introduce the words "genuine development" and afterwards put in words such as these, "buildings of a certain value in connection with genuine development." That is what the hon. Member for Brightside said we were really desirous to obtain. I think the word "suitable" must go out, as that would give the Commissioners a power which no one wants to give to them.
  Sir F. BANBURY: It seems to me that the Amendment which has been proposed is to leave out the words "it is shown to the satisfaction of the Commissioners," and the Question you, Sir, have to put is, "That those words stand part." If the Amendment is negatived, then I venture to say that it would not be in order to put in other words in their place, and what ought to be done is for my hon. Friend to withdraw his Amendment, and afterwards it would be open to him to move to omit the words "it is shown to the satisfaction of," and put in different words, otherwise it would be impossible to achieve my hon. Friend's desire.
  The CHAIRMAN: The hon. Baronet is quite right, and when I asked the hon. Member was he prepared to withdraw, why I did so was that on the withdrawal

  977
  the whole question would be open for consideration.
  Amendment, by leave, withdrawn.
  Mr. PETO: I beg to move, in Subsection (1), to leave out the words "is shown to the satisfaction of," and to insert instead thereof the words "it appears to."
  Sir RUFUS ISAACS: The position which I made clear earlier in the Debate, and also my right hon. Friend the Chancellor of the Exchequer, when we discussed this at the beginning of the proceedings, would apply in this case. This Amendment does not do what we are anxious to do, and which we made clear earlier, and it is this: It is desired that the burden should be thrown on the persons claiming to establish to the Commissioners a certain state of facts. In order to do so it is not sufficient to say "it appears to." That leaves the matter in doubt as to whether the Commissioners have got to ascertain for themselves or not. Obviously in a case of this kind, where you arc giving an exemption, that would not be right. I will take the words "where it is proved to the Commissioners" as they appear already in the principal Act. There is an appeal from that and it removes all possible doubt.
  Sir A. CRIPPS: I think we may take those words.
  Mr. PETO: The next Amendment on the Paper in my name proposes to omit the words "when suitable." That would mean that their discretion would be limited to land that is or has been developed or used for the erection of new buildings, therefore I submit it will be perfectly easy to prove to the Commissioners that land is being developed.
  Mr. C. BATHURST: I should like to know whether the discretion of the Cornmissioners is to be limited to genuine development for the purposes of the erection of buildings or the suitability of the buildings under paragraph (a), or the suitability of the roads under paragraph (b).
  Sir RUFUS ISAACS: It must apply to all. They have to be satisfied with the conditions laid down. When we come to discuss the word "suitable," I think I shall be able to meet the criticisms that have been made. I admit quite frankly I had some doubt about the use of the word
  978
  "suitable." It is a little vague, and it might be extended beyond what we legitimately intend, but I must have the word
  "proved."
  Amendment, by leave, withdrawn.
  Mr. PETO: I beg to move in Sub-section (1), to leave out the words "shown to the satisfaction of," and to insert instead thereof the words "proved to."
  Amendment agreed to.
  Sir A. CRIPPS:I beg to move, after the word "been" ["or has been developed"], to insert the words "bond fide." I think the Attorney-General agrees that we ought to have some such words in the Clause.
  Sir RUFUS ISAACS: I think it is quite clear what we intend. I have no objection to the insertion of these words in order to get rid of the word "suitable." But there must be no misunderstanding. It is left to the Commissioners to decide whether the land has been bond fide developed and whether the condition has been carried out.
  Question, "That those words be there inserted," put, and agreed to.
  Further Amendment made: Leave out the word "suitable"[" (a) that suitable buildings of a value"].—[Mr. Peto.]
  Mr. C. BATHURST: I beg to move, to leave out the word "five" ["five hundred pounds"], and insert the word "three."
  It seems to me that the Government and their advisers have been too much obsessed with the urban question and have overlooked altogether the rural or semi-rural question, and the extent to which that question will be affected by this Clause. If £500 is the limit it will clearly operate unjustly against many of those who are developing building outside villages or small provincial towns. The provision seems to contemplate a very costly scheme where the land adjoining a proposed road is to be crowded with buildings and has a very high commercial value. That is not the case in the country districts. This matter is painfully familiar to me, because large developments have been made or attempted to be made in my district by laying out roads with a view to cottages being erected, which cottages, in fact, have not been erected. Take the very ordinary case of a cottage costing £300 with an acre of land held with it, or, alternatively, two semi-detached cottages costing £150 each with half an acre of land.

  979
  That is the sort of development which we more rural people are being urged to encourage in every possible way. We are being urged to erect cheap cottages which is a very difficult thing to do at the present time, and to provide them, not merely with a garden, but with from half an acre to an acre of allotment land. Many of us are trying to do it, but this Clause will operate against our efforts. My Amendment seeks to make the margin for this purpose £300 instead of £500. That would cover the case which is more common in the country districts. No doubt the right hon. Gentleman will tell me that I should be saved by the words "exceeding twice the full site value." But twice the full site value in a purely rural district means little more than twice the present commercial value, because the full site value of such land, unless it has a few trees scattered over it, is practically the same. Take, by way of illustration, land of the present value of £150. It is quite conceivable that you may find such land immediately outside a village, and you are desirous of developing that land for building purposes. If that is so, under the circumstances which I have mentioned, it is impossible for the person undertaking such development to get any value whatever out of this Clause. In fact, he would, as a result, be charged with Increment Value Duty upon the necessary cost of the development of the land for this purpose.
  Sir RUFUS ISAACS: As the hon. Gentleman is aware, this is a concession which has been made, and I do not think it should be pressed further, having regard to the exemptions already made under Sections 7 and 8 of the principal Act in reference to both agricultural land and small cottages. I do not think that the hon. Gentleman gives full effect to the words "or exceeding twice the full site value." He seemed to read that provision as if it would be twice the full site value of the acre. It clearly does not mean that. I think it really meets the hon. Gentleman's point. First of all, the condition is that in the development of the land there have been erected buildings of the value of not less than £500 for every acre, or buildings exceeding twice the full site value.
  Mr. C. BATHURST: Of what?
  Sir RUFUS ISAACS: Of the land with the building. The words are, "or exceeding twice the full site value at the date of the occasion of the land so used,"
  980
  and that the erection of the buildings was commenced within five years before the date of the occasion. There is not a word about twelve years!
  Mr. PRETYMAN: If the Attorney-General is correct in his interpretation it makes a very great difference indeed, but I do not think the Clause as it stands will bear that interpretation.
  Sir RUFUS ISAACS: That is not the point between us. As I heard the hon. and gallant Gentleman put it, it struck me he was arguing it as though the cost was twice the full site value per acre.
  Mr. PRETYMAN: No, no, of the land.
  Sir RUFUS ISAACS: The land in connection with the buildings, certainly. It means the building upon this piece of land and the land which is connected with the building. It does not necessarily mean an acre. It speaks of the area being developed. It means that if you want to determine the land for a particular purpose, say, a quarter of an acre, and you arrive at the full site value of a quarter of an acre, then all that you have to see is that a building exists of twice the full site value of that quarter of an acre. That is what it means. There is no limit as to the building being £500 per acre. You are trying to draw hard and fast lines. What this House is trying to do is to try to get people to occupy the land, with a house, in the rural districts for agricultural purposes.
  Mr. PRETYMAN: What this Clause does is that it deals with the composite subject on the occasion exactly as every Clause which limits benefits—in these cases where in the composite subject the value of the buildings bears some large ratio to the value of the land. That is exactly what we all want to do. What we want is to get as much and not as little as possible spent on the building. It is not a question here of an acre, nor is it a question, as the Attorney-General, I think, seems to imagine it is, merely of the site of the house upon which the land stands.
  Sir RUFUS ISAACS: I was drawing the distinction between them.
  Mr. PRETYMAN: It is the whole unit on the occasion. The proposition before us is, Are we to say, whenever any unit passes on occasion, that the unit, being a composite unit, containing a house or building, shall be deemed the benefit of

  981
  this Clause unless the value of the house is double the full site value? The Attorney-General and the Government think that, in proposing that, they are going to increase the cost of the building. Not at all. What they are going to do is to limit the amount of land going with that building. The Government are so anxious to prevent anybody getting round them that they really do not see the effect of this Clause as ordinarily interpreted by common-sense people in the market place. You have got in the word "bonâfide." That in it elf makes a very big alteration in the Clause. Why do you want all these hedging restrictions? The Attorney-General, in an earlier point on a previous Amendment, said that we might be quite sure that we were quite safe on the point then under discussion. Let me remind the Attorney-General that he knows perfectly well that it has happened over and over again in connection with this very obscure and complicated Act that the assurances of interpretation given from the Government Bench have been utterly falsified when they came before the Courts. It has been so.
  Sir RUFUS ISAACS: We are putting that right.
  Mr. PRETYMAN: It is all very well to have it put right after thousands of pounds have been spent in litigation. That may be all very well from the point of view of some hon. and learned Gentlemen, but it is not the point of view of the ordinary person concerned in business with these matters. The right hon. Gentleman knows perfectly well that the business of the Department is not to construe what the intentions of the Government nor the House were, but to get the utmost duty they can out of the actual verbiage of this Clause. We are in a reasonable mood here to-day. We are settling things quite to our own satisfaction, but we know that every word that is put in here is liable to be the subject of litigation. You may be perfectly certain: may lay this down as an axiom, that any claim which can be based upon any word which we put into this Act will be claimed and pressed to the very utmost. We cannot assume anything else. We are not safe in assuming anything else. If you put in the word "bond fide" it is unnecessary to put in all these other hedging restrictions, and therefore I think the paragraphs (a) and (b) can come out altogether. Simply say that the land is being or has been bonâ fide developed. You cannot put in limitations. You are here dealing with
  982
  the ratio of buildings to land in order to ensure that there shall be a large extent of buildings. I do suggest it would be very much simpler to have paragraphs (a) and (b) out altogether now we have got the word "bonâ fide" in.
  3.0 P.M.
  Mr. C. BATHURST: I think the interpretation of the right hon. Gentleman the Attorney-General has caused some confusion, at any rate in the minds of us on this side of the House. Surely when we come to consider this question we must make up our minds when we speak of twice the full site value what is the full site value to which we are referring! For my part, I suggested across the floor of the House just now that the right hon. Gentleman must mean the area being developed. The right hon. Gentleman declined to accept that interpretation. He spoke of the unit of development. Referring back to the third paragraph of this Clause, we find the words "where it is shown that the land is being or has been developed." Surely, if those words have any meaning at all, they must refer back to the expression "land," and whatever the expression "land that is being or has been developed" means, that surely is the expression which we must read in at the end of the expression "full site value"! The Chancellor of the Exchequer is one of those who has repeatedly urged us in the country districts to develop the land and provide cottages, and provide as large as possible an area of land with these cottages. Perhaps I may say, although it may appear a little egotistical, that I have been doing my utmost in my part of the country on the lines that he has suggested. I find myself, and others will find themselves in. this difficulty, that they will get no value out of this Clause at all as regards Increment Value Duty unless they limit the amount of land which they are providing for the cottages where they are making new roads for the purpose of those cottages. The whole point lies here, that I think the Government have been a little too much possessed with the urban standpoint and have not fully realised that there is a rural standpoint. My object is to reduce the £500 to £300, in order that you may extend the same benefit to all those who desire, we will say, to provide an acre of land for purposes of allotment, or otherwise, with a cottage costing £300; or, we will say, half an acre to each of two cottages costing £150.
  Sir TUDOR WALTERS: I think there is a point in the rural question worthy of a little further consideration. I cannot imagine how this phrasing was used for paragraphs (a) and (b), or that there was the slightest desire to perpetuate conditions in the country district by making the cottage always worth twice as much as the land on which it stands. I do not think that is the object at all. I imagine this was the point of view: We want to make such arrangements under Clause 3 that anyone who really sets to work to develop land in town or country, and that the erection of those buildings was commenced five years before the occasion for the collection of Increment Value Duty, shall be free from increment Value Duty. We do not want a man with five or ten or twenty acres of land, as the case may be, simply to say he is going to use it for building purposes and by that means to escape the duty. We want him to spend money, because you cannot have houses without expenditure of money, and, secondly, we want to encourage the spending of the money. If he spends money it shows he is carrying on development. What is the best test to indicate the bona fides of his expenditure, and yet enable him to get the deduction he ought to get? If a man spends £500 an acre in building, that is a very low sum. It seems to appear on the face of it that in rural districts he would generally spend more than twice the amount in building than the land is worth. I think from the evidence adduced this afternoon that is assumption based upon practical experience, and therefore I think you must recognise that argument., and either reduce the sum as suggested from £500 to £300 or else you must have two categories, namely, a deduction of £500 in urban districts and £300 in rural districts. Either of these tests would meet the case, or you might, instead of saying twice the site value say expenditure on buildings equal to the full site value. I prefer to divide it into two classes, and say £500 per acre in urban districts and £300 for rural districts. If the Chancellor of the Exchequer would accept that we would get over the difficulty, but I should not like any words included in this Clause which seem to suggest we want to limit the amount of land to each house or cottage in town or country in connection with building operations.
  Mr. LLOYD GEORGE: I think there is a good deal in the contention of the hon.
  984
  Member opposite (Mr. C. Bathurst). It might conceivably affect the cost of a cottage in rural districts. I agree absolutely with him that it is of vital importance that you should encourage rather than discourage the amount of land attached to each cottage. We had the famous case of three acres and a cow, but not even the cost of the cow-house would make the buildings cover the exact figure. I do not think the words here would be a safeguard against acts of that kind. I am not at all sure that the suggestion made, that you should distinguish here between urban and rural cases, is not the best. The hon. Member wants us to use the words "bond fide development," but who is to judge that? Will the Commissioners' decision be final? If not, you would have litigation about every case. You would have questions in the Court in the first instance, questions in the Court of Appeal, questions before the Commissioners and the referees, and finally, the House of Lords, to decide the question of bona fides which is a very difficult one, unless you lay down some principle or rule which could be applied with simplicity to each individual case. If you have an arbitrary figure, there may be some cases of hardship, but you cannot avoid that. An arbitrary figure would avoid the greatest hardship of all, and that is, that you would have to litigate every case with enormous expenditure, and as was pointed out by somebody on Second Reading, the litigant has no chance against the Crown. I accept the soundness of the criticism of the hon. Gentleman opposite, and I will undertake to meet him. My present view is that the suggestion of my hon. Friend (Sir J. Tudor Walters) is the right one. If there is any other suggestion which can be put forward, I will be glad to receive it. I promise to meet the hon. Member, and if the hon. Member is satisfied with that, I will see the words are put down between this and the Report stage, or, if he has any other suggestion to make, if he sends it in I shall be happy to receive it.
  Sir A. CRIPPS: In reference to what the Chancellor of the Exchequer said about the different categories of £500 for every acre of laud used for building in urban districts, and a somewhat small sum in rural districts, I think in rural districts it ought to be less than £300. That figure is too much. My hon. Friend the Member for Wiltshire gave his experience. My experience is that I never like to give less than an acre, but I think you ought to

  985
  have as low a limit as £200. I would ask the Chancellor of the Exchequer or the Attorney-General, in these circumstances do they want the words, "or exceeding twice the full site value at the date of the occasion of the land so used have been erected on the land." These words never would be interpreted without all the difficulty the right hon. Gentleman anticipated. If he differentiates the figures for urban and rural, he can leave out these words altogether.
  Mr. LLOYD GEORGE: I accept that.
  Mr. C. BATH URST: In view of what has been said by the Chancellor of the Exchequer I ask leave to withdraw my Amendment.
  Amendment, by leave, withdrawn.
  Mr. PETO: I beg to move, in paragraph (a), to leave out the words "and that the erection of those buildings was commenced within five years before the date of the occasion."
  The CHAIRMAN: Has not that been very much the subject of this Debate.
  Mr. PRETYMAN: May I point out that there was not a word said about the five years' limit. We have discussed and disposed of the other part of the trouble, but not the five years' limit.
  The CHAIRMAN: I beg pardon; this is, of course, the concluding point to the Amendment of the hon. Member for Wiltshire.
  Mr. PETO: It appears to me that the words which I propose to leave out are put in there with the sole view to the builder who is developing an estate or portion of an estate. The unfortunate landowner who uses his land for building purposes, particularly in the country, does not always complete the transaction and sell his property, and therefore the occasion applies within five years of the erection of the house. But the five year limit does not even meet the case of the builder. Very frequently he builds a number of houses with the firm determination and intention of selling them as fast as he completes them. But it very often happens that the market runs away from him, and he finds himself compelled to hold his buildings, and no occasion arises. He has to let them at the best rent he can, and very often at a low rent, perhaps for a period between six and ten years. Through some reason or other he may
  986
  afterwards begin to effect sales on the same estate and sell at a considerably increased price some seven or eight years after the erection of the building, which would show something in the way of an increase in the site value which would be chargeable with Increment Duty. If the estate has been developed the land has been used for building purposes, and I do not see the reason for putting in this very arbitrary distinction.
  The more rules you make as to the size of the buildings and other things, the more cases of hardship you will create and the more friction you will put in the way of ordinary business transactions. A man will always be considering, "Shall I be able to get this thing off my hands in five years or not?" He may find that he has just missed the five years, and under those circumstances he will have an Increment Duty to pay on the top of what he has calculated. We have always understood that the object of these Land Taxes is to tax the increased value of the site not due to any part of the enterprise of the owner. In this matter, if we keep to the land we shall interfere to the smallest possible extent with the ordinary transactions of business. When we get beyond that and begin making rules as to the way an estate is to be developed the result will be just the same as in other cases: when restrictions are placed on trade, and you will hamper the industry. This proposal is certain to create very great hardship. I wish to emphasise the fact that the successful builder who has developed his estate, and who is selling his houses and plots of land on which they stand like hot cakes, is provided for in this Clause, and because he is successful he will escape the Increment Duty. On the other hand, where the builder's enterprise is not so successful and where the houses may be left on the man's hands, if these words remain in the Clause the unsuccessful builder will have to pay Increment Duty, while the man who, in the view of the Chancellor of the Exchequer in framing these Land Taxes, might he supposed to be able to afford it is going to escape the tax, whereas the other builder will be hit very hardly.
  Mr. C. BATHURST: I agree that this does not apply to the development of land in rural districts. It is quite a common case to make a road outside a small village or town and then bring building materials upon a piece of land to build, for example, a couple of cottages, and afterwards to.

  987
  find it wholly impossible, owing to temporary unemployment in the district, to obtain further occupants for more cottages at that time. The result is that three, four, and even five years may elapse before the completion of the other cottages takes place. That being so, this does not meet the case of the enterprising developer of land in the rural districts. This proposal in the Clause will actually operate against the Exchequer. When he speaks of things within five years there are many cases I could point out where buildings have been commenced, if you mean by "commenced" the turning of a sod, and five years may elapse or more before they have been completed. Surely, the test ought to be the completion of the buildings without any consideration of other circumstances. If the right hon. Gentleman will leave out the words "commenced within five years" and will substitute the word "completed" he would then get a larger revenue and he would do justice in town and country areas alike. I am sure the right hon. Gentleman will see that the word "commenced" is wrong and the words "within five years" will operate serious injustice.
  Mr. LLOYD GEORGE: I cannot help thinking that this discussion has proceeded on an entire misconception of the object of this Clause. The arguments which have been used in favour of the Amendment seem to be in favour of dropping this Clause altogether. Does the hon. Member want that? The hon. Gentleman thinks it would be better to lay down clearly that we arc not going to tax profits but purely the increased value due to communal considerations. Clause 1 has added all sorts of things which you can deduct before you arrive at the site value. Clause 2 has practically done the same thing, and if you read Clauses 1 and 2 together you will find that you cannot tax anything in the nature of profits at the present moment. I want that to be clearly understood, and, if that is not the case, then Clauses 1 and 2 ought to be strengthened.
  Clause 3, however, provides that within five years where a builder is developing an estate he is not to be liable to a duty of any sort or kind, although there may have been an increase in the communal value. That is a totally different proposition to the one put forward in this Amendment, which means that if there happens
  988
  to be a great growth in the value of land owing to the fact that the development of a town has been rushing in that direction, and which is not due to anything which by any conceivable distortion can be regarded as builders' profits, such as the fact that coal or anything else has been discovered there, even then for the five years, if the builder is developing the land you are not allowed to charge a penny of duty. Such a development may not be due to his exertions at all, and I think the hon. Member who took part in the discussion might give credit to the Government for what the Clause really means. The hon. Member opposite (Mr. C. Bathurst) says that you cannot say when the building has been commenced. It is still more difficult to ascertain when the building has been completed. Sometimes it is due to the builder, and very often it s due to the person on whose behalf the budding is being set up. He is always making alterations and additions. The original plan is not carried out all at once and in another year something is added. Therefore, you cannot arrive at the point at which the building has been completed; it is much easier to say when the building has been commenced.
  Mr. C. BATHURST: The local sanitary authorities have at present to decide when a building has been completed in order to pass it.
  Mr. LLOYD GEORGE: Yes, for certain purposes, but it is a different thing when you have to say for the purposes of taxation when it has been completed. I would infinitely rather assent to an Amendment that would extend the period than have anything of that kind. It has been suggested that we should substitute seven for five, and I think that would cover the case.
  Mr. PRETYMAN: I quite accept the suggestion of the right hon. Gentleman as to paragraph (a), the builder. I think that the seven years is better, because, if you take completion, the man might leave the chimney-pot, and the building would not be completed. Seven years, I think, would be satisfactory, so far as paragraph (a) is concerned, but the situation is a little different in paragraph (b). It may be more than seven years in the case of a man who proceeds to develop a piece of ground by making a road across it. It is a very different thing from building a house. It may be ten or fifteen years before anything is got for it at all. The Com-

  989
  mittee must bear in mind that the whole point of this Clause is not so much to give actual relief. The actual relief, as the right hon. Gentleman has pointed out very properly, is given in Clauses 1 and 2. The object of this, therefore, is not to give relief, but security to enable a builder or a land developer to feel confident that for a certain period he will not have any liability at all. I do not believe that this Clause will give much relief, because the relief is already given in a previous Clause, but it will enable a builder or a land developer when he goes to borrow to say, "There is no uncertainty about this; I have got an absolute exemption." The longer the period you give, the greater the security. I think that so far as builders are concerned seven years ought to be enough, but I would ask the right hon. Gentleman to consider whether he cannot give a rather longer period than seven years in paragraph (b).
  Mr. LLOYD GEORGE: I think that I am meeting paragraph (b)very fairly, though I promise to consider the point, between now and Report. I do not feel, at present, that a case has been made out, because, as the hon. Gentleman has very fairly pointed out, this is a case of complete exemption. He wants security, and I think that security for seven years is, on the whole, quite as much as a man would expect under the conditions. I agree that very often it means that a man has got very exaggerated ideas as to the building value of particular plots, and he goes and lays down roads and sewers years before he ought to do so, but I think when we say to him, "We will give you seven years complete exemption," that we are meeting his case very fairly.
  Sir A. MARKHAM: The Chancellor of the Exchequer is gradually shredding the whole basis of the Increment Value Duty. He has agreed to this period of seven years, but I can take him into districts where land which four or five years ago was only worth £40 or £50 an acre is now being developed and simply because a colliery has been opened in the middle of the land is selling at £1,000 an acre without a single effort on the part of the owner. I will take my own case. I am developing several collieries and the value of the adjoining land has arisen from £40 or £50 to £1,000 an acre without a single penny of expenditure on the part of the owners, and yet they are not going to pay a single farthing Increment Value Duty for seven years!
  Mr. LLOYD GEORGE: I would remind my hon. Friend that, in the first place, they have got to spend £500 per acre under paragraph (a), and then they must spend £200 per acre in development under paragraph (b). If they do that, they do something to solve the housing problem in that district. They are really spending £200 per acre in order to put it on the market and make it fit for housing, and I think we ought to meet their case.
  Sir A. MARKHAM: That is true with regard to paragraph (b), but, if a man has only put up one house on an acre, he has complied with the first condition, and therefore the whole basis of the Increment Value Duty seems to me to have gone by the acceptance of this Amendment.
  Mr. ROYDS: There is nothing new in this Clause. It is only extending the privilege which is given with regard to Undeveloped Land Duty to Increment Value Duty. When an owner has spent £100 on roads he is exempt from Undeveloped Land Duty, not for five or seven years, but for twenty years. I do not know why, if he spends £200 per acre, instead of £100, on roads under this Section, he should not be exempt from Increment Value Duty in the same way. In the original Act as printed it was only ten years, but it was thought necessary to extend it and twenty years was put in. If the Chancellor of the Exchequer is going to consider how many years he is going to give, I hope that he will give the same as he has already given in the case of Undeveloped Land Duty and extend it to twenty years.
  Sir F. BANBURY: I do not see the force of the argument of the hon. Baronet (Sir A. Markham) opposite. He did not put the coal in the earth. All he had to do was to take it out and he did not take it out for the purposes of the Land Tax. He did it in order to make, and he has made, a considerable sum of money. Yet lie does not pay any Increment Value Duty so far as I know. That being so, the hon. Baronet 'wants to have it all his own way. He seems to think that besides making profit out of the coal he should have the rest of the interest in the land which he has bought.
  Sir A. MARKHAM: The answer to that is very simple—
  The CHAIRMAN: This is a by-product. Does the lion. Member for Devizes press his Amendment?
  Mr. PETO: No; I will move a subsequent Amendment.
  Amendment, by leave, withdrawn.
  Mr. PETO: I beg to move, in paragraph (a), to leave out the word "five" ["commenced within five years"], and to insert instead thereof the word "seven." Personally, I am not satisfied with the proposal to insert "seven" years as the limit. I hoped the Chancellor of the Exchequer would undertake to reconsider his decision on that point.
  Mr. LLOYD GEORGE: I cannot do that.
  Mr. PETO: Very well; on the understanding we are not satisfied with "seven," I will move that "seven" be inserted, in order that the Chancellor of the Exchequer may have an opportunity at a subsequent period of inserting an even longer period of years.
  Amendment put, and agreed to.
  Mr. C. BATHURST: I beg to move, in paragraph (b), to leave out the words "two hundred pounds."
  I feel very strongly upon this quesiton. This limit of £200 is clearly inapplicable to the case of roads in rural districts of the kind I have described, and I therefore desire to leave out the words "two hundred pounds," in order to insert "fifty pounds." What is contemplated here evidently does not apply to short stretches of country road with a considerable depth of land behind the houses to be built on either side. You may have eighty or a hundred yards of land behind the cottages. That is not an uncommon case. What is going to happen there? The cost of forming the road, draining, kerbing, and channelling will not be more than about £50 or £70 per acre at the outside. Where you have something like half an acre to an acre supplied with each cottage, or even a considerably smaller area than one acre behind each cottage, you will find that the cost of making a road comes out at considerably less than £100. I cannot see why you should put discouragement upon those who are laying out roads for this class of house in country districts, but you will be putting such discouragement, if you insist on this limit for road construction of £200. Such a limit clearly would only apply to cases of congested districts where there are houses close together on either side of the road with very small gardens attached. There the roads may be made
  992
  in tip-top engineering fashion—in the most approved style at considerable cost. But that is not how roads are made in the country. They are not less useful because they are not intended for motor cars such as that in which the hon. Baronet opposite enjoys his pleasure, but they are intended for ordinary plain country folk, and I would make a strong appeal to the Committee to insert this limit of £50 with regard to rural districts.
  Mr. PRETYMAN: May I suggest it would be wiser to treat this matter as the proposal in paragraph (a) was treated. There is a practical reason for doing so; there is nothing in the Clause which determines the area of land in these particular cases. It should be remembered that this covers all occasions of Increment Value Duty, of Increment Duty on death as well as on "occasion." When you are dealing with building, you are dealing with a unit which is pretty obvious, but when you are dealing with development, you have something very different.
  Mr. LLOYD GEORGE: I think that would be the best way of dealing with it. The hon. Gentleman is pressing me rather too hardly. We have met him very fairly this afternoon on one or two matters of vital importance. But I am prepared to adopt the course suggested by the hon. and gallant Member opposite and to agree to the omission of these words.
  Mr. PRETYMAN: Will you take the limit of £50?
  Mr. LLOYD GEORGE: No; I cannot do that. It would be quite impossible. The hon. Gentleman appears to forget that this is a Clause which gives complete exemption for a certain period of time. Why should there be complete exemption from this duty if the land goes up in value through something which is not done by the proprietor? We are giving him seven years in order to allow him full time to develop, and it is pressing rather too hard to say that because he is spending £50 per acre on roads he should have complete exemption for a whole period of seven years. I think that is asking too much.
  Sir TUDOR WALTERS: I never listened to a more extraordinary doctrine about road-making than that advanced by the hon. Member for the Wilton Division. Does he seriously suggest we shall give exemption to people who make what they call roads, and what they are pleased to

  993
  term sewerage, at £50 per acre I There can be no arrangement for disposing of the sewerage, and I do not think they ought to claim exemption under such 'circumstances. I can quite understand that such roads would not be suitable for motors, even that driven by the hon. Baronet.
  Mr. C. BATHURST: I never made any reference to sewerage.
  Sir TUDOR WALTERS: I think £200 in towns and £100 in country districts would be a generous limit, and even that is putting the figure too low. You cannot develop land, you cannot make decent roads and provide sewers, for £50 per acre.
  Sir A. CRIPPS: I should like to give a practical instance. I can point to several cases where, in country districts, property has been properly laid out with regard to roads and sewers at a cost not exceeding £50 per acre. A fact of that kind is worth any amount of theory. In many cases there is no general sewerage system, as in urban districts. You have only to deal with the sewage of a particular cottage, and that, of course, does not involve so great an outlay. I want to ask the Chancellor of the Exchequer whether he cannot see his way to do in paragraph (b) what he did in paragraph (a). Realising there is a difficulty in regard to the amount of expenditure between urban and rural districts—and he knows perfectly well there is a great distinction —can he not see his way clear to make a concession on this point? I do not think £50 is too low. Make it 2100, if you like, but there ought to be a distinction. Two hundred pounds per acre is a sum altogether beyond any amount I have ever known to be expended in a rural country district upon matters of this kind. It would make cottage building so expensive that you could not carry it out at all. At the present time we want to reduce, so far as we reasonably can, the cost of building cottages in country districts. That is one of the problems of the day. I do not want to refer to one's own experience, but I have built a good many cottages and know what they cost. I know that as regards roads or sewers £50 per acre would be quite a large sum. Let us have here a distinction between the two as regards the development for the purposes of roads and sewers as we have in paragraph (a) as
  994
  regards buildings, in order that rural districts may be treated on substantially the same footing as urban districts.
  Mr. CAVE: I am rather struck by the fact that the Chancellor of the Exchequer has accepted the suggestion made against the landowner, but has made no suggestion in his favour. If you strike out the words "exceeding the full site value of the land," that takes away from the landowner an alternative from which he may benefit. My hon. and gallant Friend suggested that by way of set-off to a concession on the other side that the amount to be expended on the roads should be reduced. After what has been said, if those words are left out, there ought to be a reduction from £200 to £100.
  Mr. LLOYD GEORGE: Perhaps I did not quite understand the suggestion made by the hon. and gallant Member. I thought he assented to the suggestion that the words should be left out because they were left out in the corresponding paragraph above. I think there is something to be said for making a distinction between a rural and an urban area, because, in the first place, you do not have to lay out land in a rural area in such an elaborate fashion. Labour is cheap, and it does not cost so much. I am inclined to make a distinction between urban and rural land to the extent of £200 for the urban land and £100 for the rural land. I think that will meet the case.
  Mr. SNOWDEN:I understood the Chancellor of the Exchequer to say just now that he is prepared to accept the suggestion that he should make a distinction between urban and rural areas. I should like to hear something a little more definite about that, and to know how he proposes to make the distinction between an urban and a rural area. May I illustrate what I mean by referring to the case in which the hon. Baronet (Sir A. Markham) sunk a pit. The district in which that pit was sunk was at one time a rural district under the administration of a rural authority. By the opening of that pit and the development of an urban population increment value has been created. The constant transformation of a rural area into a town area is the transformation by which you get the increase in land values which it is the purpose of the Chancellor of the Exchequer to tax. If, therefore, this discrimination is going to be made an enormous percentage of the increment

  995
  which otherwise would be taxed will be lost. Increment value arising from the transformation of agricultural land into building land is almost always sudden. If you take this Clause as it will read and take the illustration of the pit that was sunk—it was known for some little time before the hon. Baronet began his operations that this pit was going to be sunk—all that the landowners in that district, which was a rural area, would have had to do in order to escape altogether paying Increment Duty upon the value which was almost immediately going to be created, would have been to expend £100 per acre. The hon. Baronet pointed out that as the result of sinking the shaft the land increased in value from £50 to £1,000 an acre. The landlord need only have spent, contemporarily with the sinking of the pit shaft, £100 per acre on roads or sewers to escape payment of the duty on the whole increment of £900. I submit these considerations to the Chancellor of the Exchequer and would point out that by this concession and those made in the course of the afternoon he is taking away all prospect of ever getting any good result from the Increment Value Duty.
  Mr. LLOYD GEORGE: I agree that would be the case if that were the interpretation of rural areas which we were to adopt. I take it that the rural areas are to be bond fide rural areas in the sense proposed by the hon. Member opposite.
  Sir A. MARKHAM: This was an agricultural area.
  Mr. LLOYD GEORGE: Will the hon. Baronet kindly allow me to proceed? I do not consider that to be an agricultural area at all. It was certainly a peaceful agricultural district before my hon. Friend began his operations. Then it became what the hon. Member for Blackburn (Mr. Snowden) called "transformed," and ceased to be of the character which the hon. Member for Wilton (Mr. C. Bathurst) gave to rural land. It became an industrial district. I do not think it will be sufficient to say that the land shall be under a parish or rural council. That is not enough. I think it will be somewhat difficult to get a definition. I understand that the object of the hon. Member for the Wilton Division is that where it is a bond fide agricultural district, and there is an attempt to solve the housig problem, so that agricultural
  996
  labourers and artisans engage in agricultural pursuits and ancillary pursuits, you, should differentiate in its favour. I am sure the hon. and learned Gentleman the Member for South Bucks (Sir A. Cripps) will realise that it must be confined to bond fide agricultural districts. It will be-difficult to find words, but I think we can, do it. It must be subject to the satisfaction of the Commissioners and with an appeal. That we will consider. I do not want to bind the Committee at the present moment.
  Sir A. CRIPPS: I think the right hon. Gentleman will find a distinction drawn between urban and rural areas in the Railway Acts and in decisions of the Courts.
  Mr. LLOYD GEORGE: I do not like to, bind myself to any form of words, so long as it is made perfectly clear what the intention is, and that it is not intended to, protect the owner of land in a district which has been transformed from an agricultural to an industrial district, or where the district has taken a wholly different character, owing to the sinking of the pit or the setting up of works, which have often been the occasion of a great population coming in. That is a very important point. I agree with my hon. Friend for Blackburn, and it is therefore very important that the words should be carefully considered. There is one matter, and it is that the words "or exceeding the amount of the full site value of the land," should come out.
  Mr. CAVE: No; it could be dealt with on Report.
  Mr. LLOYD GEORGE: I am afraid I must get those words out while we are in Committee. I want to safeguard myself against any possible infringement of the 'rules of the House.
  Mr. CAVE: In the case of the last paragraph when leaving similar words out we got a quid pro quo. In this case I am rather inclined to think, after what the right hon. Gentleman has just said, that he is disposed to whittle down the concession. Let the Chancellor of the Exchequer put down the words for Report, and at the same time move to leave out those words.
  Mr. PRETYMAN: The Chancellor of the Exchequer could not expect us on Report to agree to an Amendment which would increase the charge. Under the provision of paragraph (a) we have got a definite concession that will put us in a

  997
  better position, and I must remind the Chancellor of the Exchequer that it is quite obvious that the object of this provision as to full site value was to deal with rural districts. What we want is something for rural land. The Chancellor of the Exchequer has undertaken to agree to a lower value for rural land, and I think it will be better to leave the provision as it is. Is the right hon. Gentleman giving us an undertaking?
  Mr. LLOYD GEORGE: I have said so, subject to a definition. We are agreed in substance as to the meaning of the rural land.
  Mr. PRETYMAN: I misunderstood the right hon. Gentleman. I beg pardon.
  The CHAIRMAN: It seems to me that this Clause is to give certain relief which does not now exist, and therefore the question of increasing or diminishing does not arise.
  4.0 P.M.
  Sir A. MARKHAM: I should like to impress upon the Chancellor of the Exchequer what constitutes an urban rural district. I can give him a case which will prove my contention at once. The hon. Baronet the Member for the City of London referred to me, and suggested that I wanted to make a profit out of the land. I want nothing of the kind. I want land for the purpose of housing, and I do not care whether it is profitable or not, although I have built several thousands of houses. I recently bought land in a certain district from a Member of the other House, and in that case the value of the land was worth £18 an acre as agricultural land, and a great deal of it had been sold previously at £13 an acre. The moment there was an expenditure upon the land, and a railway siding was brought near to it in connection with the proposed site of a colliery, its value rose from £20 an acre to a minimum of £100 an acre. By the concession which the Chancellor of the Exchequer is making he will lose the whole of the profit of the tax which he himself referred to, time and again, during the discussion on the Budget, as increment value that was to be put into the pockets of the people in new districts where developments took place. By giving way on this Amendment, the Chancellor of the Exchequer loses a chief source of revenue. Where the people of a district are satisfied that there is to be
  998
  an expenditure of half a million of money to develop a certain colliery, the whole value of the land increases without any effort on the part of the owner of that land. I always thought that where a man received a windfall without any effort of his own, and is due to the increase of population, it was to be the subject of taxation. On this Amendment and the concession made the right hon. Gentleman loses the basis on which the tax is founded.
  Mr. C. BATHURST: The question which has been raised by the hon. Baronet opposite is not really material to the Amendment before the House. I understand that pasture land is intended to be covered, and certainly it is not intended to cover the class of land with which the hon. Baronet is most familiar. I desire to thank the Chancellor of the Exchequer for his attempt to meet us half way. I am going to be so ungrateful as to say that the limit does not quite meet the case that I have in mind. Still, half a loaf is better than no bread.
  Sir A. MARKHAM: About three-quarters or a bit more.
  Mr. C. BATHURST: We are not getting anything more than the crust. I understand that the right hon. Gentleman is prepared himself to bring up on Report the substitution of £100 for £200, and therefore I desire to withdraw the Amendment. I sincerely hope that it will not cut out the other alternative, which will be of very great value to the owners of rural property.
  Mr. JOHN WARD: I only wish to say with reference to the concession made by the Chancellor of the Exchequer that it is not as though he got any advantage from concessions of this sort. He is merely depriving himself of sources of revenue from the Land Taxes as imposed by the Budget of 1909, and supplying the hon. Member for Chelmsford with another ground for sayingthat these Land Taxes are absolutely unreliable as revenue-producing proposals. All that the right hon. Gentleman is doing is to supply the hon. and gallant Gentleman opposite-with the opportunity of producing another pamphlet to show how impossible it is to get any money out of the Land Taxes.
  Amendment, by leave, withdrawn.
  Other Amendments made.
  The Committee divided: Ayes, 233; Noes, 46.

  Division No. 249.]

  AYES.

  [4.5 p.m.

  Abraham, William (Dublin, Harbour)

  Gardner, Ernest

  Munro, Robert

  Acland, Francis Dyke

  George, Rt. Hon. D. Lloyd

  Murray, Captain Hon. Arthur

  Addison, Dr. C.

  Gilmour, Captain J.

  Newman, John R. P.

  Adkins, Sir W. Ryland D.

  Gladstone, W. G. C.

  Nolan, Joseph

  Agnew, Sir George William

  Gordon, John (Londonderry, South)

  Nugent, Sir Walter Richard

  Allen, A. A. (Dumbartonshire)

  Gordon, Hon. John Edward (Brighton)

  O'Brien, Patrick (Kilkenny)

  Allen, Rt. Hon. Charles Peter (Stroud)

  Grant, James Augustus

  O'Connor, John (Kildare, N.)

  Atherley-Jones, Llewellyn A.

  Greenwood, Granville G. (Peterborough)

  O'Connor, T. P. (Liverpool)

  Baird, J. L.

  Greig, Colonel James William

  O'Doherty, Philip

  Baker, H. T. (Accrington)

  Griffith, Ellis Jones

  O'Donnell, Thomas

  Baker, Joseph Allen (Finsbury, E.)

  Guest, Major Hon. C. H. C. (Pembroke)

  O'Dowd, John

  Balfour, Sir Robert (Lanark)

  Guest, Hon. Frederick E. (Dorset, E.)

  O'Malley, William

  Banbury, Sir Frederick George

  Gwynne, Stephen Lucius (Galway)

  O'Neill, Dr. Charles (Armagh, S.)

  Baring, Sir Godfrey (Barnstaple)

  Hackett, John

  O'Neill, Hon. A. E. B. (Antrim)

  Barlow, Montague (Salford, South)

  Hall, Frederick (Dulwich)

  O'Shaughnessy, P. J.

  Barnston, H.

  Hamilton, C. G. C. (Ches., Altrincham)

  O'Shee, James John

  Bathurst, C. (Wilts, Wilton)

  Harcourt, Robert V. (Montrose)

  O'Sullivan, Timothy

  Beach, Hon. Michael Hugh Hicks

  Harmsworth, Cecil (Luton, Beds)

  Outhwaite, R. L.

  Beale, Sir William Phipson

  Harmsworth, R. L. (Caithness-shire)

  Palmer, Godfrey Mark

  Beauchamp, Sir Edward

  Harvey, T. E. (Leeds, West)

  Pease, Herbert Pike (Darlington)

  Beckett, Hon. Gervase

  Hayden, John Patrick

  Pease, Rt. Hon. J. A. (Rotherham)

  Bean, W. W. (T. H'mts, St. George)

  Hayward, Evan

  Peto, Basil Edward

  Bentinck, Lord H. Cavendish-

  Hazleton, Richard

  Phillips, John (Longford, S.)

  Bethell, Sir J. H.

  Henderson, Major H. (Berks, Abingdon)

  Pollock, E. M.

  Boland, John Pus

  Henry, Sir Charles

  Pretyman, Ernest George

  Boyle, Daniel (Mayo, North)

  Higham, John Sharp

  Priestley, Sir W. E. B. (Bradford, E.)

  Boyton, James

  Hill-Wood, Samuel

  Primrose, Hon. Neil James

  Brady, Patrick Joseph

  Holmes, Daniel Turner

  Reddy, Michael

  Bridgeman, William Clive

  Holt, Richard Durning

  Redmond, John E. (Waterford)

  Bull, Sir William James

  Hope, James Fitzalan (Sheffield)

  Redmond, William (Clare, E.)

  Burke, E. Haviland-

  Hope, Major J. A. (Midlothian)

  Redmond, William Archer (Tyrone, E.)

  Burn, Colonel C. R.

  Horne, C. Silvester (Ipswich)

  Roberts, Charles H. (Lincoln)

  Carr-Gomm, H. W.

  Horner, Andrew Long

  Roberts, Sir J. H. (Denbighs)

  Cassel, Felix

  Howard, Hon. Geoffrey

  Robertson, Sir G. Scott (Bradford)

  Cave, George

  Hughes, Spencer Leigh

  Robertson, John M. (Tyneside)

  Cawley, Sir Frederick (Prestwich)

  Isaacs, Rt. Hon. Sir Rufus

  Robinson, Sidney

  Cecil, Evelyn (Aston Manor)

  Jones, Rt. Hon. Sir D. Brynmor (Swansea)

  Roch, Walter F.

  Cecil, Lord Hugh (Oxford University)

  Jones, J. Towyn (Carmarthen, East)

  Roche, Augustine (Louth)

  Clancy, John Joseph

  Jones, William (Carnarvonshire)

  Roe, Sir Thomas

  Clive, Captain Percy Archer

  Jones, W. S. Glyn- (T. H'mts, Stepney)

  Ronaldshay, Earl of

  Clough, William

  Joyce, Michael

  Rowlands, James

  Condon, Thomas Joseph

  Keating, Matthew

  Royds, Edmund

  Cornwall, Sir Edwin A.

  Kelly, Edward

  Samuel, Sir Harry (Norwood)

  Cotton, William Francis

  Kennedy, Vincent Paul

  Samuel, Rt. Hon. H. L. (Cleveland)

  Cowan, W. H.

  Karr-Smlley, Peter Kerr

  Samuel, Samuel (Wandsworth)

  Craik, Sir Henry

  Kerry, Earl of

  Sanders, Robert Arthur

  Cripps, Sir Charles Alfred

  Kilbride, Denis

  Scanlan, Thomas

  Crumley, Patrick

  King, Joseph

  Scott, Sir S. (Marylebone, W.)

  Cullinan, John

  Lardner, James C. R.

  Sheehy, David

  Dalrymple, Viscount

  Law, Hugh A. (Donegal, West)

  Shortt, Edward

  Dalziel, Davison (Brixton)

  Lawson, Sir W. (Cumb'rld, Cockerm'th)

  Simon, Rt. Hon. Sir John Allsebrook

  Davies, David (Montgomery Co.)

  Lloyd, George Butler (Shrewsbury)

  Smyth, Thomas F.

  Dawes, James Arthur

  Low, Sir Frederick (Norwich)

  Stanley, Major G. F. (Preston)

  Delany, William

  Lundon, Thomas

  Steel-Maitland, A. D.

  Denman, Hon. Richard Douglas

  Lynch, Arthur Alfred

  Talbot, Lord Edmund

  Denison-Pender, J. C.

  McGhee, Richard

  Tennant, Harold John

  Denniss, E. R. B.

  Macnamara, Rt. Hon. Dr. T. J.

  Terrell, George (Wilts, N.W.)

  Devlin, Joseph

  MacNeill, J. G. Swift (Donegal, South)

  Thomson, W. Mitchell (Down, N.)

  Dickinson, W. H.

  Macpherson, James Ian

  Thynne, Lord Alexander

  Dickson, Rt. Hon. C. Scott

  MacVeagh, Jeremiah

  Tullibardine, Marquess of

  Dillon, John

  M'Curdy, Charles Albert

  Ure, Rt. Hon. Alexander

  Donelan, Captain A.

  McKenna, Rt. Hon. Reginald

  Walters, Sir John Tudor

  Doris, William

  M'Laren, Hon. H. D. (Leics.)

  Warner, Sir Thomas Courtenay

  Duffy, William J.

  M'Laren, Hon. F. W. S. (Lincs., Spalding)

  Webb, H.

  Edwards, Clement (Glamorgan, E.)

  Manfield, Harry

  White, Major G. D. (Lancs., Southport)

  Edwards, John Hugh (Glamorgan, Mid)

  Mason, David M. (Coventry)

  White, J. Dundas (Gies., Tradeston)

  Esmonde, Dr. John (Tipperary, N.)

  Mason, James F. (Windsor)

  White, Patrick (Meath, North)

  Esmonde, Sir Thomas (Wexford, N.)

  Masterman, Rt. Hon. C. F. G.

  Whittaker, Rt. Hon. Sir Thomas P.

  Eyres-Monsell, Bolton M.

  Meagher, Michael

  Whyte, Alexander F.

  Fetherstonhaugh, Godfrey

  Meehan, Francis E. (Leitrim, N.)

  Wilson, Hon. G. G. (Hull, W.)

  Ftrench, Peter

  Meehan, Patrick J. (Queen's Co., Leix)

  Wood, John (Stalybridge)

  Field, William

  Molloy, Michael

  Wood, Rt. Hon. T. McKinnon (Glas.)

  Fiennes, Hon. Eustace Edward

  Molteno, Percy Alpert

  Young, William (Perth, East)

  Fisher, Rt. Hon. W. Hayes

  Money, L. G. Chiozza

  Younger, Sir George

  Fitzgibbon, John

  Mooney, John J.

  Yoxail, Sir James Henry

  Fitzroy, Hon. Edward A.

  Morgan, George Hay

  Flavin, Michael Joseph

  Morison, Hector

  TELLERS FOR THE AYES.—Mr. Illingworth and Mr. Gulland.

  Fletcher, John Samuel

  Morton, Alpheus Cleophas

  Forster, Henry William

  Muldoon, John

  NOES.

  Adamson, William

  Hogge, James Myles

  Roberts, G. H. (Norwich)

  Barnes, G. N.

  Kellaway, Frederick George

  Samuel, J. (Stockton)

  Booth, Frederick Handel

  Lambert, Richard (Wilts, Cricklade)

  Scott, A. MacCallum (Glas., Bridgeton)

  Bowerman, C. W.

  Leach, Charles

  Smith, Albert (Lancs., Clitheroe)

  Bryce, J. Annan

  Macdonald, J. Ramsay (Leicester)

  Snowden, Philip

  Buxton, Noel (Norfolk, N.)

  Marshall, Arthur Harold

  Sutherland, John E.

  Byles, Sir William Pollard

  Martin, Joseph

  Sutton, John E.

  Chancellor, Henry George

  Morrell, Philip

  Taylor, Thomas (Bolton)

  Chapple, Dr. William Allen

  Parker, James (Halifax)

  Thomas J. H. (Derby)

  Craig, Herbert J. (Tynemouth)

  Pearce, Robert (Staffs, Leek)

  Thorne, William (West Ham)

  Duncan, C. (Barrow-In-Furness)

  Pointer, Joseph

  Wadsworth, J.

  Gill, Alfred Henry

  Price, C. E. (Edinburgh, Central)

  Wardie, George J.

  Glanville, Harold James

  Pringle, William M. R.

  Wilson, W. T. (Westhoughton)

  Goldstone, Frank

  Radford, George Heynes

  Hardie, J. Keir

  Rattan, Peter Wilson

  TELLERS FOR THE NOES.—Sir A. Markham and Mr. J. Ward.

  Hinds, John

  Richardson, Thomas (Whitehaven)

  Hodge, John

  Question put, and agreed to.

  CLAUSE 4.—(Power to Apply for Substituted Site Value at Any Time up to the First Occasion on which Increment Value Duty is Paid.)
  An application for the purpose of the substitution of a value under Sub-section (3) of Section 2 of the principal Act (as amended by Section 2 of the Revenue Act, 1911, and Section 10 of the Finance Act, 1912) for the original site value of the land may, notwithstanding anything in those Sections, be made at any time, so long as it is made before the expiration of three months after the first occasion after the commencement of this Act has arisen on which the site value of the land has to be ascertained for the purpose of Increment Value Duty.
  Mr. PRETYMAN: I beg to move to leave out from the words "occasion after the commencement of this Act has arisen on which the site value of the land has to be ascertained for the purpose of Increment Value Duty," and to insert instead thereof the words "claim for Increment Value Duty has been made."
  The Chancellor of the Exchequer will easily appreciate the object of this Amendment. The claim for duty is really the first occasion on which a very large proportion of those who have to pay duty realise the position in which they are. The proposal itself is a concession, I admit, but I would suggest to the Chancellor of the Exchequer that the subject has the undoubted right to get the benefit of any exemption to Which he is entitled. This Amendment does not propose to increase any exemption whatever. It merely extends the period within which a person who is potentially liable to Increment Value Duty may have the right of claiming a substituted site value, to which he is actually entitled. It is only fair he should have an opportunity for bringing forward grounds for
  1002
  resisting a claim when that claim is made, and that he should not be prejudiced in resisting that claim because he has not objected some very long period before the claim actually was made. What happens on an occasion is that the owner is asked to deliver particulars. He delivers the particulars and hears nothing more. He may or may not have a claim against him. The chances are that he will not. If he does not, nothing happens. If there is no claim for Increment Value Duty this Clause will not operate, but, if a claim is made, my suggestion is that when the claim is made this is the first occasion when his attention is really called to the point, and he ought to have an opportunity of urging his claim for a substituted site value. It is only reasonable, because until the claim arises he never really appreciates his position. I am sure that the object of the State is only to take the tax to which it is fairly entitled, and if a man is entitled to an exemption he ought not to lose it simply because he has not put forward a a claim, not from negligence, but simply from want of knowledge of his position under a most complicated Statute, which is not understood by many people learned in the law and still less by ordinary owners of property.
  Mr. LLOYD GEORGE: I am sorry that I cannot accept this Amendment. I think that we have gone a long way to meet the criticisms that have been made. There is really no case for this because after the occasion the man who will benefit by the site value has parted with the property and it is in the hands of somebody else. This Clause is intended to meet the case of a man who has paid more for his house than it is really worth.
  Mr. PRETYMAN: I will not delay the Committee. We had an arrangement and if the Chancellor of the Exchequer cannot

  1003
  accept it, I will defer any suggestion of the kind until the Revenue Bill is passed.
  Amendment, by leave, withdrawn.
  Clause added to the Bill.

  CLAUSE 5.—(Remittance of Increment Value Duty Payable by Small Investors).
  "Where the value from which deductions are made for the purpose of arriving at the site value of land on any occasion for the collection of Increment Value Duty does not exceed £500, and it is shown to the satisfaction of the Commissioners that the total income from all sources estimated according to the several rules and directions of the Income Tax Acts, in the year prior to that in which the occasion arises, of the person who is entitled to receive the benefit of the purchase money or rent, where the occasion is a sale or lease, or of the deceased person when the occasion is the death of any person, or of the body corporate or unincorporate where the occasion is a periodical occasion, did not exceed £160, any increment value which would but for this Section be collected by the Commissioners on that occasion shall be remitted, and for the purpose of the provisions of the principal Act as to the collection of the duty, shall be deemed to have been paid."
  Mr. CASSEL: I beg to move, to leave out the words "five hundred" ["Increment Value Duty does not exceed five hundred pounds"], and to insert instead thereof the words "two thousand."
  The first intention was to exempt a person who pays Income Tax if he invests £500 and no more in house property. That person is not exempt under this Section. I do not think the right hon. Gentleman really appreciates that point.. Supposing he invests £500, or £400, or £300, in leasehold property, and has a ground rent of £10 or £7, he will not be exempt, and for this reason: You look to see whether it is more than £500 or the value of the freehold, and although he might have only paid £300 for leasehold property, with a ground rent of £7 or £10, he would not come within the Section because the value of the freehold would be more than £500. I think this has arisen from cases like the road sweeper's case, where he invested £300 in leasehold property with a ground rent. That case would not be covered in this Clause as it stands, because you would assess his freehold and not his leasehold. You add to the sum which he
  1004
  has invested, the value of the reversion, so if you really wish to exempt persons who have invested £500 or less in a house or landed property, you want to put it at a higher figure. Whether you put it as high as £1,000 or not, you ought to put it at a higher figure than £500.
  Mr. LLOYD GEORGE: This Clause is intended to meet the case, I will not say of the small investor, but of the artisan who has built his own house. Five hundred pounds, in my experience, practically covers every case of that kind, and the artisan who builds his house for £2,000 ought, I think, to bear his fair share of taxation. There will be Income Tax limits as well as property limits.
  Mr. PRETYMAN: Five hundred pounds is not the property limit here.
  Mr. LLOYD GEORGE: I am coming to that point. The hon. and learned Gentleman (Mr. Cassel) said you might have a case of £10 ground rent. These are not cases we intend to meet. I know ground rents are very high, but the case of an artisan paying a ground rent of £7 or £10 upon his own house does not, I think, exist. There are cases of men who build houses for themselves or buy a house, it may be a leasehold house, with a ground rent of 30s. or £2; it very rarely goes beyond that. Even if you take the ground rent and the whole into account, it certainly does not go into anything that would produce £500, and I am certain that if you take the £500 limit, and £160 a year it will practically cover every case of an artisan who builds a house.
  Mr. SNOWDEN: I understand the Chancellor of the Exchequer to say that this is intended to meet the case of the artisan who owns his own house. That may be the intention of the Clause, but what will be its effect? As I understand, the value of property in this connection includes the composite value of both site and building. Take the case of an artisan or a person whose income is under the Income Tax limit, and who is the fortunate possessor of a, plot of land worth £400 which appreciates in value. This Clause would exempt that case for two reasons—because the value does not exceed £500, and because the income is less than £160. The Chancellor of the Exchequer said that this Clause was intended for the benefit of the artisan. But it will exempt from Increment Duty

  1005
  every case, no matter how high the percentage of increment may be, provided the income of the individual is less than £160 And the value of the property does not exceed £500. I wonder whether the Chancellor of the Exchequer is aware how many cases that will cover. There are one and three-quarter million of freeholders in the country and the majority would come within this figure. By this proposal the Chancellor of the Exchequer is going to sacrifice an enormous amount of Increment Value Duty. There will probably be little appreciation in urban land. The appreciation of land values will be largely in what are now rural districts. The price of rural land is so low now that it is quite possible for a man with an income of less than £160 a year to become the possessor of a very considerable number of acres of land, which, with the spread of population, may greatly appreciate in value. By this proposal the Chancellor of the Exchequer will lose a very large amount of Increment Value Duty in those cases. But I do not intend to oppose the Clause. There are reasons, not of principle but of expediency, why it should be passed. 'There are 1,750,000 of small freeholders, who have feared that these taxes would hurt them a great deal more than they probably will, and it is for that reason the proposal is made.
  Mr. ROYDS: This Clause has nothing whatever to do with relieving the man who owns his own house. As I understand it, the object of the Clause was to relieve or to allay the fears of the small investor in land and cottages and small houses. We have been told that this applies to the artisan who invests £200 in a house that probably is worth £600, on which he borrows the £400. Therefore, if you limit this to £500 you are bringing down the value of that property. It is in order that investments may be continued in connection with the man who has been frightened in consequences of these taxes and valuations that this has been put forward. The object of the Clause was to attract capital back to the land, to relieve cottages of this Increment Duty, and so far as possible encourage the small investor to make investments in the small class of property in the future in the way he has been privileged to make it in the past.
  Question, "That the words 'five hundred' stand part of the Clause," put, and negatived.
  Words, "two thousand," there inserted.
  Mr. CASSELhad on the Paper an Amendment to insert after the word "Acts" ["Income Tax Acts"] the words "except that the incomes of husband and wife shall be treated as separate."
  The CHAIRMAN: It seems to me that if the hon. Member moves at all here, he can only deal with a very limited point, as to whether a difference should be made in the treatment between husband and wife in respect of this particular Clause.
  Mr. CASSEL: May I point out that the effect of the Clause as it stands is altogether to exempt the married woman from Increment Duty. If you think I had better not deal with it here, I will not move.
  Amendment, by leave, withdrawn.
  Mr. ROYDS: I beg to move, to leave out the words "one hundred and sixty" ["did not exceed one hundred and sixty pounds"], and insert instead thereof the words "three hundred."
  I do not know whether I should press this Amendment.
  Mr. J. WARD: I should think you have done very well!
  Mr. ROYDS: Personally, I do not in the least see why, if a man is exempt who has got £160, why the city clerk with £250 or £300 a year, who makes an investment in the same class of property, should not also be exempt. It was for that reason I put down my Amendment.
  Amendment, by leave, withdrawn.
  Mr. MITCHELL-THOMSON: I beg to move, at end of Clause, to add the words—
  "And no liability shall attach to any such person in respect of any Increment Value Duty which has accrued, but which has not been demanded prior to the passing of this Act, upon occasions, to which this Section applies, between the passing of the principal Act and the passing of this Act."
  The Committee will see that this is in respect of the particular class of persons to whom the Section applies; that is to say, the small investor that the Chancellor of the Exchequer spoke of just now. It will make the various Clauses retrospective in regard to those occasions in which Increment Duty has been demanded. It is clearly impossible to make it retrospective with regard to occasions on which Increment Duty has been demanded and.

  1007
  paid. I agree that, in equity, that really would be the fair thing, but, as a matter of practical policy, it cannot be done. I think where the money has not been demanded this is a reasonable proposition as otherwise you are going to have two classes, one of which is not to be liable in future, and the other which is to be liable between 29th April, 1910, and whatever date in August this Bill is passed, in respect. of claims which have not been formulated. A number of persons are interested in this, and representations have been made to us with regard to it. I hope, therefore, the Government will agree to it.
  Mr. LLOYD GEORGE: I agree with the lion. Gentleman it is a very small point., and if we are not to have another Amendment going further. I would not mind accepting this as it would save a great deal of trouble.
  Amendment agreed to.
  Question proposed, "That the Clause, as amended, stand part of the Bill."
  Mr. SNOWDEN: The Chancellor of the Exchequer in reply to an observation of mine when I asked how much these concessions in this Clause were going to cost shook his head, by which I understood he had no idea.
  Mr. LLOYD GEORGE: My hon. Friend made a statement that this would cost an enormous sum of money. I shook my head most emphatically at that. My advice is that it would not, but would save a great deal of trouble and expense to small people and small freeholders who have much greater difficulty in dealing with a matter of this sort than men in a bigger position.
  Mr. SNOWDEN: There may not be very much loss in revenue the Chancellor perhaps means, but whether that be a saving or not I think there is no denying that this Clause makes concessions which undermine and take away altogether the principle on which Increment Duty was based. It will be remembered when those Land Taxes were under discussion in 1909 they were recommended as the application of a principle new in British taxation. I think it was the First Lord of the Admiralty who said we were now beginning to look not so much at the man's income—
  Mr. T. M. HEALY: Is this in order?
  The CHAIRMAN: As far as I follow the argument it is dealing very closely with the question, "That the Clause, as amended, stand part!"
  Mr. SNOWDEN: The First Lord of the Admiralty said we were beginning in these Land Taxes to adopt a new principle of British taxation, and that the tax-gatherer was going to say not "How much have you got?" but "Where did you get it?" I think there is something to be said for that principle of taxation. My protest is that that principle is being sacrificed. The Land Taxes were recommended to us because it was intended that they should tax something that was not the creation of any individual, but the creation of the community, and for the time being the Chancellor of the Exchequer said he was content to take 20 per cent. of that for the State. Now he proposes to abandon that principle altogether, and he practically says that it is wrong for a rich man to take something which is the creation of the community, but it is not wrong for the poor man to do so. I remember, when I was a lad at school, a couplet which ran:—
  "It is a sin to steal a pin.
  Much more to steal a greater thing."
  The morality which is now to be embodied in our taxation is even much more immoral than that couplet. What we are going to say now is that it is wrong for a man to steal from the community, provided his income is not more than £3 a week, but the moment he gets beyond that point he is a thief. What is the moral of all this? That the Chancellor of the Exchequer has found his land taxation proposals in the Budget to be an utter failure and the machinery set up impracticable. I have always denounced these taxes, which have been put forward with the idea of securing the unearned increment, because I think it passes the wit of man to devise taxes which will do that. May I take the illustration that was cited—and which is by no means a hypothetical case—by the Chancellor of the Exchequer earlier in the Debate where land is wanted for some public purpose? This case can never be met by means of a tax. There is only one way in which it can be done, and that is by giving to the local authorities compulsory powers to acquire the land. I supported the Budget proposals because they promised us a system of land valuation. Undoubtedly the Land Taxes will have to be regarded as being only temporary, and as soon as we have the valuation they will be swept away and the common sense of

  1009
  Parliament will adopt a more effective method.
  Mr. PRETYMAN: I cannot help welcoming the speech of the hon. Member who has just sat down as a reinforcement of the very arguments which we put repeatedly before the House on the Second Reading, although the hon. Member has put them in a very much better way. The conclusions we drew are a little more complimentary to the working classes than those which have been drawn by the hon. Member. We did not suggest that the small owner with under £3 a week income who obtained increment was a thief.
  Mr. SNOWDEN: That word was put into my mouth.
  Mr. PRETYMAN: That was the inference he felt himself obliged to draw from the situation presented by this Clause, put side by side with the original Bill. We drew a different conclusion, and it was that there was no principle whatever in the original Act. Really, under the original Act you are not going to get something which is created by the State and which a private individual has appropriated. What is really happening, as is now confessed by this Clause, is that a special tax is being imposed upon one kind of increment and all other kinds of increment are exempt from it. We now get back to those bare bones with which we started the discussions. It is rather remarkable that the admission of the hon. Member should have come to-day in the form in which it has, and I feel sure that another place will take note of it in view of their rejection of this measure on the very ground urged by the hon. Member.
  Mr. SNOWDEN: I put forward those very ideas in the course of the Debates on the Budget in 1909.
  Mr. PRETYMAN: I only wish the Government had paid attention to them.
  Mr. T. M. HEALY: May I suggest that the hon. Member for Blackburn (Mr. Snowden) is wasting his time in the Labour party. He should apply for election in an Irish agricultural constituency.

  CLAUSE 6.—(Amendment of Provision as to 10 per cent. Reduction of Increment Value Duty.)
  It is hereby declared that the original site value of land for the purpose of Sub-
  1010
  section (5) of Section 3 of the principal Act (which provides for a reduction of the amount of Increment Value Duty payable. on any occasion), is the assessable site value of the land as calculated under Section 25 of the principal Act, and that the site value on any subsequent occasion for the purpose of that Sub-section is the site value as ascertained under Subsection (2) of Section 2 of the principal Act on the last preceding occasion for the collection of Increment Value Duty; but where on an occason for the collection of Increment Value Duty which occurs after the commencement of this Act the site value on which the reduction would be calculated is less than one hundred pounds, the reduction, if the person chargeable with duty so requires, instead of being at the rate of 10 per cent. on that site value, shall be at the rate of 10, per cent, on the increment value.
  Mr. PRETYMAN: I have to raise, as a point of Order, the question whether Clause 6 does not increase the charge on the subject; in which case I believe that it would require a separate Resolution. The Resolution on which this Bill is founded contains no provision authorising an increased charge upon the subject. Under this Clause, we are dealing with what is. known as the minus values case. When that case was heard in the House of Lords, it was pointed out that the 10 per cent. could not be calculated on the assessable site value where the assessable site value was less than nothing or was a minus quantity; because it was impracticable to make a deduction of 10 per cent. from a minus quantity. There are many absurdities in connection with this very difficult Act, and that is one which bas rather struck the imagination of the public. The case was heard in the Scottish Court, and the Scottish Court unanimously decided that a minus value was illegal and could not exist. The case was then carried to the House of Lords, and the House of Lords decided that a minus quantity could exist. In giving that decision, they were met with the question: How is it possible to take 10 per cent, from the assessable site value if it is a minus quantity? Two of their lordships, in giving judgment, delivered themselves of the dictum that this could not be put on the assessable site value, but must be on the full site value. If the 10 per cent. is taken from the full site value, it involves a considerably larger deduction than if it is taken from the assessable site

  1011
  value. Therefore, under the present law, according to that dictum, the 10 per cent. is taken from the full site value. This Clause says it is to be taken from the assessable site value, and that being a lesser deduction will increase the charge on the subject, because the less the deduction the greater the charge. If that is so, I ask whether that would not involve a different Resolution?
  Sir RUFUS ISAACS: I think the hon. and gallant Gentleman is mistaken. He has said there were some observations made in the House of Lords on the minus value. I should like to point out that as a matter of fact it does not change the law in the slightest degree. There was nothing said in the House of Lords on this subject. On the contrary, what the House of Lords did was to pronounce a decision that the view taken by the Government in this matter about minus value was quite correct. There was a discussion on the 5 per cent. or the 10 per cent., but what was said was no part of the judgment. If there was any doubt about it, it no longer obtains, because the Court of Appeal yesterday, in giving the decision which it did in the Lumsden case, came to the conclusion and said perfectly plainly that the observations which were made in the House of Lords were no part of the judgment, and were not assented to by the Lord Chancellor or by Lord Atkinson. The only effect of this Clause, according to the view which I take, and which the Government advisedly takes, is to leave the law as it stands, with this difference that it reduces the charge in certain cases, it does not increase it. It reduces that by saying that 10 per cent. shall not be levied on the increment value, instead of on the assessable site value. But it is not necessary for me to go into that. It will not be disputed that this is a reduction and not an increased charge. The whole point of the hon. and gallant Gentleman is that something said by the House of Lords has changed the law. I deny that.
  Mr. PRETYMAN: I did not suggest that at all. What I said was that the previous condition of the law, which was doubtful, had been made clear by that dictum of the House of Lords, and by that dictum the law was construed by the Department.
  Sir RUFUS ISAACS: That does not make any difference.
  Mr. CASSEL: The right hon. and learned Gentleman has spoken of the dicta of the House of Lords. But you are asked now to decide that they were wrong; you are asked to rule that the dicta are not in accordance with the law. That is a very strong order, especially as they have now obtained a decision in their favour on the minus value point by convincing the Lords Justices that this was the true interpretation.
  Sir RUFUS ISAACS: May I draw attention to the fact that according to the shorthand note in the Lumsden Judgment, it was pointed out that these dicta were no part of the decision, and were not assented to by the Lord Chancellor and Lord Atkinson?
  The CHAIRMAN: That is not a matter for me, either on one side of the other. The point put by the hon. and gallant Member for Chelmsford is perfectly right. He is right in the principle he lays down. If this Clause either imposes a charge or diminishes existing relief, then it would require a Money Resolution, and I could not put it to the Committee until such a Resolution had been passed in Committee of Ways and Means. But I have examined the case and endeavoured to arrive at the exact facts. They appear to me to be these: This Clause is not in any way detracting from any existing relief, in fact the very contention of the right hon. Gentleman's Friends in the case to which he refers—as I think he admitted just now—has been all along that you cannot reckon 10 per cent. on minus value. That was the main argument in the Court of Appeal. I do not see much difficulty, by using his own arguments rather than those of the learned Attorney-General, in saying that what this Clause does is to turn into a substantiality something which had no reality before, as the hon. Member himself admitted. Therefore it is the granting of a relief, and not the diminution of a relief to the subject, and I cannot rule that it requires any Resolution in Committee of Ways and Means.
  Mr. CASSEL: I beg to move to leave out the word "assessable" P is the assessable site value"], and to insert instead thereof the word "full."
  5.0 P.M.
  This, with certain consequential Amendments, would give effect to the dicta of the Judges in the House of Lords, who interpreted the law to be as it would be if that word were inserted instead of "assessable"—that is to say, to leave it on the

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  same footing throughout, that in every case you should make the 10 per cent. deduction on the full site value. That would be a reasonable way of dealing with the matter. Then it would be applicable to the minus value cases as much as to the plus value cases. This Clause proposes an absurd and arbitrary distinction. It proposes in the case where the site value is less than £100 to reckon the 10 per cent. deduction upon the increment, and in all other cases to assess it upon the assessable site value. If my Amendment were accepted, in every case the deduction would be upon the full site value. That is what the dicta of the judges in the House of Lords held to be the law as it is at present. I agree they were merely dicta, but they declared that to be the law now. If you take assessable site value as the basis for reckoning the 10 per cent., you diminish the deduction in proportion as a man has made improvements on his property. The more improvements he has made the less will be the deduction. If you take it on full site value, the question of improvements does not come- in. Say the full site value is £1,000. He gets a deduction -of £100 from whatever the increment is. If, on the other hand, you take it as being assessable site value, assuming the man has made improvements, to the extent of 2500, he does not get £500 deduction, but only £50. Could there be anything more absurd? It is going contrary to every principle upon which the right hon. Gentleman based the duty. He based the duty on the principle that people are to be taxed only upon that part of the increment which is due not to their own efforts or to their own expenditure. Here you are really taxing them more heavily in proportion as they have made a greater expenditure upon their property or, by their own efforts, have increased its value. That is an absolutely absurd way of proceeding with the assessment of the 10 per cent. deduction on the Increment Duty. It is a point of considerable importance, and one which ought to be fully considered. I also submit that if you adopt the principle of the Clause you create a distinction which does not exist under the law as it is at present, which is wholly unreasonable and wholly indefensible, between cases where the property is over £100, and where it is less than £100, a distinction which on no principle of logic or reason can possibly be justified.
  Mr. LLOYD GEORGE: The hon. and learned Gentleman has asked me to reopen the whole question of the basis of 10 per cent. If it is to be reopened, the matter of minus values has to be reopened all round. The 10 per cent. has been a very serious diminution in the value of the Increment Tax up to the present. In fact, it has stood in the way of its fructifying within these first few years. If he is going to insist on making the 10 per cent. upon the full site value instead of the assessable site value, it is tantamount to something which is 10, 15, 20, or even 30 per cent. in some cases. That is a demand which has never been brought forward, and if it is to be 10 per cent., it must be 10 per cent. on the assessable site value. That intention was clearly stated at the time. I cannot possibly accept the dicta which he quoted of the judges, which were not accepted yesterday by the Court of Appeal. We must adhere to the position which we have taken up.
  The Prime Minister indicated that we should not sit beyond five o'clock, and if the hon. Gentleman and his Friends insist upon it, I will instantly move to report Progress. But might I suggest that we should dispose of this and the next Clause?
  Mr. PRETYMAN: I should assent to that subject to my hon. and learned Friend not desiring to discuss the Amendment further.
  Mr. CASSEL: I am willing to withdraw the Amendment under the circumstances, though I feel strongly the injustice and hard-ship of imposing a heavier duty on a man in proportion as he has made greater improvements.
  Amendment, by leave, withdrawn.
  Mr. T. M. HEALY: When does the right hon. Gentleman propose next to take the Bill?
  Mr. LLOYD GEORGE: I shall have to consult the Prime Minister, but due notice will be given. I shall be very much obliged if the hon. and learned Gentleman and the hon. and learned Gentleman (Mr. Healy) will put themselves in communication with the Government in regard to their Amendments on the Reversion Duty.
  Mr. T. M. HEALY: As far as I am concerned I accept the Amendment of the hon. Member for Kingston.
  Mr. LLOYD GEORGE: That goes too far.
  Mr. T. M. HEALY: Mine does not go far enough. Let the Government put their own Clause on the Paper. That is really fair. It is not fair to us not to see what the Government propose. Let the Government put their proposal on the Paper, and we will have an opportunity of deciding. I ask that it should be done before we meet again.
  Mr. PIKE PEASE: I suppose the Bill will not be put down for after Eleven o'clock?
  Mr. LLOYD GEORGE: Will the hon. Gentleman put a question to the Prime Minister on Monday?

  CLAUSE 6.—(Amendment of Provision as to 10 per cent. Reduction of Increment Value Duty); and CLAUSE 7.—(Certificate of Discharge from Increment Value Duty) agreed to.
  Committee report Progress; to sit again upon Monday next.
  Whereupon. Mr. DEPUTY-SPEAKER, pursuant to the Order of the House of 22nd July, proposed the Question, "That this House do now adjourn."
  Adjourned accordingly at Eight minutes after Fire o'clock, until Monday next, 9th August.

PETITIONS PRESENTED DURING THE WEEK.
The following Petitions were presented during the week, and ordered to lie upon the Table:—
MONDAY.
Sale of Intoxicating Liquors on Sundays Bill—Petitions in favour, from Bailiffe Bridge, Brighouse, Eliand, Hipperholme (two), and Stainland.
TUESDAY.
Sale of Intoxicating Liquors on Sundays Bill—Eight Petitions from Halifax, in favour.
WEDNESDAY.
Sale of Intoxicating Liquors on Sundays. Bill—Petitions in favour, from Billinghay, Caythorpe, Coleby, Leadenham, Manchester, Navenby, and Scredington.
THURSDAY.
Sale of Intoxicating Liquors on Sundays Bill—Petitions in favour, from Brace-bridge, Bracebridge Heath, and Lincoln (four).
FRIDAY.
Sale of Intoxicating Liquors on Sundays Bill—Petitions from Dartford, South Normanton, and Wokingham, in favour.
NATIONAL INSURANCE ACT.
  MEDICAL BENEFIT.
  MEDICAL BENEFIT.
  Letting Furnished Houses.
  Letting Furnished Houses.
  Customs and Excise (Statistical Department).
  Customs and Excise (Statistical Department).
ROYAL NAVY.
  OIL FUEL.
  OIL FUEL.
BRITISH ARMY.
  PLAIN CLOTHES
  PLAIN CLOTHES
  Motor Traffic (Hyde Park Corner).
  Motor Traffic (Hyde Park Corner).
  Pekin Syndicate (Prosecution of Mr. H. P. King).
  Pekin Syndicate (Prosecution of Mr. H. P. King).
  Army Bands (India).
  Army Bands (India).
  Cotton Knit Goods Exported.
  Cotton Knit Goods Exported.
  Letter Delivery (Western and Paddington Town Districts).
  Letter Delivery (Western and Paddington Town Districts).
  Imperial Wireless Chain.
  Imperial Wireless Chain.
  Telephone Service.
  Telephone Service.

JUDICIAL BUSINESS.
Ordered, That this House do meet on Thursday the 16th day of October next, at half past Ten o'clock, for the purpose of hearing and determining Appeals and matters connected therewith, pursuant to the provisions of the Appellate Jurisdiction Act, 1876.
House adjourned to Tuesday next, a quarter past Four o'clock.