Sitting of 24 July 1928

Preamble
The House met a quarter past four of the clock, The LORD CHANCELLOR on the Woolsack.
REPRESENTATION OF THE PEOPLE (UNIVERSITY OF READ ING) BILL.
Returned from the Commons, with the Amendment, agreed to.
ADMINISTRATION OF JUSTICE BILL. [H.L.]
Returned from the Commons, with the consequential Amendments made by the Lords, agreed to.
EDUCATIONAL ENDOWMENTS (SCOTLAND) BILL. [H.L.]
Returned from the Commons, agreed to, with Amendments.
NAVAL PRIZE BILL.
Brought from the Commons; read 1a; and to be printed.

MARYPORT GAS ORDER, 1928.
THE FIRST COMMISSIONER OF WORKS (VISCOUNT PEEL): My Lords, I beg to move that these Special Orders, which were presented on the 25th of June last, be approved.
Moved, That the Special Orders which were presented on the 25th of June last be approved.—(Viscount Peel.)
On Question, Motion agreed to.

SHIREBROOK AND DISTRICT GAS ORDER, 1928.
VISCOUNT PEEL: My Lords, I beg to move that the Special Order which was presented on the 28th of June last be approved.
Moved, That the Special Order which was presented on the 28th of June last be approved.—(Viscount Peel.)
On Question, Motion agreed to.

RATING AND VALUATION (APPORTIONMENT) BILL.
Order of the Day for the Second Reading read.
VISCOUNT PEEL: My Lords, this Bill, of which I move the Second Reading, represents the second step in the Government scheme for the assistance of industry and agriculture. Owing to the exigencies of Parliamentary time, your Lordships have not yet had the opportunity of considering the first stage, which is, of course, the Budget Bill, and it is in the Budget that provision is made for the money to fill the gap caused by the derating scheme, and for the distribution of grants on a more scientific basis to the local authorities. I must make a short allusion to the scheme, though I dare say it is familiar to your Lordships, in order to show how this Bill fits into the general scheme of the Government. Under the scheme agriculture is to be relieved of the remaining quarter which it still contributes to the rates, and industry and transport of three-quarters of the burden of rates. But your Lordships will also remember that transport, although relieved of three-quarters of the burden of the rates, is not to retain the benefit itself, but to pass on the relief to certain selected industries by a proportionate reduction in freights. The general aim of the scheme is to concentrate relief on those points where it is most required, and, secondly, to effect a more scientific distribution of local burdens.
Now, this Bill does little more than sort out the different properties and hereditaments which are to be entitled to relief from those which are not to be entitled to relief. The next step—the third step—is to be taken in the autumn. Then there will be settled the actual amount of the relief and the method of reimbursement to the local authorities for the amount of rates which they lose. The five-yearly block grants to be given to local authorities will be progressively distributed according to a formula which will have regard rather to the needs of the
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locality than to its actual expenditure. This Bill is a machinery Bill. It does not give relief at all; it is concerned mainly with definitions. Before I deal with some of those definitions I should like to give your Lordships a slight sketch of the different stages by which the scheme will come into operation. If this Bill passes this month it will be about fourteen months or so before the scheme will come into full operation. The period to the end of November will be occupied, first of all, by the publication of a scheme and by directions to ratepayers who will, of course, send in their claims. Those claims ought to be in by the end of October. After that the provisional valuations will be made and they ought to be ready by the end of March.
These provisional valuations will be considered by certain Revenue officers. Let me say a word at this stage about those Revenue officers. The Exchequer is greatly interested in the way that this derating is carried out because the grants from the Exchequer will be determined in the main by the deficiency in the rates caused by these actual proposals. The duties of these Revenue officers will not be permanent but they will substantially come to an end about October of next year. These officers will have certain powers. They will be able to object to the derating of certain properties either in whole or in part. They will also have the power of objecting if the assessment is too high and in this they will be in harmony, no doubt, with many of the ratepayers themselves. But they will not have other powers. They will not, for instance, have to decide questions of uniformity as between the derating in one county or in one assessment area and another. These Revenue officers and the rating authorities will either agree whatever differences they may have or their differences will be submitted to the assessment committees. Their labours ought to terminate about July, 1929. Then in taking appeals to the Quarter Sessions we come to October, 1929.
That is a very slight sketch of the machinery for carrying out some of the provisions of the Bill, and I will now say a word about the definitions themselves; that is to say, what are agricultural hereditaments, what are industrial

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hereditaments and what are freight-transport hereditaments. As regards agriculture, certainly in this country, there is no great difficulty because agricultural properties, land and buildings are already three-quarters derated. Therefore, it is quite easy to take the same definitions as have been used before in the previous Acts. But there are two additions to the definitions, one of which is of importance. One is that woodlands are included under the term "agriculture" for derating, and then there is a smaller matter—land over a quarter of an acre used for poultry farming. In that way, of course, the whole of the rating will be swept away from these agricultural properties.
Industrial hereditaments present rather more difficulties. It is, of course, easy in theory to distinguish very definitely between the process of production and the process of distribution. But it is not quite so easy in practice as they are apt to be mingled together. The general principle which the Government take is that mines and mineral railways, factories and workshops will be subjects for derating. This is provided for in Clause 3. Most of the factories and workshops have already been registered and, therefore, the carrying out of the definition is facilitated. But it may frequently arise that you may have hereditaments which will quite well come within the definition of factories or workshops, but are not really in the main used as factories or workshops. The principle adopted in the Bill is that a hereditament occupied as a factory or workshop and coming within that definition is net to enjoy this derating if it is used primarily for purposes which are set out in subsection (1) of Clause 3—the purposes of a dwelling-house, of a retail shop, of a distributive wholesale business, of storage, or of a public supply undertaking.
Most of them speak for themselves except, perhaps, the public supply undertaking and about that I would say a word. The principle, of course, of the whole scheme is that the relief or the money available for relief should be applied in a manner best calculated to assist industry and employment. In the case of the industries the relief is fairly certain to get through to the consumer and particularly to assist the export
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trade. But these public supply undertakings, gas, electricity and so on, are mostly monopolies and there is no security that if they are derated the relief will go directly to the industry. In fact, it is probable that instead of being concentrated the relief would be spread over the whole body of ratepayers in the locality and, therefore, be wasted to some extent for the specific purpose for which the scheme was devised. If these hereditaments come within the definitions and at the same time are primarily used for industrial purposes, another question arises, because many parts, or some parts at any rate, of the industrial hereditaments are not concerned with the actual processes of manufacture and therefore there is no reason why, under the general scheme, they should be derated. This point is dealt with in Clause 4, subsection (2), where the non-industrial parts of the hereditament, such as offices, are to be derated if they do not exceed in value 10 per cent. of the industrial part. If they do exceed in value 10 per cent. of the industrial part the excess, and the excess only, is rated. There are then two principles which are followed in these clauses. One is the purpose for which the property is intended to be used and the second is to avoid unfairness between one industry and another. The class of case that is generally taken to illustrate that second principle is the case of a manufacturer who has a fleet of motors in his own works. If this part of the industry were derated there would obviously be rather unfair competition set up with some haulage contractor who used his garages for the purpose of his own business.
Then we come to the freight-transport undertakings definition. The subjects to be derated include railways, canals and docks. As your Lordships know, in the case of railways the benefits have to be passed on to certain selected industries, and arrangements are being made so to pass them on by reduction in freights. Not quite the same problems and not such difficult problems of definition arise in the case of these hereditaments as arise in the case of the industrial hereditaments. In Clause 6, subsection (3), it will be seen that these freight-transport hereditaments

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are derated except in so far as they are occupied and used for the purposes of a dwelling-house, hotel, or place of public refreshment, and except so far as any part is let out and capable of separate assessment. The railways include the well-known great railways and certain light railways.
Next we come to the definition of canals and docks. They, again, present no great difficulties. Docks are generally included except those used purely for purposes of recreation. Canals include also inland navigation. There is one point I must refer to and that is the question of the wharves. Private wharves belonging to private wharfingers are included in the derating scheme if they are used for purposes of public traffic, but not if they are only used for their own purposes as a wharf. A question arises about warehouses. Are warehouses in the docks to be derated? If so, how will they compete with other warehouses outside? The general principle that is followed in the proviso in subsection (3) of Clause 6 is that they Will be divided into two classes, and those which can be regarded as mere stages in the movement of transport will be derated with the general dock system, but those which are used for more permanent storage purposes will not be so derated. Obviously, if they were derated, they would come into direct competition with those warehousemen whose business it was to store and not to transport.
That is a very brief sketch of the class of hereditaments defined in the Bill which will come under the derating scheme. There is only one criticism that I should like to mention. It has been said: "You are assisting not merely the unsuccessful industries, or the depressed industries, but you are also assisting the prosperous industries." I suppose the inference from that would be that you must try to distinguish between what are prosperous industries and what are unprosperous industries. Your Lordships will see that that is a very difficult distinction to draw. Many industries are prosperous because they are well managed and it would be rather unfortunate for those well- or better-managed industries if their rivals which are unsuccessfully managed were to be derated and they themselves were not to
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be derated. Not only that, but it would be very difficult indeed for a valuer to get a definition of what was or what was not a prosperous industry. There are great difficulties in finance. Neither local authorities nor the Government could form much of an estimate of what industries were to be deemed prosperous in one year or another year. Whether that criticism be of value or not, it is a fact that the greatest measure of relief, and by far the greatest measure of relief, does go to those classes of industry which are depressed. Out of the £26,000,000 something like £20,000,000 goes to the depressed industries of iron and steel, coal and agriculture—a very substantial proportion, as your Lordships will agree.
I think the whole problem can be further defended on the basis not merely of expediency but of principle. No doubt in this case the practical requirements of industry do really coincide with theory. It has been recognised for some time that it is not really fair that industries, including agriculture, should suffer in the matter of rates merely because the necessities of their business require that they should occupy large areas or spaces of ground and use many buildings. If that is so, and if the principle is right that the raw materials of industry should, if possible, be free from rating, it follows that the objection of prosperous or unprosperous industries falls to the ground and is really not relevant to the question. As your Lordships know, this question of the rating of the raw materials of industry has never been settled on principle, but has been a long historical development from the days when rates were first instituted.
Therefore, while this machinery Bill can be defended on the ground that it will be effective in concentrating on industries such as transport and agriculture all the assistance that the Government or the State is able to give, it can also be defended on the broad ground that in a well-ordered State, so far as possible, the tools and raw materials of industry should be free from taxation, and that any taxation should be taken off at the other end when they have earned their profits. I commend this Bill to your Lordships and I hope you will pass it with such swiftness as you may in order that the third stage, which

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really will decide on the grants to be made for the relief of industry, may as rapidly as possible be put in hand. I beg to move that the Bill be now read a second time.
Moved, That the Bill be now read 2a.—(Viscount Peel.)
LORD PARMOOR LORD PARMOOR, who had given Notice to move as an Amendment, That the Bill be read 2athis day six months, said: My Lords, I beg to move the Motion which stands in my name which, of course, would be equivalent to the rejection of the Bill. That makes it necessary to examine at rather greater length than the noble Viscount has done what are the principles involved in this Bill. Of course, it is only one of three Bills—we all know that—but it is utterly impossible to discuss it or explain it without having regard to the fact that the Finance Bill has already been discussed and that a White Paper has been issued stating what are to be the future proposals. I do not intend to trouble your Lordships with any details on those points but they must be borne in mind in considering the effect and the meaning of the Bill now before the House.
There are two ways in which this Bill can be considered and, I think, when we come to discuss principles we must find that it ought to be condemned on either view. You may regard this Bill, as the noble Viscount did, as in part a Bill to give assistance to certain hard-pressed industries. Whether those industries should have assistance of that kind I do not stop to consider. Certainly nothing I shall say is in opposition to that. The other point of view is that it is a Bill in connection with our rating system and rating relief. I am bound to say that on that point I do not think the Leader of the Liberal Party in another place expressed himself too strongly when he said that the method proposed from the rating point of view was a thoroughly vicious one. I want to consider, therefore, the principles. I will not go into matters of detail. I suppose we can accept, what the noble Viscount has said on clauses, and so far as we have to discuss them we may discuss them on a subsequent occasion.
The first point as regards the subsidy principle is whether it is properly applied or not. That has already been referred
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to by the noble Viscount in his speech. I am going to suggest that what he has said from that point of view is really no defence at all, and that it is impossible, particularly under existing conditions of finance in this country, to justify this Bill by the figures which have already been given by the Government. He called attention to prosperous and unprosperous businesses. The fact that you have to draw the distinction which he has sought to draw is, in my view at any rate, a condemnation of the proposals of this Bill as a subsidy Bill. I do not want to trouble your Lordships unduly with figures, but I have before me the figures which were given by the Parliamentary Secretary of the Board of Trade in another place on May 14. What do they show? They show that breweries and distilleries are to get £400,000. Breweries and distilleries since 1924 have increased their dividends or their income from £10,000,000 to £24,500,000. I suggest to your Lordships that it is utterly impossible on any ground whatever to justify a subsidy of that kind. It is a monstrous suggestion, particularly having regard to the conditions of finance at the present time, and having regard to what you have already heard of the difficulties of unemployment in mining districts.
Then, in addition to that, the chemical industry, a very prosperous industry, is to obtain £600,000 as a subsidy. Perhaps I might point out that it was stated in the House of Commons, and I have no doubt accurately, that the great Mond chemical combine, which has a dividend profit of £4,000,000 a year, would itself get £200,000 as a subsidy under this scheme. No figures were given as regards the prosperous industries which are sometimes called the luxury trades, motor cars, artificial silk and tobacco. They were not given and never have been given. But I am willing to take what the noble Viscount said. Let us take his own figures. I am not giving the exact figures, but he said in substance that about one-third of the subsidy would go to these prosperous industries. I am not taking the exact figures, but we are told roughly one-third.
VISCOUNT PEEL: I did not say that.
LORD PARMOOR: Well, you said £6,000,000 out of about £26,000,000.
VISCOUNT PEEL: No. I said that out of £26,000,000 over £20,000,000 went to those industries which are definitely classed as depressed.
LORD PARMOOR: That leaves £6,000,000. The figures even as they have been published show quite conclusively—it is not very easy to say one-third or one-fourth or one-fifth or one-sixth—that at a time when financial conditions are extremely difficult in this country, when very heavy demands are likely to be made on our finances, this scheme would give thousands of pounds to industries which are extremely prosperous at the present time, which are earning large dividends and which on any principle ought not to have any State subsidy. The noble Viscount has said, if I may answer his argument and if he will listen to what I am saying, that it is difficult or impossible—I think he is right there—to differentiate in a subsidy principle of this kind between prosperous and unprosperous industries. I do not want to misrepresent him and I think that was in substance what he said. But that is the objection to the whole scheme. It shows that the scheme itself as regards subsidies is founded on a bad basis, for the reason that you are giving some millions in subsidies and thereby throwing away money to that extent, and you say it has to be done because neither officials nor others can draw a proper distinction between prosperous and unprosperous industries.
I do not deny that, but I draw a different conclusion from that of the noble Viscount. I say it vitiates the principle. I can think of nothing to justify the results I have read out to your Lordships, giving money to those who are prosperous and giving it at the expense of the country at large. Why should these people have one farthing of public money? Brewers and distillers, £400,000! Is there any one in this House who, for a moment, will justify a national payment of that kind? The same thing applies to the chemical industry, which is known to be extremely prosperous. Will any one in this House get up and say it is right to give out of national funds a subsidy or gift of £600,000 to the prosperous chemical industry at the present moment? It condemns the proposition. It shows that the scheme is made on a wrong footing.
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When we come to the question of rating, the procedure is wrong on principle, if I may say so, from top to bottom. I agree with the Leader of the Liberal Party in another place on this point. It disregards the whole principle of rating reform as expressed by every Commission and Committee since 1836, and more particularly by the well known Royal Commission of 1901 and the equally important and, in its careful detail, most valuable Report of the Departmental Committee of 1914, which supported in every respect the views put forward by the Royal Commission. This point is extremely important. You cannot have a fair system of rating reform unless you differentiate between the different charges for which the rating expenditure is incurred. These are of two kinds. I hope your Lordships will see the importance of what I am saying. First of all there are the charges that are called beneficial and local, and then there are those that are called onerous and national. Let us consider first of all those that are local and beneficial. We are not here dealing with charges that victimise anyone or in respect of which the persons who pay them do not get value for their money, and there surely can be no reason whatever why, when there are two industries side by side, one, let us say, distributive and the other productive, getting equal benefit from these local charges and services, they should not share the same burden under the same conditions.
To make the point quite clear, the national services defined by Sir Edward Hamilton and Sir George Murray, in their Report at the time of the Royal Commission, take up more than 65 per cent. of the rate charges. I have the figures for 1924–5, which are the latest that I could get, and I have taken the expenditure from rate charges on the four items which the Royal Commission said were matters of onerous expenditure and ought to be borne by the National Exchequer. As was said in the Report of the Royal Commission, and as has, I think, been admitted ever since, charges other than these four may be dealt with as local and beneficial. The four national charges are: education, highways, relief of the poor, and police. In 1924–5, so far as education is concerned, 21.2 of the total rate charge was incurred; in regard to highways,

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19.8; for relief of the poor, 18.4; and on justice, 7.4. I quite agree, although this is not part of the present scheme, that those charges in any rating scheme have to be dealt with as national charges, and the right principle is that which was accepted by the Royal Commission, that national charges ought to be provided for by funds from the National Exchequer. This, of course, creates the whole difficulty in dealing with rates in the lump. You have to confuse rates paid for benefits received with rates onerous in character which ought to be paid for from other than local resources.
Just see for a moment how this operates. Somewhere between 35 per cent. and 50 per cent., and on an average 40 per cent., of the rates are paid for Local services and benefits locally received. In regard to that 40 per cent., what is the meaning of this Bill? Supposing you have in a locality sanitation, lighting, water and so on, and even expenditure for parks and other purposes of that kind, why should a distributive industry be fined for the benefit of a productive industry? That is what it comes to. Take the case of houses and shops. You will find that houses and shops represent about 60 per cent. of the total rating values throughout the country, at any rate in Scotland. The figures of the Balfour Committee, from which many of our statistics have to be taken, were largely based, as the noble Viscount opposite knows, on Scottish statistics, but at the same time the Committee said that the same statistics could be used as regards conditions in England and Wales and would be accurate. Take the house or shop in comparison with an industry. Why should the house or shop have to pay for local benefits which the industry receives? The figures that I have before me show that this will be the effect of the present scheme, and I think it would always be the effect of any artificial scheme that did not begin with a proper allocation of rating charges between those that are onerous in the ordinary sense and those which really give benefit to those who pay for them. That appears to me to be an absolute condition precedent to any interference with our rating system, unless we are going to proceed, as the Leader of the Liberal Party said in the other House, by a thoroughly vicious method.
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Let me take the instances in the Bill to which the noble Viscount referred. Perhaps it would be the most convenient and shortest way if I refer to the proviso to subsection (1) of Clause 3. The people here in question are those who are not to get any benefit out of this Bill. Why should a dwelling-house pay more for benefits received than any other house? Why should a retail shop pay for benefits of sanitation, water and matters of that kind that are given to an industry in the next street? Then as regards the distributive wholesale business, it is not necessary at this stage to dwell upon what appears to be the economic blunder of thinking that you can, in these matters, differentiate between productive and distributive businesses. Why should a business which distributes have to pay in respect of benefit received by neighbouring productive industries? You have to face that point. It is not a question of victimisation or anything of that kind. The man who has paid this charge has the benefit and why, in those circumstances, should you allow him to keep the benefit and allow someone else to pay the charges? It is not equitable or just, and it is wholly out of accord with our whole rating principles. I should have thought that it was a matter of first principle at this stage with those who have read and studied the history of rating in this country, that unless you draw a distinction between charges which really impose a burden and charges which really give a benefit, you cannot proceed under the proposals of this Bill without doing an immense amount of grave injustice.
I would read one small quotation from the Report of Sir Edward Hamilton and Sir George Murray because it saves me the trouble of too long a speech and it is a quotation from the most skilled Commission you could possibly have, which heard all the evidence. They say that "the general feeling seems to be that beneficial rates"—the true local rates to which I have referred—"operate on the whole not inequitably." I think that is absolutely so. Every man is entitled in that respect to be put on an equal basis and I entirely agree with what is said in the Report which I have mentioned. I do not think that there is any answer to that. Of course, classification is a part of our rating system—it is more developed in Scotland than

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here—in order to get equality, but that is a different matter from what is suggested or proposed in this Bill. It was under that system that, long ago, agricultural land only paid one-fourth, and railways, although they paid their full quota as regards their stations, only paid one-fourth as regards their running lines; but if any one reads the Report they will find it laid down most clearly that exemption could not be justified as regards these beneficial and local rates.
I will take the case of agricultural land. I think I sympathise, perhaps too much, with the owners of agricultural land. It is a business to which we are all accustomed and of which most of us know the difficulties, but is it possible to say that agricultural land is not benefited by local expenditure? Of course it is not—access, water, lighting, improvements in every direction, in which they get a share of advantage. Nay, more than that, I am not much in favour of what I may call putting special taxes on site values, because, as a Royal Commission, we thought it was dealt with better on a more general basis, but apart from that, what land gets a greater advantage out of local beneficial expenditure than land which is coming into the market and will soon be ripe for building purposes? It seems to me, again, that to say that agricultural land in those circumstances should be immune from all rates is absolutely contrary to every principle of our rating system.
Although I do not want to dwell particularly upon that, it was looked upon at one time as the first principle—I think it is the first principle with certain exceptions—and so argued again and again by the landowners of this country, that you should be economical as regards rates, because ultimately, if not primarily, they had to pay them. If you are dealing with Schedule A, you always allow for the payment of rates before you make up the gross assessment, and there is really no reason at all why, if agricultural land is rated properly as regards classification, it should have exemption. I want to go one step further in order to show what absurdities result from the system in the present Bill. Sixty per cent. of the rate charges, I have pointed out, are for national services; 40 per cent. are for local services—beneficial services. Take that 40 per cent. and
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suppose that, as you get at the present time, you get the quarter as against the whole charge. The ultimate burden which agricultural land bears on the present distribution of rate charges would be much less than the farmer would have to bear under the provisions of the Bill, because he has to bear, anyhow, the charge for his farmhouse, and the whole charge upon it, if dealing merely with local rates and regarding them as beneficial expenditure, would be in one sense nil, because he would be getting the benefit and in the other sense it would be much less than the charge would be under the provisions of this Bill. I hesitate to go into detailed figures at the present time. As a matter of fact I have extracted a very large number as carefully as possible, but I agree with what the noble Viscount said, that the actual figures had better be discussed at a future date.
I will take another matter—namely, "the purposes of a public supply undertaking." Such undertakings are not to have the benefit of the subsidy given under the Bill. I want to know why not. If you give a subsidy at all, why should they not have the same benefit as any other industrial undertaking? Why do you penalise industrial undertakings of a beneficial character, merely because they are in the hands of municipalities or other public bodies? I have heard no other reason suggested, nor did the noble Viscount give any other reason. Therefore it comes to this, that if you wrap up together two things which are really wholly different, that is, onerous national charges and local beneficial charges, you not only necessarily produce an unjust result, particularly if you make the exceptional provisions contained in this Bill, but when you have done it all you give less relief to the real ratepayers for local charges than they would otherwise get if the true principles were properly applied.
And the more so that there is no thought of inequality or inequity at the present time, and you set to work to create it. Every time you create inequalities you create trouble. Every time you suggest difficulties which no one feels at the present time you create trouble. And why? I do not know how this valuation is to be carried out. That is another matter, but it will be an affair of great

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detail, of great complexity, and of a very large number of legal appeals. I do not think for one moment it could possibly be completed within the time that the noble Viscount stated. And, what is more, when it is completed it will only be completed at great expense, at great trouble, by raising up suspicions between neighbours who now consider they are equitably treated so far as the local rates are concerned. I admit I see no justification for the departure proposed in this Bill from ordinary rating principle.
Let us take the other side for a moment, that is, as regards the national charges for non-local purposes. I have already quoted the four which in the aggregate come to 60 per cent. of the whole. No doubt some advantage would be given if you could take those rates, properly differentiated, and on them give certain subsidies or advantages to particular districts. But that advantage is grossly exaggerated, if you remember what is really going on at the present time. Take coal. It is a terrible subject to speak of just now. Most of us, I suppose, have read the Report which indicates that there will be 200,000 men permanently unemployed in that industry. But let us take the proposal in the Bill as it stands, and let us take the subsidy to be of the amount which has been stated: it will only amount to 3d. per ton. That is utterly inadequate to stem the tide, or to open the market for our coal—and that is the only solution to the difficulties from which we suffer. It is a perfect waste and will really be of little or no value, because the evidence is that we are producing coal at 1s. 3d. a ton more than the price which we can get.
Let me take the illustrations which were given from Scotland. In the Balfour Committee it was stated that there were thirty-three illustrations, and that the circumstances would apply equally in England. Those were illustrations of productive industry, where the rates in the aggregate only amounted to between 26 and 55 per cent. of the total cost of production. And if you attack the problem in this half-hearted way, giving away nearly one-third of your fund where it is not wanted, and only have two-thirds left, the amount of assistance which it is possible to give becomes very slight indeed. Let us take
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the case of railways. In 1914 rates only amounted to 6.3 per cent. of the cost of production; the figure is now 4.6 per cent., or about two-thirds of what it was in 1914. If you take it on the basis of the unit of power, that is, locomotive power, and allow for the difference in the value of money between then and now, you find that there has been no change whatever in the incidence of rates.
These subsidies, under these conditions, not only are of no benefit to the poorer areas, they are a very great disadvantage, and place those areas in a much worse position than they are in at the present time. I have before me the poor rates and unemployment charges in some distressed or slum districts. In Gateshead, for example, poor rate charges to-day are 622 per cent. higher than they were in 1912. Of course, that is gigantic. The only way in which you can possibly deal with these slum areas is to relieve them of the charges which ought to be charges upon the National Exchequer and not on the local rates at all. I have, similarly, the figures for Newcastle, South Shields, Tynemouth, Wallsend and Jarrow, and they all show somewhat the same result. What I want to ask the Government is this: Is there any possibility of really dealing satisfactorily with these slum and necessitous areas, except by taking these charges off the rates altogether and finding the money from the National Exchequer? Of course, they may say: "We cannot help it; slum areas and necessitous areas must go on existing in the future, as in the past." I deny that entirely. I deny it because the real cause of the poverty in such districts at the present time is unemployment, and, as every authority on rating principles will tell you, unemployment is a thing which should be borne, not by the locality but by the State.
Are we, by putting our rates on a right system, going to go forward, as we ought to go forward, both as regards the proper distribution of charge and as regards assistance to our necessitous areas? You cannot approach this question without doing harm unless you keep this distinction clear. Every one who has studied the rating question knows that if you begin by lumping these two different classes of

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charges together, and proposing the assistance of a subsidy to the whole, you will never get any real system of rating reform. You are really embarking on what the Leader of the Liberal Party in another place called a thoroughly vicious method. It is a thoroughly vicious method if you have regard to the whole history of this great question. I hope, at any rate, that when the figures come finally to be disclosed something may be found not inconsistent with the principles I have enunciated, founded on the figures so far as they have been discovered and published at the present time. I am the last person to desire other than a radical and proper reform of our rating system on logical and true lines. It is essential. It has been delayed far too long. It is not for us here to talk of questions of money, but are we not, after all, coming to grief through the extravagance of our expenditure in other ways? There has been no real attempt to solve the problem. We cannot go on as we are going on under the dislocation caused by the War. We must put our finances on a sounder and better foundation, and in order to do that we must draw a distinction between national and rating charges and use them for the purpose of national and local finance. I beg to move.
Amendment moved—
Leave out ("now") and at the end of the Motion insert ("this day six months").—(Lord Parmoor.)
EARL BEAUCHAMP: My Lords, the noble Viscount who moved the original Motion this afternoon spoke with great truth of the complication of the measure which is now before your Lordships' House. Therefore, I am the more ready and the better able to congratulate him upon the easy grace with which he steered his way through its complicated technicalities. I need not say that I listened with much interest, and I hope with some profit, to the speech of the noble and learned Lord who has just sat down, but I cannot but think that I shall more readily meet the wishes of your Lordships' House if I do not follow him in the exhaustive treatment which he gave to the principles of this Bill. I cannot refrain, however, from saying that I noted with interest his constant reference with approval to the policy and words of my right hon. friend Mr. Lloyd George. I cannot but think that, perhaps
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after all, he is going to find his last spiritual home in the ranks of the Liberal Party. However that may be, I turn to the principles which really underly this Bill. We are all agreed that it is concerned with a reform which is long overdue. People have been saying for a long time that some reforms are necessary. A drastic readjustment of the burdens which now fall upon the ratepayers is overdue. So long ago as in the famous Budget of 1910 my right hon. friend began to make tentative steps in that direction. Since then more than once a series of reforms has been propounded which in the opinion of my right hon. friends would really put the matter on a firmer and more stable basis.
The Bill before your Lordships' House this afternoon really contains little more than an emaciated shadow of the proposals we have put forward. The noble and learned Lord, Lord Parmoor, referred to the apparent anomalies in the Bill, and to the fact that there is no relief where most relief is needed. Let us take those great North-Eastern districts of England where the heavy industries are, by common consent, suffering so greatly at this moment. Let us take those unfortunate areas in South Wales where the miners, following the misguided advice of the friends of noble Lords below me, have brought the whole district into a state of destitution and famine which is almost without parallel, I suppose, in the industrial history of this country. Then we compare the absence of adequate relief for them provided by this Bill with the more than adequate relief which is to be given to that interest represented in your Lordships' House by the noble Viscount, Lord Younger, who will, I hope, address your Lordships in the course of the debate this afternoon. There is also that given to such an industry as Courtaulds. I venture to say that while, on the one hand, we find that the heart-rending conditions of the districts I have mentioned will receive but very little relief, relief is to be given to various industries whose prices on the Stock Exchange seem to show that they are in a position of very considerable prosperity.
I confess that the formula which is devised in order to discover the really necessitous industries and districts is

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almost beyond my comprehension. It is exceedingly complicated, but I have no doubt that at some subsequent opportunity the noble Viscount who introduced the Bill will do his best to explain it to us. What we find is that a great deal of the relief is to be given to seaside towns and cathedral cities rather than to those districts of which I have already spoken. The legendary friend of the Conservative Party is being treated with an open hand. On the other hand, the second legendary friend of that Party, the agricultural interest, is going to receive comparatively little help. The sum of £200,000 is going to the makers of synthetic foods; but nothing is going to those institutions which cure people who eat those synthetic foods. "To him that hath shall be given" with a very liberal hand.
The defence made by His Majesty's Government of this indiscriminate subsidy is one which does not yet afford us satisfaction. After all, when the unemployment "dole" is given you do not give it to those who are employed as well as to those who are unemployed. They are not all of them put upon the "dole." But here all industries are put upon the "dole." An industry is put upon the "dole" whether it is prosperous or whether it is not prosperous. Surely, it might have been possible to devise some formula by which those industries that are doing well should not receive any relief in the matter of rates. We are bound to ask ourselves whether this will really materialise. The money which is being raised now, which is not subject to anything which may be said to-day by the Prime Minister in another place, is not going to be distributed until October, 1929. What guarantee is there that those concerned will receive it when the time comes? There may be another Government in office.
VISCOUNT PEEL: Impossible!
EARL BEAUCHAMP: There may even be another Chancellor of the Exchequer in office. We have learned that funds which are devoted by one Chancellor of the Exchequer to a particular purpose, have been diverted by the present Chancellor of the Exchequer to another purpose. The roads are not receiving the money which was put aside for their
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benefit. I venture to hope that His Majesty's Government will be able to tell us that relief will now be given to some of the districts which particularly need it at the present time. Unemployment is going up at present by 20,000 a week. It seems to me too long to wait until October of next year before they are given the money which is being collected at this moment. British industry is sick, we are all agreed upon that. Many of the great trades which go to make up British industry are sick, but the bottle of medicine is to be administered to them whether they are ill or whether they are well eighteen months hence. Consider in terms of the individual the postponement of any cure for eighteen months and the giving of medicine to him then whether he needs it or not!
It seems to me that this Bill stands in need of some amendment. Other plans are before the country to-day. One of them, at any rate, has been mentioned by the noble and learned Lord who has just spoken. Surely it would be much better if local ratepayers were relieved of charges of a national character. If that was done it would be giving relief where the shoe pinches most. It would be in those districts where there is most unemployment that this relief would set industry going again and most relief would be given to industry where there is most unemployment. At the present time there is nothing, I suppose, which makes it more difficult for industry to recover than these heavy rates where unemployment is worst. It is where unemployment is worst that the rates are highest and that they suffer the most. There is no special regard to those districts to be found in the Bill and the burdens which most retard the recovery of industry are just the very burdens which this Bill will do nothing to relieve.
I confess that I think it might have been very easy to have made or to have accepted one or two Amendments in this Bill. Why benefit the prosperous concern? I wonder whether there is any chance that His Majesty's Government would accept an Amendment saying that those industries which show a return of more than 7 per cent. should not receive relief under this Bill? I am not prepared to move that Amendment unless I am encouraged by His Majesty's

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Government, because that would be to trench upon the debatable ground which is always avoided by the wise in this House of Parliament. There is this to be said, that 81 per cent. of the people who pay the assessable value get nothing at all; 70 per cent. goes to shops and offices in the distributing trades; 11 per cent. goes to the public undertakings; and cottages get nothing. In view of the fact that there are some industries which get a special measure of protection from Parliament, I should have been glad if they were not to receive this additional benefit for the relief of their rates. I refer to those industries which enjoy the benefits of Safeguarding. I should have liked to have seen them excluded from the provisions of this measure, but I have little hope that His Majesty's Government would accept an Amendment in that direction at the present time. It seems to me very doubtful that the money which is being raised is to be spent to the best advantage of those who need it most. It certainly is being delayed at a time when industry is in urgent need of help. I regret that a measure of this kind, distributing so much money, is not going to afford relief upon a more simple and a more common-sense basis.
LORD DYNEVOR: My Lords, I am very glad to give my support to this Bill, which has been considerably improved in its passage through another place. As the Bill was introduced it contained one very objectionable feature, and that was that an occupier had to give notice within a specified time and on a prescribed form that he wished his agricultural hereditament to be derated. I felt sure that many allotment holders and smallholders, and possibly many farmers, would never hear of that provision, and, therefore, might never become derated. It is quite necessary that occupiers of productive and freight transport hereditaments should, after a public notice, claim to be entitled to be derated, as they are coming for the first time within the ambit of derating, but agricultural properties are already known to the rating authorities, and are, under the Rating Act of 1925, being now valued as agricultural units for the purpose of discriminating between lands and houses. The Land Union therefore asked Lord Hartington, who is a member of the
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Council of the Land Union, to move an Amendment eliminating agricultural hereditaments from the First Schedule so that they would not have to give notice. I am glad to say that this was adopted by the Government, who provided that there is no necessity for the occupiers of agricultural properties to make specific claims.
When this Bill becomes law we shall have a vast number of Acts of Parliament dealing with rating. The ordinary person will have no knowledge as to how to ascertain what the law is. Could I ask the Government to undertake to codify all these Acts of Parliament? We have heard very severe comments lately made by Mr. Justice Rowlatt, sitting as a Revenue Judge in the Law Courts, of the difficulties created by legislation by reference. The Income Tax Acts are bad enough to read, and if we are to have Rating Acts creating the same difficulties we shall be in a very sorry plight. I hope the Government will take into consideration my request.
There is one other point I want to refer to. Agricultural land and buildings will be derated, but not the farmhouses. I am not suggesting that it should be otherwise, but farm cottages are sometimes let with a farm, and are assessed in the holding, but, as the cottages will not be derated, it will make a great difference if they are assessed at a high or a low figure, for, if assessed highly, the lower will be the derated part and the local authority will receive a lower Treasury grant. Some local authorities, I understand, wish to put up the assessment of agricultural cottages, because they say they could be let to a week-ender for at least double what an agricultural labourer or estate hand will pay. This inequality is serious in respect of grants but does not affect the Income Tax, inasmuch as Income Tax will be charged on the farm as a whole and irrespective of the apportionment between the cottages and the land, but where the cottages are let direct to the workmen, a serious inequality will arise, as the landowner will have to pay Income Tax, and in some cases Super-Tax, on the value at which the cottages are assessed. I understand the Minister of Health is very anxious to get uniformity of valuation, and I would suggest

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that so long as rural cottages are provided and used as part of the essential equipment of an agricultural estate they should be assessed on that footing, and that all county valuation committees should act alike. If the Ministry of Health could move in that matter it would be of very great assistance.
LORD THOMSON: My Lords, in my brief experience of Parliament I do not think I have ever come across a Bill which illustrates more clearly the essential difference between the attitude of the Conservative Party towards questions of the character which we are discussing to-day and the attitude of the Party to which I have the honour to belong. The distinction really is between property and life. I dare say both Parties push their ideas on this subject too far, but—I say it in the least offensive sense—I do think the Conservative Party regard property as so sacred as to be even more so than human life. We, on the other hand, perhaps regard property with too little consideration.
VISCOUNT PEEL: I do not think so. You stick to it much closer than other people.
LORD THOMSON: No! I venture to differ from the noble Viscount. When the gracious Speech from the Throne foreshadowed legislation, one stage of which we are discussing to-day, my friends and myself assumed that certain intentions which we held would be put into effect. We imagined, for example, that account would be taken of the special conditions in necessitous areas. That is where the human side came in. There is not one of your Lordships of any Party who could go to the coalfields in Durham or South Wales without realising that there is a grim and ghastly human tragedy in progress in those regions and that there is a terrible waste of human life and human effort. Some of the finest men in our country are simply rotting. As an old soldier I feel very deeply on that subject. When I went round the Durham coalfield the other day I met at every turn men who had done great service in the War. Now they are literally fading out. That is the human tragedy which we imagined would occupy the attention of His Majesty's Government when they
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came to express in terms of action that part of the gracious Speech from the Throne which dealt with rating proposals.
There is another point. We imagined at the time that the Government recognised the urgent need for immediate action in these necessitous areas, where a great material loss is not only threatening but imminent. Certain localities are going derelict. We imagined that some steps would be taken to distribute more fairly the burden of rates and especially that burden inflicted by the Poor Rate. Without in any way wishing to be offensive to the Party opposite I would ask what it is that this Government scheme does? It gives what my noble friend Lord Parmoor has described as a subsidy to premises used for production by manual labour. This "dole" is to be paid late next year. It cannot begin to benefit any human being except the proprietors of these premises for a long time after. It penalises a variety of industries, all the distributive trades, in order to benefit, what industries? Well, among others some of the wealthiest and most prosperous in the land. But never once in reading this Bill can one come across a single trace of an effort to deal with the human problem of necessitous areas. Indeed, relief of industry so far as it goes seems to me to be somewhat ill distributed.
Various figures have been given to your Lordships and I do not propose to give you many more, but I find that the proportion of rates on the different classes of the community works out in this way. In Scotland—and the figures are declared by the Balfour Report to apply to England as well—the rates on mines and minerals, mills and factories, steel and iron works, and blast furnaces all put together, only amount to 11.55 per cent. of the total, whereas, on the other hand, 66 per cent. of the rates are paid by householders and small shopkeepers. That seems to be a most extraordinary method of tackling this subject and the real hardship is, as I have said before, that the rates are not evenly distributed. They are concentrated in areas where unemployment is greatest. The alternative proposal has been put before your Lordships and has, I am told, been turned down after careful consideration. Well,

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it certainly is cleared out and it must be admitted by all of us that no adequate reason has been given for turning down that alternative proposal—namely, the proposal to put the cost of the relief of unemployed able-bodied persons on the National Exchequer.
What the arguments are I do not know. What I imagine they may be based upon is a remark made by Lord Hugh Cecil in another place which struck me as being profoundly true. He quite disarmed me by his candour. He said if you are going to introduce any reform in the capitalist system you have got to begin with the capitalists. That is exactly what this measure does. I am not a violent Party politician; I hope I never shall be; but if I were I should regard this Bill as a crowning mercy and rejoice in its passing because from conversations with many doubting Tories in this country I feel certain that it is going to cost the Conservative Party many thousands of votes.
VISCOUNT PEEL: Then why are you going to vote against it?
LORD THOMSON: I am going to explain to the noble Viscount why I am going to vote against it. That is precisely what I am coming to. The benefits of this Bill cannot be appreciated by any one for at least fifteen months. By the vast majority of people they will not be appreciated for long after. By a very much larger number of the people the disadvantages of this Bill begin at once and will be felt more acutely as time goes on—certainly in regard to the penalised trades, the distributive trades, the small householder and shop keeper these disadvantages will begin at once—and the charges, the Petrol Tax—
VISCOUNT PEEL: The charges on the distributive trades? There is no charge.
LORD THOMSON: The disadvantages begin at once, while the benefits—
VISCOUNT PEEL: You said eighteen months.
LORD THOMSON: I said fifteen months.
VISCOUNT PEEL: I agree with all that.
LORD THOMSON: The noble Viscount asked why I did not vote for the Bill? My answer to him is that this matter of rating relief and the relief of our necessitous
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areas is much too grave a matter for Party politics. Though it will confer great benefit on us at the General Election, personally I should like to see a real approach made to a solution of this problem. I am very much afraid that the passing of this Bill will postpone that real approach and that it will embitter and make worse a problem for many millions of people who are suffering in our necessitous areas.
VISCOUNT NOVAR: My Lords, like the noble Lord who has moved the rejection of this Bill I would pay my tribute to the Memorandum to which he referred, the work of Sir Edward Hamilton and Sir George Murray. It was an admirable piece of work which I followed very closely at the time in another place. But that was a quarter of a century ago. No Government has acted upon it and I have never heard any Government of any kind give any sufficient reason for not having done so. The fact remains that nothing has been done and it is high time something was done. The noble Lord who spoke last has referred to the difficulty of grasping this Bill. On the other hand those of us who are engaged in local administration find no difficulty in grasping the purport of the Bill and its likely effect.
I should judge the Bill, as a whole, to be a good Bill. The idea is novel perhaps in some respects—the main conception of the Bill—but it does commend itself to those who are engaged in the industries that suffer most from the burden of rates, agriculture being one of them, and it also, I think, commends itself to the great bulk of those engaged in local administration. No doubt there was a great deal to be said for the division of rates into the beneficial and the onerous. It was a very sound principle and we may regret that effect was never given to it. But we are here dealing with a concrete proposal, and I doubt very much whether any Government would bring forward a measure better calculated to meet the most pressing requirements of the time. The noble Lord who spoke last referred to property. Property at any rate represents civilisation in the minds of most of us, and that civilisation is itself almost in danger owing to the burdens upon the great staple interests of this country, which leave us with such huge masses of men

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and some women on the "dole" or on relief which is causing deterioration of the whole fibre of the population. Accordingly the Bill has my most hearty support.
There is one point in Clause 9 to which I should like to refer. It is of considerable importance to agriculture in Scotland. I speak of the assessment of one-sixth of the value of a farmer's residence. I may be told that this matter might be discussed at a later stage but, having been warned by the way in which a year's extra Super-Tax has been recently imposed, it is but common prudence, I think, to deal with the matter at once, particularly in view of the Secretary for Scotland's hoc volo sic jubeo attitude in another place, where the matter was raised by certain Amendments which I intend to put down for the Committee stage. I shall propose that, in the case of agricultural land and heritages, the value of houses and cottages situated thereon shall be shown separately from the value of the agricultural land, and also that grass parks and agricultural land on which there is no house shall be valued separately. As the Bill stands, lands without houses will be assessed at one-sixth. Why? In the County of Forfar alone there are over 700 such holdings, and the Chancellor of the Exchequer on April 24, in his Budget speech, announced that:—
"Farm lands and buildings will, therefore, from and in October, 1929 … be at once completely and permanently relieved of all rates. The farmer will continue, of course, to pay rates on his residence in the ordinary way."
How after that declaration these lands are going to be assessed at one-sixth I confess passes my comprehension. Again, if you take a farm let at £1,500 a year, the residence would be assessed at an absurd figure, being one-third of the valuation. Many great farms, some of which are known to noble Lords beside me, have rentals of over £1,500 a year. I think these examples show that this change ought to be made.
Another point is that, if this assessment at one-sixth is persisted in, the agricultural industry in Scotland will, as heretofore, be more heavily rated than in England. The noble Viscount does not agree? That is a very bold denial, if I may say so. Take a farm on one
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side of the Tweed in Berwickshire and a farm on the other side in Northumberland and you will find that the relief of rates given on the Scottish side of the border has been very much less up to now than on the other side and, if you have this assessment of one-sixth, it will still be so. I refer to the occupying owner, to the man owning his farm, because if he goes under agriculture goes under with him. One has to be very careful that he is not more heavily rated in Scotland than in England. It is time that this anomaly was ended. It originated from the landowner being held to be beyond the pale and not entitled to any consideration whatever. He got none under the earlier rating relief measures and he will ultimately obtain his due measure of relief under this Bill. Why should he not? He is the partner who has found most of the capital and he now pays three-quarters of the rates. No agriculturist has a better claim to the fair consideration that has been denied him, and that is why I am so anxious to see agriculture treated on the same footing in both countries.
The Secretary for Scotland, on June 7, admitted that this method of assessment at one-sixth must give rise to certain anomalies, but he added:
"They will be anomalies loaded, if I may say so, to the advantage of the smallholder."
Again I ask, why? He said that the policy of the Government was relief for the great economic industries of the country, including agriculture. The economic agricultural industry is in the large farm and not in the small holding. It is that branch of agriculture, the economic branch, that has been over burdened. In Scotland it has had to bear not only its own burden but part of the burden of the smallholder. The small landowner has been the spoilt darling of agriculture and a burden upon the taxpayer and the ratepayer, and particularly upon the owner. Huge sums have been spent upon him, but he should bear his fair proportion of the local burdens. In many cases his rates should be increased rather than reduced.
Very interesting points will come up later on as to the rating of crofters and small holders of land in Scotland. Nothing is so essential, I believe, to the checking of local extravagance, which

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has been so much encouraged by Governments of late years, and of all who receive and do not pay, than the direct payment of rates in fair proportion by all concerned. There is no difficulty whatever in having separate valuation of houses. It is done in England and we merely ask for the same valuation in Scotland. If you have an unfair rating of residences, as is proposed by the Bill, it will greatly prejudice the cause of economy. The minimum assessment on a house should be £5 and the maximum should hardly ever exceed £50. The idea that the landowner should pass on relief of rates to the smallholder in Scotland will indeed be hard to justify. I think that probably the salmon fishing industry should have been included in the Bill. Assessments for the maintenance of fisheries are very heavy as well as the incidence of rates from which no benefit, or comparatively little, is derived by that industry. It is not perhaps realised that more salmon are taken in these islands than in all the rest of Europe put together. Such points can be dealt with at a later stage.
LORD FORESTER: My Lords, while whole-heartedly welcoming this Bill as a real, live, genuine effort to bring relief to the industries of this country, and especially to the basic industry of agriculture, may I, as chairman of the rating and valuation committee of my County Council, venture to ask the Government if they can see their way to dispense with the services of the Revenue officer who figures so largely in the First Schedule of the Bill. This official was eventually withdrawn from the Act of 1925, and although I quite realise the reason why he has been reinstated in this Bill, as was explained by the Minister of Health on the Second Reading in another place, I would still venture humbly to suggest that there is no real necessity for him. He is going to cost the State £150,000 for one year only, and if he is only necessary for one year, why is he necessary at all? Agricultural hereditaments, as was explained by the noble Viscount who moved the Second Reading of the Bill, have already been apportioned, and is not the fact that the occupiers of industrial and freight-transport hereditaments have to find 25 per cent. of the rates sufficient to
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ensure that no inflation of the rates will take place?
The Government have put a tremendous amount of work on the shoulders of the county councils and yet will not trust us. We have been working very hard, most of us unpaid, for over a year to get this Act of 1925 ready to put into operation by April 1, 1929, and I am happy to say that, at any rate in my own County, we have got unanimity and uniformity as far as we possibly can all round. To my mind the duplication of officials savours of the bad old days of the Coalition Government, when officials were duplicated and reduplicated and sent from Whitehall all over the place. I would also ask how £150,000 worth of capable officials, really first-class men who know their job, are to be found. Most of them are already fully engaged in doing the work required by the 1925 Act, and do you think that really first-class competent men are going to throw up permanent jobs in order to receive a temporary one for one year only? I only venture to throw out these few remarks to the Government. I shall certainly not move an Amendment at a later stage to that effect, but I think, as chairman of a rating and valuation committee, that if the Government can see their way to dispense with the Revenue officer this Bill will work a good deal more easily. There is one other point which I want to put, and it is this. The noble Viscount gave us a definition at the outset of agricultural land. Could he actually define the meaning of sporting rights? They tried to get such a definition in another place, and no definite solution was forthcoming. In fact, I think the Minister of Health stated there that they would have to go to law to find it out. If it could be defined definitely, I think it would make things a good deal easier.
VISCOUNT YOUNGER OF LECKIE: My Lords, I desire to support the observations of my noble friend Viscount Novar as to the position of Scotland under Clause 9. At the present moment farm rentals are inserted in the valuation roll in Scotland on the total amount paid by the tenants. There is no distinction in the Scottish valuation roll as between farmhouse buildings and land, and we ask, and I think with perfect

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fairness, as a new principle is now to be applied to the rating of these hereditaments, that that system should be altered and that there should be a separate valuation in our rolls, exactly as there is in England. There is no earthly difficulty about it. I was chairman of the valuation committee in my County for many a long year and the committee and the assessor could, in a very short time, complete the valuation of all farmhouses in the County. The anomalies would be absolutely ludicrous if the Secretary for Scotland insisted upon sticking to the present system. You would then find a noble Duke residing in a palace assessed at a rental of £120 a year, and a farmer assessed on £300 or £400—a ludicrous position. It is pretending to give a rebate with one hand while it takes it away with the other. I trust, if we cannot get the change which I suppose we all desire, that we shall have at least a sliding scale. You cannot apply one-sixth to everything. Of course it is a point to be dealt with in Committee, but it is so important that it is impossible to allow the Second Reading to take place without calling attention to it. I think this is a great constructive measure, but although I otherwise support it, I cannot do so without putting in a caveat with regard to the position of Scotland under Clause 9.
VISCOUNT PEEL: My Lords, I am very glad to know that this Bill has met with such a very large measure of support in this House. I have frequently had the honour of introducing measures into this House which were supported, vocally at least, by no one, but only assisted by criticism. On this occasion we have had a great deal of support, and may I for one moment make a reference to the points raised by my two noble friends behind me? They, no doubt, with perfect justice, look upon me as very ignorant of the rating system of Scotland, and I only ventured to interrupt my noble friend for a moment to say that there was not so much unfairness as he suggested, because what I understand is that the one-sixth of the valuation on which the rates are to be charged does represent in toto a fair proportion between the amount of the relief of the rates given in England and the amount of the relief of rates given in Scotland.
VISCOUNT YOUNGER OF LECKIE: My noble friend forgets that the landlord pays 70 per cent. of the rates, but gets no relief.
VISCOUNT PEEL: I am quite aware of the system of payment and I cannot see how it works out unfairly except, perhaps, as regards some large farms or palaces, such as were mentioned by my noble friend, or in the case of farms in Forfar, where there are no houses, or again small farms and so on. I am well aware there is a difficult point, and I am perfectly ready to discuss that with the Secretary for Scotland, who must, of course, be the authority on that point. I hope that will satisfy my noble friends for the moment.
There were some criticisms from the other side which I will deal with very shortly. I must deal much more delicately with the criticisms made by the noble Earl, Lord Beauchamp, for he at present occupies a position where he is less attackable than he is when sitting in his own place. [The noble Earl temporarily occupied the Woolsack.] The main body of criticism from the other side showed a complete misunderstanding of the whole object of the Government's scheme. It was clear to me that not one of those noble Lords had understood it at all. Certainly I did not quite understand the intervention of the noble Lord, Lord Thomson. He appeared to get up in order to say that we on this side of the House did not care about human life, whereas they did, and that we only cared about property. I have never heard such an assertion made in your Lordships' House before, and Lord Thomson has very judiciously withdrawn from the House before he heard the reply. I suppose he has gone in order to shout on some platform, to which they are far better suited, sentiments of that kind about the Party to which we belong, instead of staying to hear the reply.
LORD PARMOOR: I am sure that is not so. I am sorry that Lord Thomson is not here; he desired to stay until the end, and he will be back soon.
VISCOUNT PEEL: Well, he has not shown any great desire to hear the reply by being present. I admired the temerity of the noble Lord, Lord Parmoor, in one assertion he made—namely, that he

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does not believe in the taxation of site values. I was only reading the other day the great document issued by the Labour Party, in which that proposal occupies a prominent place. If the noble Lord is not careful he will be thrown out of the Labour Party; he is in great danger. He will have to make a circuit round by the Cross Benches, and possibly he will come back to the source of origin from which he sprang some twenty-five years ago. The noble Lord, however, gave us a very interesting speech, with the distinction which he made between beneficial and onerous rates. Well, I remember that Commission twenty-five years ago very well, and one of its ornaments, I believe, was the noble Lord.
LORD PARMOOR: I was on it.
VISCOUNT PEEL: The noble Lord was on it, and very naturally he has an affection for it. But, after all, we are not talking about such matters as differences between onerous rates and beneficial rates, we are talking about a far more serious subject. The question is what we can do to reduce unemployment and assist industry, and the whole point of the misunderstanding of the noble Lord and of others is this: they have been saying that this person will not get any relief and that that one will, while we have been trying to see whether we could not concentrate that relief to industry, and to do our best with the money that is available so as not only to decrease unemployment and relieve the burden in those depressed areas, but to give such a stimulus to those industries that the distributive trades and all other trades will be assisted.
We have heard a great deal about the distributive trades and about productive industry, but let me give the House these figures. Productive industry employs three-fourths of the number of the weekly wage earners of the country, and it accounts also for nine-tenths of the unemployed. If by the concentrated help we are giving we are able to assist those productive industries and to reduce the unemployment in them we shall have done infinitely more for the business and employment of the country than by trying to pour money into the distressed areas, which will only absorb it, and possibly add further
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to the unemployment of the country. The distributive trades, for which an appeal has been made by the noble Lord, and, I think, also by Lord Beauchamp, have not been suffering as the productive industries have suffered. They have, on the contrary, been prospering during the last ten years. If you look at the figures of the Inland Revenue Department you will see that that is so. Is it not clear that the noble Lord has not been looking at this matter from the point of view of the national interest, but solely from the point of view of a Party which tries to set one interest against another? He has been dealing with symptoms; we are trying to deal with the disease, and we are trying to strike at the source of the disease. If we are successful in that, and can absorb the unemployed and stimulate those industries, the benefit will flow throughout the country, and the distributive trades themselves will share in the prosperity derived from the productive industries themselves.
It has been suggested that no particular attention is paid in our scheme to the distressed areas. It is quite outside the scope of this Bill, I agree, and it is really irrelevant, but I just make this observation, that in the block grants and in the formula which the noble Earl (Lord Beauchamp) professed that he did not understand—but which I think he understood very well—in that formula on which the money is to be distributed to the local authorities particular care is taken of those distressed areas. By taking into calculation the numbers, the size, the rateable value, the number of children, and so on, you do get a formula which takes account of the particular circumstances of those areas, and which does not have regard merely to the amount of money which was expended under the old system, with the addition which the State used to make to it. Therefore I dismiss that subject entirely from consideration, and I ask your Lordships to concentrate to-night on this one point, that there is only a certain amount of money available, and that will be directed fully to those industries which are suffering most. If those industries are restored to prosperity, the greatest benefit will flow not only to those industries but to the whole trade and industry of the country.
On Question, Whether the word "now" shall stand part of the Motion?
Resolved in the affirmative, and Amendment disagreed to accordingly.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

AGRICULTURAL CREDITS BILL.
Order of the Day for the house to be put into Committee read.
Moved, That the House do now resolve itself into Committee.—(The Earl of Stradbroke.)
House in Committee accordingly:
[The EARL OF DONOUGHMORE in the Chair.]
Clause 1:
Power to make advances, etc., to agricultural mortgage loan company.
(2) The Treasury may agree to procure the underwriting of debentures to be issued by
Their Lordships divided:—Contents, 80; Not-Contents, 15.

CONTENTS.

Hailsham, L. (L. Chancellor.)

Bertie of Thame, V.

Dunmore, L. (E. Dunmore.)

Chaplin, V.

Ernle, L.

Churchill, V.

Fairfax of Cameron, L.

Salisbury, M. (L. Privy Seal.)

Elibank, V.

Faringdon, L.

FitzAlan of Derwent, V.

Forester, L.

Northumberland, D.

Hutchinson, V. (E. Donoughmore.)

Gage, L. (V. Gage.)

Sutherland, D.

Glenarthur, L.

Wellington, D.

Novar, V.

Greenway, L.

Peel, V.

Hanworth, L.

Bath, M.

Ullswater, V.

Hindlip, L.

Winchester, M.

Younger of Leckie, V.

Howard of Glossop, L.

Hunsdon of Hunsdon, L.

Birkenhead, E.

Askwith, L.

Islington, L.

Bradford, E.

Banbury of Southam, L.

Jessel, L.

Cawdor, E.

Biddulph, L.

Knaresborough, L.

Denbigh, E.

Bledisloe, L.

Kylsant, L.

Derby, E.

Clanwilliam, L. (E. Clanwilliam.)

Lawrence, L.

Grey, E.

Merrivale, L.

Howe, E.

Cornwallis, L.

Monkswell, L.

Lucan, E. [Teller.]

Cottesloe, L.

Newton, L.

Mar and Kellie, E.

Cranworth, L.

Queenborough, L.

Midleton, E.

Cushendun, L.

Redesdale, L.

Morton, E.

Danesfort, L.

Saltoun, L.

Northbrook, E.

Darling, L.

Strachie, L.

Onslow, E.

Dawnay, L. (V. Downe.)

Templemore, L.

Plymouth, E. [Teller.]

de Clifford, L.

Teynham, L.

Stanhope, E.

de Mauley, L.

Treowen, L.

Stradbroke, E.

Dewar, L.

Wigan, L. (E. Crawford.)

Vane, E. (M. Londonderry.)

Dynevor, L.

Wynford, L.

Westmeath, E.

NOT-CONTENTS.

Reading, M.

Arnold, L.

Muir Mackenzie, L.

Ashton of Hyde, L.

Olivier, L.

Beauchamp, E.

Bethell, L.

Parmoor, L. [Teller.]

Clwyd, L.

Stanmore, L. [Teller.]

Allendale, V.

Hemphill, L.

Thomson, L.

St. Davids, V.

Illingworth, L.

On Question, Motion agreed to.

the company as hereinafter mentioned to such aggregate amount as may be necessary to raise a sum not exceeding five million pounds.
LORD PARMOOR LORD PARMOOR moved to leave out subsection (2). The noble and learned Lord said: I placed this Amendment on the Paper in order that I might ask the noble Earl a question. I discussed Part I thoroughly, I think, on the Second Reading, and I do not wish to raise the matter again. But this, I think, is an important point and I want to understand what it means. Subsection (2) of Clause 1 states that—
"The Treasury may agree to procure the underwriting of debentures …"
I want to know what the Treasury are doing in regard to underwriting those debentures, whether there is any limit to the amount they can underwrite, whether they will become underwriters in the ordinary acceptation of the term "underwriters"

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or whether they will be in any special position. I do not think this matter is included in the other financial provisions of the Bill, though I may be wrong about that. At any rate, I am sure that the noble Earl will give me what assistance he can in the way of explaining the meaning of subsection (2) of Clause 1. I beg to move.
Amendment moved—
Page 2, line 27, leave out subsection (2).—(Lord Parmoor.)
THE PARLIAMENTARY SECRETARY OF THE MINISTRY OF AGRICULTURE AND FISHERIES (THE EARL OF STRADBROKE): With regard to the question asked by the noble and learned Lord, I would say that the maximum liability under this clause is estimated at £62,500—that is, if the Treasury assumes its powers to underwrite the full amount permitted by this clause. The amount which may be underwritten is £5,000,000.
LORD PARMOOR: I understand that underwriting may be done up to £5,000,000, and that the cost of it is estimated at £62,000.
THE EARL OF STRADBROKE: That is the maximum estimate.
LORD PARMOOR: I do not wish to press my Amendment.
Amendment, by leave, withdrawn.
Clause 1 agreed to.
Clause 2:
Provisions as to company.
(3) The Memorandum or Articles of the company shall make provision—
(c) for regulating the loans to be made by the company on mortgage, so that a loan shall in no case exceed two-thirds of the estimated value of the mortgaged property at the time of the loan, and that the loans shall be repayable by equal yearly or half-yearly instalments of capital and interest spread over a period not exceeding sixty years, or repayable on such other terms as may be authorised by the said Memorandum or Articles;
LORD STRACHIE LORD STRACHIE moved, in paragraph (c) of subsection (3), to substitute "three-fourths" for "two-thirds." The noble Lord said: I submit that unless this Amendment is accepted this Bill will
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be of little value to those who mostly need benefit, for the hands of the banks will be tied, and they will only be able to lend money under conditions which will be more onerous than those which would be imposed on a borrower by an insurance company, or by a bank under ordinary conditions, or by an ordinary individual. To my mind this limit of two-thirds entirely destroys the value of Part 1 of the Bill. What does this subsection say? It lays down this hard-and-fast rule that a loan shall in no case exceed two-thirds of the estimated value of the mortgaged property at the time of the loan, that is to say, the banks are not to be allowed under any conditions to make an advance on more than two-thirds of the property. And I would point out that that is the maximum they are to advance.
I should like to draw the attention of the Government to this fact. They have stated that they have the support of the National Farmers' Union and the Central Chamber of Agriculture, and of other agricultural bodies. I am sure the noble Earl, the Parliamentary Secretary, will not contradict me when I say that the National Farmers' Union do not look with favour on this Bill and have passed resolutions to the effect that no help would go to the men who most want it—namely, the men who have not very good security. Those people will get very little advantage, if any at all, from the Bill. The Central Chamber of Agriculture have gone further than I go in this Amendment. They have suggested that the maximum amount allowed to be advanced should be 80 per cent. whereas I am suggesting that it should be only 75 per cent. I hope I have made quite clear that the effect of my Amendment is to take out two-thirds and put in three-quarters, and that that does not mean that the banks must necessarily advance up to three-quarters of the value of the property. I would give them a free hand. They may come to the conclusion that only two-thirds or even one-half is enough to advance. I think they should be trusted to use their own discretion and be left free to advance up to three-quarters. It is certain that their valuers, whom they will instruct to give an estimate of the value of the property on which money is to be advanced, will

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give a very conservative estimate of the value. It is not at all likely that the valuers will over-estimate the value of a farm on which money is going to be advanced by the bank.
Then take the question of security. The banks will have much greater security than would the ordinary man who lent money to farmers. I know I shall be met by the noble Earl saying that the whole idea is that it should be regarded as a trustee security. Trustees, we know, may not advance more than two-thirds of the value of any property mortgaged, but trustees have not the security which the banks will get in this instance. The banks have behind them the Government guarantee of £750,000. They also have the Government undertaking to underwrite the debentures. In addition, they have the Government subscription up to £1,500,000, and last, but not least, a payment of £10,000 a year for ten years by the Government to help the banks to carry on this business. That puts the banks in a very good position in comparison with the ordinary lender of money, and in those circumstances I think they ought to be allowed to advance up to three-quarters of the value. Moreover, there is the sinking fund. I would point out that I am not asking that the bankers should be compelled to advance up to three-quarters. All I suggest is that you should remove the prohibition which fetters the banks and allow them in their own discretion to lend up to three-quarters instead of two-thirds, if they think well to do so.
The noble Earl said that the local banks would know about a man who asked to be lent money on mortgage and would use their discretion. That is so. What reason is there then for tying the hands of the bank? Why not give them discretion to treat their customers in accordance with circumstances? If they know a man is reliable and dependable they would advance more to him than they would to another man in whom they had not so much confidence. All I am asking is that discretion should be left entirely with the banks. I expect the noble Earl will say, as was said in another place, that the Ministry of Agriculture was very anxious to do this, but that the banks did not want more than this two-thirds margin. That does seem extraordinary. If the banks really
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want to make this Bill successful why should they want their hands to be tied and make it impossible for the men who want this help most to get it? If the desire of the Government is to help the man who most needs help, they should not do anything to put obstacles in the way of banks who desire to give credit to the fullest possible extent. Instead of the banks being hampered they should be left entirely to their own discretion. I beg to move.
Amendment moved—
Page 3, line 31, leave out ("two-thirds") and insert ("three-fourths").—(Lord Strachie.)
LORD HUNSDON OF HUNSDON: As a member of the Public Works Loan Board which is charged with the administration of the present Agricultural Credits Act, I think I can give your Lordships some information which may help your decision on this very important Amendment. The Act came into force on July 31, 1923, and was to operate for five years. We were authorised to expend £5,000,000 in advances to farmers who had bought their farms. No doubt your Lordships have read the valuable and informative Report of the Public Works Loan Board on their operations up to March 31 last. You will have seen from that that under the Act we have made a total number of advances of 1,179 and of those advances at that date 121 were in arrear for principal and interest. I may add that if it had been a private concern that we were managing we should have made a provision for loss on those 121 loans and also provision for possible loss on the remainder. I would like to remind your Lordships that when, because of financial difficulties or for other reasons, a farmer neglects the cultivation of his farm the land deteriorates in value. I would also like to point out that if and when this new Agricultural Credits Company had to foreclose, it would be faced with two alternatives. Either it would have to farm the land itself, which I suppose none of your Lordships would recommend, or it would have to make a forced sale—that is to say, it would have to sell with the knowledge on the part of the prospective buyer that practically almost any offer must be accepted.
That, of course, is not a strong position. The Public Works Loan Board has, in

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fact, foreclosed and sold in thirteen cases under the Act and in eight of those cases it has made a loss. This tale of woe which I am unfolding before your Lordships is due entirely to the fact that we are compelled by what is known, I believe, technically, as the wisdom of Parliament to advance 75 per cent. on the estimated value of the farm. Of course it is no part of the duty of the Public Works Loan Board to offer advice to His Majesty's Government or to your Lordships unasked, but I may say that it is the greatest relief to me as Chairman of the Board to know that the Act expires at the end of this month and that we shall not have to advance 75 per cent. any longer on agricultural land.
VISCOUNT NOVAR: My noble friend who moved this Amendment touched on a delicate part of the machinery of the Bill. Even in England there was not complete unanimity amongst the banks, and in Scotland the measure necessitates a change in the law, since there we can only lend on possession. There has to be a change in the, law to make the provisions operative there. Banks are certainly not entitled to gamble with the money of their shareholders, and after what the noble Lord, Lord Hunsdon, has just said they may be less inclined to do so than ever. To diminish their security will make it more difficult at any rate in Scotland for the banks to come in and help, which, I fear, is unlikely to be considered advisable in any case.
LORD CRANWORTH: As an ardent supporter of the Bill I venture to hope that the noble Earl will be able to accept the Amendment moved by the noble Lord, Lord Strachie. It seems to me that His Majesty's Government have spent a great deal of time and exercised a lot of care and are now prepared to expend very considerable sums of money on certain objects. Those objects, as they have quite plainly indicated, are intended to place upon the land an influx of farmer-owners and to build up a fresh bulwark against nationalisation. It does seem to me that this clause with its two-thirds limit would, to all intents and purposes, nullify the intention they have in view. The Party to which noble Lords on the other side belong have indicated that they see great advantages in nationalisation. They think it an admirable system and the noble Lord, Lord
1288
Parmoor, explained to us its merits, although I myself fail to see the advantages which would accrue. But we on this side do not take that line. I am fully convinced that a less margin than 75 per cent. may prevent a loan being accepted. I feel that every one who has the interest of agriculture at heart, who believes in the avowed object of this Bill and who is firmly opposed to nationalisation, would receive with wholehearted welcome the announcement that the Amendment is accepted.
THE EARL OF STRADBROKE: I think the answer of the noble Lord, Lord Hunsdon, is really a sufficient reply to the Amendment. The matter has been discussed at great length and in another place two Amendments were moved, one identical with that moved by the noble Lord, Lord Strachie, and the other removing all restrictions entirely. I think it is clear from what was said by the noble Lord, Lord Hunsdon, that that policy would not be sound. It would make, I think, very little difference if the figure two-thirds were taken out altogether and unrestricted power given or if, as Lord Strachie proposes, three-fourths were inserted instead of two-thirds. In either case the value of the security would be diminished. I am sorry I cannot agree with the noble Lord, Lord Cranworth, who speaks with such authority on agricultural matters. This matter has been fully discussed and it is the object of His Majesty's Government in bringing forward this Bill to try to form an investment which will be attractive to trustee investors. It has been pointed out already this evening that if you reduce the security you will run great risk of frightening away would-be investors. Our object is to tempt trustee investors with a perfectly sound investment and the Government feel that by altering in any way the security, which is put in the Bill at two-thirds, you will run a great risk. Another point is that if you reduce the value of the security a higher rate of interest will inevitably have to be paid. Our great object is that the money should be lent at small interest. Therefore for these two reasons, the risk of whittling down the security and increasing the interest, the Government cannot see their way to accept the Amendment.
LORD STRACHIE: Apparently from what the noble Lord, Lord Hunsdon, said,

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the Public Works Loan Board advance money in such a reckless way that they have lost a very large amount. My object in moving this Amendment was to enable bankers to exercise discretion. I should be sorry if I thought they were going to lend money in the way in which apparently the Public Works Loan Board lends money and advance 75 per cent. on a security which is not worth even that. No doubt this is a very good argument against the Government interfering, and perhaps that is why they did not adopt the proposal of having a Government bank instead of calling in private banks. But it does not seem to be a very good argument against my Amendment, thought it recognises the unfortunate fact that the Board were so unbusinesslike as to have made this very heavy loss.
On Question, Amendment negatived.
Clause 2 agreed to.
Clauses 3 and 4 agreed to.
Clause 5:
Agricultural charges on farming stock and assets..
(7) For the purposes of this Part of this Act—
"Other agricultural assets" means a tenant's right to compensation under the Agricultural Holdings Act, 1923, for improvements, damage by game, disturbance or otherwise, and any other tenant right.
LORD STRACHIE LORD STRACHIE moved to add to the definition of "other agricultural assets"—"subject to the deduction therefrom of any sums due from the farmer in respect of compensation for dilapidations or for the deterioration of the holding or damages for breach of any covenant or condition in the contract of tenancy." The noble Lord said: I should like at once to say that I move this Amendment on behalf of the Parliamentary Committee of the Central Landowners' Association. No doubt those of your Lordships who are members of that body know that the Parliamentary Committee, which is composed of members of this House and the other House, met yesterday and unanimously decided that this Amendment should be moved. Why is it necessary to move any Amendment? In order to make it perfectly clear that dilapidations due to the landlord should
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come before the charge to the bank. It is provided by this paragraph that the tenant right and the damage done by game and disturbance are to be prior charges in favour of the bank.
In Clause 8, subsection (6), there is a provision which sets out that the landlord's rent and rates and taxes come before any charge to the bank. The Central Landowners' Association desire to give the same protection with regard to any claim for breach of covenant or dilapidation. It seems to me that, if it is necessary to make it quite clear with regard to rates and taxes—though I should have thought that it would not be necessary in the case of taxes that come before the bank charge—the landlord's dilapidations should also be protected. I am sure your Lordships will know that it is the common practice when a tenant leaves a farm for the ingoing and outgoing tenants to agree upon the amount to be paid to the outgoing tenant, and the landlord does not come into the matter at all. It is quite common in agreements to say that the tenant right valuation shall be paid by the landlord or incoming tenant to the outgoing tenant, and the common practice is to allow the two tenants to settle that matter between them and for the landlord's agent to make a claim only for dilapidations or for breach of covenants directly to the outgoing tenant, not mixing it up with the tenant right at all.
On the other hand I may be told by the noble Earl that the landlord ought to say to the outgoing tenant that he will not receive anything from the incoming tenant, and that the incoming tenant must first of all pay all that is due to him. I imagine that the claim that the noble Earl is going to make is that it is the intention of the Government that the landlord's claim for dilapidations or breach of covenants should come before any charge which the bank may receive. If he tells us that that is so, I cannot understand why he should not be prepared to accept my Amendment and put the matter quite clearly in the Bill as an indication that the bank's charge does not take priority before the landlord's claim for dilapidations. I think there is no doubt that this would be fair to the landlord and also to the bank, and that the latter, when they are lending money,

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should do so with their eyes open. It should be made clear that the bank cannot claim any part of the tenant right against which the landlord has a claim, just as rent, rates and taxes are protected. I beg to move.
Amendment moved—
Page 7, line 5, at end insert the said words.—(Lord Strachie.)
THE EARL OF STRADBROKE: The insertion of the words which the noble Lord suggests seems to me rather misleading, coming as they do after the definition of "other agricultural assets." They seem to throw doubt on the ordinary meaning of tenant right. Perhaps I should try to make this matter clear, as a similar point was raised in Committee in another place. The noble Lord is referring to what takes place when tenancies are exchanged between outgoing and incoming tenants. Under the Agricultural Holdings Act, 1923, an outgoing tenant, as we all know, is entitled to claim from his landlord for improvements and so on, and the landlord is entitled to claim for dilapidations, breaches of covenant and the like. What really happens in these cases is that each party calls in a valuer to assess the claims. The tenant, let us say, claims £x and the landlord is entitled to receive £y, and accordingly the outgoing tenant will be entitled to receive £x—y, that is to say, his own claims with the landlord's claims deducted from them. I think that is quite clear. If, however, the valuers do not agree, then under another section of the Act an arbitrator is called in, the same course is adopted and the money is paid in accordance with his decision.
The Bill provides, in Clause 6 (2) (b), that in respect of a fixed charge there shall be an obligation on the farmer, whenever he receives any money in respect of other agricultural assets comprised in the charge, forthwith to pay to the bank the amount of the money so received, and there is a similar obligation in respect of a floating charge in Clause 7 (1) (b). "Other agricultural assets" are defined in Clause 5 (7), as including tenant right. The result is, therefore, that it is only the net amount which the farmer will have to pay over to the bank. If the landlord does not elect to avail himself of the Agricultural
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Holdings Act it is true, as the noble Lord pointed out, that the outgoing and incoming tenants make their own arrangements and the landlord may receive nothing for dilapidations, but in that case he gets something out of it, because the ingoing tenant takes over the farm with the dilapidations, whatever they may be, and the landlord will naturally look to him to set these matters right in the same way as the outgoing tenant should have done. It seems to me that it is not necessary to insert these words, and I hope that the matter will not be pressed, for the Government do not think the Amendment should be accented. We think that the clause is quite clear without the Amendment.
LORD STRACHIE: The noble Earl has not made it clear whether or not the bank charge will take precedence. He has merely told us that the landlord ought to see, before anything is paid by the incoming tenant to the outgoing tenant, that he himself is safeguarded, but that does not get rid of the difficulty where that cannot be done or where there has been some neglect. He does not contradict that it is the common practice for two farmers to settle between themselves, and for the landlord only to come in afterwards, and I should like to know definitely whether the landlord's claim would override any charge given to the bank if he has not taken the precaution to get the money from the incoming tenant.
LORD HANWORTH: Perhaps I can help on this point. I have followed the argument of the noble Lord. If it was a matter of doubt as to what is the meaning of "other agricultural assets," I think there would be good reason for clearing it up by adding the words proposed, but the matter stands really in this way. If there is no difficulty between the landlord and the tenant, and they both agree to appoint valuers in order to reach a conclusion of what are their rights inter se, then it is quite obvious that there is to be a set off between them; and inasmuch as they are reaching a result by agreement, if it is £x-y or £y-x, the amount which will be paid will be only such sum as that by which £x exceeds £y or £y exceeds £x. Supposing there is difficulty and the matter cannot be settled by agreement, then there is already provision in the Agricultural

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Holdings Act (Section 16 I think) whereby the matter goes to arbitration. When is goes to arbitration the arbitrator is charged with finding out what is £x and what is £y, and is also charged with making his award only in favour of that party who is entitled to receive the overplus, and to award the net amount only after the figures are ascertained on the one side and on the other.
Therefore when you are dealing with "other agricultural assets," it means the tenant's right to compensation under the Agricultural Holdings Act. That means such a sum as would be reached by two parties taking their balance sheet, so to speak, ascertaining on one side what is due, and on the other side what is payable, and dealing only with the overplus after a set-off; or if it is to be dealt with under the Agricultural Holdings Act and there is an award, that award will only deal with the amount which remains, the balance due on the one side or the other. Hence by reference to these words:—
"a tenant's right to compensation under the Agricultural Holdings Act, 1923, for improvements, damage by game, disturbance or otherwise, and any other tenant right—"
there is intended and there is included such sum as means the net amount after both sides have put their claims before the arbitrator and both accounts have been taken into consideration.
LORD BANBURY OF SOUTHAM: The noble and learned Lord has expressed my own view of this matter, but even assuming that it is right, why should not these words be put in? They make the thing clear. I think the noble Lord who has moved the Amendment is mistaken, but if these words make it clear why not put them in instead of leaving the matter in doubt? The people who will have to deal with this matter are not versed in the law, and may misunderstand, and it is always advisable to make an Act of Parliament clear. What is the objection to putting in these words?
THE LORD CHANCELLOR (LORD HAILSHAM): The objection is that the Amendment throws a doubt, which at present does not exist in the mind of anybody who knows the law, as to the exact nature of the tenant right, and as to the rights of tenant and landlord inter see in the assessment of compensation
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under the Agricultural Holdings Act, 1923. It is very undesirable to create a doubt where none exists at all.
LORD STRACHIE: After the explanation of Lord Hanworth and what the Lord Chancellor has just said, I ask leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
Clause 5 agreed to.
Clause 6:
Effect of fixed charge.
6.—(1) A fixed charge shall, so long as the charge continues in force, confer on the bank the following rights and impose upon the bank the following obligations, that is to say:—
(b) where possession of any property has been so taken, a right, after an interval of five clear days or such less time as may be allowed by the charge, to sell the property either by auction or, if the charge so provides, by private treaty, and either for a lump sum payment or payment by instalments;
(4) Where any proceeds of sale which in pursuance of such obligation as aforesaid ought to be paid to the bank are paid to some other person, nothing in this Act shall confer on the bank a right to recover such proceeds from that other person unless the bank proves that such other person knew that the proceeds were paid to him in breach of such obligation as aforesaid.
LORD STRACHIE LORD STRACHIE moved, in paragraph (b) of subsection (1), to leave out "or such less time as may be allowed by the charge." The noble Lord said: My Amendment is proposed because it seems rather hard that only five days interval may be allowed, or even less time, for a sale by the bank. There might be some very onerous condition in the charge, and the bank might proceed to sell at once. It seems to me that five days is the shortest time that should be allowed.
Amendment moved—
Page 7, line 17, leave out from ("days") to ("to") in line 18.—(Lord Strachie.)
THE EARL OF STRADBROKE: This clause has been drawn in an elastic form, because it is thought to be of benefit to both parties. It sets out the powers of sale of a bank, but enables the general powers stated in the paragraph to be varied by agreement between the farmer and the bank in a manner to be stated in the charge. The Amendment takes out this power of agreement between the

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banker and the farmer as to the time during which the bank is required to hold the property subject to the charge before it can sell. It seems very much better, having imposed a minimum period during which the bank must retain the property, to allow this minimum period to be varied at the option of both parties. It may be that when the bank takes over there are some fat cattle or pigs or even fruit that should be sold almost immediately, and if they are kept for five days it might mean a great loss to either the farmer or the bank. It therefore seems desirable that the matter should be left open, so that the banker and the farmer can come to terms if they think fit.
LORD STRACHIE: I cannot help thinking that the noble Earl is always on the side of the banker, and that the banker is always put in a privileged position. I am moving this Amendment in the interests of the tenant farmer, and I am asking that he shall have at least five days before the bank can sell. The noble Earl says that the bank might be advancing money on some kind of property which it might be desirable to sell. I see that the noble Earl is quite unwilling to do anything to help the farmer; he is always on the side of the bank, so I will withdraw my Amendment.
THE EARL OF STRADBROKE: The noble Lord is not quite fair. It is only done by voluntary agreement between the parties.
Amendment, by leave, withdrawn.
LORD STRACHIE LORD STRACHIE moved, in paragraph (b) of subsection (1), to leave out "by private treaty." The noble Lord said: Here again, it seems to me that the Government are anxious to help the banks at the expense of the farmers. The sale might be made in some hole-and-corner way or in great haste, and it might all be arranged. The noble Earl may tell me that there might be some contract; for instance, the farmer might be under contract to sell sugar beet, and therefore it is desirable to sell the property privately, but I do not think that is any reason. I should like to know why the Government are so anxious to allow the sale by private treaty instead of by auction. Auction seems to be the fairest way. Everybody has notice of it, and the best possible price is obtained in the market. If the bank has the right
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to sell the property they might sell at a price that was no adequate return to the farmer.
Amendment moved—
Page 7, line 19, leave out ("by private treaty").—(Lord Strachie.)
THE EARL OF STRADBROKE: I think the answer to the noble Lord is that if the farmer does not wish to agree to the bank selling by private treaty he would refuse his permission. It has to appear in the charge, and the farmer has the right to refuse permission to sell by private treaty when the charge is drawn up. The noble Lord has referred to the fact that the farmer might have made arrangements to sell his crop to somebody else. That is often done, not only in regard to sugar beet but in regard to mustard and seed corn, and it would obviously be to the advantage of the farmer that the corn or crop should be sold under those conditions, as he would get a much better price in that way than in any other way. By this arrangement for sale by private treaty terms can be arrived at suitable to both parties.
LORD STRACHIE: I accept what the noble Earl says. As the arrangement is, he says, entirely in the interests of the farmer, I shall, of course, withdraw the Amendment.
Amendment, by leave, withdrawn.
THE LORD CHANCELLOR THE LORD CHANCELLOR moved to add to subsection (4): "but such other person shall not be deemed to have such knowledge by reason only that he has notice of the charge." The noble and learned Lord said: This clause imposes on the farmer the obligation, when he sells property covered by a charge, to pay the proceeds to the holder of the charge. There was some danger, we thought, that the effect of that might be to enable the bank to follow the proceeds which were in the hands of an innocent receiver, which was obviously not intended, and subsection (4) was inserted in order to prevent that. In another place the Bill was subsequently amended and in Clause 9 (8) provision was made that the registration of a charge should operate as notice to the world of its existence. We then thought that there might be a risk that it might be held that the fact that a charge was registered operated as notice that the property was charged and thereby imposed upon any innocent receiver

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of the proceeds of a property subject to the charge the obligation to hand them back to the bank. That was not the intention and it is in order to prevent that that I move this Amendment.
Amendment moved—
Page 8, line 29, after ("aforesaid") insert the said words.—(The Lord Chancellor.)
On Question, Amendment agreed to.
Clause 6, as amended, agreed to.
Clause 7:
Effect of floating charge.
7.—(1) An agricultural charge creating a floating charge shall have the like effect as if the charge had been created by a duly registered debenture issued by a company:
Provided that—
(b) the farmer, whilst the charge remains a floating charge, shall be subject to the like obligation as in the case of a fixed charge to pay over to the bank the amount received by him by way of proceeds of sale, in respect of other agricultural assets, under policies of insurance, or by way of compensation: Provided that it shall not be necessary for a farmer to comply with such obligations if and so far as the amount so received is expended by him in the purchase of farming stock which on purchase becomes subject to the charge.
(2) Where a petition in bankruptcy is presented against a farmer, an agricultural charge on any of the farming stock or other agricultural assets belonging to him created in favour of a bank within three months of the date of the presentation of the petition shall, unless it is proved that the farmer immediately after the execution of the charge was solvent, be invalid except so far as the sums secured by the charge represent cash paid to him at the time of, or subsequently to the creation of, and in consideration for, the charge, together with interest thereon.
THE EARL OF STRADBROKE THE EARL OF STRADBROKE moved, in subsection (1) (b), immediately before the proviso, to insert "and the last foregoing section shall apply accordingly." The noble Earl said: This is a drafting Amendment. It is simply to make it quite clear that subsections (3) and (4) of Clause 6 shall apply to a floating charge in like manner as to a fixed charge.
Amendment moved—
Page 9, line 15, after ("compensation") insert the said words.—(The Earl of Stradbroke.)
On Question, Amendment agreed to.
THE LORD CHANCELLOR THE LORD CHANCELLOR, moved to leave out subsection (2). The noble and learned Lord said: I am moving to omit this subsection in order to insert a similar subsection in the next clause. The reason is that the provision applies both to fixed and to floating charges, and therefore more appropriately appears in the next clause. I might at the same time explain, with your Lordships' permission, that we are slightly altering the words, so as to make it quite clear that the effect, as well as the intention, of the modified words is that, where money is advanced by some one who has already a debt owing to him from the farmer, and then there is a bankruptcy, the charge shall then only operate in respect of the net sum remaining of the moneys advanced on the creation of the charge.
Amendment moved—
Page 9, line 22, leave out subsection (2).—(The Lord Chancellor.)
On Question, Amendment agreed to.
Clause 7, as amended, agreed to.
Clause 8:
Supplemental provisions as to agricultural charges.
(5) Where after the passing of this Act the farmer has mortgaged his interest in the land comprised in the holding, then, if growing crops are included in an agricultural charge, the rights of the bank under the charge in respect of the crops shall have priority to those of the mortgagee, whether in possession or not, and irrespective of the dates of the mortgage and charge.
(6) An agricultural charge shall be no protection in respect of property included in the charge which but for the charge would have been liable to distress for rent, taxes, or rates.
Amendment moved—
Page 10, line 11, at end, insert as a new subsection:—
"(5) Where a farmer who is adjudged bankrupt has created in favour of a bank an agricultural charge on any of the farming stock or other agricultural assets belonging to him, and the charge was created within three months of the date of the presentation of the bankruptcy petition and operated to secure any sum owing to the bank immediately prior to the giving of the charge, then, unless it is proved that the farmer immediately after the execution of the charge was solvent, the amount which but for this provision world have been secured by the charge shall be reduced by the amount of the sum so owing to the bank immediately prior to the giving of the

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charge, but without prejudice to the bank's right to enforce any other security for that sum or to claim payment thereof as an unsecured debt"—(The Lord Chancellor.)
On Question, Amendment agreed to.
LORD STRACHIE LORD STRACHIE moved to leave out subsection (5). The noble Lord said: I move this Amendment because I want an explanation from the noble Earl as regards the position of a man who has advanced money on mortgage after the passing of this measure. It is, I understand, a very common practice in East Anglia, where crops are very much more valuable than they are in pasture country, to include in the mortgage the growing crops. An East Anglian farmer told me it would be a hardship to the farmer if this subsection were passed, because what would happen would be that the mortgagee would be in a worse position in future than he is at present. Supposing a farmer, after the passing of the Bill, has mortgaged his farm for a sum of money, and, in order to give additional security, has included the growing crops upon the farm, then he has also given a charge to the bank upon the growing crops. When the mortgage is called in the bank would have the right to step in and say to the man holding the mortgage: "You can sell the land, it is true, but as regards the crops included in your mortgage you have no right to them, because I have a prior claim as provided under the Act." That is to say, the bankers will be put into a preferential position, as they always seem to be. I am aware that this applies only to mortgages made after the passing of the Bill. I move the Amendment standing in my name in order to get some explanation because the clause is not very clear as it now stands.
Amendment moved—
Page 10, line 12, leave out subsection (5).—(Lord Strachie.)
THE EARL OF STRADBROKE: The noble Lord in moving his Amendment pointed out that this only applies to mortgages made after the Bill comes into effect. I do not think there will be any hardship because those who make mortgages will make them with their eyes open to the condition of affairs. The noble Lord makes the point that the land will be less valuable if the crops are not included in the mortgage; but
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I do not think that is generally done now. As the noble Lord knows, if there had to be a foreclosure it would depend entirely as to what crops were on the land whether there was any value in it or not. When the crops are once cut and severed from the land the mortgage has no charge upon them. Therefore, it would be only in the case of growing crops that the mortgage would have any effect. I do not think that anybody taking up a mortgage would take the crops into consideration at all. The ordinary course, I think, is that those concerned either estimate the value themselves or call in a valuer, who will estimate the letting value of the land and arrive at its capital value upon that basis, and then they effect a mortgage accordingly. I cannot think there will be any hardship under the Bill as it now stands, because, as I say, people taking out mortgages will have their eyes open and will see perfectly clearly that the growing crops cannot be included in the mortgage in the case of farmers having given charges on the growing crops under Part II of the Bill.
VISCOUNT BERTIE OF THAME: Surely this clause strikes at the very root of the law of mortgage. If people are allowed to do this trustees will be disinclined to lend money on mortgage. As my noble friend Lord Bledisloe complained, there are only £14,000,000 available for the purpose. On reference to Coote on Mortgages I find this:—
"A mortgagor cannot cut or remove growing crops after the mortgagee has demanded possession. So a mortgagee who had taken possession after the bankruptcy of the mortgagor was held to be entitled to an injunction to restrain the bankruptcy trustee from cutting and removing growing crops from the mortgaged lands."
So it will be found that it is not a very unusual thing to include these crops, and if the noble Lord goes to a Division I shall certainly support him.
On Question, Amendment negatived.
LORD STRACHIE LORD STRACHIE moved, in subsection (6), after "of," to insert "wages due to men or women employed on the farm or of." The noble Lord said: Up to now I have been moving Amendments with the object of protecting the owner-occupier, the landlord, or the tenant farmer. This, the last Amendment I have to move, is based on the idea that something

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ought to be done to protect the wages of the agricultural labourer. Subsection (6) says that an agricultural charge shall be no protection in respect of property included in the charge which, but for the charge, would have been liable to distress for rent, taxes, or rates. By moving into the subsection the words of my Amendment I am trying to see that the protection given to the landlord in respect of his rent and to the authorities concerned in respect of taxes or rates, shall be given to the agricultural labourer and to the men and women employed on the farm. I do not know whether the noble Earl will tell me that the Amendment is entirely unnecessary, but there certainly might be cases. Supposing a farmer owes a good deal of money and has to go to the bank. There might be considerable arrears of wages due to his labourers or to other people working on his farm, and I am sure it would not be the wish of your Lordships that in such a case the hard-working men and women should suffer by the bank coming in and having a first charge on the property of the farmer. I am sure the noble Lord will see the point I am making, and if it is not perfectly clear that the agricultural labourer is protected and that the bank will not be able to come between him and his wages, I hope it will be made clear. I only hope that the noble Earl will be able to give me such a definite reply as will make it unnecessary for me to go to a Division. I beg to move.
Amendment moved—
Page 10, line 20, after ("of") insert ("wages due to men or women employed on the farm or of").—(Lord Strachie.)
THE LORD CHANCELLOR: The noble Lord has told us what his object is in moving the Amendment. He will forgive me for saying that his Amendment would be quite ineffective to produce that end. If his words were inserted subsection (6) would read—
"An agricultural charge shall be no protection in respect of wages due to men or women employed on the farm or of property included in the charge …"
and so on. Of course an agricultural charge is no protection in respect of wages. An agricultural charge is not given on wages; it is given on property. Therefore, the words would be quite meaningless,
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if the noble Lord will forgive me for saying so. Further, I think his words are unnecessary for this reason. There are two kinds of agricultural charges which are there dealt with. One is the floating charge and the other is the fixed charge. So far as the floating charge is concerned, by Clause 7, subsection (1), it is to have the like effect as if it had been created by a duly registered debenture, and if the noble Lord will look at the Companies Act he will find that under Section 107 and (I think) Section 209 wages have priority over debenture charges. Therefore, so far as floating charges are concerned wages have priority without the words which the noble Lord proposes to put into the subsection.
So far as the fixed charge is concerned, that has priority over wages just as a bill of sale has to-day, and no alteration is made in that respect. At the moment if there is a bill of sale on a specific property that property is covered by the bill of sale and nothing comes in between the chargee and the property. That position will still remain so far as fixed charges are concerned. But so far as floating charges are concerned—the charges which, probably, the noble Lord had in mind because they are the ones which would mostly effect the hardship of which he complains—the position is amply protected by reason of the clause to which I have called his attention.
LORD OLIVIER: Am I to understand that the position of mortgages under this Act so far as they compete with wages will be exactly the same as that of ordinary mortgages at the present time?
THE LORD CHANCELLOR: I am not quite sure that that is an accurate way of stating it. The position of floating charges under this Bill will be exactly the same as the position a debenture has at the present time. A debenture at this time ranks behind wages and wages have priority over a debenture.
LORD OLIVIER: So I understood, but I thought the noble Lord said as regards charges on the land that they would have a priority over wages.
THE LORD CHANCELLOR: The fixed charges.
LORD OLIVIER: The fixed charges. That is the case to-day?
THE LORD CHANCELLOR: Yes.
LORD OLIVIER: This does not alter the law?
THE LORD CHANCELLOR: No.
LORD STRACHIE: I am very much obliged for the Lord Chancellor's reply, and I am quite satisfied as regards the floating charge. But I should like to have some sort of assurance from him that as regards the fixed charge the labourer will not be put in a worse position than he now occupies in regard to his wages. Have I that assurance from him?
THE LORD CHANCELLOR: That is the effect.
LORD STRACHIE: Having received that assurance from the Lord Chancellor, I ask leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
Clause 8, as amended, agreed to.
Clause 9 agreed to.
Clause 10:
Restriction on publication of agricultural charges.
(4) For the purpose of this section, "publication" means the issue of copies to the public, and "publish" has a corresponding meaning.
THE EARL OF STRADBROKE THE EARL OF STRADBROKE moved to add to subsection (4) "and without prejudice to the generality of the foregoing definition the issue by an association representative of a particular trade of a circular to its members shall not be deemed to be publication for the purposes of this section." The noble Earl said: When this clause was under discussion in another place it was thought that as the clause stood it was not clear that there would be no objection to a trade association circularising its members with a list of farmers who had given the banks a charge. Although it was felt that there was no doubt that the clause as drafted would enable this to be done, an undertaking was given in another place that words should be inserted to make this quite clear. Therefore this Amendment has been placed on the Paper. I think it meets the point raised. I beg to move.
Amendment moved—
Page 12, line 19, after ("meaning") insert the said new words.—(The Earl of Stradbroke.)
On Question, Amendment agreed to.
Clause 10, as amended, agreed to.
Remaining clauses agreed to.

BETTING (JUVENILE MESSENGERS) (SCOTLAND) BILL.
Read 3a(according to Order), and passed.
SHOPS (HOURS OF CLOSING) BILL.
Read 3a(according to Order), with the Amendments, and passed, and returned to the Commons.
PETROLEUM (CONSOLIDATION) BILL. [H.L.]
Read 3a(according to Order), and passed, and sent to the Commons.

BUSINESS OF THE HOUSE.
THE LORD PRIVY SEAL (THE MARQUESS OF SALISBURY): My Lords, before we adjourn I desire to say that I have made inquiry and find that in all quarters of the House it would appear to be agreeable that we should not meet to-morrow for ordinary business until twenty minutes past four o'clock. The reason is that there is going to be an interesting presentation to a colleague of mine—may I say a great Englishman or perhaps I ought to say a great Scotsman—and that many members of both Houses of Parliament are very much interested in the occasion. As the event is to take place at four o'clock it has been thought good to ask your Lordships not to meet till twenty minutes after that hour.
LORD OLIVIER: My Lords, may I say that my noble friends who sit on this Bench gladly consent and we should be only too pleased to reinforce in any way we could the compliment to be paid, even at the cost of deferring for twenty minutes the exciting prospect of debating the Racecourse Betting Bill.
House adjourned at twenty-five minutes before eight o'clock.

NAVAL PRIZE BILL.
To be read 2aon Friday next.
LONDON COUNTY COUNCIL (IL- FORD AND BARKING DRAINAGE) BILL. [H.L.]
Returned from the Commons, agreed to.

NOTTINGHAMSHIRE AND DERBY SHIRE TRAMWAYS (TROLLEY VEHICLES, ETC.) BILL. [H.L.]
Returned from the Commons, agreed to, with Amendments: The said Amendments considered, and agreed to.
The LORD CHANCELLOR The LORD CHANCELLOR acquainted the House, that the Clerk of the Parliaments had laid upon the Table the Certificate from the Examiners that the further Standing Orders applicable to the following Bill have been complied with:
Bognor Urban District Council.
The same was ordered to lie on the Table.

DOVER GAS BILL. [H.L.]
Commons Amendments considered and agreed to.
BRADFORD CORPORATION (TROL LEY VEHICLES) PROVISIONAL ORDER BILL.
Reported without amendment and recommitted to a Committee of the Whole House to-morrow.
AGRICULTURAL CREDITS BILL.
Report of Amendments to be received on Friday next.
RATING AND VALUATION (APPOR TIONMENT) BILL.
House to be in Committee on Monday next.