I beg to move, "That the Clause be read a Second time."

There is in industry quite a large number of casually employed workers. They abound mostly round the dock and wharf areas and in seasonal industries. These men, in common with other industrial workers, are subject to quarterly assessments for the purpose of Income Tax. They are, perhaps, employed during one quarter of the year for about two or three weeks in that quarter, and during those two or three weeks, they may have half-a-dozen different employers. That quarter, when it comes under review, is not subject to any Income Tax demand. The next quarter may find the casual worker more successful; he may be employed almost the whole time by about 20 different employers. That quarter's income comes under review and it might well reach a total that makes Income Tax payable for the quarter. The position is this: The casual worker has had one quarter with very little income. There has been an accumulation of debts; perhaps arrears of rent have accrued. The keeper of the little corner shop has made certain advances in the hope that more regular employment will be obtained by this particular casual worker. The second quarter being the one which would bring the worker under review for Income Tax, he has first to fulfil the obligations left over from the bad quarter, by meeting his debts and arreas of rent. [Interruption.] If hon. Members listen, they will see that I am merely trying to present the different state of circumstances prevailing in the case of a casual worker; to point out the distinction between the casual worker and the person in receipt of a regular annual income. After he has met these arrears the third quarter comes along, and with it the demand for Income Tax based on the second quarter. Hon. Members of the Committee have got to appreciate that fact—the demand comes in the third quarter following on the ascertainment of the second quarter's earnings, the assessment being on the quarterly income. In the third quarter the man may, unfortunately, through the seasonal nature of his occupation, or a lessening of employment at the docks, find himself facing another bad period as regards income. He may be unable to meet the demand, and as a result, he is threatened with being brought before the justices. He may, eventually, be brought before the justices; he may demonstrate to them that he cannot pay, and they will inform him that there is an Act of Parliament which says he must pay, and if he does not pay he must go to prison. We consider that to be a definite hardship.

The Chancellor of the Exchequer may say that, although the man has difficulty in meeting the demand for the good quarter, he can at the end of the year review the whole of his annual income and can make a claim if, on the annual basis, he is entitled to do so. Those who have had correspondence on the subject of the rectification of Income Tax demands know very well that the casually employed men with his slender income, with his secondary social status, will get secondary consideration. Much time and trouble will be required before he can satisfy men working by rule, on strict regulations, that he has a right to be relieved of the demand or have any sum returned to him. Yet this money may have to be paid by him at the risk of going another few weeks in arrears with his rent. He is between two stools. On the one hand there is the threat of the landlord to take him into Court for the recovery of the arrears or eject him from the house; on the other the prospect of the Income Tax authorities prosecuting him for nonpayment, with the possibility behind it, of a period of imprisonment. I think the Chancellor himself will appreciate that, in these circumstances, more money is spent in the value of the time of those who institute inquiries on behalf of the Income Tax Department, in endeavouring to secure these small sums, than the sums themselves represent. If the Chancellor agrees that the circumstances are as I have stated, perhaps he will frame an agreement or re-word the Clause—we do not care which, so long as the purpose we have in view is satisfied. We are pleading that the casual worker in this country, handicapped as he is, should not be further handicapped in his struggle during the present period of depression in employment.

The Committee will realise that, in regard to the Amendment now under discussion, dealing with casual labour, it is very important to remember the exemptions from tax, which the Acts confer upon everybody, by reference on the one hand to the total amount of their income, and on the other to their family and other obligations. A man living by himself to-day pays no tax for the first £150 of his income, so that, roughly, £3 per week—in the case of a man regularly employed all through the year, week in and week out—escapes Income Tax. If he is a married man, his total exemption is £250 and then there are allowances for children, so that the married man with three children pays no tax at all provided he has only an earned income which does not exceed £350. Even on the basis of the single man's entitlement to exemption, covering £150 a year, when we are dealing with an Amendment which presses for special treatment for casual labour on the ground of its uncertainty, and, in some trades, of its seasonal character, rendering employment slack at certain times of the year, we have to bear in mind that the £150 is a much higher effective limit in such cases than if the man were regularly employed all through the year. A man who, on the average of the year, is only employed say four days in six per week, or two-thirds, will in that two-thirds of the year have to earn £150 before coming under tax at all. Consequently, we must assume, even in the case of single men, that such a worker is in receipt of wages at a much higher rate than £3 per week. I know that casual labour is not employed by the week, and I am not suggesting that the terms of employment are by the week, but it means that this Amendment is addressed, even in the case of single men, to those cases in which the wages, however paid, amount to over £150 in the year.

In the case of married men with children, it means that for practical purposes very few manual labourers at all are affected, and the Income Tax on weekly wage-earners enforced quarterly is only enforced under law on weekly wage-earners by way of manual labour. Therefore, we have to bear in mind that the claim on the sympathy of the Committee cannot be made on the footing that we are dealing here with very poor and struggling men. That is not the case at all. We are dealing with men who are in receipt of a rate of wages which in clerical walks of life means a clerk, of a good position as regards his career in life, and therefore is one that we must deal with, not on charity grounds, not eleemosynary grounds, but from the ordinary fiscal point of view. The Income Tax Acts recognise one basis of exemption as a main basis, namely, a limit of income, and that applies to everybody all through the community. Another basis of allowance—not of exemption—is family obligations, and that has been extended to certain cases where a man has lost his wife and so on and has a house-keeper or whatever it may be, but we have never in Parliament in the whole history of the Income Tax Acts adopted as a basis for exemption any such criteria as the terms of employment by which a man earns his income. I submit that it is a wrong basis and that Income Tax ought to be applied on terms that apply throughout the whole community and that this system of exceptions is a bad system.

One word more as regards the particular point raised by the hon. Member, that a man may have a good quarter followed by a bad quarter, and be assessed in the bad quarter and asked to pay tax in the next quarter, which is also a bad quarter. In fact, the method of assessment is one which takes into account to a great extent the averaging of the earnings and the grievance in practice is tempered very considerably. I want to point out that in the collection of Income Tax, as distinguished from the basis of assessment, administrative discretion is bound to come in to a certain extent. Administrative discretion in applying the law is a necessity, and in regard to the collection of tax we cannot help it. We are all creditors at times in our lives, unfortunately, and we all from time to time give time to our debtors—again I say unfortunately, but it is so—and even the tax collector is in the same case. I assure the Committee that every endeavour is made to prevent hardship in the collection of this tax. The provision of Parliament that it should be collected quarterly instead of yearly was made for the express purpose of trying to prevent individual hardship.

Say the first quarter of the finnacial year happens to be the good quarter. In the second quarter the man is assessed on his first, which would bring him in on the average for Income Tax purposes. During that second quarter the assessment is served upon him. His third quarter is no better, and by that time he is before the police court. His fourth is only a slight improvement. Then, when you take the average of the four, it is found that no demand ought to have been made it all. That is the problem that we are up against.

I venture really to assure the Committee that that gloomy picture that has been painted is one that very, very rarely, if ever, happens in practice.

Every week in every year.

An hon. Member says "every week." That, kind of exaggeration is very undesirable, and if the hon. Member who interrupted will be so good as to give me concrete cases afterwards I will have those individual cases investigated at once. Let the Committee think for a moment what alternative method of collection there is, if you are going to tax wage-earners to Income Tax at all, except the quarterly assessment and collection, with such a degree of human indulgence in hard cases, by way of postponement, as may be reasonably necessary in individual cases. The only alternative is deduction from wages at the source by the employer. That alternative was put forward and was objected to by the representatives of the men, on the ground that they did not want the employer to know what was the income upon which they were paying tax—the very reasonable objection that they did not want their private means disclosed to their employers. The employers also thought that if the system were adopted it might lead to friction between employers and employed, and I think both sides were agreed at the time that deduction at the source was not the method that they wanted, and for those reasons it was not adopted, but it is the only alternative to the method now pursued.

In regard to the question of principle, I agree that the fact that a man earns an income which is taxable in a casual employment is no reason for distinguishing him from a man who earns an income in regular employment, but, as I understand it, the substantial point which has been made by my hon. Friend the Member for West Nottingham (Mr. Hayday) is this, that these men who earn their living in this casual way and have at times in the year been taxable, are worried unnecessarily.

That is not the Amendment.

It has arisen in the Debate, and we are entitled to discuss it. My hon. Friend assures me he has personal knowledge of such cases, and there are other Members also who have such knowledge, for I cannot imagine that they would put up a purely theoretical case, and the answer which the learned Solicitor-General gives is this, that the human sympathy in administration ought to meet the exceptional difficulties. The case made is that that does not work fairly, and that these men are subject to worry and anxiety in regard to payments which might reasonably be avoided. In considering these matters, we have to put ourselves as far as we can in the place of these men, who are not trained in the observation of official and legal documents, and who are frightened by the service of these notices in a way that my right hon. and learned Friend and myself are not frightened. I am only seriously alarmed when I get the red or blue notice. That is not the case with the class of citizens with whom my hon. Friend is dealing, and the point I would urge is whether there is not some way of meeting this administrative hardship. The right hon. and learned Gentleman says that there is not any hardship, but my hon. Friends behind me say that they know of cases. That point ought to be cleared up, and the Department ought to see that these men, unaccustomed to these legal and sufficiently terrifying forms, and working under these conditions, are relieved as far as possible from this unnecessary anxiety.

The right hon. and learned Gentleman, in dealing with this case, has made one or two surprising statements. First of all, we were surprised to hear that there is such a superabundance of human sympathy exhibited in the collection of the Income Tax. We are glad to hear that it exists, and we give credit to those who exhibit it. His second surprising statement was that very few cases of hardship have occurred. I would very much like the Department to ascertain for themselves the number of summonses and the number of men who have been hauled up to the Police Court and convicted within the last six months. I want to qualify that at once by saying that within the last few months there has not been that persecution that existed previously. There has been a little more human sympathy exhibited, but the system continues and the hardship of the system is there. The only difference is that though the men still receive their demand notes they hear very little more about them. The danger, however, is always there. The debt exists, or at least they say that it does, and, consequently, the man is always in danger of being brought up for default. The right hon. and learned Gentleman has expounded the position so far as the ordinary Income Tax payers are concerned. We do not find fault so much with the law as with the administration of it. It is quite true that there is this quarterly system of payment. The casual dock labourer works for anyone who will employ him. Each employer has to send a return of the man's earnings day by day, and at the end of the quarter his account is made up. Then, probably about the middle of the next quarter, if he has had a fairly good quarter's work, he gets his demand note. Have hon. Members ever heard a real docker express himself with regard to these demand notes for Income Tax? If they have not, there is a treat in store for them. The most expressive person in the world is one of these dockers who has nothing but debts, whose best suit of clothes is lying in the pawnshop, and whose landlord is clamouring for arrears of rent, at the same time that the Income Tax collector is saying, "You have got to pay or go to gaol." It is true, and it is tragic.

The average casual labourer does not know sufficient about the methods of Income Tax administration to realise what he has to do. If he did, it would not matter, because, if he has not paid on the demand note, he is in debt, and, consequently, cannot get a rebate or a return of money overcharged. He cannot pay; he has not the means to pay. Although he may have earned sufficient in one quarter to make him assessable for Income Tax, for the rest of the year he scarcely earns enough to maintain existence. Income Tax is only chargeable on the income for the year. If a single man has earned £150 in the year—it does not matter whether he has had one good quarter and two bad quarters or how it is—he is assessable, and so is a married man according to the figures set forth. That is quite right, and we are not quarrelling with it. We quarrel with the system by which, if a man earns only £80 or a year, he has to pay on the first quarter in which he may have earned the greater portion of his income. I am trying to bring out the trouble and difficulty with which we are faced every day. I want to pay tribute and speak fairly of public servants who are always ready to help with information; but imagine one of these officials with perhaps 150 dock labourers demanding satisfaction. He is not in the frame of mind to reason or to argue, and consequently confusion arises. Go into some of our large docking centres and investigate the question; get the returns; get the number of summonses and the number of convictions—these things will tell their own tale. I think we have said sufficient to prove that the hardship exists. We are not trying to evade just payment of Income Tax. We are not here to help tax dodgers. There are enough of them to be found among the employing class, and among company promoters and people of whom we have heard so much during the last two days. We do not want to add to their numbers, but we do not want this hardship to fall upon the most hardly pressed class. I should like to know what it would cost if this Clause were accepted. What would be the loss in revenue? These summonses are being issued and there must be a sufficient staff to do the work. What is the cost and what is the return that is obtained? These are points which ought to be considered. Above all, we want to make it clear that we are not here to evade just payment of taxation, but we

This Clause is not in order, as it might impose a charge.

I quite realise that, in certain circumstances, which, I think, would very rarely occur, there might be a charge. Therefore, if after the word "charged," I put in the words "if he so elect," I think with those words it would be quite impossible for any charge to be imposed.

I think the words had better come in after the word "shall." I will accept it in that form.

I beg to move, "That the Clause be read a Second time."

This new Clause touches the cases of people who have got War Loan, and where the tax is not deducted at the source. The House of Lords the other day, in a case between the National Provident Institution and the Inland Revenue, ruled that when a, man had War Loan, and sold out part of that War Loan, and then, perhaps, sold out the whole of it, in the last year when he got no interest at all he should not have to pay Income Tax on the previous year's assessment. Therefore the Chancellor of the Exchequer has now brought in his Clause 11 to meet that point. Clause 11 says that if you buy War Loan in the first year, when you have only received part of the interest, you shall pay on the actual year's income, but that thereafter, except perhaps for the first two or three years, you shall pay on the actual income. I maintain that that acts very unfairly in a great many cases. Supposing a man has £1,000 War Loan at 5 per cent., and supposing that in the first year he gets £25 income, in the following three years he gets a full income of £50, and in the last year, when he sells out, he gets only £20 a year. If you add that up, you find that the interest he has received amounts all together to £195, but under the right hon. Gentleman's Bill he pays on £295. That, is to say, he pays on a good deal more income than he receives.

That point is perfectly easily remedied if the Chancellor of the Exchequer will say that not only shall the man pay on his actual income in the first year when he buys War Loan, but that he shall also pay on his actual income at the end of the period, when he is selling out War Loan, because the Bill puts it on a perfectly fair basis so far as the beginning of the term is concerned, but leaves it in a very unfair position at the end of the term, when possibly he sells all his War Loan. I think the answer probably will be that the Inland Revenue is already able to deal with that point by way of concession. I do not know, but it is possible that the Inland Revenue occasionally deals with that point by way of concession, though I think it is very inadvisable that the rights of the taxpayer should depend on concessions given from time to time by the Inland Revenue. I think it should be made a statutory right of the taxpayer in every case, and that the right should not depend on a concession given by the Inland Revenue. I have been talking lately to one of the greatest authorities on Income. Tax in this country, and he tells me that he does not suppose there is one man in 10,000 who knows what these concessions are. They are concessions which are based upon instructions sent out by the Inland Revenue, and then passed on to the various Inland Revenue officials. Very often the officials do not know what they are, and it is never found out that a particular taxpayer should have this particular concession. Therefore, I would suggest, not only that my right hon. Friend, if he can, should accept this new Clause, but I do suggest that all these concessions should be put into an Act of Parliament, so that the taxpayer should know what his statutory rights are, and that his rights should no longer merely depend on some haphazard concession of the Inland Revenue.

May I make a preliminary remark on the subject of concessions? That does not arise on this Clause at all, because the case is met under the existing law, not by concession at all, but by an adjustment, to which the taxpayer has a statutory right, agree with the general principle that extra-legal concessions are a bad system, and I have said so more than once during the discussion on this Finance Bill. I leave that subject, because it does not arise on the Amendment. With regard to the new Clause, the type of income which is mainly concerned, I think, is the different War Loans, and the point, as I understand it, is this: The provision of the Clause in the. Bill is that, after the second year, the taxpayer is assessed on the previous year's receipts. The Mover of the new Clause makes no complaint about the basis of assessment in the first year, or the second year, but his attention is directed to the last of the series of years. If a man sells out during the last year, before the end of the year, his receipts from his War Loan securities will be less than a whole year's income from those securities. If he has held them during the previous year he will be assessed on the receipts of the previous year ex hypothesi on the whole of the year's income upon those securities. It is said, and justly said, that if he had to pay the tax when he was receiving half the income from the securities as if he had received the whole of the income that would he unjust. I think I appreciate the point of the Amendment. The answer to it is this: that under the existing law there is in Miscellaneous Rules, under Schedule D, a rule (No. 3) which provides for the adjustment in the case so that the taxpayer does not pay in the last year on more than he has actually received.

If that be the case, I beg leave to withdraw my Motion.

The next new Clause on the Order Paper in the name of the hon. Member for Wood Green (Mr. G. Locker-Lampson)—[Income Tax on employments, etc.]—imposes a charge, and is therefore not in order.

This is a very important matter. I do not know whether I can deal with it by altering it, as in the case of the last Amendment?

I am afraid not, as it appears to me that it would still impose a charge.

I beg to move, "That the Clause be read a Second time."

I moved a similar Amendment to this last year. The feeling against the Corporation Profits Tax has steadily increased and spread throughout the country. The newspapers now understand much better than they did, and even the shareholders who suffer from it are beginning to associate with it the effect which it had upon them. I will try not to repeat what I said last year, but I must shortly explain the facts, and the effect of the tax on the ordinary shareholder. This tax is upon the profits of the company; the debenture and preference shareholders are exempt from it. The whole charge of the tax falls upon the ordinary shareholders of the company. It amounts to an extra Income Tax at the rate of about 2s. in the £ on the profits of the various companies that come under it. There are certain exemptions about which we had a short Debate the other day. The ordinary limited liability companies of this country are all liable to it. It does not matter whether their profits are earned in this country or abroad, or in the Colonies, as so many are, they all have to bear this Corporation Profits Tax if they are registered in this country. In a good many of the Colonies and Dependencies they take into consideration the question of the Income Tax which is payable in England, but in the case of the Corporation Profits Tax they have not hitherto done it. On, therefore, all the profits, wherever in the world they are earned, by limited liability companies in England, falls the Corporation Profits Tax which is exacted from the ordinary shareholders of these companies.

To make quite sure of what the effect would be, or is, I had a long chat yesterday with the secretary of an important and substantial company which, having been a dividend-payer for many years, now pays this tax. I asked him what effect it had upon the ordinary shareholders. He replied that in their case the tax amounts to about £3,500 a year, and that would have admitted a further dividend of 12 per cent. to be paid; so that if the ordinary shareholders had been getting a dividend of 5 or 6 per cent. it would have permitted the company to pay 62 per cent. or 7 per cent. Unfortunately, many shareholders do not know this. Very few shareholders, if they get the same dividend as in the previous year, look into the question at all, and are not generally aware that but for the tax the company might be paying a higher dividend, though it is possible if the company could not pay the same dividend, owing to the Corporation Profits Tax, then those concerned would probably look into the subject and find out what was the cause of the reduction in the dividends. I take it that the greater proportion of shareholders in the country do not appreciate that this falls upon them as an extra Income Tax.

In the company to which I have referred, and which I yesterday inquired into, the tax amounted to an extra Income Tax of 2s. in the £ on the ordinary shareholders, so that they are now paying 7s. in the £ Income Tax, and they do not know it. Last year they must have paid 8s., although I believe the Corporation Profits Tax was not fully assessed. This, then, is the effect of this tax on the ordinary limited liability companies of this country, and it is a most serious effect. I wonder if the Chancellor of the Exchequer or the Solicitor-General has looked into the question of what effect this is having upon the trade of the country and upon the issues of capital which are being made? The effect is very apparent at the present time. It is, I believe, the fact that in the last 12 months there has hardly been an issue made of the ordinary shares of any company, and I believe I am right in saying there has not been one new company which has issued ordinary shares to the public in the past 12 months. That is most extraordinary, and is rendered the more remarkable following the investment boom. In the old days when there were large investments, there would have been hundreds of companies started in the City of London. They would have obtained their capital, and it would have brought business to the City, and trade and profit to this country. In all probability it would have gone further and helped to open up the Colonies and Dependencies, and even foreign lands. The employment of this capital for these purposes in days gone by was provided by these registered limited liability companies. They used to be started in London most successfully, and countries like Rhodesia, Hudsons Bay, and great fields of the world were opened up by private shareholders 'by their investments. At the present time this has totally ceased. There are no new companies at present being started in London. The employment of money has been by way of investment entirely in foreign loans, loans to our Colonies and Dependencies and loans to successful concerns in this country which have made issues of further capital, very rarely have even these successful issues been made by way of ordinary shares. They have limited their issues to debentures or preference shares. Surely, when the ordinary shareholders are feeling the effect of this tax, and are not likely to subscribe for ordinary shares as they used to do in this country, it is not well! There are great blocks of these companies which at different times have been established, and whose head office is in London, who fall under this Corporation Profits Tax. I refer to one class. The great railway companies in the Argentine Republic, Hundreds of thousands of pounds of English capital have been provided in the past, to the great benefit of the Argentines, and a corresponding benefit to the manufacturers and people of this country. A very large amount of this money is represented by the railways. These companies represent enormous sums of English capital and earn a large profit. All fall under this tax. English railways do not fall under it. All these other companies do fall under it. In the case of these companies it amounts to a very large sum.

It must have occurred to the Chancellor and to the Government that, while these limited liability companies continue to work under present conditions, they have only to transfer their head offices abroad — their management is there now—and they would not be liable to this heavy burden. I do not say that arises at the moment, because they had hoped this would be the last year on which this tax would be imposed; but if ever the idea got about that this was to be a permanent tax upon the limited liability companies, then I am quite sure that the present companies will see whether or not they can to their advantage change the status of the company and the locality of its management and register in another country, and consider whether new companies should be registered in this country or be registered in other countries. It is a matter which no doubt the Chancellor of the Exchequer will deeply consider, because I believe that the future of industry and the progress of this country, and even of the Empire, largely depend upon the fact of whether these new issues are to be made in London, under London influence, and British influence, or whether they are to go elsewhere. If it is once realised that this is to remain a permanent tax, not one of these companies, I believe, but will consider the position and see what they will have to do in the interests of their shareholders.

Even in the case of the companies which are earning their money abroad it may be just as well that the management should be abroad as here. Not only would they lose the Corporation Profits Tax if they transferred abroad, but they would lose a large part also of the Income Tax. In cases of that sort the shareholders in this country would still continue to pay Income Tax upon the dividends which they received. In all eases Income Tax paid by an English company is much larger than the dividends paid to the shareholders. That portion must be loss for the Income Tax collectors, as well as for those who take the Corporation Profits Tax if these companies remove their head office abroad. I will not dilate, on that any further, but I will say with regard to the particular class which you are taxing, the ordinary shareholder, that he is the salt of the commercial community. He is the man who takes the risk. He is the man of energy and enterprise. He goes to foreign countries and says: "I believe there is a great future for this country: I will put my money into it, will grow up with it, and my investment kilt increase in value with the growth of the country." These people are those who are being singled out to bear this tax, and they were well described the other day in one of the principal financial papers in the city, from which I will read the following passage:

"Ordinary shareholders, as everybody knows, are the people who take the risk. They are the people who initiate; the people willing to test new methods, new ideas, and new openings. For the rest of the community, through its Government, to impose a fine upon them for so doing, when it is crying out for employment, and paying out in doles for unemployment times over the yield of the fine, comes very near indeed to the limit of imbecility. The effect is not merely to check enterprise; the effect, by heightening the risks and lowering the rewards of enterprise, is to add to the cost of capital for the purpose. The further effect of adding to that cost is to raise the cost of debenture and preference capital pro rata. Thus the very foundation of joint-stock investment is undermined. In short, there can be no sort of question but that alike in limited yield and in unlimited incidental harm the Corporation Profits Tax is a bad tax, and that the sooner it cam be abolished the better."

That is a short summary of the results of this tax. I hope if the Chancellor of the Exchequer cannot do anything to remedy this grievance this year, at any rate, he will be able to tell the business community that this is the last year this tax will be imposed, and that some other way must be found of raising the money which is now being raised by the Corporation Profits Tax. I think this money could be much better raised by an increase of the Income Tax, which falls upon everybody, while this tax falls only on the most enterprising people in the country, and the very people whom the Chancellor of the Exchequer and the Government should do their best to encourage.

I wish to support the Second Reading of this Clause.

I ventured to make a few remarks upon this Clause on the Second Reading of this Bill and the Financial Secretary to the Treasury received my remarks very kindly and agreed to make a slight concession which I see he has carried out by an Amendment which appears later on the Paper, but it only deals with a very small class of companies which are not allowed to use the word "Limited after them. I object to the Coropration Profits Tax on two grounds. The first is that the tax is a bad one; and, secondly, the way in which it is raised is also exceedingly bad. The true history of this tax I have never been able to discover. I know some time ago we were discussing.a luxury tax which was put forward by the Government because there was a suggestion that we might be able in this way to increase the turnover, but that proposal fell through entirely, and the next tax that was produced was the Corporation Profits Tax. I have never yet heard a really clear defence as to why this tax was put on at all.

Let me now deal with the way in which it is imposed. The way you arrive at the profits is, instead of finding out the profits in the same way as you do in the case of the Income Tax—namely, the real profits of a year after deducting expenses, you are not allowed to deduct any interest on a permanent loan. How that proposal slipped through the House of Commons I do not know, and I am certain that few hon. Members know how it got through. In ascertaining the profits of a company you are not allowed to make any deduction for interest on a permanent loan. There is a company in which I am interested, although not financially, which occupies very considerable premises.

Those premises were built and bought with borrowed money and erected in this country, and ever since then this company has occupied those premises, and they have been paying interest on their permanent loans. Each year they have not, been able to make a profit. It is an education establishment, and there is no difficulty in making up the small details of the business. Since the Corporation Profits Tax came into being, owing to this extraordinary Clause in the Finance Act which by this proposal we are seeking to repeal, this company is not entitled to deduct a single penny on account of the interest on their permanent loan, and the company now have to pay £500 by way of the Corporation Profits Tax on a concern which has never made a profit and is never likely to make a profit. I put that case forward because it shows that there is something wrong with the tax, and a case of that kind ought to be exempted even if the tax cannot be abolished altogether. I can give the exact figures if it is thought necessary, but the Chancellor of the Exchequer knows the case to which I am referring. This is an instance of a considerable sum of money having been spent on the buildings. The people have occupied them and no sum is allowed to be deducted for what really is the rent of the premises where the business is being carried on. As regards the tax itself, let us see how it affects people. It is really an Income Tax of so much in the £ upon the interest of the holders of ordinary shares, and it is levied upon every holder of ordinary shares, irrespective of whether they are exempt from taxation or not. Take the case which I know this House always likes to hear, that is the case of the widow or orphan whose total income is only £150 or £160 a year. She is exempt from the Income tax altogether by the law of the land, but if she has the misfortune to invest her savings in the shares of a company then she has to pay the Corporation Profits Tax at 5s., 6s., or 7s. in the £.

It is obvious that this is an unfair tax, because there are no exemptions under it. There are exemptions under the Income Tax up to £1,000 or £2,000, but there are no exemptions under the Corporation Profits Tax. Even from the point of view of the Income Tax there is not the slightest doubt that a very serious injustice is being done to those who are now getting remissions under the ordinary Income Tax, because they cannot get any remissions under the Corporation Profits Tax. My hon. Friend has pointed out the effect upon the big companies of this liability and the prospect of the Chancellor of the Exchequer losing a very considerable amount by this proposal. I am familiar with many trading concerns in England in the form of partnerships. I know that it has been the policy of this House in the past to encourage partnerships in every way. The policy has been to turn these partnerships into limited liability companies, and the idea has been to get them to do this. The Government gain by this policy, because the stamp duty in the first place is pretty considerable, and there is also Income Tax paid on the profits of the company. Therefore, for some reason or another, it has always been thought desirable to turn their businesses into a limited liability company.

I have known one or two instances since this tax was first imposed of people turning their businesses into limited liability companies, but directly they do it they have this tax put upon them in addition to their ordinary taxes. I know the case of a large printing works which is run by two or three brothers, and not only have they to pay large sums in the way of the stamp duty, but they have to pay this Corporation Profits Tax in addition to their ordinary taxes. I am only putting forward the case of small trading companies carried on exclusively in England, and even from that point of view I ask is it a wise thing to keep on this tax, which is a very bad one. I strongly appeal to the. Chancellor of the Exchequer to see whether if he cannot abolish the tax he can at least do away with some of the injustices I have mentioned. I hope he will be able to make a bold sweep and have done with this tax once and for all.

In addition to the objections which have already been raised to this tax I want to call attention to another, and that is the unequal incidence of this tax between one industry and another. A most striking example is the case of the Port of London. The business of that port has been divided between the dock companies and the wharfingers. That has accentuated the situation because the dock companies are immune from the Corporation Profits Tax, but the wharfingers have to pay the tax. The same thing happens with regard to a large number of other companies carrying on very extensive operations. I wish to call the attention of the Chancellor of the Exchequer to this point because, in addition to the argument that this is a very heavy tax, there is the point that its incidence ought to be fair and equal. I think that is another reason why this tax should disappear altogether next year.

It is very clear that in the present state of our national finances the Chancellor of the Exchequer cannot afford to repeal this tax, and therefore this discussion may, to some extent, be considered as purely academic. The larger the sum involved the more important it is that we should ascertain from the Chancellor of the Exchequer here and now whether he intends to make this tax permanent or not. That is really the question we wish to put to the right hon. Gentleman now. We do not intend to divide upon this proposal because we know it is impossible for the Chancellor of the Exchequer to do without the money.

5.0 P.M.

When the tax was first imposed, in 1920, I opposed it in common with other hon. Members very strongly indeed. There is not a good word to be said for it. It is an absolutely unjust tax. It is unequal, and that is, of course, a great test of taxation, because it does not apply to all limited companies. The only excuse given by the then Chancellor of the Exchequer, the present Lord Privy Seal, for bringing it in was that inasmuch as in 1867 limited liability companies were allowed to be formed to limit their liabilities, therefore they ought to be taxed for that privilege. Members of the House could not see any reason in that. On the contrary, bearing in mind public policy, it should be a ground for the remission of taxation, because limited companies facilitate very much, not only the obtaining of revenue, but the actual collection of it. It was accepted in 1920, undoubtedly because it was absolutely necessary to raise more money. The Chancellor of the Exchequer and his predecessor had stated perfectly clearly that the Income Tax was so high that it was impossible to increase it. It was higher than it ought to be and they could not increase it. But they had to get money somehow and so they brought in this Corporation Profits Tax, on the flimsy pretext I have mentioned in regard to what occurred in 1867. The real reason, however, for it was the need for money, and it, is a double Income Tax on a limited class of people. Hon. Members who have spoken have given very weighty reasons for the repeal of this tax and have even suggested that it would have been better to increase the Income Tax than to continue the Corporation Profits Tax.

Instances have been given of hardship to individuals. Two years ago I mentioned in this House the effect on the Lancashire cotton trade. An enormous number of the working classes have shares in the mills in which they work. They are not liable to Income Tax, but they have to pay it in the shape of this Corporation Profits Tax, and from it they are unable to get relief. If it had been in name what it is in fact, an Income Tax, they would have got relief and the money would have been returned to them. But as it is, this Corporation Profits Tax is deducted from the interest on their very small investments, although they are not liable to Income Tax at all. I ventured to prophesy when the tax was introduced that it would be continued. It is a tempting tax for the Chancellor of the Exchequer, because it is so easy to collect. I also asserted my belief that it would be increased as time went on. I still believe it will be if this House suffers it to continue. I seriously warn the Chancellor of the Exchequer that he will find an enormous amount of opposition to this tax in the future. He may say he wants money and must have it, but eventually the House will insist on it being raised in a more equal and just way, from the whole of the public and not from a section of limited companies, and from one class of shareholders, the ordinary shareholders in these companies.

This matter was considered by the Income Tax Commission on which I had the honour of serving. I cannot now vote against the Government without giving a reason for my action. We who sat on the Income Tax Commission for two years tried to arrive at some basis on which taxation should be raised according to ability to pay. The matter was worked out in great detail, and the recommendations of the Commission were accepted by the Chancellor of the Exchequer and by the House, and have been almost entirely embodied in our Statute law. At the very moment when the bulk of those recommendations on the basis of ability to pay were being accepted by the House, this entirely new tax was imposed without any regard whatever to the principle of ability to pay, and thereby the whole of our calculations were upset. The only ground on which I understood this tax was imposed was that in the consideration of Income Tax by the Income Tax Commission, one of the points we had great difficulty with—and this will be within the recollection of the Committee—was the question of charging Income Tax upon co-operative societies. In the evidence they gave before the Income Tax Commission, those who represented the great co-operative societies stated that if a Corporation Profits Tax were imposed they would he perfectly willing to pay it.

Acting no doubt on the faith of that statement, the tax was introduced into this House, and immediately the representatives of the co-operative societies raised such strong objections and such an outcry against being asked to pay it, although they had actually given evidence before the Income Tax Commission that they would be prepared to pay, that they were exempted. Thus the whole object of the tax fell to the ground, and other people who are already paying the Income Tax are now burdened with this tax. On the grounds I have stated, I cannot vote with the Government on this occasion unless we get some assurance that this tax is regarded as a temporary tax. I understand, of course, that the present Chancellor of the Exchequer was not responsible for it, and that he has to face an extraordinarily difficult financial position in which he has the support of every member of this Committee. If he will say he recognises the justice of our claim, but that he cannot take the tax off now, because he must get money, and yet he regards it as a temporary tax, then I shall feel I can go into the Lobby with the Government. But if this is to be a permanent tax, for the reasons which have been given by hon. Members on both sides of the Committee, then I shall certainly vote against it. I want to get an assurance, however, that it is to be regarded only as a temporary tax.

We have been told that the object of this tax in the first place was to get more money. That, I think, is the origin of most taxes imposed by Parliament. Like other speakers, I am well aware that the Chancellor of the Exchequer needs every penny he can get in order to balance his Budget in the present financial year, and on that ground, if I could get some assurance from the right hon. Gentleman that this tax is not to be a permanent tax, I might be inclined not to vote against the Government. But I am going to vote against it, because, to my mind, the continuance of this Corporation Profits Tax involves a breach of faith with the retail trading community. The retail traders got a certain pledge, or, rather, an undertaking from someone in the right hon. Gentleman's office last year in regard to this tax. I think it was the Financial Secretary who assured them that if the tax were kept on this year, the Government would assess to it the co-operative societies.

May I say at once that nobody in my office ever gave any such pledge.

That is the story which is told to me. It will be in the recollection of the Committee that last year when this tax was being discussed, there was an Amendment down to exempt the co-operative societies from its operation. After all, it was a comparatively small sum which those societies were called upon to pay—I think it was about £180,000—but they turned up in full force against, it, there was hardly a Member on the Committee who was not lobbied, excepting perhaps myself, whom they knew of old. Some of us were told by the Whips on that occasion to be back from dinner by 9.30, but when we got back at that hour we found that a Division had been taken and that the Government had been defeated by two votes. As a result, a deputation went to the Treasury on behalf of the retail trading community, and, as I am informed, they saw the Financial Secretary to the Treasury, who gave them a pledge or, at any rate, who gave them to understand that the Government were so nettled at their defeat that they were considering whether they should not recommit the Bill or else, if the tax was continued in the next Budget, assess the co-operative societies to it. Fortified with that pledge or understanding the deputation left the Treasury, but to their astonishment when this Budget came along they found in it no mention of the co-operative societies or of their being rendered liable to it. The retail trading community feel that they have been let down by the Chancellor of the Exchequer. I can speak with some authority for them, and I say that they feel this very acutely.

No such pledge was ever given.

At any rate, that was the understanding arrived at.

Neither was there any such understanding.

At any rate, they have been led to believe that that was the understanding arrived at and they are extremely angry with the Treasury because it has not been given effect to. I am sorry that the Chancellor of the Exchequer or someone at the Treasury could not have received a deputation from the retail traders before this Debate. They should, at any rate, have done so, and told them that they had been misinformed. They should have told the deputation frankly that they could not do this thing and that the Chancellor of the Exchequer declined to raise a hornet's nest about his ears by bringing the co-operative societies under the operation of the tax. The right hon. Gentleman has not done that, and as one speaking on behalf of the retail trading community, I intend now to vote against the Government.

I do not think I have ever concealed from the House of Commons the fact that I am not at all enamoured of the Corporation Profits Tax. I entirely agree with much that has been said to the effect that it is a burden on the industry of this country and a check to enterprise. All taxation has to some extent the same effect. Undoubtedly a very high Income Tax and a high Super-tax produce that result to- day to a degree which disturbs the equanimity of everyone who is interested in the subject. Accordingly, as has, I think, been well recognised by Members of the Committee on the present occasion, it would be quite impossible for me to give up this source of revenue just as it would be impossible for me to give up many other sources of revenue which are at least equally burdensome. For example, I have no doubt that I should shock my hon. Friends opposite if I said that I regard the extent of Super-tax at the present time as one of the greatest burdens upon industry—as even more burdensome than the Income Tax. It may seem to be something like a paradox to say that to take away money from those who seem to have it in excess, is a course of action which can be readily defended as expedient and profitable, but that really you are taking away money from the people who have shown that they know how to use it and how to make it fructify. I venture to say that, paradoxical as it may seem, one of the heaviest burdens upon industry to-day is the grevious extent of the Super-tax. I cannot, however, give up any portion of the Super-tax at the present time, as I am sure hon. Members will readily realise: nor can I give up the Corporation Profits Tax; but I should be as sorry as anyone who has spoken this afternoon if I were to think that the Corporation Profits Tax had taken any permanent place in our system of taxation. It can only be regarded, at the best, as a second-rate tax, if it even amounts to that; but, as I have said, the considerations which move one in dealing with taxation at the present time are rather such as compel one to adopt expedients that are ready to one's hand, in order to meet the exigencies circumstances over which we have not sufficient control.

Having said so much, I hope I have satisfied hon. Members with regard at least to my own personal opinion on this matter. I cannot give anyone's opinion but my own, but I readily assent to the general principle with regard to the Corporation Profits Tax. I agree also that to some extent it forms a double Income Tax upon a certain portion of the community, although I believe some modified justification can be given for it even upon that score, if it be remembered that, perhaps, there is an oppor- tunity of treating it as a working expense, and, to some extent at least, passing it on to the consumer—the person who buys the goods. That is not by any means a full justification, but it affords some sort of excuse and explanation as to this particular tax. It was said—I think by the hon. Member for Oldham (Sir E. Bartley-Denniss)—that no sort of excuse has ever been made for this tax. While I agree with a certain amount of the criticism that has been made, I do not entirely accept that statement. A certain measure of privilege is obtained by limited companies, by reason of the fact that their shareholders are not liable to the same extent as if they were partners in a private business. That, no doubt, has been a great advantage to trade, but, at any rate, the privilege must be recognised when one is dealing with this matter. I do not, however, want to delay the Committee by presenting that consideration further, but I should like for one moment to advert to something that was said by my hon. and learned Friend the Member for Cambridge University (Mr. Rawlinson). He instanced the case of a private partnership of several brothers who were contemplating the possibility of turning their business into a private limited company, but who were deterred by the operation of the Corporation Profits Tax. What is the balance of considerations, for, believe me, they are not all on one side? The private partnership has to pay Super-tax upon its income. The private limited company has not to pay Super-tax on anything it puts to reserve, and, therefore, it escapes a burden which is imposed upon the private partnership. I can imagine two or three brothers balancing these considerations and saying to themselves, "Can we better afford to bear the Super-tax as a private partnership, or the Corporation Profits Tax as a private limited liability company?" And, in cases where the private partnership was a very lucrative concern, it would, in my view, pay them better to become a private limited company, with the necessity of paying Corporation Profits Tax, rather than to remain a private partnership with the burden of Super-tax upon them. It altogether depends, of course, upon the financial condition of the firm and the rate of profit-making which it is enjoying at the time.

The illustration I have given will have brought home to the Committee the fact that there is at least this one justification for the Corporation Profits Tax, that the private limited company, while it has to bear the Corporation Profits Tax, is at least escaping a burden which it would have to bear if the business were being carried on as a private partnership. As I have said, these are excuses and explanations, and I have assented quite frankly and candidly to the main proposal, that it is at the best a second-rate tax, and that it should not become a permanent part of our system of taxation. I now turn to a less pleasant matter which was raised by the hon. and gallant Member for Finchley (Colonel Newman). The hon. and gallant Gentleman complains that the Government has been guilty of a breach of faith towards the co-operative societies.

Towards the retail trade.

Towards the retail trade. No such attack upon the Government has any foundation whatever. Let me recall to the hon. and gallant Gentleman what happened last year. It is not any use saying that he was away at dinner. That kind of excuse is not of any value in the House of Commons. The situation was that the Government proposed to apply the Corporation Profits Tax to co-operative societies, in accordance with what seemed to be a recommendation—although it is now disputed by the co-operative societies—of the Royal Commission on Income Tax; but a very eloquent and powerful case was made by my hon. Friend the Member for Linlithgow (Mr. Kidd). He put forward the same case the year before and failed, but he put it forward again last year and got a great accretion of support, with the result that the Government was defeated, and we had seriously to consider whether we should accept that defeat as so serious as to give rise to consideration whether we could carry on with the Finance Bill or not. It is no use saying that that defeat occurred when a certain number of people were away at dinner. Many may have been away at dinner, and, although my hon. and gallant Friend would, as I understand, have voted with the Government on that occasion, many other people who were absent might have voted the other way. The fact was that in a large House—it was by no means a, small Division—the Government suffered defeat. What happened thereafter? I am very familiar with the circumstances, because it was my first Finance Bill as Chancellor of the Exchequer, and I think my hon. and gallant Friend will take it from me that I did not regard that defeat lightly. I had made the best case I could to a large House, and had been defeated. That is how the matter stood, and that is the fact which must, be considered in relation to the decision. My hon. and gallant Friend says we have been guilty of a breach of faith by not coming to the House to ask it to reverse that decision.

No. May I interrupt for just a moment? The right hon. Gentleman missed the point of my complaint altogether. My complaint was not that the Division was taken while I was at dinner. That has happened in other cases, and I am only sorry for my own negligence. But subsequently, either the next day or two days after, the Financial Secretary to the Treasury received a deputation representing retail traders, and gave them to understand that either the co-operative societies would be assessed to Income Tax or else that the Corporation Profits Tax would be repealed altogether. That is what. I complain about.

I am prepared to say with complete confidence that not only was no such pledge given as my hon. and gallant Friend suggests, but that nothing approaching any sort of understanding upon the matter could possibly be founded upon what was said by my hon. Friend the Financial Secretary to the Treasury, upon whom I have as great reliance as upon myself, and who knew my views. As the person who is alleged to have come to this understanding, he has denied it. I accept his denial, and I should expect my hon. and gallant Friend to accept it also.

When has he denied it? He is at The Hague.

I am familiar with the circumstances, because I have heard this suggestion before. The question has been asked on the Floor of the House, and the denial given. Why the suggestion should be repeated I cannot tell, but I think it is not out of place for me to tell the Com- mittee that, after the Division to which I have referred, I was approached by a representative of the retail traders, whose complaint to me was that the Government had deliberately engineered the Division in order to let them down. If that be the class of accuracy, or the attitude of mind with which these people are going to approach this matter, the Committee will forgive me if I ask them to accept the version of the, Financial Secretary to the Treasury rather than that which has been given by my hon. and gallant Friend, which is a complete travesty of the facts. There was no suggestion whatever on the part of the Treasury that this matter was going to be reopened, and I hope I have now laid the matter to rest. My hon. and gallant Friend says that the retail traders of this country are a very large body. I agree, but, however large they are and whatever voting power they control, we really must be honest with each other and state the facts with accuracy. I think I have dealt with all the matters that have been raised—

Will the right hon. Gentleman deal with the question of the Argentine railways?

And also with my other point as to whether he can see his way to make any concession as regards interest on permanent loans?

I beg my hon. and learned Friend's pardon for not recollecting that that was one of the matters which he raised. I readily understand the difficulty of the particular case to which he refers, where permanent loans are raised upon buildings and lands which, as I understand, were purchased with borrowed money. The reason, as I understand it, why the provision about permanent loans was inserted in the Clause dealing with this matter in the original Act, was in view rather of debenture issues than of any permanent loans such as my hon. and learned Friend has referred to. To anyone conversant with money matters it will be apparent that by means of debentures the imposition of the Corporation Profits Tax could, to a large extent, be evaded if interest upon debentures were to be exempted from the tax—or, as I should rather put it, if it were to be allowed as a working expense before arriving at the amount which ought to be assessed to the tax. My hon. and learned Friend, who is familiar with these things, will readily see how that position could be abused, but I shall certainly, in accordance with his request, look into this matter of permanent loans of a public character, and if there is any way in which I can alleviate the position, without infringing upon the general necessities of the situation, I give my hon. and learned Friend the assurance that I will do so.

Could it be done by exempting debentures existing in 1920?

Will the right hon. Gentleman deal with the question of small shareholders who are not liable to Income Tax?

I am afraid I cannot give any answer upon a specific matter which has not been brought to my notice sufficiently early for me to get information upon it, and that must be my reply to my hon. Friend the Member for Yarmouth (Sir A. Fell). As regards the suggestion of the hon. Member for Oldham (Sir E. Bartley-Denniss), I am afraid I could not undertake at the present time to carry out the proposal he commended to me.

Will the right hon. Gentleman consider it.

I will certainly consider it.

I beg to move, "That the Clause be read a Second time."

This Clause deals with Death Duties as they affect agricultural estates. Under the original Act of 1894 there were certain provisoes for the protection of agricultural estates. Under the Act of 1909 they were repealed. The first of them was that agricultural land should be assessed for Death Duties on a valuation arrived at by multiplying the net annual income by a maximum multiplier of 25, instead of being assessed on a sum estimated at what it might be expected to sell for if sold piecemeal to the highest bidder. In the Act of 1909 there was inserted in Section 60, Sub-section (1), a provision which really repealed the provisoes of the former Act. The Subsection was introduced really so that its provisions should affect personal estate, that is, money in the form of stock and shares, and was not intended to apply to agricultural estates. I do not know whether it is the intention of Governments to effect, by Finance Acts, the absolute extinction of agricultural estates as agricultural estates. If that is so, no doubt the provisions of the Finance Acts will in a very short time have that effect. But I am quite certain that this Government at any rate has not the intention of destroying agricultural estates. Therefore it seems to me that they should repeal that part of the 1909 Act which affects agricultural estates in the way I have described. To describe it a little more minutely, I might say that under the provisions of the 1894 Act, on the death of the owner of an agricultural estate, his successor was called upon to pay duties on a valuation of 25 years rental value of the estate, and under the 1909 Act this was altered by the inclusion of these Subsections, so that the valuation should be on the basis that the estate should be split up, and the eyes, as it were, taken out of it.

To such lengths has this system proceeded that a certain estate in my constituency, which has become famous owing to the fact that Death Duties under this 1909 Act have been paid on it, has operated in this manner. It is known as the Ellesmere Estate. Lord Ellesmere died, leaving an estate, part of which was situated in Northamptonshire, to his son, and his son decided to dispose of the estate as a unit in order to pay Death Duties. He employed a well-known auctioneer and valuer in London, who acted in conjunction with a local valuer, and they fixed the price which he was entitled to get for his estate, and he sold it for the price fixed by the valuers. I imagine he sold it to a land speculator. At any rate, the purchaser split it up into various small units and sold them by auction, I think employing the valuer who had originally valued it, and he realised a larger figure than he paid for it. The Inland Revenue claimed Death Duties not on the price at which the son had sold the estate, but on the price which the speculator had obtained after it had been split up. That appears at first sight to be an intolerable and incredible state of affairs. Those are the actual facts of the case. The case was taken right through the courts, and ultimately was decided in favour of the Inland Revenue. I am certain it cannot have been the intention of Parliament when they introduced those Subsections into the 1909 Act that such a state of affairs should be created, the actual successor to a property being called upon to pay Death Duties not on the amount at which he actually sold the property, but on the amount which the person to whom he sold it got for it at a subsequent date. I feel sure this must have the sympathy of the Chancellor of the Exchequer, and that he will assure us that as soon as he is able to do it he will reintroduce the original proviso in the 1894 Act and bring the, law back to its origin-al condition.

I want to make quite clear how this question has arisen. It really appears to have been a misapprehension. We recognise that the Chancellor of the Exchequer has shown great sympathy with agricultural and rural interests, and we do not wish to press him unduly to do too much this Session. But this is really such a serious grievance that I hope the Committee will realise it and unilerstand it, and if the right hon. Gentleman cannot give it us this year, we shall get an understanding that it will be most seriously considered next year. The way it has arisen is that under the Finance Act of 1909–10, Subsection (1) of the Section to which my hon. and gallant Friend has referred simply repeals the proviso in the Act of 1894 under which agricultural estates were to be valued on a multiple of the net rental instead of on the assessed capital value. I believe that- was the limit of the intention of the House. Then came Sub-section (2), which had no reference to agricultural property at all, and was not primarily intended to apply to it. What Sub-section (2) said was that

"In the case of any person dying on or after the 30th day of April, 1909, the Commissioners shall fix the price of the property according to the market price at the time of the death of the deceased, and shall not make any reduction in the estimate on account of the estimate being made on the assumption that the whole property is to be placed on the market at one and the same time."

The object of that was, as I understand it and as my recollection carries me back to that date, to deal with cases where large blocks of stocks and shares which were the property of some individual who had died were placed upon the market and had to be valued for Death Duties and a claim was made that a reduction should be allowed on the market price of the day on the ground that it had been necessary to realise the whole of those stocks and shares at once. I do not think it was then realised that the House had any idea that that was going to be read with the previous Sub-section and was going to be applied to agricultural estates.

The effect is that an agricultural estate is placed in an infinitely worse position than a building estate. In the case of a building estate of 100 acres, if you take the aggregate value of the whole or if you take it in lots, there is practically no difference. If you take it as a whole you take it for what anyone would give for it as a whole as it stands. If you take it in lots, the sale of the land which is immediately on the frontage must precede the sale of the other land, and, therefore, when you sell it in lots you have to discount it according to time, and that brings it back to the single value. I have gone into the matter and I know how it is done in practice. Where you are going to sell 100 acres of building land the Inland Revenue are entitled, in assessing the Death Duties, to lot that out to the best advantage. Having lotted it out to the best advantage they say: "In the probabilities of the case and having regard to the sales which have recently taken place here, and the demand in this locality, we consider that of the 100 plots into which we have divided this land five might be sold the first year, and then after they are sold that will bring five or six in another year, and so on." They discount each particular set of plots in proportion to the number of years they think will elapse before they think they can actually be sold, and when that discounting has been done that really brings back the figure to what would be the best price to be obtained for the single plot of 100 acres or thereabouts. When you come to an agricultural estate of 5,000 acres which is divided into, say, 20 farms, 10 or 12 smallholdings and 40 or 50 cottages and small houses, if that is treated in this way there is no discounting whatever. You destroy the unity of the whole property and you say: "If this property was divided up into all these separate units—farms, smallholdings and cottages—and each is put up absolutely separately, and sold as a separate unit, it might fetch so much." There is no discounting whatever. It actually happened in the case to which my hon. and gallant Friend has referred that a person gave a fair price for the property, broke it up into lots, and resold it, and the original seller, who had sold it in order to pay Death Duties, had to pay Death Duties, not on the price that he got, but on the price that the purchaser from him got when he had broken it up into lots. That seems incredible, but that is what happened. Let us take the imaginary property of 5,000 acres, with a value as a single unit of, say, £20 per acre, which would amount to £100,000. Suppose that by breaking up that estate into separate units and selling it separately you got £120,000. The owner of that property has to pay heavy Death Duties. He cannot pay those duties out of his income. These things are all cumulative, because he has to pay Super-tax, and Income Tax on his income. He cannot pay the Death Duties out of his income. Therefore, he is obliged to sell some part of his property in order to pay Death Duties on the whole of the property. That property is valued, not at the £100,000 as a whole, which it would fetch as a single unit, but at £120,000, which is the break-up value.. He sells part of it and he has to pay, say, £30,000 Death Duties. He sells enough of the estate to realise £30,000. What he has left is not going to be worth the difference between £30,000 and £100,000. He is not going to have £70,000 left when he has taken this property of 5,000 acres and broken it, and sold part of it. It is valued for Death Duties at £120,000, and in order to pay the duties on the £120,000 value he has to sell £30,000 worth of the estate. What is going to be the value of the single unit that is left? It will certainly not be the difference between £30,000 and £120,000. The State takes its pound of flesh out of the £30,000.

This is not a fair method of assessment. The owner is left in a very unfair and difficult position. He suffers the cumulative effect of this and all other forms of taxation which fall upon landed property, and it probably means that the house has to be shut up, the property has to be broken up, there is loss of taxation and loss of rates, and the evils which this House have already recognised are exemplified from one end of the country to another. I earnestly appeal to my right hon. Friend to look into this matter most carefully and see whether he cannot restore the Proviso of the 1894 Act. It was a wise provision that was inserted in the original Act. We are not asking for anything new. We are not asking for anything for which there is no precedent. Sir William Harcourt, when he imposed the Death Duties in 1894, recognised the position of agricultural property, and this Proviso of the 25-years' purchase on the net income was specially inserted to enable agricultural properties to continue to exist. All that we ask is that the ill-considered repeal of that Provision should now, when its effects have been realised, be put right. Its effects were not realised at the time the Act of 1909–10 was passed. Everybody realises the atmosphere in which that Act was passed. It was a case of "Down with landed property in every direction." The consequences have now been discovered, and this Committee realises that that is not a sound policy from the national point of view. Therefore, the restoration of this Proviso, which was contained in the original Act, would be a sound policy from the national point of view, and 'would remedy the serious mistake that was made in 1909.

The two speeches that have been made on this Clause are, of course, well informed, coming from hon. Members who understand what they are talking about better than anybody else in the Committee. Much of what we have been told gives food for thought. I want to state, quite simply, the legal aspect of the matter, what the law is, and what it was, in order that I may correct one or two things that have been said, in which I am satisfied hon. Members were wrong. It is quite true that in the Act of 1894 a Proviso was inserted in regard to agricultural land, in which 25 times the annual value, or 25 years' purchase of the annual value was to be taken as representing the capital value upon which Estate Duty should be paid. It is not true to say that 25 times the annual value was the standard measure. Twenty-five times the annual value was the maximum.

If there was any value other than agricultural that could be added. Qua the agricultural part of the estate, I think that was the maximum.

One difference between its being the standard and its being the maximum was that land which was of a lower value than 25 years' purchase did not pay on 25 years but paid on something lower.

That is quite right.

Therefore, the effect of that Proviso was, in the case of agricultural land, that you let off the higher value land seine of its duties, whereas the lower value land had to pay the whole, creating a disparity and, to that extent, an injustice, because a tax should be equal. Inequality of taxation is an injustice as between the owner of the high value agricultural land, which got the benefit, and the owner of the low value agricultural land, which got a prejudice. That was one of the reasons why the Proviso was repealed by the Finance Act, 1909–10. Another reason why it was repealed was that it was thought right that there should be no longer a distinction between agricultural land and other land. The basis of the Act of 1894, the Death Duty Act, is that Death Duty is payable on the market value of the land at the time of the death. It was intended that that should be applied to land, and, indeed, to all property, because, in the case of stocks and shares, they are assessed at their market value. Market value if, of course, merely the real value. Sometimes it is difficult to get at it. Take the case of a building estate. The hon. and gallant Member who moved the Amendment, and the right hon. Gentleman who supported it, said, suite correctly, that the valuation is carried out as a mere matter of valuation practice and fact, and not of law, by seeing how you would sell the estate as at the date of the death, if you were going to sell it to the best advantage. It may be that that is an inauspicious time to sell. If that is so, the value is got at, not by imagining a sale at that time, when no sensible man would sell, but by postponing, hypothetically, your sale to some future date, when it might be assumed that it would be a suitable moment to sell. In other words, the valuation is got at, as best you can on the facts, by trying to get at what would be the best market value at the time, providing you could get a willing seller and a willing buyer. That is the basis of the whole system of Death Duties.

The Proviso in regard to agricultural land was, no doubt, inserted because of the peculiar fact attaching to agricultural land, which does not attach to other land as a general rule, namely, that the capital value of the land is very often considerably more than its due proportion in ordinary relation to the annual value. In other words, the annual value is measured in some sort of indirect way, and does not represent in any sense the capital value that many are willing to give for agricultural land. The possession of a large estate in the country has a fancy value which commands in the market a high figure. The basis of taxation for Death Duties is, that the State, on the passing of property on a death, takes a toll on a percentage basis of the capital value as it is at the death. That is the principle of the Estate Duties. The view was taken, no doubt, in 1909, that you must apply that rule to agricultural land as to other land. That was the reason why quite deliberately, whether we agree with it or not, Parliament at that time made the alteration. It was said by the right hon. Gentleman that, although the value of a building estate is got at in that kind of rule of thumb or sensible way for the purpose of getting the real value, something different is done in regard to agricultural land. He gave an illustration, which I listened to carefully, but, quite frankly, I found it very difficult to understand it. I have not the least doubt from the fact that he told us that it was so, that it was so.

I did not say something different was done, but I said it had an absolutely different effect.

That is not what the Act intends, and that is not the law. If that kind of valuation is, in effect, carried out, it is not the intention of Parliament.

Hear, hear!

The intention of Parliament is to get at the real value, and if you take any hypothetical method which results in a purely fictitious value, it is wrong. It is not law, and the answer to that particular complaint is that it is not the law to-day, and it can be perfectly well put right either by a discussion with the Chancellor of the Exchequer or, if necesasry, by an appeal to the Courts. This Amendment would cost £250,000 or so annually, and at the present time it is a very difficult concession to make. On behalf of the Chancellor of the Exchequer I am not in a position to make the concession asked for. It may be that in a year or two, or in a few years' time, we, as a nation, may be rather better off and may be able to reconsider this matter. The matter is one upon which the arguments in favour of the Amendment are, no doubt, substantial, but at the present time the arguments against it are stronger.

I had not meant to intervene, but the speech of the Solicitor-General makes it very difficult for any layman to understand the aim of the Government. He said that if the description now given of the case in question is the fact, it is not the law, and that it can be put right in the Courts. I understand that the case has been taken to the Courts, and has already been adjudicated upon, and that the Courts have pronounced that under the law as it stands a man can be assessed to Death Duties, not on the price at which he sold the property, but on the price that somebody else is able to get for it.

The law was that the duties were assessed on the real value, and it was a question of what the value was on the facts stated and the facts found by the Court. In that position there was nothing to prevent, hypothetically, of course, the owner who succeeded to the estate selling it in the kind of way in which it was ultimately sold, and the valuers were entitled to look at that as a. measure of the value showing what the value was at the date of death. The Court does not supervise valuation. It must leave these matters to the discretion and understanding of the valuers on the two sides for the Inland Revenue and for the estate. The point is that you want to get at the real value, and I cannot imagine for a moment that there is any general case made that in the case of agricultural land valuations are habitually made at more than the land is worth.

I beg to move, "That the Clause be read a Second time."

This Clause raises a point on the same lines as the last. Under the Act of 1894 there was a provision that when a person died and left an estate in settlement, duty should only be paid once on the settlement, and, in consideration of that, additional duty, called Settlement Estate Duty, was levied which was in some sense a composition for that relief. If there is a wish to destroy settlements, then the existing practice is no doubt effective for that object. It is possible that if this Amendment were accepted there may not be any loss of revenue, because all you have got to do is to adjust the Settlement Estate Duty to a point at which it would amount to something like an insurance for the length of the settlement. The position at present is that where you have got property tied up by settlement it is very difficult for the owner to deal with it, and an estate suffers more from Estate Duties, when there are frequent deaths, than if the estate were free. It would be far better for the estate and for the revenue not to go outside the principle of the Act of 1894. It is outside the prin- ciple on which that Act was based to levy duty except on the death of a person who is competent to dispose. The original wording of the Act is that Estate Duty shall be claimed on the death of a person who is competent to dispose.

The duty is not paid by the successor. It does not in the least depend on the wealth of the man who is going to get the property or parts of the property. It depends solely on the value of the property at the time of the death which was in the hands of the person who was competent to dispose. You have gone outside the principle of that Act and applied the duty to the case of persons who are not competent to dispose. I would suggest that you should go hack to the original principle of the Act. By charging Settlement Estate Duty you can recoup yourself for any probable loss. It really amounts to this, that within a small area, the area of a single settlement, an estate can by paying Settlement Estate Duty insure itself against frequent claims of duty during the currency of the settlement. I hope that the Chancellor of the. Exchequer will have the matter looked into between now and next Session, and legislate for it. This Amendment and the last were put forward so that these matters might be considered.

I understand from the speech of the right hon. Gentleman that he is not asking the Committee to adopt the Amendment without a correlative Amendment for the re-introduction of the Settlement Estate Duty.

indicated assent.

Also that he is not asking the Committee to accept this Amendment now, but is going to ask leave to withdraw it. The position is this. When the Act of 1894 was passed there was a Provision made in regard to settled property that one payment of Estate Duty should, so to speak, frank the settlement so long as the settlement continued. Or, in other words, until the property passed into the hands of the tenant for life competent to dispose- of the whole of it. But as a corollary to that concession the House of Commons imposed a condition that the settled property should in addition to ordinary Estate Duty pay a second duty called Settlement Estate Duty. That was originally taken at 1 per cent. Two or three years later it was raised to 2 per cent. That was substantial compensation to the Exchequer for the exceptional treatment of settled land. The proposal now is that that system should be again adopted. To that I say that the House, after very careful consideration in 1914, came to the conclusion that there was no real reason for treating settled property differently from other property, that the course of descent was not often different with settled property from what it is with any other property—sometimes it is, but not often—and, it was felt, that there was no reason for making this difference. There was an additional reason that if there were a difference which in the result, after taking the exception and the additional duty together and setting them off one against the other, inured to the advantage of settled property it was an invitation to settle and escape the general duty. It was for reasons of that kind that the course taken in 1914 was adopted. To adopt the proposal as it stands would cost a large sum of money, probably 4,000,000 a year, though I understand that it is contemplated by the right hon. Gentleman that additional duty should be imposed making up approximately the same sum.

indicated assent.

If it is going to make up the same sum it is as broad as it is long, or it should be so. I cannot express an opinion on that, but this year it is impossible, and the right hon. Gentleman does not treat it as possible, to accept the Clause. All he asks us to do is to consider this Amendment, and the last Amendment, and the Chancellor of the Exchequer authorises me to say that between now and next year he will consider the matter, though he must not be understood as making any promise whatever.

May I ask whether, when a settlement of land is executed now, a stamp duty of 1 per cent. on the value of the property is not payable, while at the time of the Act of 1894 a stamp duty of 10s. only had to be placed on the deed, so that a person now has already paid on the settlement itself an ad valorem duty of 1 per cent. at the time it was settled, and in addition he will have to pay this duty?

What the Solicitor-General said was justified. In reference to the statement that the Government will undertake to give this matter consideration next year I wish to have it placed on record that if the Government do propose to alter this duty next year the proposal will meet with the unmitigated hostility of those who sit on this side.

The right hon. Gentleman has misunderstood what the Solicitor-General said. He said that we would take the matter into consideration, but no pledge has been given.

What is the exact value which the Government attach to taking the matter into consideration? Nothing at all.

I rise because of the interruption of the right hon. Member for Peebles (Sir D. Maclean). Surely, if the suggestion be that the duty should be so increased as to make no difference in amount to the Exchequer, and that it is merely a matter of machinery, there is no reason for that warmth in prophesying objection this time next year. When these duties were put on for the first time in 1894 there was science in the way in which they were put on, and there was a scientific assessment. But in 1914, by reason of our profligate expenditure on all kinds of things, we had reached the absolute limit, and morality in taxation had ceased. What was done in 1914 must not be taken as a standard of just taxation. It is simply a terrible record of what a Government situated as that Government was at that time will do. I am not going to inflict on the Committee the iniquities which were perpetrated at that time with regard to land and taxation. It is going rather far to say that because machinery may be altered in a year's time, so as to produce the same revenue, violent opposition is to be offered by the Front Opposition Bench. Perhaps it will form in the interval an electioneering cry.

With regard to the increase in the Stamp Duty, may I point out that there was an increase in the Stamp Duty some three or four years ago for War purposes, and that it is still running? It is a small thing.

I repeat what I said at the time. I said that when the 1894 Act was passed there was only a 10s. duty, whatever the value of the land settled, and that was the only sum payable. Subsequently an ad valorem stamp duty, on the value of the land settled, of per cent. was placed upon it, and is payable now.

I beg to move, "That the Clause be read a Second time."

I do so on behalf of the Imperial Arts League, a sort of loose federation of professional artists. They say, and I think rightly, that there are certain glaring anomalies in the way that Entertainments Duty is charged now. The Royal Academy does not pay Entertainments Duty, but the Royal Society of Painter-Etchers does. A large number of the professional artists' societies are exempt, while others have to pay, under the existing law. What the artists feel most of all is that last year this House gave complete exemption from Entertainments Duty to trade shows. That is to say, if the textile manufacturers arranged an exhibition in London of art textiles and things of that kind for sale, they were not charged Entertainments Duty. But the unfortunate artists, who have had a very bad time since the trade depression, have to pay Entertainments Duty on the large majority of their professional society exhibitions. They feel a double injustice. It is a manifest injustice that the Royal Society of Painter-Etchers should pay the duty, while the Royal West of England Academy at Bristol escapes. I have made every effort to safeguard the Clause against abuses. I do not want to include the exhibition of amateur work or the one-man show. If an artist can get up a one-man show, which is no doubt in the nature of an exhibition, he is in a somewhat different position. I want to confine the proposal to bonâ fide professional societies, which are incorporated by Royal Charter or are limited as to the distribution of any profits they make. As a matter of fact, most of these societies do not make any profit. I have evidence to show that the Royal Society of Painter-Etchers, rather than pass on the tax to the public, pay it themselves, and as a result, the whole of the profits of their exhibitions have been swallowed up. It would be unfortunate for this country if trade shows, motor shows, and things of that kind were exempt, and the higher craftsmanship was penalised. We let off ordinary mercantile exhibitions, but when it comes to etching, painting, and sculpture we come down on them. If my words are not sufficient safeguard, I shall be glad to accept any other words that the Chancellor of the Exchequer suggests.

I do not resent at all the principle which has been affirmed, and I am prepared to adopt it. I cannot adopt my hon. Friend's Clause as it stands. If he will allow me, I will put down for the Report Stage a Clause which will entirely cover what he desires.

I beg to move, "That the Clause be read a Second time."

This is concerned with what are known as Parliamentary settled estates. I believe there are about fifty or sixty of these in the country. The object of the Clause is to enable such estates to pay Death Duties out of capital. If I succeeded to my father's estate, I should be able to pay out of capital, because it is not a Parliamentary settled estate. Parliamentary settled estates are debarred by law from paying out of capital. There is a glaring case now under consideration in my constituency, and that is why I am moving this Clause. I refer to the Shrewsbury estate, which is the subject of a law suit. If the will of the late Lord Shrewsbury should stand, that estate, being a Parliamentary settled estate, passes to his grandson, who is a small boy, and the Death Duties on the whole property will have to be paid out of that settled estate. The Death Duties are such that if they are to be paid out of income, and the capital cannot be touched, the whole income for the next 11 years will be taken up, and there will not be one farthing to educate or feed that boy. Further, there will be no money whatever to pay two jointures, one for the wife of the previous owner of the estate and the other for an aunt. As these Parliamentary settled estates are so restricted and the Death Duties are now so high, it is essential that we should give them the same sort of freedom as other estates. There will be no money for repairs or for the adequate maintenance of the estate. The whole of the income and the rents will be taken for 11 years and the property will deteriorate in the most lamentable way, and will affect many persons besides the eventual owners of the estate. In the interests of the agricultural dependants on this estate I hope that the Chancellor of the Exchequer will accept the new Clause. I have put it down in two alternative forms. The second form, which appears later on the Paper, has been drafted by a skilled Parliamentary agent who tells me that it effects my object in somewhat more cumbersome language. Even so, there may be verbal alterations required, as to which only a Treasury expert can advise.

I prefer the second of the two alternative forms put down by my hon. Friend. Both effect precisely the same result, but to my legal mind the second is more apt to achieve the purpose than the first.

Do I understand that the Government will accept the second?

Yes.

I am sorry the Government propose to do that. Hard cases make bad law. The argument for altering the settlement which was made under the authority of an Act of Parliament is that in one special case hardship might arise.

That case was only an illustration. It could happen in any other case.

It might. As a matter of fact, as far as I know, it has not happened in any other case. What was the object of the settlement in this case? The object was to preserve the property. The last owner has been rather foolish and he has spent money in a way which the person who settled the estate certainly did not contemplate. Because he has done that, and in order to relieve the estate, it is proposed that part of the estate shall be taken away in order to pay Death Duties, instead of the proper course being adopted, namely, that the Death. Duties be paid out of income. I think my hon. Friend must have been guilty of exaggeration when he said that there would be nothing left for the owner of the property. The proper course would be to ask the Inland Revenue authorities to extend the payments over some years. We do not want to encourage people to spend capital in order that they may have a pleasant time in the next few years. They must be impressed with the fact that they must have bad times and must save money if the country is to be resuscitated. The result of acceptance of this Clause might be that the present owner's son might say, "I will pay the Death Duties from what is left of the property," and in two or three lives you might have nothing left at all. In the end the property would have disappeared. I view with great apprehension the passing of these estates. As things stand at the present moment, it is almost impossible, with the Death Duties and the enormous taxation, for the owners of these historic estates to maintain them. The only possible way is by rigid economy on their own part, and I think a great many of them are exercising it. It would be very serious if all these great estates, with all the advantages which they have conferred upon the country, were to be dissipated. After all, the land-owning class has done a great deal for England. Is it to be wiped out of existence in order that some persons at the present moment may enjoy a pleasant time? Some alteration should be made in the law which would prevent estates being continued in the hands of such persons, and would place them in the hands of someone of rather stronger mind. I do not know whether the Chancellor has considered these points, but I put them before him in all seriousness, and I believe, in what he is going to do now, he is making a great mistake.

I considered very carefully all the points which the right hon. Baronet has put forward, before this Clause came on the Paper at all. The matter has been impressed on my mind, having been brought to my attention in its most extreme form by the case to which my hon. Friend the Member for Stafford (Mr. Ormsby-Gore) referred. I agree with the right hon. Baronet who spoke last that one of the elements of the stability in this country has been the preservation of the old landed properties. I would point out, however, to the right hon. Baronet that the principle with which he was dealing has already been given away by the House, and the right hon. Baronet has been a Member of it for a long time. I do not know whether he raised his voice in this matter on previous occasions, but we have this anomaly to-day, that while there are some 50 Parliamentary estates in the whole country, the great mass of estates in the country are in another category and are what I may describe as ordinary settled estates. What is the fact in regard to them? It is that, the estate duty may be paid out of the corpus of the estate. In fact, only an infinitesimally small part of the estates of England come within the Clause with which we are now dealing. So far as the great mass of the estates of the country are concerned, what the right hon. Baronet asks for has already been given away. It is no good trying to shut the door upon this comparatively small portion of the country's estates. I think it is preserving an anomaly at the present time which we really should not suffer, especially if in doing so we are also to create great embarrassments, not merely to the individuals chiefly concerned, but to every person who resides upon the property.

I think the somewhat ungenerous speech of the right hon. Baronet the Member for the City of London (Sir E. Banbury) requires that some facts should be placed upon record to correct the impression which the right hon. Gentleman evidently intended to create in regard to the particular ease referred to. It is not a question of people having a good time now, as he said. It is a question of getting a fair subsistence to provide for the maintenance and education of the grandson who is the next heir. I wish briefly to tell the Committee that the income of this particular estate is, roughly speaking, £30,000 a year, and when the outgoings of Income Tax, which amount to £9,000 in the current year 1921–22, and the first instalment of Estate Duty, amounting to £18,730, have been paid, there will be a nominal surplus—without any allowance for the maintenance of the estate or making good the ordinary ravages of time—of £2,250. In the following year the Income Tax amounts to £15,750, the second instalment of Estate and Succession Duty to £18,750, and this, with interest on the unpaid duties at 4 per cent., turns that £2,250 surplus into a deficiency of £3,552. So there is an absolute deficiency upon the accounts of the estate without reference to any repairs or maintenance, and nothing to provide maintenance and education for the infant. In the following year the deficiency amounts to £5,536, and so on until in the year 1928–9 the deficiency in the aggregate will have amounted to £34,000. Taking into consideration the incidence of other duties which have to be provided for, there is a total deficiency of £37,350, and not, a penny to pay the jointure of the widow of the late Earl whose son died—not a fraction to pay for the two jointures that are chargeable upon the estate, and nothing to provide for the maintenance and education of the infant. I wish those facts to be placed on record in the OFFICIAL REPORT in order that the speech of the right hon. Baronet may be controverted to that extent.

I am glad my hon. Friend has read extracts from the accounts of the estate. They show the ruinous effect of the enormous taxation which is being imposed at the present moment. They do not do away with my argument that what we ought to do in the dreadful state to which the country has been brought owing to this enormous taxation, is to endeavour to save money and not to endeavour to get out of ruinous taxation by getting rid of our capital. I may point out to my hon. Friend that I suggested the proper way of dealing with cases of this kind, was to approach the Inland Revenue authorities and ask them to allow the payment of death duties to be spread over a longer period. I cannot believe that the Inland Revenue authorities would refuse, as they have allowed the payment of other duties to be spread over an extended period. As to what the Chancellor said, it is quite true that in the case of the ordinary settlement this is allowed, but the particular settlement referred to is not an ordinary settlement. It is a special settlement made under Parliamentary powers, and it is rather a new thing if, when people have gone to the trouble of getting a special Act of Parliament in regard to these settlements, the special Act of Parliament is to be set aside because there are other cases where the people concerned have not gone to the trouble and expense of netting a special Act. I am much obliged to the hon. Member for Ealing (Sir H. Nie1d) for the extracts he has read, which show in a lurid light the position in which we are at the present moment.

I beg to move "That the Clause be read a Second time."

This is a result of Clause 12, which the Government have included in the Bill. Under Clause 12 the Chancellor of the Exchequer has transferred a great many people from Schedule D to Schedule E. This Clause suggests that all persons transferred from Schedule D to Schedule E shall have the right of appealing to the Special Commissioners instead of the General Commissioners. Under Schedule D there is a right of appeal to the Special Commissioners, but under Schedule E the only right of appeal is to the General Commissioners. That did not really very much matter under the former system, because Schedule E only comprised a comparatively small number of people—employés of the Government, of Corporations and of companies, and it only applied really to the chief employés in those three categories. Now it is proposed to transfer to Schedule E practically all the employés even of private employers, so that in the future Schedule E is going to comprise a very large proportion of the population of this country. I do not believe the General Commissioners are really qualified to deal with a great many of the appeals which will arise. After all the General Commissioners are appointed by the Land Tax Commissioner; they are very often local people, and generally know nothing whatever about Income Tax law. With the exception of some parts of Wiltshire and the City of London, referred to by my right hon. Friend the Member for the City of London the other day, in most parts of the country the General Commissioners have no expert knowledge. They are entirely in the hands of the local Inspector of Taxes. They are local people, and very often an appellant does not like his private affairs to be known by his neighbours who are General Commissioners. He would prefer that his appeal should be dealt with by people entirely outside his own locality whom he can trust not to pry too much into his private affairs. All I am asking the Chancellor of the Exchequer to do—the right hon. Gentleman has not listened to one single word I have been saying. May I, on a point of Order, Sir Edwin Cornwall, ask, if the Minister in charge does not really pay the slightest attention to what a speaker is saying, if it is possible to repeat the whole of one's speech over again?

I am sorry the hon. Member should think that his remarks have not received sufficient attention.

I do not apologise, because I have been listening to all that the hon. Member has said. It is possible sometimes, and even necessary, for a Minister to be getting information from the Bench behind and yet to listen to what is being said by an hon. Member who is addressing the Chair, and I am rather surprised at the hon. Member's reproach because, indeed, it was not deserved.

I quite realise that the Chancellor of the Exchequer has treated the Committee with great courtesy throughout the Debate. I hope I have made myself clear that I want to give these people who have been transferred to Schedule E from Schedule D the right to maintain the privilege, which they have had in the past of appealing to the Special Commissioners, if they so desire, instead of to the General Commissioners.

In order to show that I fully appreciated the speech of the hon. Member, I may say that I approve what he has said and am prepared to adopt his suggestion, but not in the precise words which he has put on the Paper. If he will allow me, I should like to bring up another Clause dealing with the point on the Report Stage.

I very much appreciate the kindness of my right hon. Friend, arid what I said before was not, of course, in any way personal.

I understand it is the ruling of the Chair that a Clause in my name on the Paper, which I have put down at the instance of the Income Tax Payers' Society, and which is on somewhat the same lines as that now before the Committee, cannot be discussed when we come to that point, but must be dealt with now?

In the event of the Clause now before the Committee being withdrawn, that does not prejudice the hon. Member on a later Clause, but there is no reason why he should not put his point now, in order to save, the time of the Committee.

I will shortly put the point to the Chancellor of the Exchequer. My Clause is rather a wider one than that of the hon. Member for Wood Green (Mr. Locker-Lampson), and it simply provides that, notwithstanding anything in the Income Tax Act, 1918, except in the case of railways, which are in every respect dealt with by the Special Commissioners, every appeal against any assessment to Income Tax or Super-tax may be made to the Special Commissioners or to the General Commissioners, at the option of the taxpayer. At the present time a company, firm, or individual assessed by the General Commissioners can appeal either to the General Commissioners or to the Special Commissioners, as he or they think fit, but a company, firm, or individual assessed by the Special Commissioners must appeal to the Special Commissioners and cannot appeal to the General Commissioners. All that I ask is that this anomaly should he removed and that there should be a right of appeal to either the Special Commissioners or the General Commissioners in either case. It is a very simple and reasonable point, and I hope the right hon. Gentleman will see his way to agree to it. It is very much desired by the Income Tax Payers' Society, whose attention has been drawn to it by a large number of persons, and as it will cost nothing I hope the Chancellor will agree to it.

I am sorry to say that I cannot, as at present advised, agree to what my hon. Friend has suggested, for, as he said, his Clause is very much wider than that now before the Committee. It would include every possible assessment, including assessments under Schedule A, which at present I should not regard as at all suitable for appeal to the Special Commissioners, and accordingly I would suggest to my hon. Friend that he should not insist on this matter now, but should wait until his Clause is called and make his Motion then, and I will perhaps have an opportunity in the interval of considering if by any chance I am able to meet him.

I think we had better understand that this question, having been raised now, cannot be raised again.

On a point of Order. I understood my hon. Friend the Member for South Kensington (Sir W. Davison) only got up in deference to a statement from the Chair, and as the Chancellor expressed a desire that he should make his statement when his Clause comes on, would it be possible for the Chair to allow it?

It would be possible, but, having regard to the large number of Amendments on the Paper, and the fact that the subject-matter has been before the Committee, I only intended to indicate, for the convenience of the Committee, what I thought would happen.

I understand the Chancellor has accepted my Clause in principle. Would he like me to withdraw it now?

I would prefer that the hon. Member should withdraw it now, in order that it should be put on the Paper on the Report stage in a form which we could approve.

Then I will ask leave to withdraw it.

I beg to move, "That the Clause be read a Second time."

The Royal Commission on Income Tax did its work so well that I feel a little temerity in asking the Committee to reconsider one decision at which it arrived. The point of my Amendment is this. As the Committee is aware, every married man and woman who are living together are entitled in the assessment for Income Tax to a free allowance of £225 a year. Every single man and single woman in the assessment of Income Tax are allowed only a free assessment of £135, or £90 less, and then the Royal Commission provided, and the Finance Bill founded on that Report provided, that a widower and a widow should be treated exactly in the same way as if they were single. The result is that a widow is only entitled to a free allowance in the assessment of the tax upon her of £135, in place of the £225 which they had got when her husband was alive. So far as a widower is concerned, I think that is a perfectly right and proper decision, but, so far as a widow is concerned, it seems to me to raise a very grave hardship, and this is a point of very great importance in principle, because it applies to every widow in the country who pays Income Tax. It is hardly necessary to point out that as soon as a woman becomes a widow, in the ordinary case, except where they are living on unearned incomes, the whole of the revenue of the household, so far as it is earned by the breadwinner, the husband, disappears, and it is just at that time, when the obligations on the woman become so heavy, when she is left with her family and her children to educate, and the bulk of her means of livelihood is taken away, that the Income Tax gatherer steps in and says, "We will make the tax harder on you than it was when your husband was living, and when you had his income to draw on to pay the tax."

I put this before the Committee as a very grave hardship indeed, and I have raised the matter because from my own constituency I have had so very many glaring cases of it, and so many widows who are placed in this unfortunate position and who suffer from it writing to me about the hardship of their particular case. It will be obvious to the Committee that on the husband's death, where there are children, the whole expenses of the household remain practically the same. Of course, if the husband's earned income is a large one, the widow may have to go into a smaller house, but the trouble and cost of education and the expenses connected with her family remain just the same. In the case of a widower it is different, because his income continues, he is able to go on with the same house, and he has the same income pretty well as he had before, but with this very serious reduction in income, it is extremely hard on the widow. I commend this Clause, therefore, to the Committee as being right. I have been unable to find any ground of this particular finding of the Royal Commission, and I cannot imagine that there can be any real objection to this Amendment. I have little doubt the Chancellor will say that he cannot afford the money, but to my mind that is no answer where there is a grave case of hardship on people who cannot protect themselves who are left in this unfortunate position. My new Clause is, I think on consideration, drawn too widely, and I would be very glad, if the right hon. Gentleman will ameliorate the hardship of this case, that it should be limited to those widows who are left with children under the age of 21 years.

The hon. and learned Member for East Grinstead (Mr. Cautley) has made a very strong appeal for the consideration of this particular case, but I have to remind the Committee, as I have had to remind them so often, that the whole scheme of the Royal Commission on Income Tax involves the interrelation of all its parts, and if you begin to make an alteration in this particular case, I am quite certain it will be impossible to resist a consideration of other cases as well. If my hon. and learned Friend has been listening to the Debate in this Committee during the last two days, I am sure he will recognise that other cases just as hard have been put from the Benches opposite and from the Labour Benches and that there is no possibility of differentiating between the embarrassing conditions in which some people are situated. To my mind, if we were to grant what is asked in this particular instance we should immediately rip up very many of the provisions which have been made as a result of the considerations of the Royal Commission.

7.0 P.M.

Let me state what the particular position is. A widow is put in the same position, in regard to the allowance granted, namely, £135 a year, as is a widower, a spinster, or a bachelor, even although the spinster or the bachelor may have people who are just as much dependent on them as are the children of a widow upon her. Infinite cases could be brought up, to my certain knowledge, of a character just as impressive as the case which my hon. Friend has presented. The suggestion is, that the widow should get £225 a year allowance in the same way as if her husband were still alive. In most cases, no doubt, the husband is a source of support to his wife while he is there; in many cases he is not. If you begin to talk about hard eases, you could immediately conceive of a case, which might be presented to raise a particular situation, in which a wife is living at home with her husband and where, so far from being a help, that husband is an embarrassment. So, if a widow is entitled to get an allowance of £225 a year, how much ought she to be allowed if she has got to support her husband? There would be no answer to such an argument. You must draw the line somewhere. We should give the scheme of the Royal Commission a fair chance of operation for a period which will give every opportunity for a discussion of its merits and not begin, when it has been so shortly in operation, to make changes in it. This proposal would cost the Exchequer £250,000 a year. For that, amongst the other reasons I have suggested, I do not think the Clause can be accepted.

I beg to move, "That the Clause be read a Second time."

I hope the Chancellor of the Exchequer will see his way to accept this Clause, which will cost nothing to the Exchequer, and will save a very heavy expenditure to a large number of people in this country. The Committee will remember that in the Finance Act, 1910, a duty called Increment Value Duty was proposed. In order to facilitate the collection of that duty, it was enacted that everybody who sold land or who leased land for a long term of years should present particulars to the Inland Revenue showing the price which they had obtained, and a great many other details which required very careful drafting and which entailed a great deal of expense and trouble. The Committee will also remember that that Increment Value Duty was repealed last year, but, for some reason which I have never been able to understand, the enactment that these particulars were to be presented still remained in force. I now suggest that that enactment should also be repealed. Figures show that the solicitors' costs for presenting these particulars amount to over £500,000 a year. An hon. Member, who is not here at the moment, but who said he would be present to support the Clause, told me that he had had in one case 1,100 similar conveyances to pass through, and the only cost and trouble in connection with those conveyances was the presentation of these figures. In the ordinary case, the charge of a solicitor for preparing and presenting these particulars amounts to £1 11s. 6d. It used to be £1 1s., but it has now been increased to £1 11s. 6d. I believe some cases are done more cheaply, but the average cost is about £1 1s., and that amounts to over £500,000 in the whole, which is a pure waste of money.

It has been suggested that the presentation of these particulars may be of use to district valuers in valuing for Death Duties. I hope that defence will not be put forward, because it is far from being the case. These particulars are really of no value whatever for Death Duty purposes. On the contrary, they are very misleading, because all the particulars given here are those of completed transactions, without any record whatever of the circumstances and motives in which those transactions were carried out, and without any record of attempted sales which did not take place. That is a very important matter in the market. A valuer or a surveyor in a district, who is considering what the capital value of any particular piece of land or house may be in that district, at any given moment, would have regard not only to a few successfully completed sales, which might be at a high figure for special circumstances personal to the vendor or the purchaser. He would have regard to the whole state of the market, and to such sales as had been attempted and had failed. Further than that, particularly in these times, everybody is aware of the very rapid fluctuations which take place in the value of property. It runs up and down, and I unhesitatingly say that any competent valuers, such as those on the panels and those who have to assess the value of property for Estate Duty, would only be hampered in considering Death Duties if they were given these particulars of sales. He would be in a much better position to value if he were left perfectly free to ascertain the whole of the circumstances available.

Suppose that the Increment Value particulars did give him an advantage. Is it fair that a special advantage given to the people who are valuing for the State apart from those who are valuing for the individual? Why should particulars be available to the person valuing for the State which are not available to the man who is valuing for private individuals? This is a most wasteful provision. If the Exchequer were getting this money it would be a very unfair tax, but at any rate it would go to the revenue. Here is a tax, imposed by the State, of over £500,000 a year on a particular form of property, at a time when it is passing through greater difficulties than any other form of property, from which the revenue authorities derive no benefit whatever. I hope I am knocking at an open door in this matter, for I cannot think that the Chancellor of the Exchequer has any desire to maintain this particular imposition. If it is not going to be withdrawn I shall press my Clause to a division, because it is very important that this unnecessary tax should be withdrawn. I sincerely hope that my right hon. Friend will see his way to accept the Clause.

The primâ facie case for the Clause seems a strong one, yet I hope I shall be able to satisfy the Committee that the reasons in favour of retaining this system of delivering particulars of transactions in land are good ones and are much stronger than those in favour of abolishing it. Let me deal with the figure of the alleged cost of £500,000 a year in payments to solicitors incidental to carrying out this obligation. That estimate was arrived at by the right hon. Gentleman who moved this Clause by assuming that, for each set of particulars delivered, the solicitors concerned charged £1 1s. He has taken the number of transactions, which occurred under the absolutely abnormal conditions of 1920, as representing the average number of transactions in a year, upon which this charge of £1 1s. has to he paid. Before the War, the number of transactions during the year was under 200,000, and this year the figure is comparable with that. Even if solicitors were ad infinitum, to continue to charge £1 1s., the figure would be 200,000 guineas in the average and not 500,000 guineas. If we look at the charge, it merely means this, that where a sale is effected some small fee has to be paid in order to let the appropriate Department of the Govern- ment know the details of the transactions. In past years, say 15 years ago, it was an extremely difficult thing for the Government to know what the position really was in regard to transactions in land.

Why should they know?

There are very many reasons why they should know. It is very desirable that the Government, in taxing land, should know the details. This House often thinks it right that land should be acquired for public undertakings of one sort or another. It is very desirable, when land is acquired for public purposes, that the price paid for the land should not be in excess of its fair value. It is not a bad principle that the same value should be applicable where a. tax has to be paid by the owner of the land and where money has to be paid to the owner of the land for the acquisition of it. [HON. MEMBERS: "Hear, hear!"] I am glad to note approval of my sentiments in quarters where they are not always supported. It is of great public importance that we should have sonic system of knowing what is fair value of land, both for purposes of taxation and of acquisition. In order that we may know what the value of land is it is very desirable that the Valuation Department and the Government should be in possession of the necessary information.

Before I deal with what is necessary by way of information for the Valuation Department, I want to say a word upon that Department. I had occasion to make particular inquiry into the Valuation Department over a series of years. I came to this conclusion—I say it with all deliberation—that that Department to-day contains a very competent staff. At one time, we know, there were a large number of persons engaged in the Department—in the early stages, a good many years ago I do not want to rake up the embers of past controversies—some of whom, to be perfectly frank about it, were not competent. During the War I had the privilege of acting as Chairman of a Committee appointed by the Prime Minister to consider a number of questions relating to the acquisition and valuation of land. It was upon one of the reports of that Committee that the Acquisition of Land (Assessment of Compensation) Act, 1919, was based. Another report produced the Law of Property Bill, which awaits the Royal Assent, I think, to-morrow. But in connection with these subjects of valuation and acquisition, we made a close and critical inquiry into the working of the Valuation Department, and of the work of the valuers of that Department, to see whether they were competent or not., and the unanimous testimony of the independent experts—we had three or four on my Committee—was that they did their work extremely well. I got similar evidence from several of the Departments, particularly the Admiralty and the War Office, and the result was that we came to a very strong conclusion that they were a very useful Department, and saved the public a very great deal of money by the excellence of their valuations and the cheapness at which they were done. The Committee on National Expenditure presided over by the right hon. Baronet the Member for the City of London (Sir F. Banbury), in their 5th Report, expressed approval of the Valuation Department, and that opinion was concurred in by the Geddes Committee.

That being so, I venture to submit that we ought to approach the question from the point of view of accepting as a premise that the Valuation Department is a useful item of Government machinery, which tends to economy, and saves the public money. From that point; of view I want to approach this question. That Department cannot function properly unless it be supplied with the kind of information which is contained in what are called "particulars delivered," under the Finance (1909–10) Act, 1910, and, in order to enable that Department to function properly, it is essential to maintain the delivery of those particulars. The records of the Department as to the details of land upon which it is enabled to form its opinion as to the value of land have been maintained now continually for a series of years. To break the continuity would be, in effect, to multiply many times over the work that would have to be done at some future date to enable valuers to get the information necessary to form their opinion. When the Law of Property Bill comes into operation on the 1st January, 1925, these particulars delivered will become very much simpler, and the solicitor's costs involved in them will be smaller. I doubt very much then whether it will be necessary to employ solicitors for these particulars, and, consequently, the cost will fall to a comparatively small figure. Even to-day a copy of the document will do just as well as the particulars delivered under the Section of the Act, and the cost will thereby be substantially reduced.

Lastly, I want to say—not on the merits, with which I have dealt pretty fully—that the House considered the matter very fully in 1920. The then Chancellor of the Exchequer dealt with it, and insisted that the Valuation Department must be retained, and that these particulars were essential to its successful and efficient functioning. The House at that time accepted that view. Incidentally, I may add that under the Acquisition of Land (Assessment of Compensation) Act, 1919, there are several purposes for which the Valuation Department ought to be used, and has been and is being used. I ask the Committee to say that these various reasons are sufficient for resisting this new Clause.

The learned Solicitor-General has stated quite correctly that this matter was fully debated in 1920, when the present Leader of the House was Chancellor of the Exchequer, and the argument which he then adduced in favour of the retention of this special piece of machinery has been strengthened, I think, by the experience of the two intervening years. It has been suggested to me that there is a sentimental interest in the retention of this machinery, in so far, as it is the sole remaining bit of salvage of the wreck of the land policy of the Prime Minister, and serves to mark the burial place, with, I hope, a lively prospect of resurrection, some day or other, of the whole scheme. But that is not the object with which I rise to support the position taken up by the learned Solicitor-General. There is no doubt at all that this Department does serve a really useful purpose. To begin with, it is useful for the valuation of assets on death. By the preliminary examination of valuations you can arrive at the market value on or about the time of decease much more easily. In the second place, as the learned Solicitor-General pointed out with very great force, you have here an estimate. Market value, of course, is a very difficult thing to define, but, at any rate, you have an estimate of what is the value of property at a time when a public authority seeks to acquire that property for public purposes. Whether it be a railway company, or a local authority's undertaking of any kind, there is this most useful basis of valuation. Machinery was set up by this Government in 1919 for the acquisition of land for various public purposes, and there is no doubt at all that this Valuation Department has been of real service in this connection.

There is one interesting point to me, as belonging to another branch of the profession from that of my hon. and learned Friend. It is, that the official representatives of solicitors are very willing to forego the fee of which, I understand, they have been in receipt while this thing is in operation, amounting to about £200,000 a year. I think the Solicitor-General was perfectly accurate in saying that there is nothing like the enormous amount of business in land that there was in 1920, and that it is much more likely this year to be about the general average, namely, £200,000. The objection taken by solicitors was that the details asked for were unnecessarily prolix, and that particulars were sought which were not really useful. I had a good deal to do with an effort with the Chancellor of the Exchequer in those days and some representative solicitors, to simplify the form. The form has been very much simplified since. I think it can be further simplified quite easily, and, as to the fee which is charged, it might be reduced quite usefully to one-half. The thing becomes a matter of mere machinery. The real point was that they were after a lot of details which were quite unnecessary. To the extent which they cut down these unnecessary details, provided the important information is obtained, I think all cause of grievance is removed, and this most useful basis of valuation, or rather information, on which ultimate valuation is based, ought, in the interest of the general community, to be maintained.

I have listened to the exordium which has fallen from the right hon. Gentleman. I can well understand it. Indeed, if there were any cat in the bag, it was let out when he said that they desired to obtain this in view of future developments. He said it was a very useful Department. We know it has been a useful Department. It was most useful in 1909–10 to enable the right hon. Gentleman and his friends then on the Treasury Bench to pay a number of political debts by the appointments they were able to make. That I am able to know, because I was asked to undertake an investigation at that time of those very appointments, and I could show to this Committee, were I to have access to my reports and dossier, some very startling appointments that were made. Of course, it is very useful. It has cost the country £5,000,000, which has been a dead loss. That is far from, a sentimenkal reason for continuing it, and I am, of course, not surprised to find that unity of purpose prevailing between the learned Solicitor-General and the Opposition Bench. May it continue. It is the very surest evidence that the time must come when there must be a change here.

But let us see precisely what is meant by this. My hon. and learned Friend who is always so sympathetic and affable that it is always difficult to pick a bone with him, has said that this is most useful information. I venture to think the information he gets on this form is of no practical value at all to those called upon to value land. If I may say so respectfully and kindly, my hon. and learned Friend has got a bee in his bonnet on this particular subject. He has been chairman of a Committee dealing with the acquisition of land, and he has been chairman of other Committees of investigation. Further, he had a very large hand indeed in the production of that monstrous Bill—I say "monstrous" from the point of view of size—the Law of Property Bill. It is part and parcel of the argument of my hon. and learned Friend that it is under the operation of that Bill that they will be able to make use of this Department. I thought the Department was scrapped; that it had been set aside as a useless thing; that it was produced for purely party purpoes, and it had to be scrapped. It is a great surprise to me to find it still in existence. Of course, my hon. and learned Friend the Solicitor-General thinks it has justified its existence, and is producing a profit. I should very much like to know whether he can give any specific instance which would stand the test of cross-examination, in which the Exchequer has really derived material advantage on a question of value as apart from the work of the valuers and the information on the land and in relation to the particular estate in question. No! I think we may safely conclude, those of us who have moved this new Clause, and those who have sympathy with our action, that there is a great deal of arrière pensée about this.

I hope that those who have already, that is the general taxpayers, paid this five millions of money that has been lost in the operations of this Department, will take note that this Government declines to remove it, and is quite willing that the cost of it should go on; quite willing that those who are constantly aggravated by this constant requirement for official particulars should continue to be. Some of us—solicitors and others—arc never without a form to be filled up. When that Budget, about which I have really to restrain myself when I speak—when that Budget which has been responsible for all the mischief and all the evils that have followed—[An HON. MEMBER: "The War!"] Oh, no, but for this Budget there would have not been that bargain with hon. Members who sit opposite, and we should not have had the troubles on the other side of the Irish Sea. I pass from that. But it is very unpopular to mention some of these matters. It is rubbing salt into the wounds. I finish with that. But I venture to say that what was clone then has proved to be a disastrous failure and has riled the general public. I refer to Form IV and all the other mischievous forms pronounced illegal after great expenditure had been incurred upon the actions. All this shows the mockery of the whole business, and I am surprised the Government to-day should offer one word in justification for the retention of this Clause.

A similar proposal to the present was made in the House last year. I was rather surprised to hear the speech of the right hon. Gentleman the Member for Peebles (Sir D. Maclean), because I have a recollection that last year he took part in the Debate, and I understand that while there would be some difficulty in removing this Department then—that was last year—there would not be the same difficulty in a year hence—that is now. After I had spoken the right hon. Gentleman got up and said that he had had great difficulty in coming to any decision on the matter, but, after hearing what I said, he thought I was a practical person, and he had decided to support the proposal to keep this department on. I, myself, do not know how the matter stands with him now, for he made a very different sort of speech this evening. I am speaking from memory entirely, but I think what I say is fairly accurate.

Assuming the hon. and gallant Gentleman is correct, I remain convinced by his arguments of last year.

I, at any rate, support the removal this evening, and for this reason: I thought it was reasonable, seeing we had such short notice last year, that the work might be continued for another year; but there is no excuse whatever now, for no reason can be given to justify the continuance of this Department. It is only a waste of money. Whether a man is dealing with a lease or a sale or with a matter of £500,000 or £50, the tax is all the same. We have just passed a Law of Property Bill to facilitate and to cheapen the transfer of land. I pointed out at the time that Stamp Duty was one of the great costs in the transfer of land, and here is another Government tax. It is a tax on every person, great or small, dealing with land, whether of the value of £50 or a rental of only 10s. There is no justification whatever for continuing it or making it permanent. The whole scheme should be scrapped.

I do not know whether the hon. and learned Gentleman the Member for Ealing (Sir H. Nield) has handled the dossier to which he referred. If he has I have been wondering whether my name was in it, because I received one of the appointments at the time that this Department was formed, and I spent some eight years in it; so I may perhaps be credited with some little knowledge as to the value which the Department attaches to the particulars and the value which they in fact receive from them. I must confess that in the early years of this Parliament, following the time when the right hon. Gentleman the Prime Minister achieved his great victory—for it was a great victory, and it came as the result of one of the most wonderful pieces of organisation which this country has known—and I congratulate him—I did wonder why these particulars were left, why this small remnant of the scheme had been left. I suppose it is sonic sort of final thank-offering, a souvenir which the Prime Minister cherished of his Land Valuation Department. My mind went back to a story narrated in a well-known book of another David who, when a fierce lion came down upon his flock and seized a lamb, if I remember rightly, snatched an ear of the lamb out of the mouth of the hon. I thought that probably these few particulars represented, so to speak, the ear of the lamb, and the remnant which the Prime Minister had taken from a once large Department.

I am not without some sympathy with the position taken by those who want to get rid of these particulars. What is advanced on their behalf? The argument is, and it is perfectly true, that these particulars do keep the Valuation Department in touch with the market value. As a Department, they are not per se entrusted with any power of negotiation for the purchase and the sale of property. I think it might be truly said that if they do not get these particulars that they would be remote from a knowledge of the market values. Against that it might very fairly be argued if that is se it is not the business of private individuals to educate a Government Department at private expense. That, I understand, is the point. If this Department is to be kept informed, kept up in its work, that should not be done at the expense of private individuals. I am bound to say that there is a good deal for that case. But what has the House to consider? It has to consider this: First of all, has this Department, to be kept on? Members who think that it ought not to he kept on are entirely consistent in that view in supporting the proposed Clause, because if the Department is no use, informed or uninformed, it is no use asking the people to spend half a million upon it.

So far as we can judge it is the general sense of the House that it should continue. When the House got rid of the duties, they decided to keep the Department, and I believe everybody and every Committee that has investigated this Department has come to the conclusion expressed by the Solicitor-General, that it was a good Department, efficient, that its services were valuable and should be retained. My hon. Friend the Member for Consett (Mr. A. Williams) I believe has had opportunities as a member of the Committee on National Expenditure of going into this point, and I think he is prepared to add his confirmation to what has been said by the Solicitor-General. If that be so, if it be that this Department is one worth retaining, that it is to the advantage of the State in its dealings with matters arising out of the transfer of property that we should have a Department of this kind, it follows that such Department must be maintained at its most efficient level. As the policy of the Government comes up at the present time it should be said there is no other way of maintaining this Department in a position to render the service which it can render, than that at present adopted, of supplying it with particulars of every transfer of property which takes place.

It is not all loss, I think, even to those individuals who resent this charge and its services, because I think nobody would be readier than my right hon. Friend the Member for Chelinsford (Mr. Pretyman) to admit that if there are to be conflicts of opinion between surveyors representing private interest and surveyors representing the Government in connection with Death Duties and matters of that sort, it is of value that those Government surveyors should be as well-informed as possible. I do not think anything has ever been said derogatory to the efficiency of the Department. General surveyors who have come in contact with the Department and have had to negotiate with them, have paid tributes to the efficiency of these civil servants. That is the position. So long as the Government maintains its present policy, or not engaging the members of the valuation staff in the actual sales and the actual negotiations with regard to the sale of land, the only way to inform them is to supply them with the particulars. If not, they had better scrap the Department. If they are going to maintain the Department they must continue to feed it.

There is, however, a way in which I think the desire of hon. and right hon. Gentlemen opposite might be met. I will trouble the Committee a very few moments with the matter, but I refer to a change in the method of employing the Department—a change set forth in the Report which is published by the Committee on Crown and Government Lands. This Report was issued only two or three days ago, and it represents the opinion of a Committee consisting of a number of very distinguished surveyors. The chairman was Sir Howard Frank, a gentleman who holds a most distinguished place in his profession, and who has been entrusted with the most responsible task ever allotted to a surveyor in this country. Sir Howard Frank was supported by a number of gentlemen to whom the Chancellor of the Exchequer will be ready to testify as to their ability. They include Sir Frederick Ponsonby, Mr. E. G, Strutt, Sir John Stirling Maxwell, Sir N. F. Warren Fisher, and Sir John Hubert Oakley. They reported:

"We have been informed that of existing public Departments the Board of Inland Revenue—in virtue of its controlling a valuation branch with local offices throughout Great Britain—is regarded as the proper Department for undertaking all valuation work for the Government (other than that connected with the winding up of certain War transactions), but that it is not considered desirable to place on that Department the responsibility for purchase, sale or management of lands, etc."

While this Department is employed for the purposes of valuation, it is divorced and kept separate and apart for the responsibility in regard to the purchase, sale or management of land. That is not dealing with the real thing, and it is not actually engaged in the purchase, sale or management of land. In their recommendations on page 9, the Committee described the procedure involved on a purchase or sale, and they come to the conclusion that:

"It follows from this that purchases and sales involve at every stage the advice and active intervention of a professional valuer if the work is to be satisfactorily performed, and a divorce between valuation and dealings in land is seen to be purely artificial."

That is the position at the present time, because there is actually a divorce between valuation and dealings in land. You get that divorce at the present time. The Committee further report:

"We therefore regard it as axiomatic that a qualified professional staff should he available for advising Departments in regard to valuations, purchases and sales, etc., of real property,"

Therefore they recommend that a valuation Department should go on, and that there should be a qualified special staff of valuers engaged by the Crown. The Report continues:

"and for the actual conduct of negotiations, and we cannot adopt any suggestion that valuations should or can be separated from purchases and sales."

I suggest that the Report of this Com- mittee is entitled to great weight, and that the Government should give it consideration. I for one would be perfectly willing to agree that when this change took place the supply of these particulars should cease, but I do feel that as long as the Government maintain this artificial division between their valuation staff and their land staff this is the only way in which they can bridge it. For these reasons I cannot support the Amendment as it stands.

Both the Solicitor-General and the right hon. Gentleman the Member for Peebles (Sir D. Maclean) agree that these particulars are required, but for a totally different purpose to that for which they were ordered by the Act of Parliament under which they are delivered. It is extremely difficult, to my mind, to justify the continuation of this heavy burden on a particular class of the community for a purpose entirely different from that which was intended. The only argument in support of their continuance is that the valuation staff is used for other purposes, and that this staff should be informed of the sales of land. I know it is very desirable that the valuation staff should have these particulars, but why should a special section of the community have to supply them and at its own cost? I waited to see what answer the hon. Member for Newcastle (Major Barnes) would give to his own question, but he ran away from it, and never gave any reasons, and the Solicitor-General has not given any reason why the cost of these particulars should be put on the landowners and they be compelled to supply information for a purpose not connected With themselves.

Why do the Government not pay for this information in the usual way instead of leaving particular landowners to supply it and pay for it? The costs have been put at £500,000 or about £480,000, and this is really an average of the transactions for the three years 1919–20–21. A charge of one guinea has been taken in arriving at these figures, but my experience shows that one guinea is by no means sufficient to cover the charges incurred. No layman could supply these statistics himself, and if they could, particulars supplied by laymen would not be accepted by the Department. Why should this particular class of people be taxed in this way for supplying information which, in many cases, will never be used at all Evidence as to the value of land five or 10 years ago is of no use as to the value of that land at the time when the inquiry is being made.

For another reason there is no ground whatever why the landowners should continue to deliver these particulars. I have always regarded it as being of the utmost political value to the State that we should in every way cheapen the sale of land and make it easier to transfer it, and yet the learned Solicitor-General brings in the Law of Property Bill, which for the next twenty years is going to increase the cost of the sale of land. The Solicitor-General is now insisting on the supply of these particulars. This again is only adding to the cost of every transaction that takes place, and whenever we have a Finance Bill that can put more taxes on the conveyance of land, we do so. Already the heavy stamp duty on the conveying land adds very materially to its cost. For these reasons I shall go into the Lobby against the Government, because I consider these particulars are quite unnecessary, and it is a gross injustice to a special section of the community.

I should not have intervened in this discussion but for the remark made by the hon. and gallant Member for East Newcastle (Major Barnes), who referred to the now defunct Committee on National Expenditure, of which I also was a member. The hon. and gallant Member referred to the hon. Member for Consett (Mr. A. Williams) as the one person who would be ready to confirm the generally expressed approval in that report of the continuance of this Department. I believe the Committee did report in favour of continuing the Department, and that is why I have got up to speak, because members of a Select Committee cannot make a Minority Report, and therefore the only thing I can do now is to utterly dissociate myself from that Report. It is common knowledge that those Reports are written by the President, and I believe the Chairman of the Committee is backing this resolution, and to me that seems quite inconsistent. I have nothing in common with the right hon. Gentleman who has moved this Clause, and I have no particular sympathy to waste on landlords. However, I can assure my right hon. Friend that, if he takes this proposal to a Division, in order to express my utter disapproval of the continued existence of this utterly useless Department I shall give myself the unqualified pleasure of following him into the Lobby.

I know that this new Clause has been discussed at considerable length, and I shall not stand for many minutes between the Committee and a Division. I only wish to express an opinion about the particulars which are now being demanded for the passing of every conveyance. I was astonished to hear that the supplying of the particulars for every conveyance meant a tax upon the landowner. That may be so in London and some parts of the Provinces, but, generally speaking, it is a tax simply upon the legal profession upon their time and patience, and it is included in their charges. The suggestion made by the Law Society as to the payment of one guinea has not been generally followed throughout the country. This practice is a great hindrance to easy conveyancing, more particularly in those parts of the country where we have no stamping office at our disposal. What happens is, that the conveyancer has to send his documents by post, and has to postpone the actual conveyance for many days, because of requirements which are far more complicated than is necessary.

8.0 P.M.

I associate myself with what was said by the right hon. Member for Peebles (Sir D. Maclean), namely, that it is a fair thing to ask all owners of land or owners of houses when they sell their property to give particulars of the amount at which

I believe a simplification has already been effected, and if any further simplification be possible, obviously it should be carried out.

We want to prevent the holding up of the conveyancing.

If there be any hindrance in that respect, it should be removed, and that matter shall be looked into at once.

I beg to move, "That the Clause be read a Second time."

It is directed to allowing the farmer to have his motors at the lower duty which the House of Commons intended they should get them. Paragraph (4) of Schedule 2 of the Act of 1920 reads:

"Locomotives, ploughing engines, tractors, agricultural tractors, and other agricultural engines not being engines or tractors used for hauling on roads any objects except their own necessary gear, threshing appliances, farming implements or supplies of fuel or water required for the purposes of the vehicle, or for agricultural purposes—5s."

I am leaving out the words "for haulage" in order that the £6 duty only may be charged as was intended by this House in regard to motors used by farmers in their business. It is a very interesting point, I admit, but I do not think the word "haulage" was put in by Parliament with any intention. As a matter of fact I imagined it was intended that the small motors used by farmers should be charged at the cheap rate of £6 instead of the £21 which the Minister of Transport now endeavours to charge. I should like to refer to a case recently fought out between a. farmer and the Ministry of Transport in which this point was raised. In the first place the justices gave a decision in favour of the farmer, but the Minister of Transport appealed and the case came before Mr. Justice Darling, who, in giving judgment, held that as the locomotive was not used for haulage only it was liable to a charge of £25. In the case of this vehicle it had two small hooks at the back which enabled it to be used for hauling, and Mr. Justice Darling had to decide whether these two hooks were so used. I should think this House, when it considered this matter, did not go into this very intricate point, but simply desired that the farmer using the motor for the purposes of tillage on the land and generally for the work of the farm should have the benefit of the reduced licence. I hope the Minister of Transport will accept my Amendment. It will give the farmers a concession which I believe Parliament. intended to be given to them. Farmers use the roads very little compared with the heavy rate they have to pay, and surely this is a very small concession to make to the agricultural interest, which is so badly hit by the heavy rates, and which, in these difficult times, has had very little help from Parliament, seeing that the only Act which was intended to give it real help has been repealed.