Selections from The Chancellor of the Exchequer's (Lloyd-George)
Budget Statement 29 April 1909

TAXATION OF LAND

HC Deb 29 April 1909 vol 4 cc532-6 532

Now I come to the question of land. The first conviction that is borne in upon the Chancellor of the Exchequer who examines land as a subject for taxation is this: that in order to do justice he must draw a broad distinction between land whose value is purely agricultural in its character and composition, and land which has a special value attached to it owing either to the fact of its covering marketable mineral deposits or because of its proximity to any concentration of people. Agricultural land has not, during the past 20 or 30 years, appreciated in value in this country. In some parts it has probably gone down. I know parts of the country where the value has gone up. But there has been an enormous increase in the value of urban land and of mineral property. And a still more important and relevant consideration in examining the respective merits of these two or three classes of claimants to taxation is this. The growth in the value, more especially of urban sites, is due to no expenditure of capital or thought on the part of the ground owner, but entirely owing to the energy and the enterprise of the community. [Cries of "Oh."] Where it is not due to that cause, and where it is due to any expenditure by the urban owner himself, full credit ought to be given to him in taxation, and full credit will be given to him in taxation. I am dealing with cases which are due to the growth of the community, and not to anything done by the urban proprietor. It is undoubtedly one of the worst evils of our present system of land tenure that instead of reaping the benefit of the common endeavour of its citizens a community has always to pay a heavy penalty to its ground landlords for putting up the value of their land. There are other differences between these classes of property which are worth mentioning in this connection, because they have a real bearing upon the problem. There is a remarkable contrast between the attitude adopted by a landowner towards his urban and mineral properties, and that which he generally assumes towards the tenants of his agricultural property. I will mention one or two of them. Any man who is acquainted with the balance-sheets of a great estate must know that the gross receipts do not represent anything like the real net income enjoyed by the landowner. On the contrary, a considerable proportion of those receipts are put back into the land in the shape of fructifying improvements and in maintaining and keeping in good repair structures erected by them which are essential to the proper conduct of the agricultural business upon which rents depend. Urban landlords recognise no obligation of that kind, nor do mineral loyalty owners. They spend nothing in building, in improving, in repairing or in upkeep of structures essential to the proper conduct of the business of the occupiers. The urban landowner, as a rule, recognises no such obligations. I again exclude the urban landowner who really does spend money on his property; that ought to be put to his credit. The rent in the case with which I am dealing is a net rent free from liabilities, or legal obligations. Still worse, the urban landowner is freed in practice from the ordinary social obligations which are acknowledged by every agricultural landowner towards those whose labour makes their wealth.

It is true in the rural districts that there are good landlords and there are bad landlords. But in this respect there are so many good landlords in the country to set up the standard that even the worst are compelled to follow at a greater or a less distance. But the worst rural landlord in this respect is better than the best urban landlord in so far as the recognition of what is due to the community who produce the rent is concerned. [Cries of "Oh!"] I will point out what I mean. First of all the rural landowner has the obligation to provide buildings and keep them in repair. The urban landowner, as a rule, has neither of these two obligations. There is that essential difference between the two. The urban landlord and the mineral royalty owner are invariably rack-renters. They extort the highest and the heaviest ground rent or royalty they can obtain on the sternest commercial principles. They are never restrained by that sense of personal relationship with their tenants which exercises such a beneficent and moderating influence upon the very same landlord in his dealings with his agricultural tenants. And the distinction is not confined merely to the rent. Take the conditions of the tenancy. I am not here to defend many of the terms which are included in many an agricultural agreement for tenancy. I think many of them are oppressive, irritating, and stupid. But compared with the conditions imposed upon either a colliery owner or upon a town lessee they are the very climax of generosity. Take this case—and it is not by any means irrelevant to the proposals which I shall have to submit to the Committee later on. What agricultural landlord in this country would ever think of letting his farm for a term of years on condition, first of all, that the tenant should pay the most, extortionate rent that he could possibly secure in the market, three, or four, or even five times the real value of the soil; that the tenant should then be compelled to build a house of a certain size and at a certain cost, and in a certain way, and that at the end of the term he, or rather his representatives, should hand that house over in good tenantable repair free from, encumbrances to the representatives of the ground owner who has not spent a penny upon constructing it, and who has received during the whole term of lease the highest rent which he could possibly screw in respect of the site? Why, there is not a landlord in Great Britain who would ever dream of imposing such outrageous conditions upon his tenant. And yet these are the conditions which are imposed every day in respect of urban sites; imposed upon tradesmen who have no choice in the matter; imposed upon professional men and business men who have got to live somewhere within reasonable distance of their offices; imposed even on workmen building a house for themselves, paying for it by monthly instalments out of their wages for 30 years purely in order to be within reasonable distance of the factory or mine or workshop at which they are earning a living.

This is by no means an imaginary picture which I am drawing. If anyone thinks so I would invite him to examine for himself the evidence given before the Town Holdings Committees in 1888 and the subsequent Committee of the same character held later on—Committees appointed by the Unionist administration of that date. There was the case of the Festiniog quarrymen, who had to build on rocks which could not feed a goat, and upon swamps for which the landlord could not, and did not, receive more than, sometimes, 2s. an acre, and, at the outside, 7s. 6d. an acre. These were let to the quarrymen for building purposes at rents that amounted to £50 an acre. Leases were given for 60 years. All the improvements were effected either by the quarrymen themselves or by the local authority to whom they paid their rates. To build or buy their houses, most of these quarrymen generally borrowed money from building societies. As long as they were in good health and in full employment they were able to pay their monthly instalments. When either health or work gave out they were very hard pressed indeed. But they never got any assistance or sympathy from the landllord. As they paid, the property, instead of increasing in value for them, became of less and less value as it passed year by year into the possession of the landlord. There were many illustrations of that kind given before these Committees, though not all 60 years. Some were 70, some ran up to 90, other were for lives And 21 years.

You cannot put cases of this kind at all in the same category as that of an agricultural landlord who builds farmhouses and farm buildings, and generally incurs most, if not all, of the capital expenditure in and around a farm, and who by no means, if he is a fair-minded landlord, ever thinks of extorting these monstrous rents out of the necessities of his tenants. I might give other cases where land in the neighbourhood of towns has appreciated in value owing to the growth of the population. I do not wish to multiply instances, because every hon. Member must have in his own mind illustrations, with the details of which he is cognisant, from his own experience and observation of what I am referring to. I might, perhaps, take another case, and I am not sure that you can find a better or a fairer one than that which is provided by the working class suburbs of London. I am referring to the case of Woolwich. Considerable population has been attracted there largely owing to the expenditure of public money upon the Arsenal. If there is any increase in the value of land there, not a penny of that increment is attributable to anything done by the local landowners. Now I would commend Members of the House to a speech delivered by the late Conservative Member for Woolwich, who in his day was one of the most striking figures in this House. This is what he says about Woolwich:— "In the parish of Plumstead land used to be let for agricultural purposes for £3 an acre. The income of an estate of 250 acres in 1845 was £750 per annum, and the capital value at 20 years' purchase was £15,000. The Arsenal came to Woolwich; with the Arsenal the necessity for 5,000 houses. And then came the harvest for the landlord. The land, the capital value of which had been £15,000, now brought an income of £14,250 per annum. The ground landlord has received £1,000,000 in ground rents already, and after 20 years hence the Woolwich estates, with all the houses upon them, will revert to the landowner's family, bringing another million, meaning altogether a swap of £15,000 for a sum of £2,000,000." There are many cases of a similar character which will readily occur to the memory of every hon. Member who is at all acquainted with the subject. Take well-known properties in Lancashire and Cheshire in regard to which evidence was given. And yet, although the landlord, without any exertion of his own, is now in these cases in receipt of an income which is ten or even a hundred-fold of what he was in the habit of receiving when these properties were purely agricultural in their character, and although he is in addition to that released from all the heavy financial obligations which are attached to the ownership of this land as agricultural property, he does not contribute a penny out of his income towards the local expenditure of the community which has thus made his wealth, in the words of John Stuart Mill, "whilst he was slumbering." Is it too much, is it unfair, is it inequitable, that Parliament should demand a special contribution from these fortunate owners towards the defence of the country and the social needs of the unfortunate in the community, whose efforts have so materially contributed to the opulence which they are enjoying?

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