In Support of the Taxation of Land Values

Richard Stokes

[A speech delivered by Richard Stokes, M.P. before the House of Commons,
Tuesday, 23 May, 1944]

In the Debate on the Motion for Second Reading of the Finance Bill:

Mr. Stokes (Ipswich): When I heard the hon. Member for Hastings (Mr. Hely-Hutchinson) refer to the importance of the continuation of certain controls when the war ended, I could not have agreed with him more. I was particularly glad when I heard him say that he thought it important for the release of purchasing power to go step by step with the return to normal production. I was disappointed, however, that he did not say that the artificial absence of purchasing power at a later stage, should not be allowed to interfere with increased production - in other words, he did not enunciate that there must always be enough money in circulation to enable the people to purchase all the goods they are capable of producing. If he had said that, I should have felt much happier.

Mr. Hely-Hutchinson: Is it not the case that money does not circulate, but is circulated by the people?

Mr. Stokes: I allow that. The hon. Member went on to say that our standard of living depended on exports. If he means that we cannot grow bananas and oranges here and therefore, if we want them, we have to send goods away to get them back in exchange, I agree; but if he means a return to what was, before the war, known as a favourable balance of trade, then I entirely disagree with him. A favourable balance of trade was regarded by our pundits as a state of things in which you send more wealth out of your country than you bring in. Obviously that is completely "phoney " - if that is a Parliamentary word. I would agree with the hon. Member if he were to say that exports are important to us, but they are important only in so far as they enable us to bring in the equivalent value of goods in exchange; they are not to be used for the purpose of buying up the capital assets of other nations overseas.

I would not really wish to return to the business of " Salute the Soldier " had not the Financial Secretary in his opening remarks to-day referred to it. I happened to come into the House the other day when a discussion was going on and, without having prepared myself for the fray, made an impromptu speech quoting as an example a rather ridiculous affair which had taken place in a borough the name of which I did not mention. To-day, the Financial Secretary said that the Prudential had never subscribed £2,000,000 to any borough, and that therefore my figures were all wrong. I accept the rebuke that my figures were out of proportion - the right hon. Gentleman did not warn me that he was going to raise this or I would have obtained the reference - but I was only illustrating. I apologise to the Prudential for misrepresenting them over this particular case, but I know for certain that they have subscribed a good deal more than £2,000,000 elsewhere to these loans. They have £400,000,000 available, and they have subscribed millions more elsewhere. What I was trying to illustrate was the nonsense of the whole business. When the Financial Secretary said that the House did not think very well of my speech, that was a parody of the truth. The House roared with laughter and, when I went out, I was had to explain that the House realised the humbug of the whole thing. The Chancellor himself knows it. If he does not, let me quote what was advertised in my constituency the other day:

"Our savings . . . are the insurance that, in the last great battles, our men will have the arms and equipment they need in full measure and overwhelming superiority over the Axis."

If I were advertising goods in that way I should expect to be run in for making false statements. If it is true it implies that if people do not subscribe our men will be without weapons when they go to the Second Front. Of course it is not true. If it is necessary for this money to be made available in order to win the war, why does not the Chancellor take it? I have all along realised the importance of. savings and of not spending money when goods are in short supply, but I have always advocated that the important thing is to put money on deposit at the bank and leave it there. If the House wants authority for that I will quote Lord Kindersley. He said, in reply to a letter I wrote to him:

"I do not disagree with your expressed belief that it does not make a pennyworth of difference whether anybody subscribed to these Savings Groups or not, provided they bank their money and do not spend it. The governing factor is embodied in the last few words."

I see that the Chancellor nods and that he agrees to that. That is what I have been beseeching him to do for years. Why does he not start a campaign of truth among the people and tell them what is involved instead of all this ridiculous nonsense, which the people themselves are beginning to realise it to be? May I quote another case which was given to me just before I came into the House? In the "Salute the Soldier" week a case of whisky was put up for auction and the highest bidder got it for £1,000. The result is that the community will have to pay 2.5 per cent, on £1,000 for ever, and the purchaser gets the case of whisky as well as interest on his investment. The whole thing is utter nonsense. The more he pays for the whisky the more the people will have to pay him!

I would like to reply to the speech of the hon. Member for South Croydon (Sir H. Williams), whose attitude of mind in these matters I have long ceased to expect to coincide with my own. To-day, however, he did appear to be about to stumble on a great truth when he said that the interest on the National Debt was mounting steadily and was, indeed, mounting so high that we would have to borrow money in order to pay the interest on it. We have known that for years. It has been going on for generations. He made a mistake when he said that the service of the debt was £200,000,000. The Chancellor has said that it was over £1,000,000 a day, and I believe that if the war went on till the end of this year it would be at the rate of £600,000,000 a year. That is equivalent to something like 2,000,000 men working for a year and handing over all their wages in order to pay it. The sooner the humbug of this money business is exploded the better. The hon. Member for South Croydon said that all the Chancellor could do to get money was to bring in a Bill like this and collect it all from the people. While that is true it is only half true. He will still have the gap which he cannot collect. What does he do then? He allows new money to be created. What happens when he is asked about it? He says that he does not know how much new money is created. In answer to my questions he says that he does not agree with my figures and that he does not keep the kind of record which would give him the answer which would enable him to answer my question. As a pure business proposition, the Chancellor ought to be able to say how much new money is created.

I got up to speak on the Amendment in my name, and other names, on the Order Paper dealing with the land question. I regret, Mr. Speaker, that you did not see fit to call it. I look forward to the day when you will see fit to enable me to divide the House or> this issue because we are talking in the air until we deal with this fundamental problem. The fact is that this land issue, the whole question of what is to be done with the land and land values, has been completely sidestepped by the Government. They have had all sorts of Reports like the Uthwatt, Scott and Barlow Reports, but nothing has been done. I would not be very satisfied if the Uthwatt Report was implemented, because I do not think it goes nearly far enough, and merely suggests buying out the robbers for having robbed the people in years past. The Committee could not do what it set out to do because its terms of reference were wrong. One of the things it was asked to do was to stabilise the value of land, and that is the one thing you cannot do. Therefore the terms of reference made the whole work of this Committee abortive.

We have heard a great deal about full employment. My hon. Friend the Member for South Croydon said that that was nonsense and did not make sense to him. I look at it in a different way. What I want is not full employment, because that conjures up in my mind conditions of slavery and everybody being dragooned to do things. What I want is full opportunity. The difference between full opportunity and full employment is the difference between freedom and slavery. I want to deal with the obstructions to full opportunity. I will not discuss the monetary system. That is a minor obstruction, but it is far from being accepted as it is by the common man. To me the great obstruction to full opportunity is the land monopoly whereby the landowners are allowed to control and own the sources of wealth and the raw materials of the world free and unmolested, and to collect their full value for themselves. We have appealed again and again to successive Chancellors to do something about this. I have asked the present Chancellor and his predecessor on numerous occasions to do something about it and to remove what I call the obstruction to the flow of the life-blood of the body politic. Money can only make that blood flow more freely when it is in motion, but the land monopoly stops the flow altogether. The Chancellor will be well aware of that from representations that have been made to him in the past 12 months by no less people than the Lord Mayors and Mayors of the blitzed cities. They have complained to him that they cannot even begin to rebuild their cities and get hold of the necessary sites because the Government will riot come to a decision.

What is to be done about the land question? It is the same old story. Enslave the men, shove them into the Fighting Forces, but leave property alone, and particularly land property. Touch everything else but that. The land question always has to be shut out. I want to give some examples, and for fear of being twitted by the Chancellor about what I have said on the "Salute the Soldier" week, I would tell him that all my figures are authentic. I quote them from a book, "Why Rents and Rates are high", published by the United Committee for the Taxation of Land Values. We are going to spend vast sums of money on housing, but what do we find? Always the same obstruction with regard to the land. When the right hon. and gallant Member for Kelvingrove (Lieut.-Colonel Elliot) was Minister of Health in 1938, he spoke of the purchase of land for the five years ending 3ist March, 1938, and said that local authorities under the Housing Acts had spent no less than £8,000,000 to buy 35,000 acres of agricultural land for housing schemes. It was derated land and was paying no contribution of any kind to the community, yet before it could be got hold of for housing the people had to pay no less than £200 an acre for it. I could quote innumerable examples of that kind. On slum clearance here is a glaring case from the London County Council. In four years the Council bought land at Bellingham, Roehampton, Becontree and St. Helier, which had a rateable value of £7,305, and they purchased it for £835,826. At five per cent, that land should have been paying taxes of £40,000 a year, but it was purchased for no times its rateable value. If that is not obstruction of slum clearance I do not know what is.

Then comes the question of green belts for the recreation and health of the people. An example is to be found at Bush Hill, Middlesex. The county council bought 107 acres of Bush Hill Park Golf Club for £70,000, which is equal to £700 an acre. That was not even to build on it, but in order to prevent anybody building on it. Then we come to education. In the four years 1935-7 290 acres for 105 sites were purchased for £218,000, which is again £700 an acre for land which was idle and derated. Whenever one challenges the Chancellor to say whether the purchase money for this land was subject to taxation he will not tell you. Ninety-nine times out of a hundred it is not because it is all regarded as capital* appreciation, but land is not capital and the appreciation in value results from the work of the people and not the work of the landlord, but the landlord gets it. We hear great talk about those tin shanties, the Portal houses, but where are they going to be put? They have to stand on land, and you cannot say they are cheap until you know where they are going. Have any arrangements been made for the land for them?

With regard to the whole question of speculation in land, the Chancellor may say that it is not going on so much now because the Government has fixed a 1939 ceiling. In fact, however, it is still going on. I was amused on Sunday to read an article in that great newspaper, the " Sunday Express ", by a correspondent named Michael Stuart, called, "Why do we allow the dons to grab the land?" He went into an examination of what Oxford and Cambridge had been doing in the past. I am a great believer in the universities and do not blame them for what they are doing, for they are acting within the law, but here are some interesting facts. Oxford is the proud possessor of 179,000 acres, not around Oxford, but in 47 different counties. Cambridge owns 115,000 acres in 39 counties. They never pay any Estate Duty because they never die. The revenue that comes in is staggering. The revenue from the land which Oxford alone owns amounts to £470,000 a year, all tax free because the university is a benevolent institution. It has so much revenue now that it goes on buying land and increasing its stranglehold -- sells a bit at high value, and re-invests in more at low. I want to quote an authority on this question of land, the present Prime Minister, with whom I very rarely agree, although I feel that 30 years ago he and I would probably have been in the same party. He said then - I believe it was in 1907:

"Land monopoly is a perpetual monopoly, and it is the mother of all forms of monopoly.''

That is true. It is all very well for people to smile and say, "What is the difference between land and everything else? "The great difference is this: Motor cars, houses, armchairs and the like are all produced from wealth. They are all brought about by the effort of man on raw materials. But who creates land value? Not the owner of the land, from his ownership. In so far as he is a worker he does contribute, but the value which attaches to land is created by the community as a whole, and nobody else. Why should not this value be collected for the people? It might be said that it is not much, but if the land of Great Britain were used properly it would bring to the landlords in economic rent £500,000,000 per annum. That is what could be collected and the extent to which it is not collected is the measure of the hardship landlords are inflicting on the community by not allowing the land to be used for the best purpose.

It is argued that we must not introduce this tax because it is so expensive to collect. That is an absolute lie. I do not say that anybody intentionally lied, but it is so. The Chancellor knows that he has Treasury officials willing and ready to put it into operation, officials who believe that it ought to be put into operation. The cost of collection would be about £2,000,000 per annum, a negligible figure. I agree that in the first year you would not get a vast margin over that but in the end you would collect £500,000,000 a year simply for this cost of collection, amounting to £2,000,000. Compare that with the ridiculous army of officials which the Chancellor has going round the country now, collecting money from the people's efforts. Think of the financial pundits, armies of them, who would be set free if we were to have a simplification of procedure along the lines which I have just described.

I want to quote the Prime Minister again, on this question of landlords:

"He, the landlord, renders no service to the community, he contributes nothing to the general welfare, he contributes nothing even to the process from which his own enrichment is derived. It is monopoly which is the key note and, where monopoly prevails, the greater the injury to society the greater the reward of the monopoly will be. See how all this evil process strikes at every form of industrial activities. The municipality wishing for broader streets, better houses, more healthy, decent, scientifically planned towns is made to pay, and is made to pay in exact proportion, or to a very great extent in proportion, as it has exerted itself in the past to make improvements. The more it has improved the town the more it has increased the land value and the more it will have to pay for any land it may wish to acquire. It is not the individual I attack, it is the system. It is not the man who is bad, it is the law that is bad."

Mr. Kirkwood: The Prime Minister, at that time, was speaking as a Liberal.

Mr. Stokes: Well, he was speaking the truth. I put this to the Chancellor. I do not know whether it was his ambition, as a young man, to be a Chancellor of the Exchequer; probably he stumbled into it by mistake. But if he had given his thoughts in the past to this problem of taxation he would have stumbled upon certain truths. First, that taxation should bear as lightly as possible upon production. Every one of the Chancellor's taxes in this Bill bears heavily on production, some more than others. Every one of the taxes we are discussing tends to prevent production. To illustrate what I mean I would like to tell the House a story about a Sultan of the East, who was a rich man and who had a large area of fertile soil. He wanted money with which to pay his armies to attack some body else. He put a tax on fig trees; the result was that the farmers did not like it and cut down the fig trees except those necessary to feed themselves, so that the income from the tax fell and his army starved. His Grand Vizier said, "You have done this the wrong way round. You have discouraged these people from producing wealth. Why do you not tell them that the land will grow many fig trees and then put a tax on the land according to its value?" He did, and what happened? The farmers planted more and more trees, everybody had plenty in abundance and the army grew fat and went away to conquer the enemy.

Secondly, a tax should be easily and cheaply collected. This is. Thirdly, a tax should be incapable of evasion. We have heard much about tax evasion to-day You cannot evade this tax. It is quite impossible. You need no detectives to get it. Finally, a tax ought to be a fair tax. What is more fair than to collect for the benefit of the people the value which they themselves have created - lane value? I quite understand that the Tory Party do not like it, and I suppose they will not bring it into being until they are forced to do so. As I have said, I do no want what is called "full employment"; I want full opportunity to employ myself and for each other man to have the right to do likewise in the way he chooses. The only way to put this matter right is to tackle the fundamental cause of unemployment, as I have suggested; otherwise we shall achieve nothing. Just another story and then I will sit down. It concerns the test employed in a lunatic asylum to make sure that new inmate are really "cracked ". The test is that new inmate on arrival is led into a bath room where the taps are pouring fort water into the bath - pouring wealth into the landlords' pockets. He is then given a bucket and told to empty the bath. If he turns the taps off before he start he is considered curable.