LLOYD GEORGIAN FINANCE.
WITH much of what Mr. Lloyd George said in his impassioned speech at Whitefield's Tabernacle last Saturday it is unnecessary for any serious critic to deal. When the present Chancellor of the Exchequer finds him- self facing a sympathetic and undiscriminating audience he habitually allows his tongue to run away with him, and much of what he said on Saturday is only of interest so far as it illustrates his emotional character. What is of import- ance to the people of this country is the demand which he made that the National Insurance Bill, one of the most im- portant measures ever submitted to Parliament, should be forced through the House of Commons before Christmas in order to save his personal reputation. By way of justifying this preposterous claim, Mr. Lloyd George suggested that all the critics of his Bill were inspired with some malevolent desire to kill the Bill. He ignored the fact that every critic, including the Spectator, which came in for a special share of his abuse, welcomed the Bill when it first appeared, and only began to criticise it as the practical defects of the measure were revealed. We are quite willing to shrug our shoulders at the charge that we are actuated by malevolence in this matter—and, if Mr. Lloyd George likes to say so, in every other matter; but it is a little curious that among the critics of the Bill whose opinions Mr. Lloyd George dismisses as being unworthy of attention, because so obviously inspired by malevolence are men of such different temperament and origin as Mr. Philip Snowden, " my friend Lansbury," Sir Edward Braybrooke, and Kr. Sidney Webb.
Mr. Lloyd George has in fact reached this point in regard to his Bill that he now demands that the measure, in whatever shape he chooses to put it forward, is to be treated as sacrosanct. When he has pronounced his judgment not a dog is to dare to bark. The Bill as finally designed by him must be accepted by the House of Commons and the country as the flawless work of an inspired lawgiver. When such a proposition as this is put forward by any Minister the country is entitled to ask what he has previously done to justify his present claim. Mr. Lloyd George's previous great achievement was the Budget of 1909, and the dis- tinguishing feature of that Budget was the entirely new proposal to levy certain duties on certain defined values of land. Apart from the land value duties the Budget of 1909 would have passed through the House of Commons with very little opposition. The land value taxes were put in the forefront of the Bill because they constituted the portion of the Budget to which Mr. Lloyd George attached most importance, and which be knew would meet with most opposition. While fighting these new taxes through the House of Commons he repeatedly claimed that they were going to yield a magnificent revenue to meet the demands of social reform and of naval defence. More than once, in reference to his Id. in the £ on undeveloped land, he demanded scornfully of his critics on the Opposi- tion benches whether they could not spare even Id. for old- age pensions and the needs of the Navy. The impression created throughout the country by his speeches was that the new land value duties were going to be a prolific source of revenue. Yet now we have the confession of the Inland Revenue Commissioners that in the first completed year since these taxes had been in operation the increment value duty and the reversion duty have each yielded sums so small that the Commissioners are afraid to mention them, and the undeveloped land duty in the two years since the tax has been in operation has yielded respectively £1,189 and £1,162. In order to secure this laughable result a gigantic staff of valuers has been appointed which at the end of the financial year 1910-11 numbered over 1,500, and has since been considerably increased. The aggregate cost of this staff already appears to exceed £230,000 a year. A very large sum must be added for the printing and distribution of the millions of forms issued. In return for this expenditure Mr. Lloyd George has succeeded in raking in a revenue of £2,351. In other words, the net loss to the country of two years' operation of Mr. Lloyd George's land taxes has been, on the most favourable estimate, well over a quarter of a million sterling.
In answer to these damning figures Mr. Lloyd George's supporters in the Press have all with one accord been crying that it is quite ridiculous to expect that the land taxes should vield their full revenue in the first few years of their operation. It is in years to come, they tell us, that the revenue is to roll in. That excuse would be very plausible if it were not for the unfortunate fact that Mr. Lloyd George has definitely committed himself on more than one occasion to precise estimates of what the laud taxes were to yield, not in the remote future, but in the years just concluded. In his Budget speech on April 29th, 1909, he stated that the increment duty would yield in the year 1909-10 £50,000, and that the reversion duty would yield £100,000. He gave no separate estimate in that speech for the yield of the duty on undeveloped land because that was mixed up at the time with another tax on ungotten minerals which was subsequently abandoned. He did, however, more than a year later, namely, in his Budget speech on June 30th, 1910, give a fresh estimate which included the undeveloped land tax. The estimate given on this latter date was :—Increment Duty, .R20,000 ; Reversion Duty, £90,000; Undeveloped Land Tax, £140,000. It is to be noted that when this estimate was given, barely fifteen months ago, Mr. Lloyd George's Valuation Depart- ment had already set to work. As the Commissioners of Inland Revenue confess, they made their preliminary arrangements for putting the Budget of 1909 into opera- tion before the Royal Assent was given to the Act, and by June, 1910, they had had nearly six months of preparation, while the Act itself had been legally in force for two months. Therefore Mr. Lloyd George had then all the data necessary for forming a judgment. The contrast between the judgment which he formed then and the realized results can best be set out in tabular form :- As estimated on Actual June 30th, 1910. yield.
Undeveloped Land Duty ... 140,000 £1,162 Increment Duty ... ... 20,000 Nil Reversion Duty ... ... 90,000 Nil
This concise table absolutely disposes of the plausible excuse that the present farcical results of the tax are only due to the fact that it has been such a short time in operation, and that we can still rely upon the estimates of a Heaven-sent financier.
It is worth while to deal with another defence of Mr. Lloyd George's finance which some of the Radical papers have hastened to make. They have seized on a paragraph in the Inland Revenue Report which states that the Valuation. Department in dealing with property passing at death and valued for the pur- poses of death duties has increased the valuation as brought in by the accounting parties by the sum of no less than £3,283,000. It is argued that this increase has only been secured through the operations of a department appointed for the purpose of giving effect to Mr. Lloyd George's land value duties. The answer is that before ever Mr. Lloyd George's land value duties were brought before the House of Commons the Inland Revenue Department had created a separate valuation staff for dealing with valuations for death duty purposes, and the only connexion between this staff and Mr. Lloyd George's new taxes is that the old staff formed a nucleus for the new department. It is perfectly reasonable that the Inland Revenue Commissioners should possess a valua- tion department for checking valuations for death duties ; the folly of Lloyd Georgian finance consists in setting up a vast machinery for valuing a thing which nobody, except under the rarest conditions, ever wants to buy, namely, a piece of land stripped of everything which human labour has added to it. As was repeatedly urged in the columns of the Spectator during the whole long con- troversy over the land taxes, the scheme of a special tax on bare sites is not only utterly unsound in principle, but utterly unworkable in practice. Already within the space of two years it has hopelessly broken down. The Com- missioners, at an enormous cost and with an even more serious multiplication of permanent officials, have succeeded in making 298,000 provisional valuations, covering :370,000 hereditaments. They state that the number of heredita- ments to be dealt with is 11,000,000, so that at the present rate of working it would take thirty years to complete the provisional valuations of the United Kingdom. But a provisional valuation is a very different thing from a final valuation, as the Inland Revenue Commissioners will shortly be discovering. Yet the Act requires them to revalue all undeveloped land once every five years. It is palpable that this cannot be done, and that the terms of the Act cannot be carried out unless the Valuation Department is enormbusly extended, with a corresponding increase of cost.
What prospect there is of getting any revenue even to pay interest on the capital sums wasted in this valuation we may infer from a little point in the present report which has been generally overlooked. The Commissioners state that instructions were given to their valuers to deal in the first instance with properties where there was some pro- spect of getting an immediate revenue, and in particular with undeveloped lands. That is to say, the valuers have not attempted to make a systematic and uniform valuation, taking the rough with the smooth. They have picked out properties where they thought there would be a revenue, and the result has been that in two years they have secured .22,3M at an expenditure certainly exceeding quarter of a million. That is Mr. Lloyd George's financial triumph, and it is on the credit of this record that he demands that the country shall accept at his hands whatever provisions he chooses to put into a Bill affecting, perhaps for gene- rations to come, the finances of the United Kingdom.
Previous page
