Orders of the Day — Rating of Machinery Bill.

Part of the debate – in the House of Commons at on 28 April 1922.

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Captain Sir HAMILTON BENN:

I beg to second the Motion.

I am not a manufacturer or particularly interested in machinery, nor am I interested in it from the local point of view, but I have long been aware of the anomaly which exists in England with regard to the rating of machinery, the uncertainty of the law, and the variety in practice of assessment committees which are very detrimental to the national interest, and therefore contrary to public policy. I have been a member of a number of municipal authorities, and have therefore seen something of assessment and rating. The absence of uniformity is a very real grievance, and the rating of machinery penalises enterprise and efficiency. It encourages the maintenance of old and obsolete machinery and the continuance of old methods. It seems curious that we who pride ourselves upon being a practical business nation should be the only nation which rates machinery and makes a manufacturer pay higher rates if he scraps old iron and instals modern machinery. There never was a time when it was so important that we should do everything in our power to stimulate production and reduce the cost of manufacture. Yet I am informed that at this moment there is greater activity on the part of assessment committees in the matter of rating machinery. In districts in England where machines have not been rated in the past they are now proposing to rate them. We in London and in many parts of England have been accustomed to be rated in this varying manner according to the caprice of the local assessment committee or their valuer. We have no means of forming an estimate of what that rating will be. We always thought that in the harder-headed portions of the country, such as Lancashire and Yorkshire, they understood these matters better, but now, I am informed, they are beginning to rate even cotton machinery.

I have in my hand some particulars of recent examples, though nothing so extravagant as that quoted by the hon. Member for Holborn, where the assessment was increased to the extent of 60 per cent, on account of the inclusion of machine tools. If I may quote just two or three cases, there is one in 1919, in Walsall, where the old rateable value, excluding machinery, was £285 per annum, and the new rateable value, with machinery, was £446, about 30 per cent, being due to the inclusion of tools. There is another in Huddersfield, in 1921, where the old valuation was £1,180 and the new valuation £3,426, 40 per cent, of the increased assessment being due to machine tools. There is the case of some cotton mills, where the old rateable value was £263 and the new valuation £1,039, owing to the inclusion for the first time of cotton weaving machinery. That was at Wigan. It is not only the effect that it has upon established industries, but it is also the effect that it has upon the establishment of new industries. A very curious and important case came to my notice two or three years ago. I was crossing the Atlantic, and came into contact with a group of very wealthy financiers, English and American, who had agreed to establish a very big industry in connection with the metal trade. I was shown the reports by some eminent engineers who had considered the question of the new works from every point of view. They went into the question where it was best to establish these works, it being a case in which the raw material could be obtained equally well in the United States or in England. The market for the goods was largely in England and in Europe, and the whole question was where it would pay them best to manufacture. It was clear that, if the market was mainly in Europe, England was the most desirable place, because then they would save the freight from America. England also had the advantage that coal and some other articles which were needed for the manufacture were cheaper or likely to be cheaper than in America. But when it came to the question of expense of operations the whole scheme for establishing the plant, which was going to cost between one and two millions sterling, and to provide employment for from 500 to 1,000 men, broke down on the question of the rating of machinery in England. The engineers pointed out there was no process by which they could be assured exactly how it would work, and if they were rated on the full value of the machinery installed, they would be put entirely out of court in competing with American works. They pointed out that in three cases in America where they had contemplated erecting works, the local authorities had offered them total exemption from local rating for a period of from 10 to 15 years —a very different attitude of mind to that exhibited by our local assession committees. I regret to say that the result of this expose^ of the situation by the engineers decided the financiers to erect these works in the United States. The hon. Member for Holborn (Sir J. Remnant) in his speech referred to the Royal Commission which sat upon this subject. That Commission was appointed in 1896 and it sat until 1901. It issued two interim Reports and its Final Report was dated the 28th May, 1901. They therefore had plenty of time to consider this matter in all its bearings. Lord Balfour of Burleigh was the Chairman. Lord Cawdor and many other people were on the Committee, whose opinions were bound to weigh with those acquainted with them. I think I may be permitted to read some short extracts from their report which really sum up the whole situation we are dealing with. In the first place they state that Up to the passing of the temporary Poor Rate Exemption Act, 1840, personal property which was local, visible and productive, including stock in trade and all machinery whether physically made part of the manufactory in which it was found or not was rateable according to law." … "As a matter of fact however it appeared that such property was usually not rated although the practice in this respect varied in different localities. Then they go on to say that it was with the object of removing these grievances that the Act of 1840 was passed and that Act has been kept in force by the Expiring Laws Continuance Act. It provided that It shall not be lawful for the overseers of any parish, township or village to tax any inhabitant thereof as such inhabitant in respect of his ability derived from the profits of stock in trade or any other property for or towards the relief of the poor. Since 1840 therefore machinery has not been rateable per se, but according to decisions of the Courts, certain kinds of machinery are taken into account in valuing factories. The Report of the Royal Commission goes on to recite certain of these legal decisions which have altered the Act of 1840, and they say: From the authoritative expositions of the existing law which have been cited, it will readily be seen that under the law as it now stands the line between the kinds of machinery which are and those which are not to be taken into account in ascertaining the rateable value of the factory is one which it is practically impossible to draw with any approach to distinctness. What machinery would and what would not pass to a tenant by demise of a factory as such must be very uncertain, as to the proposed alternative that if bobbing net machines, whether physically attached to the premises or not, are taken into account in rating a lace factory, why are sewing machines in a tailoring factory not to be taken into account? The fact is that no one can say with certainty in any given can what machines are and what are not to be taken into account in ascertaining the rateable value of the factory which the machines stand. The result of this uncertainty is that a great divergence of practice exists among the rating authorities in different places and a large amount of dissatisfaction prevails among manufacturers in regard to the matter—a matter which deeply affects the interests of some of the most important industries in the country. They conclude by saying: Having regard to all the history and circumstances of the case we are of opinion that the adoption of the proposals contained in the Bill introduced at the House of Commons in 1899 as to the class of machinery which should be taken into account in estimating the rateable value of premises containing machinery would be a fair solution of this difficult problem. These proposals exclude the classes of machinery which in our opinion it is desirable should be exempted. The law as to what machinery should be included in the assessment of premises containing it would also be more precise, greater uniformity in practice among the assessment committee would be secured and the probability of litigation lessened. That was the considered opinion of the Royal Commission, the recommendations of which were read by the hon. and learned Member for Holborn. I would wish to point out that the Bill we have introduced is a Bill which is precisely similar to that which was passed for Scotland. The Scottish Bill was founded on the recommendations of the Commission following the lines of the Bill of 1899, and really therefore what we are asking the House is to terminate the unfair position in which machinery is placed in England, and even at this late date to follow the good example set by Scotland. It has been suggested to me that this Bill will be opposed by Scottish Members. Far from it. I have found that many Scottish Members have signed a memorial in favour of the Bill, thus showing that large-mindedness for which they are notorious. It seems to be curious that a Bill of this kind should have been introduced 17 times, should have passed its Second Reading nine times, should have had the Ministers in charge of the Department in favour of it, and yet should not pass into law. Surely there is some obstacle, the nature of which we do not exactly know. There must be something behind the scenes which keeps us from arriving at what want When it been the expressed wish of the House of Commons on nine separate occasions to have this Bill, why do we not have it? It has been blocked in some way every time. I trust that on this occasion, in this intelligent House of Commons, it will not be allowed to be blocked a tenth time.