I beg to move in page 25, line 12, to leave out "ten shillings," and to insert "one pound."
The Amendment is very simple. I know the Committee are aware that Land Tax is a very complicated affair, but I am not sure that the Committee are aware in what a frightful muddle Land Tax assessments are. In every Income Tax office up and down the country Land Tax assessments are in such a muddle that nobody knows on what particular bit of land the tax is assessed. The proposal to do away with the tax is very desirable.
The Chancellor has proposed that all assessments under 10s. should be completely disposed of at once. I suggest that 10s. should be raised to £1 because that would include a very large number of small assessments, and would save the Inland Revenue, a large number of lawyers and private individuals an immense amount of time and trouble. I hope the Financial Secretary will see fit to accept the Amendment because I can assure him that it was put down only with the view of helping the Board of Inland Revenue. I do not think it would cost the Government anything at all. Probably they would be in pocket as a consequence of accepting it.
The reason for abolishing the Land Tax where it is not in excess of 10s. is that it is not worth while collecting it. The cases in which it is less than 10s. are 700,000 out of 1,100,000 assessments and, therefore, there is a strong case for saying that if it does not mean a loss to the Revenue, if the tax is not worth collecting, then it should be abolished altogether; and that applies to the figure of 10s.
That cannot be said, however, when we get above 10s. It cannot be said that it is not worth collecting at figures between 10s. and £1. The redemption value for Land Tax of £1 is £25. It would cost the Treasury something like £75,000 a year if the Amendment were accepted and, therefore, we feel that we cannot fairly go above 10s. If we did go above 10s. then landowners who have redeemed their Land Tax in excess of that and have paid 25 years' capital redemption sum to redeem it, might have a grievance, because they would have paid quite a substantial sum to redeem it. For those reasons we have fixed a level which takes out 700,000 of the 1,100,000 and we cannot go further.
I was not pressing the right hon. and learned Gentleman to go further if it meant a loss of revenue. I believe it would save a lot of money. I do not believe that the argument which the right hon. and learned Gentleman has put forward is a very convincing one because I do not think he appreciates the amount of work involved and the frightful muddle which now exists. Possibly we could pursue the matter on the Report stage and because I know the Committee is most anxious to get on with the business, I beg to ask leave to withdraw the Amendment.
I beg to move, in page 25, line 19, at the end, to insert—
(d) all properties comprised in the countries of Orkney and Shetland.
Hon. Members who sit for Scottish constituencies are sometimes accused of taking an undue interest in the antiquarian side of politics. On occasions, in my capacity as a Chairman of the Scottish Standing Committee, I have had to recall them to the present. I am, therefore, all the more sorry tonight that I have to go right back to the year 872. Do not let hon. Members be alarmed, however; I hope the intervening centuries will melt away like snow in May, and I shall refer to nothing which is not strictly relevant to the Amendment.
In the year 872, Jarl Harald Haarfagr, who hon. Members doubtless met in their history books as Harald Fair Hair, subdued his brother Jarls in Norway and turned that country into a monarchy with himself as King. Orkney and Shetland were conquered at the same time. They had been settled about a couple of centuries earlier and they became part of King Harald's Norse domains. Orkney became an Earldom under Jarl Sigurd, whilst Shetland was ruled by a Foud or Governor directly responsible to the King of Norway. King Harald instituted throughout his Norse Domains, including Orkney and Shetland, a yearly Land Tax called Skat which was levied for the support of the State. It was not in any sense of the term a feudal duty because there could be no such thing in the Udal system of law and land tenure which then prevailed throughout the Norse domains. Such duties were entirely foreign to the Udal system.
Jarl Sigurd of Orkney and the Foud of Shetland were authorised to levy Skat, or Land Tax, in Orkney and Shetland and were specifically directed to apply it for purposes of administration in the islands. This is borne out by various references in the Orkneyinga Saga and also by the expressly specified conditions under which the half-Norse, half-Scottish nobleman, Lord Henry St. Clair, obtained the Jarldom of Orkney from the King of Norway in 1379.
I am not proposing to discuss the merits or demerits of Skat. I must refer to it, however, in order to make my case with regard to the Land Tax. Lord Henry St. Clair's accounts are still extant and they show that he gathered the Land Tax and applied it in the islands for its proper purpose. This continued until 1469, when Orkney and Shetland were pledged to the Scottish Crown by King Christian I of Norway, Denmark and Sweden in security for the unpaid balance of the dowry of Princess Margaret on her marriage to James I of Scotland.
At that time there was levied in Scotland a Land Tax known as the "Old Extent." This tax was not levied in Orkney and Shetland after these islands came under the Scottish Crown, doubtless because they were already paying a form of Land Tax, Skat. But in 1643, when the "Old Extent" was repealed in Scotland, a new Land Tax or Cess was introduced. That new tax was imposed in Orkney and Shetland in addition to the Land Tax or Skat which they were already paying, with the result that from 1643 down to the present day the islands have been paying a double Land Tax. That is why I put the Amendment on the Order Paper.
When these islands were pledged to the Scottish Crown the King of Norway stipulated that the Scots were not to interfere with the Norse laws and language and customs and the Udal system of land tenure which then prevailed in the islands. That is actually stipulated in an Act of the Scots Parliament in 1657, but it was more honoured in the breach than in the observance. During the first two centuries under the Scottish Crown, the Earldom lands were, to quote Balfour:
Granted, revoked, annexed and regranted, confiscated and re-annexed with wearisome monotony and torturing change. Five times they were formally annexed to the Crown by Acts of the Scots Parliament, and fourteen times were conceded in defiance of such Acts to one needy and rapacious courtier after another.
At length, in 1707, the then Earl of Morton procured a redeemable Crown grant which was made absolute in 1742. This grant embraced the lands which the Earl of Morton sold, in 1776, to Sir Laurence Dundas, ancester of the present Marquess of Zetland. The Grant to the Morton family conferred on them the right to levy Skat but failed to stipulate that it should be spent as it had been during the previous nine centuries, for the purposes of administration in the islands.
In the meantime, the udallers of Orkney and Shetland had never ceased to protest, since 1643, against the injustice of having to pay the Scots Land Tax in addition to the Norse Land Tax. These protests became more vigorous when the Donatories of the Scottish Crown not only treated Skat as part of their personal income, but greatly added to the burden by arbitrarily altering the long-established Norse weights and measures in their own favour. These protests continued for two centuries without redress and came to a head in 1835 when the matter was brought to the Court of Session in Scotland. The udallers based their case on the argument that the levying of the Norse Land Tax in Orkney and Shetland should have ceased in 1643 when the Scottish Land Tax was introduced. They said it should be either one or the other, but that it was utterly wrong to continue with both forms of taxation.
The Court held that the Earl's right to levy the tax was secured by prescription, since the tax had been paid to the Crown from 1643 to 1707, and from that time on to the Crown's Donatory without interruption. The decision may have been right in law, but it did not remove the essential injustice. The Crown should forthwith have remedied this by repealing either that or Land Tax.
It was very foolish of the Crown ever to have granted the right to a private citizen to collect a public tax and then to allow——
Well, Mr. Burden, the Scottish Crown. It was foolish to have granted to a private citizen and his successors the irredeemable right to collect a public tax and use it for his own private purposes. But having made that error it was indefensible on the part of the Crown to cover up its own folly by victimising the people of Orkney and Shetland.
This grievance has subsisted for over 300 years, and I can assure the right hon. and learned Gentleman that the islanders affected feel just as bitter today as their forbears did then. I hope the right hon. Gentleman does not think that this has been forgotten. There is in the Treasury a memorial which was lodged as late as 1921, and a further memorial was lodged with the Scottish National Development Council in 1939, so that I can assure him that it is a very live subject at the present day. It is a grievance which can to some extent be remedied though not wholly by accepting the Amendment which stands in my name. The grievance would not be wholly redressed because of the fact that the Norse Land Tax, which must remain as the law stands, is a far heavier burden than the Land Tax, which is the subject of this Amendment.
More than one half of the duties collected by the Earldom and the Crown consists of Skat, and the burden and other duties is so heavy that in many cases it even exceeds the rental of the lands. Here are a few examples for the year 1918. The lands of Tirlot in the Island of Westray with a gross rental of £138 15s. 9d. paid duties amounting to £161 9s. The land of Upper Scapa, St. Ola, with a gross rental of £60 paid duties amounting to £63 16s. 0d. The land of Fea in Orphir with a gross rental of £11 5s. paid duties amounting to £10 18s. 11d. the lands of Hoy with a gross rental of £387 5s. 6d. paid duties amounting to £306 14s. 2d. when it is remembered that more than half of these duties consisted of Skat which is obviously a far heavier burden than the land tax, it will be realised what a scandalous injustice it was to superimpose an additional form of Land Tax.
I have given my right hon. and learned Friend a golden opportunity to redress partially this 300 years' old grievance by exonerating from land tax all properties comprised in the counties of Orkney and Shetlands. I suggest, too, that the Crown might well take steps to examine the whole position regarding the imposition of Skat, and see whether, perhaps in this Bill, some arrangement cannot be made whereby this grievous burden can be redeemed in the course of time on reasonable terms.
I am sure the Committee would like to congratulate the hon. Member for Orkney and Shetland (Sir B. Neven-Spence) on his historical researches. I should like to thank him for the compliment he paid to my right hon. and learned Friend the Chancellor of the Exchequer, because the hon. Gentleman obviously feels that an injustice is being suffered in the Orkney and Shetlands which has lasted for 300 years and which in 1921 and again in 1939 he sought to have removed by Governments of his own party. Apparently Chancellors of the Exchequer of the day were unwilling to yield to the blandishments of the hon. Gentleman, and yet he feels the present Chancellor of the Exchequer will remove this alleged injustice. It seems to me, after listening to his interesting speech, that he is going about this the wrong way if it is an injustice, because he said that a heavier burden by far is imposed by Skat than by the land tax. If that is so, he should lead a crusade for the abolition of the burden of Skat.
But he is asking the Government to go about it in the wrong way, because if he leads a crusade for the abolition of Skat and other curious land burdens in Scotland and elsewhere, he might find a certain amount of sympathy on this side of the Committee. This Amendment is not acceptable because it seeks to exclude all properties in the Counties of Orkney and Shetland and the majority of the tenures in Orkney and Shetland are not udal tenures but feudal tenures, and it would embrace the feudal tenures.
If the right hon. and learned Gentleman looks up some of the observations of distinguished members of the Court of Session in the past he will find that the whole land retains its essential udal character. The granting of feudal charters has not altered the fundamentally udal nature of land tenure in Orkney and Shetland.
There are feudal charters in existence which regulate the burden put upon the Islands of Orkney and Shetland, and they far exceed the tenures held under the alternative system of udal tenure. According to this Amendment the feudal tenures in these islands would be exempt from tax, although feudal tenures elsewhere in Scotland will be subject to the tax. That is indefensible. Even if it were the position that all tenures in the Orkney and Shelands were udal tenures, the difference between a udal and feudal tenure is not sufficient to justify any differentiation for land tax purposes. While Skat is not a feudal tenure it is, to all intents and purposes, commensurate with the burdens imposed by a feudal tenure——
I cannot give way again because the hon. Gentleman knows that this is a matter of principle. There would be no justification for giving exemption for one type of burden imposed on the land and not giving exemption for other types of burden. The logical result of this Amendment would be to exclude from the Land Tax altogether all kinds of land property in Scotland.
I would point out to the Committee that this tax as levied in the Orkney and Shetlands is not providing any great hardship in these islands. The total land tax in the islands, once it becomes operative, is only £427 per annum reduced to £325 per annum on the operation of that part of the Clause which excludes an assessment less than 10s. The £325 will be levied on 140 separate assessments and it is quite obvious that there is no great financial hardship to be suffered, particularly at a time when, as a result of other measures by this Government, these islands are in a properous position, more prosperous than they ever were before.
I want to say a word here, because it seems to me that the right hon. and learned Gentleman in the last few words gave the case away. He says that the amount of money at stake is extremely small, but he attempted earlier in his speech to say that there was an injustice but that my hon. Friend the Member for Orkney and Shetland (Sir B. Neven-Spence) was going about it in the wrong way.
I am sure the hon. and gallant Gentleman does not wish to misrepresent me. I did not admit that there was an injustice. I said, if there was an injustice as alleged by the hon. Gentleman, but I was not admitting that there was any.
There is a slight difference between what I said and what the right hon. and learned Gentleman has said. However, be that as it may, the position is that it is undoubtedly an injustice to have double taxation however insignificant a double taxation may be. He went on to say that my hon. Friend should not have attacked it in this way, but that he should have dealt with another tax. My hon. Friend says that it is not possible for him to do that, but it is possible for the Government to take action. The solution seems to be a simple one. The Skat tax should be abolished and an injustice would be removed from these islanders.