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Leader's speech, Southport 1909

Herbert Asquith (Liberal)

Location: Southport

Commentary:

After paying tribute to Sir Curzon Wylie, who had been assassinated the day before, Asquith spoke briefly about international affairs. Here, the key events were the establishment of self-government in South Africa following the Boer war, and the forthcoming Conference on Imperial Defence, at which representatives of all the nations of the Empire would discuss security, particularly in relation to the seas. In domestic politics, the Old Age Pensions Act had become law, but the House of Lords had thrown out the Licensing Bill. For Asquith, the latter highlighted the need to reform the relationship between the Lords and the Commons, and he identified this as the principal issue in the Liberal programme. However, the focus of Asquith’s speech was the Budget, which introduced a number of Land Values Taxes. Following a preliminary valuation, certain types of land (e.g. undeveloped land) that increase in value due to the growth and efforts of the community – not of the owner himself – would be subject to a windfall tax on the increment. Asquith called on his party to support the Budget because it was fair and – most importantly – paved the way to social reform.

I thank you with all my heart for the kindness of your greeting. It is, I think, now something like five years since I last had the opportunity of addressing an audience in Southport. We were then on the eve of what proved to be a momentous and decisive election, and it was a great satisfaction to be able to come here and say a few words in support of the claims upon the confidence of the electors of Southport of my friend Mr. Astbury. No Liberal member returned at that election has more faithfully redeemed his pledges, or better deserved the confidence of his constituents; and it is to us, his friends and colleagues in the House of Commons, as I am sure it must be to you, the electors of Southport, a matter of infinite regret that considerations of health, and of health alone, require him to retire for a time, and we hope only for a time, from the active discharge of the duties of public life. I am glad to recog­nise that I am confronted tonight by an audience which is not drawn only from Southport, but from all parts of the United Kingdom. There can be no greater pleasure for those of us whose working days and nights are spent at Westminster than from time to time to meet the men and women who in the different constituencies of the country are doing the hard everyday work of Liberalism - if I may venture to adopt the current phraseology of the hour, those who are ripening undeveloped opinion, those who are winning un-gotten votes to add to, as we hope and believe, and to enlarge the patrimony of our party.

The Assassination of Sir Curzon Wyllie

Now, before I get to controversial topics, I think I should only be doing justice to your feelings and my own if in a sentence I give expression to the horror felt everywhere in this country at a detestable crime which was yesterday committed in London. A distinguished officer of the State, a man of blameless character, after a long record of eminent service, was struck down by the hand of an assassin. We mourn his loss, and we give our sympathy, our heartfelt sympathy, to those whom he has left behind. And I will only add this, that you have here a startling and emphatic piece of evidence as to the character and the methods of the conspiracy, happily confined to a small number of people, but desperate and determined in its methods, which I felt it my duty a few days ago to describe in the House of Commons.

South African Union

On an occasion like this, when we have more or less to take stock at the end of twelve months of the political situation, we naturally and appropriately extend our vision in the first instance beyond the limits of our own purely domestic concerns. I am not going to say anything to you tonight about what are called foreign politics; but in such a survey there are, I think we shall agree, two outstanding points. In the first place - and the chair­man has already referred to it - there is the accomplishment of the Union of South Africa. The statesmen of the different communities who have become parties to the great and memorable compact are now on their way to this country with Lord Selborne as their pioneer - Lord Selborne, whose invaluable services at every stage of this momentous enterprise I highly appraise, and am glad to have the opportunity of warmly acknowledging. But what is the lesson which we, and we Liberals in particular, have to draw from this great event? What is it that has made union in South Africa possible? Why is it that that which a generation ago seemed to be a generous but impracticable aspiration, that which only five years ago seemed to have been indefinitely postponed, if not irretrievably lost - why is it that it has now passed not only into the domain of the possible but of the real? The answer is a very simple one; it is because we have applied in South Africa that which is the saving and sovereign principle of British rule - the union of freedom with responsibility. We had the same problem, in conditions which were almost equally arduous and difficult, in Canada as we are in the way of solving now in South Africa. That long racial conflict, with its chequered annals of ascendancy and humiliation, within recent days its memories of rival heroism on the stricken field - that controversy has been appeased and, as we hope and believe, put for ever to an end by applying there, as I trust and hope we shall apply everywhere where similar conditions and difficulties arise, the doctrine - it is more than a doctrine, it is a rule of action with us British Liberals - the doctrine that you trust the people to govern themselves according to their own ideas.

Imperial Defence

Another matter of a not purely domestic kind to which I should like to make one moment’s allusion is the forthcoming Conference on Imperial Defence. I am told, gentlemen, that in your interest­ing, stimulating, and thoroughly harmonious proceedings in the course of the last two days you have had a speech from an hon. friend of mine which stirred your emotions, and, I think, appealed to the general assent in favour of disarmament. Yes, there is no body of men in this world who have more reason to desire disarma­ment - a cessation of this miserable, this heartbreaking, competition between the different so-called civilisations of the world - than those who are for the time responsible for the conduct of the Government. But in the meantime we here, whether we look at our extraneous or our domestic Imperial conditions, cannot afford to depart from the command of the sea. In these islands, as time goes on, our waste places have been more and more filled up by an industrial and enterprising population, transformed by a course of events from an almost purely agricultural to a mainly urban and manu­facturing community, dependent therefore every year more and more not only for its material prosperity but for its national life itself upon the free influx of food and of materials from across the seas. But simultaneously we have been extending our borders, building up an Empire which, unlike almost every other Empire recorded in the annals of history, is not confined within the boundaries of its territorial area but is scattered over the length and breadth of the globe. To secure a continuance of such a union naval strength and union is as the essence of life. That security is being exposed now, not necessarily from deliberate hostility, but from the natural development of other nations. This has been the more striking during the course of the last few months; and we have received manifestations from fellow subjects in almost every part of the globe that they are conscious of the common end, and are not only pre­pared but willing and eager to share its difficulties and its burdens. In these circumstances it appeared to his Majesty’s Government that the time was ripe to bring all the great communities that con­stitute our self-governing Empire together to consider their relative responsibility. They have cordially responded to our invitation, and we look forward with hope and with confidence to the result of those common deliberations.

The Old Age Pensions Act and the Licensing Bill

But now I come a little nearer home and look at our domestic history during the same time. It seems to me again that there are two events which not only strike the imagination but which will be graven indelibly on the pages of history. The first is the passing into law of the Old Age Pensions Act - the most conspicuous land­mark, I do not hesitate to say, on the road of social progress since another Liberal Government forty years ago passed the Education Act of 1870; the second is the history, which has not such a happy termination, of the Licensing Bill. That was a Bill, as you know, which was debated for weeks and for months and passed through the House of Commons with sustained and unexampled majorities. When it reached ‘another place,’ what was its fate? It was re­jected without even any pretence of consideration of its details, it was rejected in pursuance of a pre-concerted party resolution, it was rejected with every circumstance of contumely and contempt. I will not pause to dwell upon, certainly not to praise, the provisions of the Licensing Bill, which, I may say, was to some extent my own handiwork. But in regard to its rejection I will say that it has made two things - that rejection and the circumstances preceding, following, and attending it have made two things - abundantly plain. The first is that it has ruined the prospects of any really effective temperance reform on anything like a large and comprehen­sive scale during the lifetime of the present Parliament. I will say next the circumstances of that rejection have brought into greater prominence than ever before the fact that our constitutional system is, or at least that it can be made to be, not the embodiment, but the caricature of a representative and responsible Government. And the question of the relations between the two Houses of Parliament must be, for us Liberals at any rate, as I described it at the time, the dominant issue in our programme.

An Unusual Budget

But for the moment our attention is concentrated, and naturally and necessarily concentrated, neither upon the past nor upon the future, but upon the great struggle which is being waged in regard to the Budget. Now I do not quarrel with those who say that this is a very unusual Budget - so unusual that it may possibly require a more than ordinary expenditure of time and consideration before it passes into law. Parenthetically I may say that, so far, it is re­ceiving, and receiving in full measure, very full tribute. The dis­cussion so far as the first clause was concerned in Committee occupied no less than five-and-a-half days before this tyrannical Government, the well-known enemy of free speech, ventured to apply the closure. A more ridiculous contention than that there has been anything like suppression or curtailment of debate with re­gard to the Budget has never been put forward by any sane poli­tician.

New Fiscal Ground

I said the Budget was unusual; and by that I mean it has two special and exceptional features. The first is in the amount for which it has to make provision, and which everybody agrees to be necessary and which has to be provided somewhere and somehow. Its second exceptional feature is in certain of the applications - I mean what are called the taxes on land, in regard to which I admit, and I not only admit, but I claim, it strikes new fiscal ground. It is not as if the principle upon which these taxes are based is in any sense a novel principle. On the contrary, it has been perfectly familiar to instructed politicians for many years past; it has been discussed and debated and approved by all the greatest economists during the last 50 or 100 years; it has been put, as you all know by this time, in one form or another, into practical operation, not only on the Continent of Europe but in several of our own Colonies. What is new is this - it is the applica­tion of a well-understood and thoroughly-sifted problem, as an instrument of Imperial taxation, to a land system and to economic conditions such as are to be found in this country.

What the Land Values Taxes Really Are

Now, as I observe that the attacks upon the Budget are mainly, if not exclusively, confined to these taxes, I think you will perhaps bear with me if for a few moments I seek to direct your attention and that of others to what they really mean. In the first place, let me repeat an observation which I made a week ago at the Holborn Restaurant - that these taxes, though popularly and con­veniently described as taxes upon land, are not in the strict sense of the term taxes upon land at all. What are they? A very dis­tinguished economist, a professor of political economy at Cambridge, writing in the Times today, says that the proper description of them would be taxes upon windfalls, and that is really what they are. That is to say, what the State is doing is not putting a tax upon land as such - nothing of the kind. What it is doing is this: it is saying to the landowner, the owners of certain classes or cate­gories of land, ‘When your land acquires through causes for which you are not responsible, and to which you have not contributed, but which result from the growth of the community and the action of the community - when your land under these conditions, and these conditions only, acquires an increment of value either actually realised or conveniently realisable, the State will step in and exact a toll.’

Revenue Small, but Progressive

The next observation of a general kind which I should like to make on these taxes is that their primary object is to raise revenue, which ought, I think, to be the primary object of every tax that any Chancellor of the Exchequer proposes for the accept­ance of the House of Commons. From the very nature of the case - as any one will see who has even an elementary acquaintance with the facts - from the very nature of the case the revenue so raised from taxes of this description cannot be very large in the first year, or even in the first few years. Take the taxation upon increment and upon reversions. With those taxes the yield will only be realised when the increment comes to hand or the reversion falls in. But in either case the revenue will be but a small fraction of the fiscal system of the country. It will be progressive in its operations. It was precisely the same with the succession duties proposed by Mr. Gladstone in his great Budget of 1853 with a complexity of machinery and detail to which nothing in this Budget affords any parallel at all - those succession duties, which in course of time, amplified and developed as they were by Sir William Harcourt, now form, not only one of the most productive sources of our Imperial revenue, but, be it observed, an instrument for raising revenue which no Tory Chancellor of the Exchequer has for a moment ventured to tamper with.

‘Where the Shoe Pinches’ – Valuation

My third and my last general observation in regard to these taxes is this - that they are taxes none of which can be justly or even practically levied without some preliminary valuation. It is impossible - as my hon. friends will agree with me who sit in the House of Commons - it is impossible to have followed these debates without seeing that this is where the shoe pinches. There has been an astonishing indisposition on the part of many - I am glad to say not of all - of those who profess to speak in the name of the landed interest in this country to have the land valued by some indepen­dent and competent authority. All this random talk that you hear upon the platform or read in the newspapers about their being at the tender mercies of a despotic department - all this random talk betrays to my mind an uneasy consciousness and an uncomfortable apprehension: an uneasy consciousness that this class of land is at the present moment very much under-valued and an uncomfortable apprehension that if it ever comes to be valued for these taxes at its true market value that valuation may possibly be taken advantage of for some other purpose.

The Increment Tax

Now, I should like to deal a little more closely with these taxes in detail. It is a dull subject, but it is very important. I am sure you will bear with me if I have to descend or ascend to technicalities. I will take first of all the increment tax. As I said a few moments ago, this is a duty imposed not upon land, but upon the added value which accrues to land, not from the efforts of its owner or from those interested, but from social causes. Now, no one, so far as I know, out of a lunatic asylum has ever contended that land in this country steadily and normally increases in value. I have seen the statement attributed to myself. I need hardly say I never made it. What I have said, and what I believe to be perfectly true, though there is an exception here and there, is that there is such an increase in this class of land on which these particular taxes, this increment tax, will fall.

Agricultural Land

It is not true, I quite agree, for instance, to make the thing clear, it is not true of agricultural land as a whole; but what do you mean by agricultural land? I mean by agricultural land not land which is locally situated in what is technically called a rural area, but I mean by agricultural land - land which is actually and at the same time properly and economically applied to agricultural purposes. Land of that kind may rise in value from a variety of causes - it may rise in value, for instance, from the enterprise and expenditure of landlord and tenant, either or both. It may rise in value from causes which are common to the agriculture of the country and to a large extent of the world. No rise of that kind falls or was intended to fall within the increment taxation.

Land and Population

Let me contrast the land which lies within the fringe of a growing and naturally created population - I do not care whether it is a rural or an urban area - take land of that kind which in virtue of that population, its expanse, and its growth, even in virtue of the expenditure made for communal purposes for that population, increases in value steadily, regularly, continuously, and acquires a special market price. That is the windfall of the Cambridge pro­fessor; and I ask this question, and I will ask it of any audience of my fellow countrymen, I do not care whether they are Liberals or Conservatives as long as they are fair-minded and just men and women - I ask, ‘Is it unfair or impolitic that the State should have a share of the increase so produced?’

Increment on Other Kinds of Property

As I have said before, no answer has ever been given to the question. The only answer which has been made is one which the lawyers call the answer by way of confession and avoidance. It is this - it may be true, it may be right - but, they say, there are other forms of property in which you may discern the same increment due to the same or to similar causes, and you don’t propose to tax them. I have never denied that there may be and there are occasional cases apart from land in which an added value is given to property by social causes, but they are very rare and exceptional, and I believe some of them are taxed already through the income tax or some other tax of our fiscal arrangement. This does not fall in the same category as land, for the reason that land is limited in quantity, and its use in the interests of the community is a matter of vital moment to every man, woman, and child in this country. How can you put into the same category as that the fact that a doctor’s practice may have risen because a colliery village has suddenly grown up in what was previously a rural district, or the fact that a Holbein or Velasquez has risen in market value at Christie’s in consequence of the scarcity of the supply and of the growth of taste? The doctor pays his income tax on the increased sum which he makes out of his new patients, and as to the Holbein and Velasquez we may leave them to themselves. It is a matter of very little moment after all; and anxious as I am myself, as all of us are, to retain them in this country, it is a matter of very little importance whether they belong to this man or that.

The Case of Land Altogether Exceptional

But when you come to land, land on the outskirts of a growing community, land the holding up of which may throttle and cripple the development of its industries, may destroy the health and even the long life of its population, it is mere trifling, unworthy even of an academic dialectician, to speak of land as though in these vital respects it stood upon the same footing as other forms of property; and let me add that it is no answer to say to a dweller on the out­skirts of London, for instance, there is plenty of land in the Hebrides. What London needs and every other community, every growing community, needs, is not to know that somewhere or other on the face of the globe or within the ambit of this United Kingdom there is land available. What they want is land in their own neighbourhood, land upon which they can ex­pand and extend themselves and carry on their industries and their local and their social life. Yes, and for the purpose of this tax, remember, it is the owner of the land, the man who finds himself happily circumstanced in the possession of land where it is wanted and not where it is not wanted, he is the person, we say, who in policy and justice ought to contribute to the State.

What the Tax on Undeveloped Land Means

Let me pass now in a few words to the other tax, the tax on undeveloped land. There is much misapprehension on this subject, and as it is some time before we can possibly reach it in Committee upon the Bill, I do not think I shall be wasting a few moments of your time if I endeavour to state clearly and distinctly what this tax really means. This is a tax of a halfpenny in the pound on the capital value of undeveloped land. It applies only to unbuilt-on land which is not being bona fide used for any business, trade, or industry other than agriculture.

Agricultural Land and Other Exemptions

Let us see how it affects agricultural land. All land the site value of which does not exceed £50 an acre is exempt, and that will exclude a great part of the agricultural land of this country. And with regard to land, and there is some purely agricultural land the site value of which exceeds £50 - even in regard to that the tax is only to be charged on the amount by which the building value exceeds the agricultural value. Let me further point out to you, because there are perpetual mistakes on these points, that there are exempted altogether from the operation of the tax lands owned by municipalities and other rating authorities; land occupied and used for public or charitable purposes, parks, gardens, or open spaces to which reasonable access is given to the public, when such access contributes, as it almost always does, to the amenity of the locality; land let under an agreement of not less than five years - we are obliged to put in some safeguard - for games or for recreation; private gardens up to an acre (private gardens between one and two acres being allowed one acre duty free); and, lastly, land held on agricultural leases of not more than twenty-one years entered into before the Budget statement. Well, of course, we are open to argument, but have we not there shown a disposition to exclude from the operation of this duty all land in which under present conditions of user it may be said the public has really an interest of its own? If any other such purposes can be suggested, if any reasonable extension of these exemptions consistent with the principle of the tax can be made good, I can assure you the Government and the majority in the House of Commons are perfectly prepared to entertain them. That is the scope of the tax and its general effect.

Land that is Being Held Up

Let me point out to you that, like the increment duty, with which I have already dealt, it is in its intention, and it will be in its effect, primarily a fiscal instrument - namely, a means of raising revenue for the Exchequer. It merely says - and here again I think we come down to an almost elementary principle of social justice - it merely says that those classes of land shall be taxed now on the basis of real as distinguished from a perfectly fictitious value. Such land is under-rented - that is to say, for a number of reasons, reasons which are satisfactory to the owner, it is bringing a lower yield than it would, if put into the market, bring in and ought to bring in. Take the case of land which can be sold for immediate development, but which is being held up, and legitimately held up, in the hope of getting a higher price in the future. Such land can command a definite economic rent, and is capable of producing an income. That land ought to form part of the taxable income of the country. The landowner does not take the rent, but chooses to forgo it, and the source of revenue is reduced pro tanto, and the national income reduced so much. He does this for his own purpose, and with the hope of future profit, and it is clearly fair and just that the State should apply to him rather than to other taxpayers to make up the deficiency.

The Undeveloped Land Duty and the Sale of Land

Now it is said that one of the effects of this undeveloped land duty will be to put pressure on landowners to sell their land. Perhaps it will. Is that a calamity to the community? Is that a contingency which we ought to regard with horror and aversion, and against which we ought to take all possible precautions and safeguards? Remember this - we hear a great deal about the with­drawal of capital from this country. It is quite true that capital can be withdrawn from one area to another, and sometimes that transference is beneficial to the other area; but land cannot be removed, and even if this terrible calamity should happen, and there should be a transference of ownership, the land is there, and the community will continue to enjoy it.

The Duties Economically Sound and Socially Just

The truth is, and I may sum up what I have been saying as regards the increment tax, and the same thing is true of rever­sions, it only takes part of the windfall, as and when it falls. In regard to the tax on undeveloped land, it only taxes a man on an income which he might enjoy, but chooses for the time being, for purposes of his own, to forgo. I maintain that taxation which seeks these ends by these means is taxation which is not only sound in economic principle, but which conforms to the eternal and immutable principles of social justice. I am afraid I have dealt at great length with these technical matters, but I have tried to present clearly what is the scope and purpose of this new form of taxation.

What is the Alternative?

Now let me, before I come to a close, ask once more the question with which I mean to conclude every speech I make upon this sub­ject until I get a satisfactory answer to it. The question is: You have got to provide this money; the purposes for which it is to be provided are purposes of importance and urgency, and the necessity of which no party in the State disputes - how otherwise are you going to provide it? I put that question a week ago in the Holborn Restaurant, after a very menacing demonstration on the previous day, when the bankers of the City of London met; I put that ques­tion to the Free Traders among the protesters, and particularly Lord Avebury, an eminent man, who has rendered great service to the cause of Free Trade.

Lord Avebury’s Alternative Budget

What is Lord Avebury’s reply? He has produced, perhaps, the most marvellous exercise in fiscal arithmetic which has yet entered into the mind or wit of man, either to talk about, or to put upon paper. He squared Mr. Lloyd George’s Budget for him, leaving out the land taxes and other objectionable schemes - what he con­sidered to be Socialism - by a simple process of attributing to this year’s income the yield from the income tax and indirect taxes which cannot possibly be received until the year after. Thus, when the matter comes to be examined you will find there is no escape from the conclusion that under Lord Avebury’s Free Trade alternative Budget we should be landed on March 31st next year with a deficit of no less than three million sterling. That is not a very hopeful alternative.

Lord Cromer’s Alternative Budget

Then there is Lord Cromer, another very eminent man and also a strong Free Trader whose service to that cause is well known. What has Lord Cromer to say? Lord Cromer says he would get out of the difficulty first of all by re-imposing what I believe to be the most objectionable tax we have had in this country for many years - the sugar duty, which I reduced last year because it presses so heavily, not only upon the food of the people, but upon the raw material of some of our industries. He would re-impose that most objectionable tax, and the balance for naval expenditure he would meet by a most improvident addition to the National Debt. I am afraid that we must admit that our Free Trade friends have broken down in their attempts to provide an alternative Budget.

What Has Become of Tariff Reform?

And what of the other? What has become of Tariff Reform? I scarcely ever hear it mentioned. Only a few months ago those gentlemen were so vocal upon all the platforms of the country, but now their tongues are tied in what looks like a concerted unanimity of silence. The truth is they don’t wish, at this moment it would not be convenient, that the country should realise what is the choice that actually lies before it.

The Choice a Very Simple One

The choice is a very simple one - here you have, in addition to taxes to which I have referred to, the indirect taxation of spirits and tobacco, the income taxes, the death duties, and the tax for the first time imposed upon that great monopoly, the tax on liquor licences. You have, in addition to those, the additional tax on land, the equity, fairness, and justice of which I have, I hope, demonstrated tonight. We know we are directly within the limits of Free Trade, we are imposing no additional burdens on the neces­saries of life. What is the choice the other way? They are very quiet about it, but we know what it is. It means the introduction under the guise of Colonial preference of a tariff upon foreign goods. It means the introduction of taxes upon the simplest necessaries of life, upon your bread and your butter and your cheese, and the ordinary commodities which enter into the everyday consumption of the working classes of this country, and thus an enhancement of price to be cast upon the shoulders of those who are least able to bear the burden. That is the alternative which really lies before the electors of the country.

Why the Budget should be Supported

And I ask you and my fellow countrymen who are Liberals to support this Budget both for what it does and what it does not do, both for the taxes which it imposes and for the tariff which it avoids. I say to them, support it because for the first time it is making some of the richest monopolists in this country contribute their fair share to the common weal; support it because it calls upon all classes, rich and poor alike, to join in making provision for our national necessities; I say support it, last and most of all, because it opens the gate and paves the road to social reform.

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