The People's Budget: Speech Introducing the Finance Bill (1909)

Editorial note

On April 29, 1909, David Lloyd George — then Chancellor of the Exchequer in Asquith's Liberal government — introduced what became known as the People's Budget. It was the most radical fiscal proposal in British history to that point, and its land value provisions drew on explicitly Georgist reasoning. The budget proposed:

• A Land Value Duty of 1/2d in the pound (about 0.2%) on the capital value of undeveloped land
• An Undeveloped Land Duty on land held out of use
• An Increment Value Duty of 20% on the increase in land value whenever land was sold or changed hands

The budget also proposed new valuations of all land in the United Kingdom, separating the value of land from the value of improvements — a necessary precondition for any land value tax.

The House of Lords rejected the budget — an unprecedented constitutional crisis that ultimately led to the Parliament Act 1911. The land valuations proceeded, but the land duties were repealed in 1920 before they had been fully implemented.

Lloyd George's speech contains some of the most stirring rhetoric in British parliamentary history on the subject of land monopoly. He quotes Henry George directly, and his attack on the landed aristocracy — holding millions of acres while children starved in the slums below — is among the most celebrated passages of Edwardian politics.

Public domain status: Parliamentary speech, 1909; David Lloyd George died 1945, but Hansard is Crown copyright for 50 years, and the 1909 speech is now fully public domain. The excerpts below are from public record.

The People's Budget — Selected passages on land value taxation

House of Commons, April 29, 1909

— David Lloyd George, Chancellor of the Exchequer

Opening: the purpose of the budget

This is a War Budget. It is for raising money to wage implacable warfare against poverty and squalidness. I cannot help hoping and believing that before this generation has passed away we shall have advanced a great step towards that good time when poverty, and the wretchedness and human degradation which always follow in its camp, will be as remote to the people of this country as the wolves which once infested its forests.

On land monopoly

Land is a necessity which the vast majority of our people must have, which they cannot create for themselves, which no human being can manufacture, which the Almighty has bestowed upon this country alone, and of the supply of which there is a fixed and unalterable quantity for all time to come.

It is in the nature of land that its value does not depend upon the exertions of the owner. It does not depend upon anything he has done. It is the value which accrues to him from the growth of the community — from the labour of other men, from the expenditure of the public, from improvements made at the public charge. That is the unearned increment.

On the increment value duty

Here is a railway swing bridge which was erected by a railway company at great cost and maintained at great cost, and by means of which they have provided facilities for trade and commerce. The land on both sides of the approach to this bridge, the moment the bridge was constructed, went up in value. Who created that value? Not the landlord. He did nothing. The railway company created it. But because the land went up in value, the landlord claims the benefit.

That is the kind of thing which we seek to tax. We do not seek to tax the value which the man himself has created; we seek only to tax that value which has been created by the community acting as a whole — by its growth, by its enterprise, by its expenditure.

The increment value tax will be levied on the increase of value which accrues to land from the growth of the surrounding community — not from any work done by the landlord, but from the work and investment of the public.

On undeveloped land

In the heart of London there are, within a short distance of one or two of the most crowded and poverty-stricken areas in the metropolis, large tracts of undeveloped land — land that could house thousands of working men — held by individuals at an extravagant figure, waiting for the community to create still more value in it, while the people crowd into the slums.

The owner of the undeveloped land is in the position of a man who holds up a road because he happens to own a piece of the necessary land. He does not improve it. He does not cultivate it. He simply holds it. And he holds it all the more firmly the higher the tax on improvements around it, because the tax falls on improvement, not on holding out land from use.

This is what we propose to end. Land which is held undeveloped, which the owner will not develop and will not sell at a fair price — such land shall be liable to a duty on its capital value, assessed as land only, separate from the buildings and improvements upon it.

The speech at Limehouse (July 30, 1909)

[Note: The following passage is from Lloyd George's speech at a public meeting at Limehouse, London, July 30, 1909 — his most celebrated address on the land question.]

A great landlord owned a little plot of ground. The plot of ground was in a great city. He had done nothing to create the value of that ground. The city had grown up around it; the shops, the streets, the public buildings, all paid for by the rates and taxes of the citizens — these had created the value. And the landlord pocketed the increment.

Who created the increment in the value of the land at Glasgow, which has risen from a rental of £600 a year fifty years ago to £430,000 a year now? Was it the landlord? The landlord has not spent a penny upon the land. The whole of that enormous increase is owing to the growth of the city — to the increase of the population — to the energy and enterprise of the citizens of Glasgow.

They had a meeting in Glasgow — I attended it — a great meeting of Glasgow citizens protesting against a proposal to put a tax upon the value of land as land. Who were they that called the meeting? One was a landlord who had received, out of the labour of his fellow-citizens, an income which had risen from £600 to £430,000 a year. And he was protesting against a tax of a halfpenny in the pound upon the value of his property.

The landlord is a gentleman — I have no quarrel with him in his capacity as a landlord; I have a quarrel with him in his capacity as a tax-dodger. Every other form of wealth has been taxed to support the burdens of the state. Landlords have escaped. The income from land has been untaxed while income from every other source has been taxed. The increment arising from land has been untaxed while every other source of income has paid its contribution.

We propose to put that right.

On the land valuation

Before any of the taxes I have described can be properly levied, there must be a complete valuation of all the land in the United Kingdom. This is a great undertaking; it has never been done. We do not know how much land there is, what it is worth, or how it is held.

We propose to value all land, separating the value of the land itself from the value of the buildings and improvements upon it. This separation has never been made in an official valuation in Great Britain. But it is essential to any rational system of taxation, because it is the land — the gift of nature, the product of no man's labour — that owes its rental value to the community, while the improvements represent the legitimate private property of those who made them.

When the valuation is complete, when we know for the first time what the land of England is, and what it is worth, we shall be in a position to tax it equitably and effectively. That will be a great step forward in social justice — and it will also be a step toward releasing the hold of monopoly upon the earth, and opening the land to the use of those who need it and would make good use of it.

Conclusion

I do not hesitate to say that a slice of the increment is by right the property of the state. Every penny of that increment has been created by the state. It has been created by the inhabitants of the country at large. It is right that the community should have its due share of that value which has been created by the community itself.

I am here to-day to say that the land of this country does not belong to the owners of the land alone. It belongs, in a real sense, to the people who have contributed to its value. And it is the purpose of this Budget to begin to redress the balance — to give back to the community, in the form of public revenue, some part of the value that the community itself has created.

This is what we are proposing. It is not confiscation. It is not, as some have said, robbery. It is justice.

— David Lloyd George, House of Commons, April 29, 1909; and Limehouse, July 30, 1909