§ WAYS AND MEANS considered in Committee.
§ (In the Committee.)
§ THE CHANCELLOR OF THE EXCHEQUER
Mr. Raikes, before I begin to lay before the Committee the Statement which I have to present, I would beg permission to say a very few words with regard to the manner in which I introduced the Budget of last year. It will be in the recollection of the Committee that I stated last year the amount of the estimated Expenditure, and the amount of the estimated Revenue; and taking the amount of the estimated Revenue according to the careful calculations that had been made by the Heads of the 1101 different Revenue Departments, I brought the two estimates of Revenue and Expenditure to within about £400,000 one of the other—that is to say, I reckoned I should have a surplus of a little more than £400,000. I proposed, in my speech, to take off some £60,000 for remissions of taxation, reducing the surplus to about £340,000 or £350,000, and I proposed, also, to make a provision for the Debt, which involved a further deduction, bringing down the surplus to about £100,000. At the same time, I stated to the Committee that I had not included in the Estimates which I proposed to them any Supplementary Estimates, and that I had not even made provision for one large Supplementary Estimate that I knew would be required—namely, on the Irish Education Vote. But I said, at the same time, that, although by the course I was pursuing I was leaving myself for the moment a somewhat narrow margin, or even with the prospect of a deficiency, I was confident that the Estimates which I submitted were so moderately framed, and I also felt confident that the prospects of the year justified me in anticipating so much larger a revenue than was estimated, that I was very willing to place the matter before the Committee on those terms. I was willing to make no special provision for Supplementary Estimates, but to trust to the growth of the Revenue in order to meet them, not anticipating how I should apportion that growth as between Customs and Excise, because I felt that there was great uncertainty as to the heads under which growth might accrue, but trusting confidently that in course of the year the growth would be found sufficient, or more than sufficient, to cover the charges I should have to meet. Well, the Committee accepted that view; but it was subsequently criticized and commented upon, not only by right hon. Gentlemen opposite, but by various other hon. Gentlemen, who considered that I was taking a novel and rather adventurous course. Hon. Gentlemen will see what the result of the year has been. They will see that, in point of fact, the anticipations I then made have been justified by the result. They will see that the Estimates submitted to the Committee have been very largely exceeded by the actual produce of the Revenue, and they will also observe 1102 that while I was justified, as the result showed, in anticipating a large increase of Revenue, I was also justified in the caution I displayed in not attempting to apportion it under the two great items of Customs and Excise, for, whereas, the revenue from Customs has largely exceeded my estimate, the revenue from Excise has fallen short of it; and I felt at the time, and expressed at the time my belief, that it was not safe for a Chancellor of the Exchequer to endeavour to say whether he would rely upon increase from one particular branch of the Revenue or another. Therefore, if I were disposed to justify my conduct last year by the result, I apprehend that I should have a complete justification. But I must frankly say this—that I should be exceedingly sorry to allow myself in such a case as this to appeal only to the result as a justification for the course I then pursued. For it is perfectly obvious that a Chancellor of the Exchequer might in any case do the same thing; he might ask the Committee to reckon on a surplus the grounds of which he was not prepared to explain, and if, in the course of events, that surplus was realized, he might come forward and say—"I was right." I consider that that in itself would be a most unjustifiable course for any Finance Minister to take, and it is one which I should never be prepared either to adopt or to justify. I conceive that the only grounds on which my action last year was justified were that I had before me sufficient information to enable me to form a very sound and certain forecast that there would be an increase of Revenue; and coming forward on my own responsibility, supported as I was by the authority of my financial advisers, I was just as much justified in saying to the Committee—"This is likely to be the Revenue of the whole year," as "This will be the Revenue of the Customs and that of the Excise." And, therefore, I am prepared to say that in any other year I should be ready to follow the same course as last year, provided the circumstances were similar, and justified it.
Having said so much in introduction, I would now call attention to my estimate of the Revenue for 1875–6. My estimate of the Revenue was £75,625,000, but it proved to be £77,131,693, showing an excess of Revenue over Estimate 1103 of £1,506,693. The Expenditure which I estimated in my Budget, after making allowance for the increased charge for the Debt, at £75,522,000, was afterwards increased in the course of the Session by Supplementary Estimates which made a total—the amount voted in the Appropriation Act—of £77,002,896. The Expenditure proved to be £76,421,773, being less than the sum voted in the Appropriation Act by £581,123, but greater than my Budget Estimate by £899,773, or nearly £900,000, and the result is, taking the Revenue at £77,131,693 and the Expenditure at £76,421,773, you get a surplus of £709,920, or nearly £710,000, and that is the net result of the year.
I will now go more into details. The estimated revenue from Customs and Excise was £19,500,000; but the actual result is £20,020,000, and the excess of Customs over the estimate therefore is £520,000. But, in point of fact, I must inform the Committee that the excess of the Customs revenue was considerably larger than that, for there are payments which have to be made between the two great Departments of Inland Revenue and Customs, and in the last financial year a change was introduced as to the time when those payments were made, in consequence of which the Customs paid £140,000 over to the Excise which otherwise the Excise would not have received. The Committee must therefore remember, when we compare the receipts of the year, that the Customs are £140,000 worse and the Excise £140,000 better than they would otherwise have been, and that consequently there was really an increase on the Customs of £660,000. The estimate of Excise revenue was £27,740,000; the actual result was £27,626,000, being a deficiency of £114,000. And when you add to that deficiency the £140,000 which I have mentioned, the total deficiency of the Excise below the estimate was £254,000. Taking these two Departments together, as you ought to do, I find that the excess of the Customs and. Excise together over my estimates was £406,000. The principal item of increase in the Excise, I am sorry to say, is the Spirit revenue, which shows an increase of £610,000 over last year. There is an increase in the Tea duty of £133,000; on Tobacco of £320,000; the increase on Malt and Sugar for brewing is 1104 £70,000, whilst on Wines there is a decrease of £40,000. I may here mention that in some respects the last quarter of the year has been unsatisfactory in comparison with the previous quarter. In the quarter ended the 31st of March the revenue from Excise, compared with last year, fell off £170,000. The payments into the Exchequer show a greater falling-off, because of the Inland Revenue paying last year into the Exchequer more than they received. Malt in the quarter fell off £164,000; Railways, £58,000; Sugar used in brewing, £5,000—in all £227,000. Excise Spirits, however, increased £55,000, so that the net falling-off is £172,000. The corresponding quarter of last year showed an increase of over £300,000. In Stamps the increase on the year was £412,000. That on the quarter was £82,000—that is to say, the rate on the year was maintained. In Customs the increase on the year was £850,000; that of the last quarter was £208,000. Although the quarter compares favourably with the March quarter of last year, it ought to have compared more favourably, because it is to be remembered that the March quarter last year had a Good Friday, a Bank Holiday, and no 29th of February; therefore, the March quarter of this year, which escaped the dies non and had the 29th of February, ought to show a rebounding revenue; in fact, however, the rate of increase had ceased or retrograded. There are, therefore, indications that are not altogether satisfactory in the condition of the revenue of the last quarter. Turning to the other heads of revenue, Stamps, according to my estimate, were taken at £10,600,000; they actually produced £11,002,000, or £402,000 more than the estimate, and about £460,000 more than last year. The Land Tax and House Duty I estimated at £2,450,000; they produced £2,496,000, being £46,000 more than the estimate. The Property and Income Tax I estimated to produce £3,900,000; they produced £4,109,000, being £209,000 more than the estimate, and only £197,000 less than last year, in spite of the reduction of the Income Tax. The Post Office was estimated at £5,750,000; it produced £5,950,000, being £200,000 more than the estimate. The Telegraph Service was estimated at £1,200,000; it produced £1,245,000, being £45,000 more than the estimate. Crown Lands 1105 were estimated at £385,000; they produced £395,000, being £10,000 more than the estimate. And Miscellaneous, estimated at £4,100,000, produced £4,288,693, being £188,693 more than the estimate. The whole Revenue for the year 1875–6, as I have said, I estimated at £75,625,000; the actual Revenue was £77,131,693, or £1,620,693 more than the estimate, or, deducting the decrease on the Excise estimate of £114,000, £1,506,693,being £2,209,000 more than the produce of last year.
Now, Sir, I stated a few minutes ago that at the time I brought in the Budget of last year I had foreseen that there would be Supplementary Estimates. There always are Supplementary Estimates, and under our present system there always must be Supplementary Estimates, because we have adopted the very proper and business-like proceeding of voting our Estimates as early as we can, and of carrying nothing over from the preceding year. Therefore, as in the course of the year circumstances in one Department or another require it, Supplementary Estimates are necessary. The only way in which that could be avoided would be by taking in the beginning of the year larger Estimates which would cover the Supplementary Estimates anticipated, and to do that, the Committee will see, would not be a very business-like, and would perhaps be rather an extravagant, arrangement. But while, on the one hand, there always are and will be Supplementary Estimates, there always are, and must be savings, and in regard to them I have heard it remarked in public that the savings promised last year have gone the way of all savings. That, of course, is in one sense true, for they have gone into the Exchequer. But if it is meant that there were no savings last year it is untrue, because the savings last year amounted to no less than £580,000. But there were Supplementary Estimates, and they were very considerably in excess of anything I had contemplated at the time I brought in the Budget last year. For instance, the Irish Education Estimate, which I had expected would amount to £120,000, was raised to £185,000 by the grant to teachers. Then there was the grant for defraying the expenses of the visit of the Prince of Wales to India—£60,000 for presents, and £48,000 for the expe- 1106 dition. Then there was a very large sum—no less than £60,000—to make up the Police grant. Besides this, there was—what I had no reason to anticipate—the Navy excess of £238,000, which my right hon. Friend the First Lord of the Admiralty explained in his Statement the other evening, and £500,000 recently voted for settling the account long out-standing between the War Office and the India Office. The consequence has been that the Supplementary Estimates amount to something like £1,500,000, and, taking off the savings, an excess of Expenditure amounting to £927,000 is left.
I shall now run through the total Expenditure of last year under the different heads. The Debt was estimated at £27,470,000; the actual amount charged was £27,444,000. The Consolidated Fund Charges were estimated at £1,590,000, and they only amounted to £1,557,000. The reason why the charges on the Consolidated Fund vary is this—they vary according to the demands from the Bankruptcy Court. We are bound to keep a certain balance. The Army was estimated to take £14,678,000; it took £14,577,000, being a saving of nearly £100,000. The Purchase Vote took £501,638, being a saving on the estimate of £134,000. The Navy, which was taken at £10,825,194, took £11,063,000, including the Supplementary Estimate. The Civil Services, which were estimated at £12,656,000, took £13,119,000. The Customs and Inland Revenue took exactly what they were estimated at—£2,694,393. The Post Office, which was taken at £3,036,000, only came to £2,982,000; and. the Telegraph Service, which was estimated at £1,098,000, came to £1,022,000, so that I am able to congratulate my noble Friend the Postmaster General on having kept his expenditure within the estimate, and having brought in a revenue considerably above the estimate. The Telegraph Service, I hope, has now turned the corner, and I am quite sure the Committee will be glad to gain that information. The Packet Service was taken at £878,000; it cost £884,054. There are two other items:—There is the £500,000 for adjusting the account between the War Office and the India Office; and there is also a sum of about £76,000 in respect of the cost of the 1107 Suez Canal Shares, which are also brought into the Expenditure of last year. The sum of £4,000,000 was raised by loan, but the balance of £76,000 has been paid out of the ordinary Revenue of the year.
Well, now, having gone through the heads of the items of Expenditure, I wish to say a word or two upon them, and especially in regard to the first. The Budget Estimate of Debt was £27,470,000. The actual amount was only £27,444,000. In point of fact, the amount required for interest is something less than was calculated, but the Committee will like to know what the effect of the new Sinking Fund has been. It will be remembered that I estimated the surplus at £255,000; in point of fact, it was raised to £280,000. That has been the amount available and applicable, and of this amount there has been handed over to the National Debt Commissioners £250,000 to buy up and cancel Stock created for the Telegraphs; and the rest, above £30,000, will be applicable for cancelling Stock in due course. We were taunted last year with having devised what would be altogether a futile fund. It was said—"The true way to provide for reduction of Debt is by the surplus of the year, and it is much better to allow your surplus to be applied in the old way." But what I have to point out is that under the old system nothing would have gone to the reduction of the Debt, because, although there is the surplus of £700,000 Revenue over ordinary Expenditure, yet, inasmuch as £4,000,000 has been paid for the purchase of the Suez Canal Shares out of the Consolidated Fund, there is, in fact, no surplus at all applicable under the old system to the redemption of Debt. The £4,000,000 is, indeed, provided for by loan, and the annuity of £200,000 to be paid by the Khedive is set against that for interest; but, to keep our proceedings regular, it is necessary that we should assume that burden on ourselves—it is necessary that we should make the payment fall in the regular course on the Consolidated Fund. The question will be asked, what becomes of the £700,000? It goes to strengthen the balances in the Exchequer. We do intend to make a certain provision out of it towards the reduction of the Debt, in this form; we have applied £200,000 out of the balances of 1108 the Exchequer to the payment for local barracks. My right hon. Friend opposite (Mr. Childers) is aware that the charge for local barracks may be, and usually is, met by the creation of fresh Debt. It is legal to provide for it out of the balances in the Exchequer, and, as there is a sum of £200,000, it is better to use it than add to the Debt.
I now wish to call attention to the mode in which the charge for the Debt will be stated in the present Budget and in future Budgets. Formerly, it has been the habit to charge the item of interest and that for the management of the Debt in a single sum; we now propose to charge these items under three heads. They will stand in this way in the Estimates for 1876–7. For our Debt proper there will be the interest of £27,700,000, £300,000 more than last year, in accordance with the Act we have passed; secondly, there will be for temporary Debt £150,000; and thirdly, for Debt incurred for local loans, £160,000. What is the temporary Debt? Temporary Debt is the £150,000 which we shall have to pay as interest upon the £4,000,000 which is to be created as a new Debt for a limited number of years on account of the purchase of the Suez Canal Shares. We have to provide that under a charge for Debt. A sum of corresponding amount will be received in the Miscellaneous Revenue from the Khedive of Egypt; but we think it best to keep the matter separate and manifestly before the eyes of Parliament. We desire to keep this clearly outside the charge for the present Debt; and although we reckon with great confidence upon the continuous and punctual payment of the revenue which the Khedive of Egypt has bound himself to pay us, we include that as one of the receipts of Miscellaneous Revenue, and we make our calculations to provide for the payment of interest and sinking fund on the £4,000,000. The amount that will have to be paid this present year will be £150,000, and the amount the Khedive will have to pay in the course of the year will be £200,000, of which, however, we shall not receive above £160,000, the balance going to the Messrs. Rothschild. We therefore have an amount which balances that temporary Debt, but, as I said, we think it very important to keep this temporary Debt outside the provision 1109 for the permanent Debt; and I am anxious to impress upon the Committee what has been the character and the change in the progress of our Debt arrangements of late years.
With regard to the permanent Debt of the country, we have for a great number of years borne the charge for interest, and from time to time have made arrangements, either by way of the operation of the old Sinking Fund or by the way of Terminable Annuities, for the reduction of that Debt. Beyond these provisions for the payment of the Debt charge, it has until lately been the general practice of Parliament to pay all the expenses of the year out of the Supplies of the year; but of late years a system has made its way into notice, and has been adopted in several cases, of not providing for certain services out of the Supplies of a single year, but of spreading the charge for them over a number of years, and of making provision for some great work by borrowing money and repaying it by the creation of Terminable Annuities. The most notable case in which this was done was in making provision for the expense of the Fortifications. I remember at the time it was proposed that I, being younger and also in a less responsible position than I am in now, protested against the principle being introduced; I protested against the principle of borrowing a large sum for this purpose and concealing the payment, as it were, from Parliament by making it a charge on the Debt. In that protest I pushed my arguments perhaps a little too far, and further than they would bear; but I believe substantially I was right in the view I took; and that it would be a mischievous practice, if we were to allow ourselves to fall into it, of providing for any expense which it was inconvenient to meet out of the Supplies of the year by raising a temporary loan, and practically concealing the amount of the charge from the eyes of Parliament and of the public by mixing it up with the ordinary charge for the permanent Debt. I think it is important in all these matters, and especially when they become large, to have a clear and distinct system of finance, and that we should lay before Parliament our accounts and balance sheets, our estimates and results, in a form which makes it perfectly competent for all who 1110 look at them to see how we are spending money and where it is going. I do not go so far as to say that the raising of money for important works, such as fortifications and local barracks, by raising the sum which is to be paid off within a limited number of years is an unsound principle; I think it is even a sound principle and a good principle; I think it would be absurd that, for a work spread over a number of years and which would be of great benefit to our successors as well as ourselves, we should in a single year make an enormous addition to our taxation, and then in the next year have to take it off, for the purpose of buying a large piece of valuable land or for the construction of some great work which required to be immediately provided. Therefore I do not object to the principle of raising a sum of money in that way. What I think you should do is this—For the services that ought to come, say, upon the Army Vote, or upon the Office of Works Vote, or any other Vote, it would be your best principle to borrow the money, to assess the charge, and, having done so, to spread that charge over a certain number of years by providing for it by Votes in the Estimates to which it properly belongs. For instance, in the case of the Fortifications, instead of providing for the annual charge as a charge upon Debt, you would provide the sum required by a Vote on the Army Estimates; and the cost of purchasing land for some great public works you would charge to the Works Department. But in any case what I desire is that you should not allow—now that we have introduced and established this principle of defining the sum which is to be applied to the payment of interest and reduction of Debt—I hope we shall not allow the principle to be infringed by what would be a most dangerous practice—the raising of sums for particular services, and allowing the charge of them to fall upon the charge for the Debt. And, therefore, with regard to the Vote for the purchase of the Suez Canal Shares, although, in one sense, we hope the receipts will balance the outlay, as we have estimated, we treat it as a debt, and we keep it outside the £27,700,000.
Then there is the third item, and that is the money which it is intended to provide for public local loans. And here I 1111 am anxious to call the serious attention of the Committee to the progress of this expenditure. Some years ago there was a system under which the demands which were made for assistance from the public funds were limited to the cases in which there were works to be undertaken in which it was desirable to raise money on good security, but under circumstances which made it difficult to borrow in the open market, and application was made to the Public Works Loan Commissioners for the amount required. They had a very limited sum at their disposal, and according to the regulations in force they could only lend that money at a comparatively high rate of interest—I think, 5 per cent. There were, by degrees, exceptions introduced; and first of all came the harbours of refuge, and then one thing and then another; until by degrees, as Parliament was anxious to encourage localities to incur expenditure for purposes which seemed to be of national importance, clauses were included in Acts of Parliament, passed from time to time, which although of the very simplest appearance, yet had the effect of giving one party and another party, for this purpose and the other purpose, a right to come to the Public Works Loan Commissioners and say—"You must, in compliance with the wishes and directions of Parliament, advance us money at the easy rate of 3½ per cent." My right hon. Friend the Member for the City of London (Mr. Hubbard) and the hon. Member for Peterborough (Mr. Hankey), and other hon. Gentlemen who have served so long and with such great advantage to the public upon that body, began to find themselves placed in a position of great embarrassment. They found, on the one hand, that they had a too limited sum at their disposal, and they were, on the other hand, oppressed by these applications, which it was difficult for them to refuse without seeming to fly in the face of the intentions of Parliament. By degrees matters became considerably strained as between the different Departments concerned. Naturally, the Local Government Board was anxious in every way to promote sanitary improvement, and to urge the locality to undertake works that were of importance; and naturally, the locality would say—"Having undertaken to do this work at the instance of the Government, let us raise money, 1112 and ask the Local Government Board to support us in our application for its advance on easy terms." The Loan Commissioners would feel themselves in a difficulty under such demands, and the Exchequer was placed in a difficulty; because it is the duty of the Treasury to find the money so called for, and it often happened that large sums were called for which we were not at all prepared to lend. Of late years the pressure for social improvements—and social improvements which cost a great deal of money—has induced a very large extension of this principle of borrowing money; and in order to meet the difficulties to which we found ourselves exposed, we last year introduced and passed a Bill which was intended to regulate the system of loans. The principles of that Bill I will take the liberty to briefly mention. In the first place, the Public Works Loan Acts are amended and consolidated; in the second place, Parliament is to be informed each year of the progress of loan transactions; thirdly, Parliament will provide each year the sum required for loans, and old running loans which have hitherto escaped the attention of Parliament are now condemned, and will be put an end to. Fourthly, Parliament will be empowered yearly to borrow what is necessary to enable them to make loans, and no loan is to be remitted or compounded without the authority of Parliament. This was one of the great evils—that pressure was constantly put upon the Treasury to remit or compound a loan which Parliament had granted, but about which it would hear nothing more. In the next place, the estimates are to be sent in by the 31st of December from all bodies and corporations intending to apply for loans in the succeeding financial year. Next, the interest and the principal of the loans have been separated, and this is a very important point to which I must again direct the attention of the Committee. In former times the money that was lent out was repaid, and repaid with interest, but the interest was not separated from the principal that was repaid, and therefore that interest came into the hands of the Exchequer without Parliament knowing anything about it, or having its attention called to it. There was thus provided a fund, which was constantly accumulating in the Exchequer; it was properly Revenue, but it remained 1113 to be made use of by any one who wished to deal with it as the Chancellor of the Exchequer might deal with the Exchequer balances. In consequence of that, it would sometimes happen that the Exchequer was so full of money earned in this way, that the Chancellor of the Exchequer would justify himself to the House—I have known it done by high authority—in estimating for a deficiency; "because," he would say, "my balances are so good, that I can very well afford to spare a large sum out of them." Well, that is a system which is now put an end to, because the interest is now separated from the principal. The interest is now put, as it ought to be, to the Revenue, and it amounts to a sum of £500,000 or £600,000 at the present time, and as it goes on, it will become an increasingly important source of Revenue. Besides that, we have now the means of ascertaining what the loan assets of the country are. We have obtained fairly exhaustive Returns of the loan transactions from the commencement of the system in 1792 to the present time, and we are now preparing the amount of irrecoverable balances after a minute inquiry into the circumstances of each case. Lastly, the Controller and Auditor General now has these matters submitted to him, and looks into these accounts. In addition to these improvements, which I shall have to speak of more fully on another occasion, when I bring forward, as I hope to do after Easter, a Bill authorizing the raising all the loans for the purposes of next year, I shall then be able to show more fully what the probable working of the system is. Without going more into detail, therefore, at the present time, I shall just say this—that the effect of what has been done has called forth a most luxuriant crop of claimants for assistance of this kind. I am told that the applications to the Public Works Loan Commissioners do not fall far short of £10,000,000, and that there are, besides, other applications which will be made to the Public Works by the persons who have charge of this matter in Ireland, so that in all probability these demands will not fall short of £11,000,000. That only indicates the way in which persons not knowing exactly what they may want will be sure to ask for enough. I do not anticipate that anything like that amount will be required, and I do not 1114 make provision for anything of the sort in the Budget, nor indeed would it be possible to ask Parliament to authorize any loan for so very large an amount as that. I have no doubt, however, it will be something like £3,000,000 which will have to be provided. I do not pledge myself to the amount, because it will have to be discussed on the introduction of the Bill, but I mention it now in order to account for the item which I spoke of—of £160,000 as the charge for the interest on local loans. The principle of the matter is one which is really outside the finances of the year, yet it is one which always ought to be brought before Parliament, and which Parliament ought to be aware of when it is dealing with its finance as it does in the Budget. The principle upon which we ought to go in these matters is to charge everything we can, explaining, of course, how much of it is really a charge for the year upon the transactions of the year, and how much stands apart and is otherwise regarded. Therefore, I shall make this provision distinctly and separately for the interest of the money required for local loans.
As I am now speaking of these matters I must refer to another topic, which is the state of the balances in the Exchequer. The balances in the Exchequer are at this moment, I think, literally £5,119,000; but I must take them at a higher figure, because by Friday next we shall receive £700,000, which properly belongs to the Exchequer in respect of advances which have been made by the National Debt Commissioners to meet the payment for the Suez Canal Shares. It was the National Debt Commissioners who advanced the £4,000,000, which advances were to be made at such times as might be most convenient for them. They were receiving the money in part out of the Irish Church Fund, which was coming to them at different dates, and the payment for advances made to the Exchequer were to be regulated according to the dates most convenient to them. It was found that the last payments were most conveniently made on the 7th April, and in the Act passed providing for the sum, provision was made for allowing the payment to take place on the 7th April, and therefore I treated the Exchequer balance as £5,819,000. That is a small amount. When I first came to the office I now hold, two 1115 years ago, the balances in the Exchequer were £7,442,000. Since then the transactions have been as follows:—We have, on the one hand, received a surplus revenue in two years of £1,303,000; we have received on different advances repaid, £163,000; we have borrowed £850,000 for fortifications and local barracks, and £3,200,000 for the purpose of making advances to public borrowers under the Public Works Loan Commissioners. We have also borrowed for the purchase of the Suez Canal Shares £4,000,000, making £9,516,000 received in the course of two years. Then, on the other side, what has been the expenditure? We have bought the Suez Canal Shares—£4,000,000; we have advanced in excess of the repayments £4,725,000; we have expended on fortifications and local barracks £1,050,000;we have redeemed Debt by the old Sinking Fund to the amount of £1,087,000, and paid off Exchequer bills £278,000, making altogether £11,140,000. The Exchequer balances have therefore been reduced by £1,623,000—being now £5,819,000, and, as I have said, that is not a large balance to have in the Exchequer. Its smallness is due to the excess of advances we have been obliged to make for the purpose of the Public Works Loans, but some of that drain on the Exchequer is now closed by the new system we have adopted. Upon the whole, I am not dissatisfied with the amount of the balance, provided it does not go lower. There are, in fact, as the Committee is aware, advantages as well as disadvantages in a small balance. As far as we are concerned, it is not our object to keep a large sum of money in the Bank which yields none or at most a low rate of interest. On the other hand, it is undesirable that we should run the balances so low that in the event of a sudden call being made we should have to borrow, perhaps at a time when it was inconvenient. There are two opposite theories held on this subject. There are those who say you should keep your balance as low as possible and borrow freely whenever you require to do so; and there are others who say you must keep your balance at such a point that in ordinary years you will not have to borrow at all. It has been estimated in ordinary years that if you could keep a balance of £8,000,000 in the Exchequer at the present time 1116 of the year, say, the 31st of March, it would be unnecessary to borrow at all in the course of the year; but if you were to attempt to raise the balances to £8,000,000 you would find you would have to pay a considerable amount on account of the public, for you would be charged interest on what you borrowed. I have here a Paper drawn up by one of my ablest assistants at the Treasury, Mr. Welby, whose name ought always to be mentioned with honour in this House, and I will quote from it a few figures. Mr. Welby says—The old Public Works Loans Act did not enable the Chancellor of the Exchequer to borrow the sums which he had lent to local bodies. The result was, of course, that his balance was diminished. Suppose that he had obtained a special borrowing power to restore the balance to £8,000,000, he must have borrowed £560,000 in 1874–5, £1,180,000 in 1875–6, and he would have to borrow about £440,000 in 1876–7. These loans would probably have been in Exchequer Bonds at 3½ per cent interest, and the charge would have been £19,600 in 1874–5,£60,900 in 1875–6, and £76,300 in 1876–7—total, £156,800. In fact, the Government paid to the Bank as interest on deficiency-advances in 1874–5, £6,927; in 1875–6, £8,946; and in 1876–7 we expect to pay £10,500, or something in excess of £26,000; making a difference in favour of the public of about £130,000.Consequently it must be obvious to the Committee that it would be an extravagant arrangement to raise our balances to too large an amount. But, obviously, that is a principle which ought not to be pushed too far, and it is clear that we have brought the balances of the Exchequer to a point below which it would be wrong to sink them.
Speaking of these loans, it is a point worthy the consideration of the Committee that we have £20,000,000 of public money lent on these works, exclusive of the £4,000,000 advanced for the purchase of the Suez Canal Shares. These advances to public bodies in England have been made upon admirable security and after the most careful examination by the Public Works Loan Commissioners, and there are, as I have said, about £20,000,000 of these assets. That is an important item, and it is an amount that is increasing. I draw attention to these things not only to show the exact position of our Exchequer and of our balance-sheet, but because I wish to impress upon the Committee that all this new system which has been growing 1117 up, makes it all the more necessary for us to be careful to maintain the system for keeping down and reducing our own National Debt. We cannot shut our eyes to the introduction of the system to which the House referred—that—namely, of raising money on easier terms to meet great works. We cannot shut our eyes to the fact that we have become responsible, to a certain extent, for this great mass of loan which is now standing to the credit of the Treasury, but which nevertheless represents a sum of money which, if there were any difficulties or failures, the nation would be responsible for. Therefore, it is peculiarly necessary that, in days like these, we should avoid anything which might even seem to tamper with the credit of the nation, and it is most important, if we wish to keep the nation in the position which she occupies in the face of the world, and for the sake of which we are ready to spend large amounts on our Military and Naval Services, and to incur considerable expenditure for the promotion of the health and comfort of the people—I say it is absolutely necessary, if we are not to sacrifice that great and Imperial position to which we should look, to maintain our national credit on a sound and solid basis. To that end I believe the step taken deliberately last year in forming and expanding a system for the gradual and moderate reduction of our National Debt is a greater source of strength to us than even the addition of regiments.
Well, Sir, I will now proceed to give the Committee the details of the Expenditure and anticipated Revenue for next year. I have already mentioned that the charge for Debt for next year will come to £28,010,000; the Consolidated Fund charges are £1,590,000; the Army Expenditure, £15,282,000; Army Purchase, £464,000, which is less than was taken last year or the year before. It has been estimated after a most painstaking investigation, but it is impossible to say with absolute confidence what the actual sum will be that will be taken out of the Vote, as it depends upon the claims of those officers who may be desirous of retiring. I propose, too, to take a sum of £170,000 for charges that may have to be met during the year through the War Office on behalf of the Indian Government. 1118 Those charges, as the Committee are aware, are, in fact, matters of account between the Indian Office and officers of the Indian Army, but the settlement goes through the hands of the Imperial Government. The item might be kept entirely out of our accounts, and the charges be met out of a reserve fund; but I think it is a more businesslike transaction to deal with it in the way we propose to deal with it, by placing on the one side of the account the amount we are liable for, and on the other the corresponding amount we shall receive. Well, the Navy will cost £11,289,000, the Civil Service £13,309,000, the Customs £2,730,000, and the Post Office Service £3,120,000. There is also a Bill passing through Parliament for the erection of a new Post Office at Manchester, which is urgently required, and which will involve an expenditure of about £100,000. The Packet Service I estimate at £852,000, and the Telegraph Service at £1,128,000, making a total expenditure for the year 1876–7 of £78,044,0000. That is the Estimate we make as compared with the Estimate I submitted last year in my Budget Statement of, in round numbers, £75,388,000, showing an increase of no less than £2,656,000, and the increase this year upon the actual expenditure of last year is £1,622,000. Now, Sir, how does this increase arise? I will not trouble the Committee with minute details, but will give the figures roughly. The Army Estimates show an increase of £604,000, the Navy of £504,000, the Civil Service of £533,000, the Revenue Departments of £144,000, the Manchester Post Office £100,000, and the Permanent charge of Debt £300,000. Now, with regard to this additional charge, I will not enter into the questions involved in the great items of Army and Navy expenditure. They have been already explained to the House by my two right hon. Friends, and I will not attempt to open up the discussion which will arise upon them. I will only say that, as Chancellor of the Exchequer, I have looked very jealously upon those proposals. As a Member of the Government, however, I have had to consider them in a somewhat different light, and I have undoubtedly felt this—that if you are to have a military Force kept up it ought to be one worthy of the country. But inasmuch as, from the 1119 circumstances of the population, it cannot be a numerous Force, it ought to be well appointed and well equipped; and, inasmuch as it cannot be recruited by conscription, but by voluntary service, it must naturally be attended with a rate of remuneration which will induce men to join it. Therefore, without going into details which may be more properly left to others, I have joined with my Colleagues in assenting to the proposals which have been made, and which, as far as we have gone, have been accepted by this House. But if upon this occasion I may look at the matter more narrowly from the stand-point of Chancellor of the Exchequer, I must remark that those two Services have laid a very heavy burden upon the country. In my first Budget, two years ago, I took the Army and Naval expenditure at £24,815,000. In the present year I estimate it at £26,571,000, showing an increase on the two Services of £1,756,000. So much for those two great cardinal heads of increase. I have already alluded to the increase of the charge for Debt, and as there is not a very large increase in the Revenue Departments, I will say nothing about them. If our Departments are to earn more money, especially the Post Office and Telegraph Services, it is obvious that you will have to expend more to earn it. We are endeavouring to keep down the expenditure on those Services, and, I hope, with success. I trust that every year will show that, as compared with the expenditure they involve, the Service charges have become more and more moderate. But I will now go to the Civil Service, for the expenditure on which I am, perhaps, more especially responsible. We are constantly told that there is a good deal of extravagance or want of sufficient control in the expenditure on the Civil Service, but I will ask the Committee to allow me to take a broader view of the matter than merely to compare the present Estimates with the Expenditure of last year. In this year's Expenditure there are those Supplementary Estimates to which I referred. What I wish to do is to compare the estimated expenditure of the Civil Service of this year, not with last year's, but with that of the year before we came into office, because when we are told that we are a very extravagant Government—extravagance is a relative 1120 and comparative quality—I want to know what hon. Members mean when they say we are extravagant? Do they mean that we spend more than ought to be spent, or that we spend more than our Predecessors spent? Generally speaking, the criticisms that one sees are to the effect that we do not hold that tight hand upon the expenditure which our Predecessors did, and consequently we are blamed for being an extravagant and uneconomical Government. Well, although it may be admitted that the expenditure is a good deal higher now than it was two years ago, we cannot admit ourselves to be chargeable with extravagance or want of economy as compared with our Predecessors, because our Estimates are larger than theirs. There are many circumstances which render thatnecessary—the growth of population, and other circumstances, and the new policy which is initiated in one and another direction, thus leading to the continued demands for fresh services involving fresh expenditure. For instance, the Merchant Shipping Bill, which is now under the consideration of the House, is one which, if passed, must increase the charge upon the general funds of the country, by reason that a staff of officials will be necessary to carry out the provisions of the measure. I again admit that there has been an increase in the amount of the Civil Service Estimates in late years, but I should like to point out to the Committee the reasons which have caused the increase in question. In the year 1873–4 the expenditure under the Civil Service Estimates was set down at £11,067,000, while in the present year it has gone up to £13,308,000, or an increase of £2,241,000; but let me ask, what is the reason for that increase? ["Hear, hear!"] Well, I supposed that would be cheered. It is more than accounted for by two items—the increase in the grants in aid of Local Taxation, amounting to £1,400,000, and the Education Estimates, amounting to £910,000, or more than £2,310,000in all. Therefore, as the total expenditure is only increased by £2,240,000, it shows that, setting those two points aside, these figures not only account for the increased Expenditure, but if hon. Members will compare them with the Estimates presented to the House by our Predeces- 1121 sors, they will find that with an increasing population we are actually spending less money by £60,000 than was expended by the previous Government. I was going to say we were attacked by what savours sometimes of a word which it is now forbidden to use in this House—I was going to say "Party"—but, without anticipating any such objection, I do not think it would be at all desirable that we should bandy about Party quarrels on such a subject as this. It is more important that we should show the country, if we are able to do so, how and where it is that this imaginary increase in the expenditure of the country is really to be found, and therefore I desire to extend the comparison which I have made between the Expenditure of the coming year and that of the last year of our Predecessors, and with the permission of the Committee to go back 20 years; and I would ask to be allowed to compare the general expenditure for Civil Services in 1857–8 as compared with the year 1876–7. The total expenditure on the Civil Service in 1857–8 was £8,167,000 as against £10,394,000 in 1873–4, and £13,095,780 in the past year. Of this amount the grant for Educational purposes has risen from £790,000 to £2,758,000, and the sum of money paid in aid of Local Taxation has risen from £1,430,000 to £4,150,000. Therefore, without disputing small matters of detail, the Committee may take this as an ascertained fact, that the great increase in the last 20 years in the Civil Service expenditure is to be attributed to these two things—the increase of the charge of Education, which I believe everybody welcomes, and to Local Taxation, which both our enemies and friends tell us is a mere bagatelle.
I have now to turn from the Expenditure of the year to the other interesting branch of my subject—namely, the estimated Revenue. The Estimates of Revenue have been prepared on the same principles as last year, and with the same care, caution, and due regard to the circumstances of the time—prepared, too, under a consciousness that the circumstances of the country are not exceedingly flourishing, and that trade prospects are not as bright as could be wished, and more especially with reference to all the circumstances which particularly affect the consumption of 1122 those articles from which a large part of our National Revenue is derived. The Estimates have been prepared also with reference to the peculiar minute considerations, and to the fact that we have a day less than last year, which was Leap Year, and in which there was no Good Friday or Bank Holiday. Having taken all these matters into consideration, these are the figures which I have to submit to the Committee. The Customs we take at £20,250,000 as against £20,020,000; the Excise, £27,650,000, as against £27,626,000 last year; Stamps, £11,000,000, which is about the same as last year; Land Tax and House Duty, £2,500,000, which is just about the same as last year; for Income Tax we take £4,100,000, which is a fraction less than what it produced last year; the Post Office we take at £5,950,000, which is the same as last year; for the Telegraphs we take £1,325,000, which is in advance of last year, when it was £1,245,000; for the Crown Lands, we take £395,000, the same as last year; and for Miscellaneous we take £4,100,000, as against £4,288,693 last year. That makes the total estimated Revenue £77,270,000, against an estimated Expenditure of £78,044,000, showing a deficit of £774,000.
Before saying a word on the manner in which we are to meet the deficit, I wish to mention a matter which, though small in itself, is not without its interest, and which has caused a great deal of friction, although it involves only a trifling amount of Revenue. There have been complaints with regard to the tax levied on boys employed as servants for an hour or two in a day, and it has been pointed out that this bears very hardly upon many persons of limited means, and also upon the boys themselves. It is said that it operates to deter boys from going to school, and that we ought to exempt school-boys from the tax. I am not able to make a distinction between school-boys and other boys, nor am I able to make a distinction as to age, because there is no reason why, in great houses, a little boy should not be taxed, although he happens to be dressed in a suit with a great many buttons upon it; but I propose to alter the definition of male servants in this way—to make the term include such persons only as are bonâ fide domestics 1123 exclusively engaged for that purpose, and giving their whole time to their employers. This will relieve from taxation under this head such persons as only employ boys during a few hours in each day, and farmers whose labourers take part occasionally in discharging domestic duties. In fact, it will in many ways remove a source of annoyance at a trifling expense to the Revenue. I put the amount at £26,000; it may be £30,000, but I put it at £26,000 for the sake of symmetry, which brings up the deficit to £800,000.
Now, the question arises as to what we are to do with the deficit? One thing, I think, is quite clear. We cannot leave it to take care of itself. Last year I came to the House and presented something like an equilibrium between Revenue and Expenditure, and I made no provision for Supplementary Estimates, for I said there was a prospect of a spring in the Revevenue covering any Supplementary Estimates that might be presented. I have been justified by the result, and I think if the circumstances now were the same as last year, I should be prepared again to adopt the same course. But there is a very great difference between coming forward with an equilibrium before we knew anything about the Supplementary Estimates and coming forward with a deficit of £800,000. We made the proposal last year at a time when there seemed to be a fair, if not a good, prospect of a harvest, and when there were signs of a revival in some branches of trade, and a hope for improvement which has not, I am sorry to say, been altogether realized; but there is a great difference between that state of things and the circumstances of the present year. Well, then, if we are not to leave this deficit alone, how are we to deal with it? There are only two ways of dealing with it. One is to propose an addition of taxation in order to cover it—the other is to tamper with the arrangement made last year with regard to the National Debt. Now, I never stated that that arrangement was to be a law of the Medes and Persians, and that under no possible circumstances should any interference be allowed with it. Indeed, I can conceive circumstances under which, when taxation was very high, when a great emergency was upon us, or when it was necessary to make 1124 some very great national effort, it might be wise and prudent to interfere with that arrangement. But if, in the very first year after you have adopted it; if, before it has even come into operation, for the purpose of meeting a trifling deficit of £800,000, which it is quite possible, though I do not venture to prophecy, may be recovered from unexpected improvement of the Revenue, and at all events which we may look upon as being only a temporary deficit—if under such circumstances we, and especially we who were the authors of the proposal, were to come forward and ask you to arrest the arrangement for the sake of avoiding an addition to taxation, we should not only be arresting and suspending the arrangement; but we should be manifestly destroying it altogether. One of the most plausible, if not the strongest argument adduced against my proposal last year was, that it was a proposal which was good for fair weather, but that the moment it was tried it would break down. I was told that something of the kind happened 20 years ago, and that when the arrangements of that time were made they had to be given up, and I was taunted with the prospect of having myself to come forward to propose to cancel the arrangements which Parliament, at our suggestion, had adopted. But the circumstances under which that former Sinking Fund was abandoned were as different as light from darkness from the circumstances of the present day; and, therefore, I do not think it at all necessary to enter into distinctions which will be obvious to those who know the history of that period. I trust and firmly believe that the idea of suspending or interfering with the arrangements in regard to the National Debt will not commend itself to any Member of the Committee and will not be expected from Her Majesty's Government. Well, Sir, since we are driven to meet this deficit, which we cannot prevent, and which we cannot provide for without recourse to additional taxation, we come to the second question, which is, Of what character is that taxation to be? Now, I can conceive of but two alternatives. It would be possible to make an addition to the Spirit Duties, or it would be possible to make an addition to the Income Tax. With reference, however, to the idea of making an addition to the Spirit Duties, I would 1125 remind the Committee that, in the first place, the consumption of spirits at present is not quite in the condition that renders it very certain that you would realize any very large amount from that source; and, moreover, any meddling with the taxes on intoxicating drinks would raise a series of questions and a complication of difficulties which I think the House would be sorry to have to encounter. Therefore, Sir, I am driven, as a last resort, to the decision of asking the Committee to make an addition to the Income Tax. I need not say that I do it with reluctance. I need not say I had hoped that our tenure of office might not be marked, at all events, with any addition to that particular tax. But, Sir, the logic of facts is too strong for me. I have been unable to resist, and I do not see how the Government could have resisted, the claims that have been made upon us for additional expenditure; and I do not see how we could have done more than we have done in order to keep down our expenditure with a due regard to the demands of the country. Therefore I do it without hesitation, though with reluctance, feeling sure that both the House and the country will respond to what is certainly a very disagreeable call in the spirit in which it is made by Her Majesty's Government.
If we were to add 1d. to the Income Tax it would increase our Revenue for the present year by £1,480,000, which would leave £320,000 to be brought to the charge for the next year. We do not require yet the full amount I have spoken of, and I think this is a time in which we might fairly carry further the exemption of small incomes. When Sir Robert Peel first introduced the tax the limit of exemption was fixed at £150; subsequently my right hon. Friend the Member for Greenwich carried the tax to £100; and I think one of the reasons he gave was, that he wished to carry the tax down to a point at which it would reach the wage-receiving classes. Wages have risen considerably since that time, and I think we should not be doing an unreasonable thing in reverting to the exemption originally proposed by Sir Robert Peel; and, at the same time that we make the difference in the total exemptions, we should be disposed to make a corresponding addition to the amount which is deducted from incomes above 1126 that amount. At present, I think, the limit of total exemption is fixed at £100. The deduction is fixed at £80, and goes up to £300. We propose to make the the reduction £120, instead of £80, and to carry it up to £400 a-year. That is to say, all incomes below £150 will be wholly exempt, while those from £150 to £400 will have £120 taken off. Well, the financial result of this will be that we shall receive during the present year £1,168,000, and deducting from that the £800,000, we shall be left with a surplus for the year of £368,000. In conclusion, I must now thank the Committee for the kindness with which they have listened to me. I am very sorry it has been my duty to lay before them a proposal which I fear cannot be otherwise than unpalatable; but at the same time, events have rendered it necessary, and we, therefore, submit it with confidence to the consideration of the Committee. The right hon. Gentleman concluded by moving the first Resolution.
Motion made, and Question proposed,
That there shall be charged, collected, and paid for one year, commencing on the sixth day of April, one thousand eight hundred and seventy-six, in respect of all Property, Profits, and Gains mentioned or described as chargeable in the Act of the sixteenth and seventeenth years of Her Majesty's reign, chapter thirty-four, the following Duties of Income Tax (that is to say):
For every Twenty Shillings of the annual value or amount of all such Property, Profits, and Gains chargeable under Schedules (A) (C) (D) or (E) of the said Act, the Duty of Three Pence;
And For every Twenty Shillings of the annual value of the occupation of Lands, Tenements, Hereditaments, and Heritages chargeable under Schedule (B) of the said Act:—
In England, the Duty of One Penny Halfpenny; and
In Scotland and Ireland respectively, the Duty of One Penny Farthing.
§ MR. DODSON
said, he trusted that the Resolution which had just been read would not be pressed upon the Committee that night, and that an opportunity might be afforded them to consider the lengthened and complicated Financial Statement which had just been made to them. The right hon. Gentleman, after making the alteration in reference to the tax upon male servants, estimated his deficiency at £800,000, and he proposed to meet that deficit and obtain a surplus by placing an additional 1d. 1127 upon the income tax, which, subject to the exemptions he proposed, would produce in the present year £l,168,000. The right hon. Gentleman had taken a very moderate estimate of the growth of the Revenue for the year, it being only £347,000. Last year, however, he estimated the growth at £946,000; but, although he stated in his Budget speech that £946,000 was a careful and accurate estimate of growth, as soon as he had to meet Supplementary expenditure, it appeared that he had in reserve another estimate of growth beyond that. Though he never gave any detailed estimate of this ulterior growth, it became evident, towards the close of the Session, that the whole growth he reckoned upon must be about £2,000,000.
§ THE CHANCELLOR OF THE EXCHEQUER
What I stated towards the end of the Session was, that I thought that probably the Revenue would be from £800,000 to £1,000,000 more than I had stated it in my Budget Estimate.
§ MR. DODSON
said, that fortunately for the right hon. Gentleman, his esoteric estimate, which was much more sanguine than his exoteric one, was realized, for there was an increase in the Revenue of £2,400,000 over the Revenue of the preceding year, and notwithstanding the large Supplementary Estimates, amounting in all to £1,405,000, he reached the conclusion of the year with a surplus. The right hon. Gentleman had called their attention in a very marked way to the sluggishness of the Revenue in the latter portion of the last year, and to the larger growth of the Revenue in the earlier portion of the year. Is was true that the larger portion of the growth of the Revenue was due to the first six months of the past year, when the growth of the Excise and Customs was over £700,000, while in the last six months it was only £250,000. The truth was, that the right hon. Gentleman had made his fortune last year by Stamps and Miscellaneous Receipts. The increase of the latter was over £500,000, and the growth of the stamp duty was estimated at £60,000, while the actual growth was £460,000. Both these items partook of a casual character. Stamps embraced really a very mixed and miscellaneous subject of Revenue, because items proceeding from very different sources were all classed under the head of Stamps. There were some stamps, such as those upon bills of 1128 exchange and transfers, which tended to show that trade was upon the increase, and that there was activity and prosperity throughout the country; but there was also a large amount of stamp duty the income from which should be treated rather in the nature of a windfall; such, for instance, as the probate, succession, and legacy duties. He hoped that in the course of the discussion upon the Budget the right hon. Gentleman would analyze for them a little the total amount received from Stamps, and would state in what proportion the increase was due ta the increase of trade and business throughout the country, and what portion of it was due to the good fortune of the Chancellor of the Exchequer in consequence of death during the year making havoc among rich people. A very large portion of the amount credited to growth of the Revenue was from what was called Miscellaneous Revenue, but which would more properly be called miscellaneous receipts. There had been an increase under this head of upwards of £500,000 in the year, though £300,000 of this might properly be treated as belonging to the preceding year. In comparison with last year, the right hon. Gentleman had taken a very moderate estimate of the growth of the Revenue for the coming year when he placed it at only £347,000 upon all branches of the Revenue, except Miscellaneous Receipts, the produce of which he reckoned at less than last year. It would be indiscreet in them, perhaps, to ask questions upon that; but still he could not but think that, considering what passed last year, it would be interesting to know whether the right hon. Gentleman, as last year, reserved some esoteric estimate of a further growth of Revenue beyond that which he had just stated to the House, and, if so, what that estimate might be? As to the additional 1d. on the income tax, he wished to throw out a suggestion for consideration, without, however, expressing an opinion upon it, as to the future mode of collecting the tax. It was proposed to place another 1d. upon the tax, which, as at present levied, would produce upwards of £2,000,000. Now, there was a certain amount of inconvenience in a tax which they could only vary by an amount so large as £2,000,000 at a time in one direction or the other, and he would suggest whether the time was not come when it 1129 would be well to mate provision that they might deal with it by a ½d. at the time, so that the amount of the tax could be increased or decreased by £1,000,000, which would certainly be a more convenient sum than £2,000,000. A strong appeal had been made to them by the right hon. Gentleman to support the new Sinking Fund instituted last year by the Chancellor of the Exchequer, the charge for which this year would be £570,000. The deficit was £770,000; but had it not been for that charge for the new Sinking Fund the right hon. Gentleman might, by taking a little more sanguine estimate of the growth of the Revenue, have been in the position to propose no increase of taxation whatever. He would, indeed, have been in the position to introduce the most sensational Budget of modern times, for he would have been able to say that the estimate of Revenue was so much, and the Expenditure so much, so that they just met each other; and, therefore, he could have proposed that they should stand where they were, making no alteration whatever in the taxation of the country. No such Financial Statement had been known for years past, and it would have been a most appropriate Budget to come from a Conservative Chancellor of the Exchequer. He (Mr. Dodson) did not at present wish to commit himself in reference to the proposals of the Chancellor of the Exchequer; but he hoped that the Government would consent to the Chairman reporting Progress, so that the matter might come on for consideration upon some other evening.
§ MR. J. G. HUBBARD
said, he wished to take the earliest opportunity of stating the great pain with which he had heard the announcement of the right hon. Gentleman the Chancellor of the Exchequer. Up to the moment of stating the Estimates for the current year the course of the Budget was quite satisfactory; but those Estimates, as had just been said, were very moderate ones. He was not prepared for the announcement of the way in which the right hon. Gentleman proposed to meet his self-created difficulty in an artificial deficit. How much of the £78,000,000 which the Chancellor of the Exchequer had estimated as the necessary charge upon the taxpayers of the country for the year was to go to the reduction of the National Debt? 1130 Would it be much less than £5,000,000? The sum devoted to the reduction of Debt had been increasing year by year, and was increasing very fast before the right hon. Gentleman came into office; and he (Mr. Hubbard) was exceedingly anxious that the Debt should not be further reduced by the means which the right hon. Gentleman proposed. Last year he introduced a scheme which eclipsed the schemes of his Predecessors, and in the course of a few years would be found impracticable, and which had already landed us in a great difficulty. He (Mr. Hubbard) objected not to the reduction of the National Debt, but to the means by which it was proposed to be effected. We had an income tax which, as at present levied, was acknowledged to be one of the most bungling, demoralizing, and inequitable taxes that had ever been imposed. It was originally imposed for three years in order to do a specific work; and it had been continued for 30 years, and no Minister had yet had the courage to reform it. Yet, properly levied and collected, an income tax was the best tax that a country could have, and it was a reproach to justice and to the ability of the Members of that House that this tax should continue in the condition in which it was now. He had imagined that with a 2d. income tax we had reached a point at which the Government should reconsider the whole matter. There was no difficulty whatever in placing an income tax upon a thoroughly equitable and satisfactory footing; but until this was done he should protest with all his heart against increasing its aggressions upon the consciences and pockets of the community. He must entirely object to the application of the income tax, in its present unreformed state, to increase the Revenue in order that a surplus might be applied to the reduction of the National Debt. Everyone should contribute according to his ability, and there was no principle in taking £400 as the limit for the commencement of partial exemption from the tax, and in the entire exemption of incomes under £150. These exemptions were the sop offered in order to obtain consent to the scheme proposed. It was not his intention on that occasion to make an income tax speech; but he gave Notice that he should, on a future day, move a Resolution to the effect— 1131That it is inexpedient to increase the revenue by adding to the burden of an inequitable and demoralizing Income Tax, particularly when the surplus anticipated is to be applied tot he reduction of the National Debt.
§ MR. LAING
thought that, as a rule, they should not discuss the details of a Budget upon the first night; but upon the present occasion the real issue seemed to be narrowed down to the question how the increased expenditure was to be met, and under those circumstances it was right that those who, like himself, had a strong opinion that the Chancellor of the Exchequer was doing the right, if an unpopular thing, to state that opinion and participate in the unpopularity of it. On two former occasions he had criticized the Budgets of the right hon. Gentleman, and urged on him a policy resembling that which he had now adopted. In reference to the Sinking Fund, he said last year that it ought not to be proposed, unless there was a positive certainty that there would be an excess of income over expenditure; because, with a deficit, it would not carry with it the appearance of sincerity in the proposal. On the present occasion it was evident that the Chancellor of the Exchequer had had but three courses before him. He might have trusted, as he did last year, to sanguine estimates of Revenue, or he must have abandoned his scheme for the reduction of the National Debt; or, finally, he must have done what he had done that evening—namely, proposed an addition of 1d. to the income tax. As to meeting the deficit, which was a temporary one, by an addition to the permanent taxes on articles of consumption, such as the spirit duties for instance, that was a proposal which could not be regarded as worth a moment's consideration. Looking to the present circumstances of the country, it would have been most unwise for the right hon. Gentleman to have indulged in sanguine Estimates, knowing how much the credit of the country depended on the Estimates being correctly framed. He (Mr. Laing) had been opposed on previous occasions to taking too close a view of the Estimates, because such a view would tend to produce want of confidence and mistrust. Another reason why they should not run the Estimates too close was the state of the balances. The Chancellor of the Exchequer candidly admitted that the balances now were lower than it was 1132 desirable to have them. It was a most wholesome rule that we should keep our balances in such a state as not to have to go as a large borrower to the Bank of England, least we might create a crisis, and, looking at it from the point of view of the Exchequer, lose thousands where we were gaining hundreds. The circumstances of the last quarter were conclusive against any prudent Chancellor of the Exchequer venturing upon any sanguine Estimates, especially considering that he had in it the benefit of three days—the additional day in February, Good Friday, and the Bank Holiday, which might both have come in March—and these three additional days ought to have given over £700,000 or £800,000 more than would otherwise have been received. For his part he (Mr. Laing) was astonished that the Revenue kept up so well as it did, when they knew what was the state of trade in most of its leading branches. In many branches they were at present making no profit, and in others trade was hardly ever so bad; whilst it was notorious that wages, which had risen so rapidly in 1873, were now rapidly subsiding to a lower level; and, therefore, to take a sanguine view of the Estimates would certainly not be a prudent course. The only resources there were left open then to the right hon. Gentleman, as he had said, were an increase of the income tax, or the abandonment of the Sinking Fund arrangements of last year. Looking to the growing wealth of the country, he could not think that the income tax, reduced to one-half of what it was when Sir Robert Peel proposed it, could be considered a crushing amount of taxation as affecting the resources of the country. When it became evident that the time had come for making a moderate provision for the reduction of the National Debt—it might be right or wrong—but that step having been taken last year, they could not undo it afterwards without a shock to the credit of the country. With regard to the main principle—that relating to the income tax—he thought the Chancellor of the Exchequer was right. The additional 1d. allowing certain exceptions to small incomes, was, he considered, a fair proposal to make, although an additional ½d. without those exceptions would have been the same thing in its financial results, and it was a fair question for discussion which 1133 would have been the better. The right hon. Gentleman had, in fact, shown a considerable amount of moral courage in making a sound financial proposal, avoiding the temptation of resorting to unsound temporary expedients to meet the difficulty. He thought it only fair and right that he should say thus much, having criticized the proposal of the right hon. Gentleman last year.
§ MR. SANDFORD
said, he thought that his right hon. Friend had acted wisely in adding 1d. to the income tax. He had also listened with peculiar pleasure to the statement of his right hon. Friend that he intended to further extend the exemptions under the tax. He wished they could be carried further, and he was inclined to believe, on a little more reflection, he might move on a future day that they should be extended still further. In consequence of the falling off in the Excise during the past year, he considered it was unsafe and unwise to calculate on a considerable increase in that Department, and to do so was taking too sanguine a view of the matter. The adherence of the Chancellor of the Exchequer to the proposition he made last Session for the reduction of the National Debt struck him (Mr. Sandford) as peculiar, from its having broken down in the first year of its trial; because, disguise it as they might, they had increased and not diminished the National Debt. We were paying this year £700,000 towards the reduction of the Debt, but we had added £4,000,000 to the Debt; and if we reduced the Debt only at the rate of £700,000, adding to it at the rate of £4,000,000, we should, in 1885, arrive at a very different result from that calculated upon by the Chancellor of the Exchequer. No doubt, the annuity of £200,000 from the Khedive was to be hypothecated towards payment of the interest on the £4,000,000; but could the Chancellor of the Exchequer reckon on receiving it? He thought it extremely uncertain, and he warned his right hon. Friend not to place too much reliance on Egyptian securities. It was an unhappy fact that in the first year the arrangement should have so far failed, and he called attention to it in the hope that future Chancellors of the Exchequer, instead of Icarian flights with a view to the reduction of the Debt, would direct their attention to the prevention of deficits, by 1134 taking the practical course of reducing the Estimates.
§ MR. RYLANDS
said, that the right hon. Gentleman the Chancellor of the Exchequer had assumed that there were only two ways of putting an end to the deficit; either to propose additional taxation, or to tamper with the arrangements for the reduction of the National Debt; but he must remind him that there was a third mode of dealing with it, by the reduction of expenditure. The difficulties of the Chancellor of the Exchequer had entirely arisen from the enormous expenditure of the Government; and he had attempted to justify that expenditure by urging that they were no worse than their Predecessors, and that the additional increase in the expenditure arose from the increase of the population, and other unavoidable circumstances; but he entirely over looked the fact, that whenever there was a Conservative Government in power, the expenditure of the country went on increasing. The right hon. Gentleman the Prime Minister was continually giving the country surprises—either by some extraordinary stroke of spirited foreign policy, or by some unexpected measure of home legislation; and so much was this the case, that hon. Gentlemen on the Conservative side of the House were as little able to calculate on what the right hon. Gentleman would do next, as those on the Opposition benches; but, at least, in the matter of expenditure, the course taken by the Prime Minister could occasion no surprise. In that respect, history invariably repeated itself. When Lord Palmerston was in power in 1865, and was succeeded by Lord Russell, the expenditure of the country stood at about £67,000,000; but in 1867 and 1868, Lord Derby and the right hon. Gentleman (Mr. Disraeli) increased the amount by about £3,000,000, exclusive of the charges on account of the Abyssinian War. In 1870–71, the expenditure under the Liberal Government was £69,698,539; and, although that amount was unnecessarily increased, owing to the panic arising out of the Franco-German War, yet when the right hon. Gentleman (Mr. Gladstone) left office the expenditure stood at £72,000,000. The present Government immediately commenced enlarging the Estimates—last year the total expenditure had increased to 1135 £75,431,000, and for the coming year it was estimated at £78,044,000—an enormous sum, which could not be justified by the increase of the population. It was thus that the beneficent reductions of taxation which they had received from the right hon. Member for Greenwich were entirely lost so soon as the right hon. Gentleman opposite came into office. He (Mr. Rylands) was sorry to be obliged to admit that increased Estimates were popular with many hon. Members, with the London Press, and in the London clubs. The spending servants of the Crown had great influence over hon. Members of that House, over the Press, and over the clubs, and they formed a great trades union to support one another in their demands upon the public purse. His complaint against the Government was, that they yielded to, instead of resisting, the pressure that was brought to bear upon them to increase the expenditure. He believed that in every Department there was more or less waste, or needless expenditure; and in some instances, as they had recently seen in Committee on Civil Services, there had been actual jobbery. If the House would adopt the principle urged by Mr. Cobden of limiting the expenditure of the Government to a fixed and reasonable sum, he had no doubt that the unnecessary charges would be cut down, and that the Services would be kept in a state of efficiency at a much lower cost. It was perfectly scandalous that in a time of peace, and under general circumstances of a favourable character, the people of this country should be called upon to pay £78,000,000 a-year. He hoped the Motion would not be pressed that evening, and that time would be allowed to the country to express its opinion upon the proposals of the Government. At all events, it would now be seen that they could not have a Conservative Government without increased taxation, and that the "blundering and plundering" of the Liberal Government meant the reduction of taxation, and the increase of the comforts of the people.
§ MR. CHARLES LEWIS
supported the request that the Resolution should not be taken that evening, and expressed his great disappointment, as a Conservative, that the Government was departing from what was understood to be one of the leading lines of its policy—the aboli- 1136 tion of the income tax. He had not forgotten that when the Government came into power, they found they were obliged to apply a portion of the surplus to the reduction of the income tax, which they had now re-imposed. He protested against its being carried out. In 1873, when the hon. Gentleman the Secretary to the Treasury (Mr. W. H. Smith) brought forward a Motion with reference to the income tax, the Chancellor of the Exchequer manfully protested against its being made a balancing entry from year to year, but last year it was put down, and this year it was to be put up. This income tax, which was originally proposed for three years, had been kept continually hanging round the necks of the people for 34 years under different pretences. They were told that it was not a permanent tax; but in reality it was, because every Chancellor of the Exchequer made his arrangements with regard to the reduction of taxation in a way to prevent the annihilation of the tax. The time had now arrived when the Government should deal plainly and fairly with the country in connection with this tax, for there was no security that they would not be asked next year for another 1d., with an endeavour to charm the country by increasing the line of exemptions. These exemptions were delusive, and were full of incongruities. An income of £400 at 2d. in the pound paid 800 pence under the proposed rate of exemptions, at 3d. in the pound it would pay 840 pence. He called upon Her Majesty's Government and the House to devise some scheme to meet the case, for if they left the subject untouched, they would still have a tax which was unequal, unjust, and oppressive, and, in the words of a former Chancellor of the Exchequer, provocative of false returns. He would urge on the Government the absolute necessity of affording to the country a full opportunity of considering this serious increase of the income tax—this breach of an understanding come to two years ago that they would keep to 2d. in the pound—["No, no."]—well, if there were no such understanding, it was full time that an understanding should be come to, and that the public should be made aware upon what principles the income tax was not only to be continued, but increased. By their present proposal, they shut their eyes to a great 1137 social and commercial evil, and deserted the duty which rested upon the House and the Government to effectually grapple with the subject. The Chancellor of the Exchequer had sufficient ability to deal with the income tax on a fair and equitable basis, and unless some understanding to that effect was come to he should feel bound to vote against the proposal of the Government.
§ MR. PEASE
said, that concurring in what had been said as to its unjust incidence, he felt that the proposal to increase the income tax could not but be unpopular with the country; but he nevertheless thought that the Chancellor of the Exchequer would have been too sanguine if he had gone beyond the figures which he had laid before the House. He regretted two great items of this increased expenditure—the large amount devoted to paying off the National Debt and the additional cost of the Army and Navy, the latter exhibiting an increase of £1,100,000 on the year, and of £2,200,000 in excess of the estimates of the preceding Government. He had always objected to paying off the Debt by a hard and fast line, and it would have been much better as to both these items if the Government at a time of commercial depression had left the money to fructify in the pockets of the taxpayers. The country would do well to pay off the Debt in times of prosperity; but, under the present Budget, they would be paying it off at a time when it was incumbent on the Government to economize by every means in their power. Had they been economical, instead of their having to propose an increase on the income tax of 1d. in the pound there would have been an ample surplus. He trusted that the Resolution for an increase of the income tax would remain for some days in the hands of the Committee before a vote was asked upon it.
§ COLONEL EGERTON LEIGH
said, he had pleasure in congratulating his right hon. Friend on the excellent nature of his Budget. His (Colonel Leigh's) idea of a Chancellor of the Exchequer was one who paid his debts and kept the country out of all scrapes, and he thought his right hon. Friend the Chancellor of the Exchequer had not brought them into any scrapes. His right hon. Friend had proposed a fair mode of taxation, for it hit those who could afford to pay, and allowed those who were not possessed of 1138 such worldly means as others to escape. When "invasion" was talked of, it should be remembered that no small portion of the increased expenditure was required for the purpose of providing against an invasion of ignorance. The Government had been obliged to raise the pay of the Army, because, when every other description of labour had increased in value, that step was inevitable. No one grudged the increased expenditure for education, and it was unfair to blame the Government, who in that respect were only doing what their Predecessors ought to have done long ago.
§ MR. MUNDELLA
said, there was no doubt that if the right hon. Gentleman the Chancellor of the Exchequer was really obliged to provide for an expenditure of £78,000,000, he could hardly have brought before the House any other Budget than that which he had brought. He entirely approved two features of the Budget—the relief given by the right hon. Gentleman as to the paltry and vexatious tax on boys, and his determination to maintain the principle of reducing the National Debt. With regard to the former, he was astonished its aggregate amount was £40,000; that showed, however, what a vexatious impost it must be; while as to the latter, it would effect much more than the mere payment—it would have a good moral effect on the country. It would call out the best characteristics of the country and show that there was a moral obligation to do that as a nation which every private individual would accept as a moral obligation. He was also glad that the right hon. Gentleman had done his best to gild the pill by reducing the income tax on the smaller incomes—and he had really tried to lighten the burden upon them. But they all knew what the Inland Revenue did in such cases. They gave the screw another turn, so as to bring the man of small income within the prescribed amount. The House had seen how expansive the 1d. of income tax had been in the hands of successive Chancellors of the Exchequer; but he wished the right hon. Gentleman would turn his attention to its unjust incidence. No one could have forgotten the strong appeal made a few years ago by the hon. Gentleman the present Secretary to the Treasury when in opposition, yet the injustice and in- 1139 equality of the tax remained unchanged. The Associated Chambers of Commerce had passed an unanimous resolution against any proposal to re-enact the income tax in any shape or form. Why was the Chancellor of the Exchequer under the necessity of imposing this extra 1d.? He rejoiced to see the increase of the Education Vote; but it only formed a small part of the present excess of expenditure. It was the profligate and unnecessary expenditure of an additional £1,100,000 upon the Army and Navy, at a moment when we had nothing to fear, which rendered it necessary to increase the income tax.
said, he had pleasure in congratulating the right hon. Gentleman the Chancellor of the Exchequer on the exemption from income tax which he had made in his Financial Statement in favour of those with small incomes. In his humble opinion, it would be approved by the country at large. The increase of the amount now exempted from tax on incomes of £300 per annum, from £80 to £120 would be a boon to men with small incomes; and he thanked the right hon. Gentleman for his statement which would go forth to the country, and be hailed with gratitude by the large body of men numbering hundreds of thousands, who would derive the benefit of this just legislation.
§ MR. D. DAVIES
considered that the addition of 1d. to the income tax was not much, and he also thanked the right hon. Gentleman the Chancellor of the Exchequer for the manner in which he dealt with the matter. He and those on his side of the House had no choice but to submit, and for his own part he should give his hearty support to the laying on of the additional 1d. The constituents of hon. Members on his (Mr. Davies's) side would have no tax to pay, and it was therefore very honourable and the right thing for the right hon. Gentleman to do. He was afraid, however, the right hon. Gentleman had been over sanguine as to the next year's revenue. He—and he was not alone in doing so—thought they were just on the borders of bad times, into which the country would in the ensuing year be more deeply plunged. He was perfectly disinterested in saying that he should willingly pay 1d. or even 2d. extra income tax; for, if the extra amount had been put upon spirits, he should 1140 have paid nothing, as he did not drink them.
§ MR. PELL
, while he acknowledged the Chancellor of the Exchequer's concession to small incomes, would be glad if some definite principle could be stated—some point fixed below which there should be no favour shown. He was afraid that the experiment was one that might be carried to a dangerous length. It was a sound principle that no part of a man's income should be taxed which was necessary for the support of life; but, in his opinion, a man with £400 was as much entitled to pay as one with £500 or £600. He also was desirous to know whether they were to have Supplementary Estimates: or in estimating their surplus at £368,000, had the Government not taken into consideration the paragraph in the Queen's Speech relating to the introduction of a Prisons Bill? Reference had been made to a sum of £4,000,000 as the present amount of Treasury Grants towards Local Taxation, and he was at a loss to know how that amount was accounted for unless it included £1,000,000 sterling which was to be appropriated to the police of Ireland. A very large sum, it should be observed, was devoted to the purposes of education. Regretting that something more had not been done for the relief of local taxation, he thanked the Chancellor of the Exchequer for his remarks on the modern system of loans. Every local authority, down to the smallest Vestry, had got into a confirmed habit, rendered possible by the Public Loans Commissioners, of borrowing sums for the most evanescent improvements. For instance, at a recent meeting of the Metropolitan Asylum Board there was a proposition to borrow a sum of money to be expended on iron tanks, and although the tanks would be sure to be full of holes in a few years, the repayment was to spread over 60 years.
§ MR. MONK
congratulated the Chancellor of the Exchequer on the unsensational character of his Budget. There were, however, two items in it to which he wished to draw the attention of the right hon. Gentleman—namely, the stamp duty and the Post Office. The right hon. Gentleman anticipated £11,000,000 from stamps and £5,950,000 from the Post Office; but he would draw attention to the fact that although the receipts from stamps and taxes as well 1141 as from the Post Office had increased steadily for some years past, the right hon. Gentleman had put the former down at less, and the latter at the same sum which they produced last year. He regretted to find that to meet a deficit of £800,000 the right hon. Gentleman had taken the retrograde step of proposing an increase of 1d. in the pound in the income tax. He thought it would have been better had a ½d. instead of 1d. addition been made to the tax, and he failed to see the justice of exemption to so high a figure as £400 a-year. A far better plan, and one of which the country would have been more tolerant, would have been to have increased the duty on spirits.
said, the Chancellor of the Exchequer included among grants professedly in aid of local taxation many sums which were really expended for Imperial purposes. For instance, the first item that struck him was a grant of £10,000 a-year in aid of the Fire Brigade. He also found that the right hon. Gentleman had set down a large sum as what he called grants in aid of the criminal prosecutions of the country. He further found that of the £4,000,000 in aid of local taxation more than £1,000,000 was granted in aid of the Irish Constabulary. If the various items which did not properly come within that description were deducted, the £4,000,000 for grants in aid of local taxation would be reduced to a very small amount indeed.
§ MR. ANDERSON
said, the Chancellor of the Exchequer found himself in the face of a deficit, and although it was not a large one, yet he had to meet it, and he had stated he had only two alternatives—either to tamper with the scheme of last year for the reduction of Debt, or to increase the income tax, and he had chosen the latter. He (Mr. Anderson) by no means admitted that these were the only two alternatives. Last year he was one of those who denounced the scheme of the right hon. Gentleman, and the experience of this year ought to have satisfied the right hon. Gentleman that that scheme was altogether erroneous; for if he had not shut them up to the payment of £28,000,000 through good and bad times, and irrespective of the condition of the country, he would not have been in the position to-day of having to face a deficit, but his accounts would 1142 have balanced. Amongst other alternatives, the right hon. Gentleman might have increased the duty on spirits, which he thought would have been a proposal which would have been more popular with the country. There was also another thing to which he had not alluded, and which he (Mr. Anderson) commended to his consideration. That was the question of legacy and succession duty on property in the hands of corporations. There was an immense amount of property in the country which was shut up in that way without bearing its fair share of national taxation. It was put into the hands of corporations, and these corporations lasted for ever, and therefore the succession and legacy duty was not paid upon that property to the same extent that it was paid upon property left to private parties. It was believed that property in the hands of private persons paid legacy and succession duty on an average about once in 18 or 19 years, and the Chancellor of the Exchequer ought to bring the property of municipal and all other corporations under a similar payment, because there was a great mine of wealth untouched there at present. The real fault of the Budget, however, was not in the way the right hon. Gentleman met the deficit, but in the fact of having a deficit at all. They did not complain of the increase in the Civil Service Estimates, except in one or two particular cases to which the attention of the public had been drawn, and they did not complain even of the increased expenditure on the Navy, because that might be necessary too. What they did complain of was, the large expenditure in connection with the Army. It was there entirely that the mischief was done, and the Government ought to give their attention to the matter, or the expenditure would go on increasing, at the same time that the financial difficulties of the Government were increasing.
§ MR. WHITWELL
thought the right hon. Gentleman's system with regard to local loans was most commendable, and wished to know how much of the additional 1d. of the income tax would be absorbed in the further exemptions? Instead of making an abatement on incomes up to £400, he would suggest that it would be better to make an abatement of £300 in the case of all incomes.
§ SIR HENRY PEEK
thought that, as between an increase of the spirit duties and the income tax, the Chancellor of the Exchequer had exercised a wise discretion in falling back upon the latter, for he doubted whether, through illicit distillation, an increase in the spirit duties would lead to an increase in revenue. He very much regretted that the right hon. Gentleman had not touched upon one point in his Statement—an amalgamation between the Customs and Excise Departments. There were now two very extensive Governing Bodies, and, considering that nineteen-twentieths of the Customs revenue were produced by the duties on four articles—tobacco, spirits, tea, and wine, he thought a considerable saving might be effected by such an amalgamation. That suggestion led to another—the propriety of doing away with the minor Customs duties, which now only yielded the difference between £19,300,000 and a little over £20,000,000. It would be of great public advantage to abolish the duties on coffee, chicory, and cocoa, among the other minor articles now subject to Customs duties. Another duty which might be reduced with advantage was the duty on silver plate. There was a complaint just now of a depreciation in the value of silver; but if the duty were diminished, silver plate would be largely substituted for electro plate in this country, and the consumption of silver would thus be increased.
§ MR. MELLOR
said, he had entertained the hope that in the advent of a Conservative Government to power a period of economy and retrenchment had arrived. They were, however, now living in a period of as great extravagance as ever, each Department vieing with one another as to which should go at the most rapid rate. In the item of superannuation of retired officers a constant increase was going on. There appeared to be a system of frequent reorganization and abolition of public offices; the holders were pensioned off frequently at an age at which they were still qualified to do good service to the country. In that way annual grants were being constantly created, and the consequence was there was never any reduction in the annual cost. In 1868–9, 130 pensions were granted, involving an annual charge of £27,591. In 1869–70, 243 pensions were granted, 1144 creating an annual charge of £85,129. In 1870–1, 280 pensions were granted, creating an annual charge of £63,737. In 1871–2, 117 places were abolished, the result being an annual charge of £27,243; and in 1872–3, 52 places were abolished, creating an annual charge of £23,449. He hoped the Chancellor of the Exchequer would turn his attention to this vicious system, which appeared continually at work, and more especially when there was a change of Government. It appeared to him as if people were sent adrift in order to extend the patronage of the Government. In the Woods and Forests Department also there was infamous and scandalous mismanagement, which should be looked into by the Government. In England and Wales, upon an annual rental of £312,944, the arrears amounted to over £52,000, of which a large proportion was declared to be irrecoverable. In Ireland, upon a rental of £42,000, the arrears were £86,000, or 201 per cent, £53,000 being declared to be irrecoverable. In Scotland the rental was £23,000, and the arrears £45,000. Such a state of things could only be explained by gross neglect on the part of those from whom greater vigilance was to be expected, and but for whose neglect there would be a considerable increase of revenue under this head. As some safeguard for proper accounts he would suggest that the names of defaulters whose rent was deemed irrecoverable should be given in the annual Returns of the Woods and Forests. In conclusion, he greatly regretted that they should have a national expenditure of £78,000,000 per annum, and he hoped that instead of adopting the alternative of putting a further duty on spirits, or of increasing the income tax, the Chancellor of the Exchequer and the Heads of Departments would turn their attention to the reduction of expenditure.
§ THE CHANCELLOR OF THE EXCHEQUER
, in reply, said, that after the general wish which had been expressed that the Resolution should not be proceeded with that evening, the Government would not press it. The dividends would be paid in a few days, and it was a matter of convenience to ascertain as soon as possible the rate of the tax and the deductions. However, he found that it was not absolutely necessary to 1145 pass the Resolution to-night, and he should therefore propose to report Progress and take the Resolution on Thursday. Though a considerable range of topics had been introduced, the point for discussion was a narrow one, upon which he hoped that hon. Members would be able to make up their minds on Thursday. As to the remarks which had been made that evening, he did not propose to enter into the general question of the merits or demerits of the income tax, or the consistency or inconsistency of his proposals. The proper time for doing so would be when the real discussion came on. Meanwhile, he would only correct one or two misapprehensions of his meaning. The hon. Member for South Leicestershire (Mr. Pell) asked whether, in estimating the surplus of £368,000, the Government had taken into consideration the paragraph in Her Majesty's gracious Speech referring to the Prisons Bill? He believed that his right hon. Friend the Secretary of State for the Home Department (Mr. Cross) would introduce the Prisons Bill shortly after Easter, and his explanations would satisfy the hon. Member that there was no inconsistency between the terms used in the Queen's Speech and the Budget Statement. The hon. Member had also asked, with reference to the grants in aid of local taxation, how much was included in the £4,000,000 of which he had spoken? The £4,000,000 was the sum set out in the two explanatory pages printed this year with the Miscellaneous Estimates, and they included those items to which the hon. and learned Member for Chatham (Mr. Gorst) referred—the Irish Constabulary, costs of criminal prosecutions, and so forth. He did not quite understand the objections of his hon. Friends. He was not endeavouring to raise any question as to the propriety of these Votes. What he wished to point out was that the additions to the expenditure formerly incurred under these heads had formed the main increase which had been complained of in the Civil Service Estimates. In fact, the whole increase could be accounted for partly by the increase in the Education Vote and partly by the addition to the Votes included in this class of services. Whether or not it was right to call them grants in aid of local taxation, they were sums which had been trans- 1146 ferred from local to Imperial funds, and that point should be borne in mind when an increase of expenditure was spoken of. It was not altogether an increase, but rather a shifting of the burden from one shoulder to another. Then the hon. Member for Gloucester (Mr. Monk) challenged one or two of his estimates on the ground that they had been taken too low. With respect to Stamps, he did not think he had been at all too cautious in taking them at the same amount as last year. He remembered in his first Budget he made a very handsome calculation for an increase on Stamps, but, most unfortunately, he found himself thrown out by £340,000. On that occasion, Stamps were within a fraction of the same sum they had yielded the year before. Warned by that, he took Stamps last year at very nearly the amount they had produced the year before, and they more than answered his expectation. This year he also took them at the same amount as they had produced. He must remind hon. Gentlemen that the Stamp revenue was just the revenue which would be affected by the two or three days which we were to lose this year—the two Good Fridays and the Bank Holiday. Therefore he thought he had acted prudently in taking Stamps as he had done. So with regard to the Post Office, he had put the revenue as high, or rather higher, than the actual receipts justified. As they were this year bringing £50,000 out of the Post Office balances, which were somewhat larger than was necessary, that would make the receipts larger than the amount earned would justify. With respect to the suggestion of the hon. Member for Glasgow (Mr. Anderson), that the succession tax might be laid on corporations, he did not say that it would not be an equitable thing in itself, but he felt satisfied it would be a difficult tax to levy, and he must take time to consider the proposal. The hon. Baronet the Member for Mid-Surrey (Sir Henry Peek) reminded the Committee of his favourite proposal for amalgamating the Customs and Inland Revenue Departments. Though such a proceeding might appear economical, it would not be truly so. We might carry amalgamation too far, and might find that we were doing more harm than good. His hon. Friend had talked of abolishing small duties of Customs, such as on coffee, chicory, and fruit. But that 1147 was a proposal hardly apposite to the present occasion, nor was he in a position to consider such tempting suggestions. As to the abolition of the duty on silver plate, he would like first to hear what should be said by the Committee now sitting on the depreciation of silver. The hon. Member for Ashton-under-Lyne (Mr. Mellor) had made some very valuable remarks. He did not know, however, whether they bore on the proposals under consideration. But a Gentleman who devoted himself as his hon. Friend had done to the items of expenditure was doing, and would do, a good work. Chancellors of the Exchequer were always thankful to have their hands strengthened by those who would take the trouble to look into those matters, call attention to them, and censure what was wrong. Though it was not a very agreeable thing to listen to attacks on the Administration and to defend the office attacked, he thought such Gentlemen did great good. With regard to the income tax, what he said was this—that to add 1d. without making any alteration in the present arrangements would give £1,480,000 this year, and £320,000 next year, or £1,800,000 altogether. But if they took the exemptions proposed, he estimated that we should have £1,168,000 this year, and £230,000 next year, or about £1,400,000 in all. He thought it would be best for the Committee to consider the general question, and the discussion both of the propriety of meeting this deficit by increasing the income tax, and the manner in which the income tax should be assessed, on Thursday next. With that in view, he would propose that the Chairman report Progress, and ask leave to sit again.
§ Motion agreed to.
§ House resumed.
§ Committee report Progress; to sit again upon Thursday.