§ Considered in Committee.—[Progress, 7th May.]
§ [Mr. WHITLEY in the Chair.]
Motion made, and Question [6th May] again proposed, "That the Customs Duty charged on tea until the first day of July, nineteen hundred and fourteen, shall be charged as from that date until the first day of July, nineteen hundred and fifteen, that is to say:—
Tea, the pound … … five pence;
and it is declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."—[Mr. Lloyd George.]
§ Debate resumed.
§ Mr. CHAPLIN
We are now engaged in the discussion of the fifth or sixth Budget of the right hon. Gentleman, and whatever we may think of it in other respects, there can be no doubt whatever that the proposals which he makes are of the very first importance and very far-reaching in their character. Unfortunately, the statement of the right hon. Gentleman in introducing his proposals was, and is still, so incomplete in the information which it afforded, it was in many cases so faulty in its sequence, and so much of it which ought to have been fully explained at the time remains still unexplained, that we are left in this position—that in regard to many of its most important points we are still left almost entirely in the dark. That is the position with which we are confronted to-day. Hitherto on the first Resolutions of the Budget we have been allowed very considerable latitude in discussion. With very few exceptions I have heard, I think, nearly all the Budgets over a vast number of years, and we have been allowed practically a free hand in their discussion. Our difficulty to-day, Mr. Whitley—if I may say so, with every desire and intention on my part to observe your ruling—and has certainly not lessened by your reminder to us the other day that in Committee of Ways and Means what we ought to discuss, and what we should, so far as possible, limit our discussions to, is the method of raising the money which is, 747 required, rather than entering into detail upon its distribution. It is on some points, some two or three of the methods of raising the money which have been put before us by the Chancellor of the Exchequer, that I am going to ask the Committee to allow me to make a few observations this afternoon.
To begin with, I take the right hon. Gentleman's proposals with regard to Income Tax, and the Super-tax—which, of course, is part of the Income Tax. Here I may say at once that I entirely agree with my right hon. Friend the Member for East Worcestershire (Mr. A. Chamberlain) who in days gone by has occupied the same position as the present Chancellor of the Exchequer. He opened the discussion upon these Resolutions, founding himself upon the views and statements of men even greater, he said, than the present right hon. Gentleman who controls the finances of our country. Much as I differed in days gone by in many things with Mr. Gladstone, nevertheless I must say that he was probably one of the greatest of the financiers of the past generation; and I am bound to say that on one point, namely, the view which he held that the Income Tax should be held largely in reserve as an engine to be used in the possible necessity of a great war, I entirely and most unreservedly agree. Concerning what that very distinguished man Mr. Gladstone used to think on these questions, I am told that in these days many Liberals think and say they do not care very much. I should be very sorry to believe that that was true. I do not think myself that it is true—even now. Be that as it may, however, I am going, with all respect, to remind this Committee of some of the things that Mr. Gladstone did say upon this question. Whether they be popular or not I am determined to remind both the Committee and the public of them, for I think they ought to be brought before the country in face of the proposed Budget. "Anyone who wanted to appreciate the Income Tax," said Mr. Gladstone, "ought to go back to the epoch of its birth." I do not know whether the right hon. Gentleman has done that or whether he is one of those who do not take the views of that distinguished man into very great consideration. He said, further:—You must consider what it has done for you in times of great national peril and emergency, and what it may do for yon again if such times should unhappily return.748 Again, Mr. Gladstone spoke of the Income Tax as "This colossal engine of finance, an engine to which you may resort, and with which, if you judiciously employ it—if the necessity should arise—you can again, if need be, defy the world." Lastly, Mr. Gladstone said, "That the times when the language of violence is let loose, and the plains are besmeared with carnage, are times in which this mighty engine may again be made available for the defence and salvation of the country"—all this, however, subject to one provision, that you do not destroy it! By destroying the Income Tax, Mr. Gladstone, I suppose, meant to use it in the way in which it is being used at the present time by the right hon. Gentleman. That is what I greatly fear that our present Chancellor of the Exchequer will be successful in accomplishing if the has his way in this matter unchecked for a very much longer time. I ask the Committee to remember that all this is being done at a time of general disquiet and unrest among the nations of the world; when what we see at the present moment is not one or two countries, but the whole world in arms. It is a matter for very grave and serious consideration. There is another matter connected with the Income Tax to which I venture to refer, not, in my opinion, so grave as this, still, of very grave and serious importance. It is this: When a man lives up to his income—and lots of people—the majority of people—who have got incomes at all, so far as I know, do live up to their income—it has been my own personal experience, and I believe it is general—what do men do when the time comes and you have a Chancellor of the Exchequer with very ambitious schemes to put before the country, and additional reourse is had to Income Tax for the purpose for which he desires to find the money? What is the result? All the people in the country who live up to their incomes must immediately make reduction. I do not care in what direction it is done, and it must be done, the reductions that they make will inevitably have this result, that a vast number of people will be put out of employment in all parts of the country, in every kind of work on which they also depended for their very existence, and the ultimate burden of all those proposals on the part of the right hon. Gentleman who thinks it so easy or so convenient a method of finding money which he can produce at a moment with more popularity, than he can 749 raise it by any other means. The ultimate end of all these proposals is that the burden will fall not upon the rich, upon whom he desires it to fall, but upon the poorer classes of the country. I believe that economically that is a statement which cannot be contested. However that may be, if the wise, patriotic words which I have quoted from that great statesman who was so worshipped for years by the Liberal party are not sufficient to make a, good many Gentlemen opposite pause before they continue to support the right hon. Gentleman in his career upon this particular question, I am afraid that nothing more that I can say would have any effect whatever upon them.
I pass, therefore, to the next point on which I desire to say a single word, and here again I am happy to think that I am entirely in agreement with my right hon. Friend the Member for East Worcester in the views which he expressed the other day upon this further increase of the Death Duties. And once more I am able to submit the most eminent authority of all Liberal statesmen, the man most worshipped by his followers, who undoubtedly was held up to be one of the greatest financiers that ever lived in modern days, and again I am able to quote that most eminent man in my support. Speaking of the case of owners being driven to forced sales in many cases, in order to enable them to meet new obligations of this kind, he said this:—I think it would be an invidious, an offensive, an unwise, and an unjust measure. … to lay on a tax in such a way as would have the effect of forcing them to part with it: and there is no tax, however moderate it might be, if it were fixed on the capital value of such an estate. … which would not have the effect of compelling the possessor to bring his estate into the market.That is one of the things that is exorcising and occupying public attention at the present time. That is one of the things that the right hon. Gentleman himself has been only quite recently alluding to, in some of the speeches he has made in the country, all the evils which arise from the estates of great landlords being put upon the market because they cannot afford to retain them in the face of taxation of this particular character. I venture to think that it showed a very remarkable instance of the prophetic and statesmanlike foresight on the part of that great and distinguished man so long ago that he should have been able to protest against the difficulties and objections which he foresaw to legislation of this kind, and which is now being put into force more and more in 750 successive years on the part of the right hon. Gentleman. And one thing is perfectly certain in my humble judgment at all events, and that is this, that the only thing this policy can end in, if it is to be constantly extended, is that we may expect that whenever the right hon. Gentleman is hard up for money, his policy will be to break up great estates in all parts of the country. That may be, and I daresay it is, the ideal, the wish, and the desire of the Socialist party in this country; but is the policy of those whom you called in the old days the Liberal party, and is that a policy that will find favour amongst the general ranks of the people of this country? That is the question we have to consider, and as far as I know the people, the right hon. Gentle man will find that his support in this direction is of the smallest and narrowest possible character whenever he has the courage and the decision to appeal to the people of the country for judgment upon all these new-fashioned and extended proposals I would say which he is making in this direction.
Passing from that altogether, I wish to say something, if the Committee will permit me, upon the proposals announced by the right hon. Gentleman in his speech upon quite another subject, quite different, and that is the withdrawal of the Grant under the Agricultural Bates Act from agricultural districts, and its inclusion amongst the new Grants as part of the proposals of the Chancellor of the Exchequer for raising the money for the purposes of his general scheme, I propose to show that that method, at all events, of raising the money and funds that he requires may very easily prove, and in all probability will prove, most injurious, not only to agricultural interests, but to the whole of the community at large; and I say this, because we are quite in the dark at the present time as to what is going to be substituted for it. I ventured to put question on the Paper upon this subject in regard to one particular administrative county, and I will have to say a word or two later on upon that particular question. Let me ask now of the right hon. Gentleman what are the Bills that he has already referred us to in connection with the Budget? How many of them are there? With what subjects do they deal? What parts of the Budget? Where are they? What do they contain? When shall we see them? And when shall we have an opportunity of knowing what way we ought to deal with his appeal to vote vast 751 sums of money he asks for as a preliminary step by these Resolutions? And why does he still leave us so completely in the dark, and ask us to vote blindfold these enormous sums of money without the least knowledge of the actual purposes for Inch they are going to be used.
I want to pass to the withdrawal of this Grant from the agricultural districts. Will t he Committee bear with me while I ask them to consider for a single moment what the continued prosperity of agriculture means for the community, and especially at a time like this. What it means, in the first place, is this: It is the great machine for supplying the food which is necessary to the lives and existence of the people, and, as a matter of fact, I may mention this that, in spite of the enormous amount which we receive from abroad, I believe it is the actual fact, though I have not had the time to consult the latest figures upon the question, that even now in spite of foreign competition, we produce one-half of the meat which is consumed in this country. It is quite true with regard to bread, and bread stuffs, on which our population depends far more than on anything else for the great staple of their food, that we receive at this time four-fifths of the whole of that commodity from abroad. It has to be brought across the seas from all parts of the world, and in these days of disturbance and possible war, what would our position be? I have heard great naval authorities on this side of the House say, that our trade routes would be undefended and could not be defended, and I believe that is true owing to the requirements of the Admiralty for all their ships for other purposes. What would be our position here? Why, under these circumstances a general condition of affairs might arise which would most certainly require all the utmost possible effort of the home-grown machine to supply the requirements of the whole population. That raises an enormous question, for which I have no time and could not enter upon this afternoon, namely, the question of our food supplies in time of war. But I have said enough to show that the continued prosperity of agriculture as a food producing engine in this country is a matter of vital importance to the whole of that community, and we are therefore bound to consider, I think, this very difficulty with our present information, to arrive at a conclusion as to how we are likely to stand under 752 the new proposals of the right hon. Gentleman in regard to agricultural districts. I was so impressed by its importance that as soon as the Report of the Departmental Committee on Local Taxation was issued, and as soon as ever I had had the opportunity of carefully reading it, I took a typical agricultural county in this Kingdom which I knew well myself, namely, Lincolnshire, and there I endeavoured, and I have succeeded with only partial success, to apply the proposals of the Local Taxation Committee to that particular county to find out how it would fare under their recommendations, and whether it would be worse or better off than it was before. Lincolnshire, in which I was bred and born, is divided into three administrative counties, and I took the Parts of Holland, which is wholly agricultural. It gave me a great deal of trouble, because in order to get all the figures I had to write to all the different local authorities, some twelve in number; to ask for the figures and information I needed. They were all most helpful, as I was certain they would be from all my recollections in that part of the world, and I have got sufficient information out of them, in addition to what I obtained and could obtain from certain public returns, for the purposes which I wanted, namely, to make a comparison between their receipts under the Agricultural Rates Act from the latest figures of 1911 and 1912, and what they would probably get under the recommendation of the Departmental Committee.
I have here a rough summary of them. It is not quite complete, for one or two of the returns are still wanting. In what I am going to say I am rather understating the loss under the recommendation to the Departmental Committee, because my figures are not absolutely complete. Under the existing Grants, what they get according to the latest available returns, is roughly £70,000. Under the Committee's recommendations they would get £60,000, and no more. That is a loss of £10,000 in one county. Like all the other counties, instead of a loss they demand a great increase of relief in consequence of the enormous increase of the burden of the rates on agricultural land at the present time, a relief which the right hon. Gentleman has already more than once promised to the agricultural districts of this country, and, above all, to the Farmers' Union, which called upon him not very long ago. Now, 753 I come to my next point. Since the recommendations of this Committee we have had the Budget proposals, and it is impossible to make the same calculations because, I understand, in spite of the reply given to me, that the basis of distribution is not sufficiently settled to enable even the Government themselves to know what share is to go to the agricultural districts. We should all like to know what it is going to be. We are referred to these Bills. It is quite true that the Budget makes larger contributions than the recommendations of the Local Taxation Committee, but there is no reason whatever, as far as I can make out, having studied them both, to suppose that in this particular county they will wipe out the deficit which would undoubtedly have occurred under the recommendations of the Local Taxation Committee.
I am quite convinced myself as to what will occur under the proposals of the Budget. If it did wipe them out, what then? Where is the large additional relief come from which the right hon. Gentleman has already promised, and promised quite recently to the Farmers' Union and to other representatives of the agricultural interest? We want a great deal more information upon this crucial point than we have had up to the present, and more than we are likely to get very easily from the right hon. Gentleman. Will he be kind enough to tell us to-night all about these other Bills which he has spoken of, and to which we are referred for information? Where are they? Are they drawn? Are they prepared, and what do they contain? The right hon. Gentleman ought to know all this, and he must know unless he has adopted a wholly unusual and the wholly unconstitutional course of asking Parliament to vote him unnumbered millions of money—[Laughter]—well, I call it unnumbered millions. The Chancellor of the Exchequer trips down to the House of Commons and asks for £10,000,000 additional money for purposes which he has never explained, and which I am asking him to explain at this moment, and which he has already been asked to explain, and which up to the present we have had no explanation of any sort or kind. Is this additional relief promised provided for in these Bills, and how is it given? How is it to be distributed, and how much is to be given? These are all perfectly plain questions which, if put to any other Chancellor of the Exchequer in making these enormous proposals, 754 would be answered at once, if they had not in the usual course been already explained to Parliament upon which he was making these enormous demands. We have a right to know on behalf of the agriculturists of this country, Parliament has a right to know, and the people have a right to know, before Parliament is asked to vote for these Resolutions.
The agricultural position calls for it in addition. It is serious enough, Heaven-, knows. I will give the briefest possible summary of it, so that the House may judge whether I am exaggerating or not. The total amount of the rates on agricultural land to which the Act of 1896 applied was in round numbers at the time when it was passed £2,700,000, or 2s. 3d. in the £. Since the passing of the Act the rates to which the Agricultural Rates Act apply have increased from £2,700,000 to £4,400,000, or 3s. 8d. in the £. I remember a speech made by the President of the Board of Agriculture somewhere down in Wiltshire in which he spoke of the rates at the time, which were 2s. 1d. or 2s. 5d. in the £, as an enormous burden upon the agricultural production of the country which ought not to be suffered or continued. Here we have an increase up to 3s. 8d. in the £, and that is an increase of 1s. 5d. in the £, or £1,700,000 in the rates, falling on agricultural land since the passing of the Act in 1896. But now, in spite of that enormous increase in the rates, we are told that the Grant of £1,325,000 is to be withdrawn altogether, and that is part of the scheme of the right hon. Gentleman. I want to know, and what we shall insist upon knowing as this Debate continues is, what provision you have made or are making in your Bills to supply the deficiency created by the assessment of agricultural land on one-half of its rateable value which is to remain, and in so doing restore the position in rural and agricultural districts to what it was at the time when the Act was actually passed. That is a perfectly plain, simple, and straightforward question, and one to which we are entitled to an answer, and I hope with all my heart there will be no evasions on this subject. I hope the right hon. Gentleman, who is usually so open and fearless in the demands and the statements he makes, will be as frank and complete in his reply as I have tried to put the case before him this afternoon.
But that is not all. I must remind the right hon. Gentleman of another thing. 755 That is not the whole of the demand. The right hon. Gentleman must remember that two Royal Commissions—the Royal Commission on Agricultural Depression appointed by his own leader, Mr. Gladstone, and the Royal Commission on Local Taxation which reported in 1901, of which he spoke so highly the other night, and which, as a matter of fact, was appointed by the humble individual who has now the honour of addressing this House—put their names to their several reports and expressed the opinion that if full and fair justice was done to the interest and industry of agriculture, as compared with other trades and industries in the Kingdom, they were entitled both on the ground of ability to pay and benefit received, to be relieved, not of one-half, but of three-quarters, and to be assessed only on the rateable value of one-quarter of agricultural land. Those recommendations have been before the country for years, and nobody ever acted upon them. I was not able to act on them at the time I introduced the Bill of 1896, because at that time to use the right hon. Gentleman's own expression, there was not enough money to go round. It was none the less just then, and it is just to-day.
I always intended, and I think I said so, that whenever the opportunity offered again, I would press the just claims of agriculture to their full extent. I hope the right hon. Gentleman will bear that in mind. That increase, it must be remembered, is due to no fault whatever on the part of the local authorities. It has been caused by and is due to the action of Parliament. It is Parliament which has passed over and over again Acts imposing new burdens upon the rates for national and general purposes of its own, and in some of those Acts it has even gone further and taken powers to itself for the different departments in the Government to enforce them at the cost of the local authorities, over the heads of the local authorities, and very often entirely in opposition to their wishes. The right hon. Gentleman alluded to this the other night when he made his statement on the Budget. When I first came into Parliament local taxation was always one of the prominent questions, and before we had passed in this House all kinds of new rules and regulations, which I did my very utmost to oppose at the time, the independent Members took good care that the rates should not be raised. Whenever Bills were introduced into the House of 756 Commons the local taxation party at once took counsel together and opposed, as a general rule, every Bill for increasing the rates unless national funds were forthcoming for the purpose, and we were almost invariably successful. Then came a different era in the House of Commons, and it was one of the most unfortunate I have known, for the power of independent Members ceased to exist. That is why the rates upon agricultural land have increased to the enormous extent that they have done. No blame whatever is attached to those who passed the Agricultural Rates Act in the year 1896.
§ Mr. CHAPLIN
That began before, and no one had greater cause to object to it than myself, because it was the effect of the Education Act of 1902, many years afterwards, and nothing else, which lost me the seat I had filled in Lincolnshire for twenty-seven years. I want to remind the right hon. Gentleman of what happened at the time the-Agricultural Rates Bill of 1896 was before the House. I have been a long time in Parliament, but never in my career have I known so obstructive an Opposition as we had to meet at that time. The right hon. Gentleman opposite was the moving spirit of that Opposition. I have never forgotten it, and I have always looked forward to the time when I might possibly have the opportunity of paying my debts. I am not sure that it has not come. It will depend on the attitude of the right hon. Gentleman. If he will meet us fully, fairly and frankly on this question, well, he will not find me up in arms as strongly as I should otherwise be. I will not make any promises except of one kind. If he does not meet us as he ought to do, and as I am quite sure the agricultural party will demand that he shall do, he will find, if I am spared life and health, that he will have the hottest time he has over had in his life. I will spare nothing to defeat him and his measures; and with those words, and my thanks to the Committee for the patience and indulgence with which they have listened to me. I beg to conclude.
§ Mr. DILLON
This Debate has proceeded now for three days, and up to the present no one representing the Irish Nationalist party has sought to address the House. Therefore, I feel bound to say a few words in order to lay before the 757 House the views of the Nationalist party in regard to the Budget. I do not rise to complain of the right hon. Gentleman's Budget proposals as unfair to Ireland. On the contrary, in their main outlines, both as regards the method by which he proposes to raise the money and as regards the conditions under which he provides that Ireland's share should be allotted, I think that the Budget is fair and just to Ireland. There are two points, before I say a word on the effect of the Budget generally upon Ireland, to which I would like to draw the attention of the Chancellor of the Exchequer. The local Grants that are to be distributed under the Budget are to be allocated in the various proportions he has set forth. I do not agree with hon. Members who find it is extraordinarily difficult to understand the details. I fancy I understand fairly clearly the principles on which these Grants are to be allotted. They are, under certain conditions which are set forth, to be allotted to those services which are now partially maintained by the rates. Accordingly, in applying that principle to Ireland, the Chancellor of the Exchequer says that he must, before calculating the Irish share, subtract all those services to which it is proposed in Great Britain to give relief which in Ireland are not maintained at all out of the rates.
The two main cases—in fact, I think the only two cases, which come under that definition are the police and education. In the case of Ireland, of course, as we all know, the police are not on the rates. The rates do not and never did make any contribution since the reform of Sir Robert Peel in 1845. That is a strong position for the Chancellor of the Exchequer to take up, but I would ask him to keep an open mind on the question of the Dublin Metropolitan Police, because they are on the rates of Dublin, and heavily on the rates. Indeed, if he looks into it, I think he will find that the police rate in Dublin is heavier than it is in most English boroughs, or even, if I am not mistaken, in the Metropolis itself. That is the first point to which I wish to draw his attention. I do not ask the Chancellor of the Exchequer at this stage for any specific answer to the claims I am now making, but simply that he will promise to consider them, preserve an open mind, and be prepared to meet our claims when we put them forward in greater detail, supported by figures, at a later stage. The second point is that of education. It is quite true 758 that in Ireland, for historic reasons, we have never been able to put education upon the rates, and it would be impossible to do so. That has been unfortunate in some respects for education, because it has placed us at a disadvantage as compared with England and Scotland. The principle upon which the Chancellor of the Exchequer proceeds is that he will give to Ireland no relief in respect of the services which are now maintained by an Imperial contribution entirely, and which do not come upon the rates. At first sight, as applied to Irish education, it is plausible that we should lose all our share in the Education Grant, but I think, when he looks into the figures, the Chancellor of the Exchequer will find that Ireland has some claim—I do not say a large claim, but a moderate claim—even in respect of education, and while we cannot ask for any relief given under this Act in so far as it is a relief of the burden of rates, we are, I think, if we can say, apart all together from the rates, and eliminating the rates, that we obtain a smaller proportion per child or per head of the population from the Imperial Exchequer, entitled to our share so far as it is covered by that principle.
I do not think anyone will argue, that because in Ireland primary and secondary education get no support from the rates, therefore the Imperial Exchequer should give them less than they give to education in Scotland and England. On that point, also, I will ask the Chancellor of the Exchequer to keep an open mind and not to close the door against us until we take an opportunity on the Second Reading or in the Committee stage of the Bill of laying the case before him in full detail. There are just one or two questions as regards the method of raising taxation. I have been a pretty attentive listener during these Debates, and I have been very much amused. I heard the right hon. Gentleman the Member for Wimbledon (Mr. Chaplin) to-night call attention to the Debates on the Agricultural Rates Bill, which the Chancellor of the Exchequer and myself joined in obstructing. I may say that I am absolutely unrepentant. I opposed it on principle, although Ireland stood to win by it, because it is an agricultural country, and I am still of the same opinion. We have all listened with pleasure—I know I have—to the speech of the right hon. Gentleman, and I must congratulate him on the fire of youth which he still retains. He, as well as the hon. Member for St. George's, Hanover Square 759 (Sir Alexander Henderson), and Lord Esher in the "Times" to-day, advocate with extraordinary force, earnestness, and eloquence, a doctrine I have heard for nearly thirty years advocated from the same quarters in this House whenever fresh taxation is proposed to be placed upon property or income. If you tax income or rich people, you are not taxing them at all, but the poor. Indeed, the hon. Member for St. George's, Hanover Square, went on the other night to prove that not only when you tax the rich are you in reality taxing the poor, but that the rich man immediately transfers his burden, with additions, on to the shoulders of the very poor people. That is a strange doctrine—a very interesting one. If it were true, then all the old lessons which we used to be taught in our youth, when we studied history, are false, and it is not true to say that the great starvation and misery which drove the people to madness in France before the great Revolution were due to the fact that the rich classes were exempt from taxation and the whole burden fell on the poor, because if they had transferred the burden—as has since been done, with the result that enormous wealth has accumulated in a country which was described as inhabited by starving wretches who fed upon grass—if they had then transferred the burden of taxation from the poor to the rich, they would have done away with the exemption which the rich enjoyed, and they would only have produced an aggravation of the cause.
When I listen to the Jeremiads of wealthy men like the hon. Member for Liverpool (Mr. Houston), who the other day, arose amid the groans of the House, and asked what a man would have to pay under this Budget if he enjoyed an income of £100,000 a year, I am reminded forcibly of the prohecies of disaster and woe to which we listened for nine months, when the Budget of 1909 was under discussion. We were told then by great and illustrious men, by some who at one time had been Liberal leaders, that if the Budget of 1909 were passed, everything would be at an end. One distinguished statesman said there would be an end of family institutions in this country, that the wealth of England would disappear, together with its trade, and that the real result of the Budget would first be seen in the starvation and unemployment of the masses throughout the country. We were also told that, if we passed that Budget, we 760 would starve Ireland and reduce her to poverty, and that our constituents would rise up as one man against us, and we would never be seen in this House again.
What has happened? The Budget of 1909 has now been five years in operation, and I challenge any man in this House, or any man outside who is learned in the history of economics, to point to any five years in the whole history of Great Britain where there has been such astounding and marvellous prosperity, which has defeated and falsified all the anticipations of those learned in economics and trade. No one expected, not even the Chancellor of the Exchequer, or any of his colleagues dreamed, that the last five years would prove so prosperous. It is said it is all luck and chance, but what would have been said if the contrary had been the case? Suppose we had had depression in trade, would it have been attributed to bad luck? Would it not have been triumphantly claimed as the inevitable result of the Budget of 1909. All my life I have believed that the principle of laying the burden of taxation in fair and just proportion on the backs of population, as far as possible in proportion to the extent in which they are able to bear it, is a principle which is not only defensible from the point of view of justice and right, but is in reality the soundest economy. I believe the work of the Budget of 1909 by putting some check—a check in my judgment just as beneficial to the wealthy classes in this country as to the poorer classes by preventing them becoming too much the objects of class hatred, jealousy, and envy—on the undue accumulation of wealth in the hands of a small section of the population, not only will be advantageous from the point of view of justice and equity, but enormously advantageous for the prosperity of the country and the increase of trade.
That brings me to the last point I wish to touch upon. I really only rose for the purpose of stating the case of Ireland in this matter; but there is one point which makes me perhaps value more highly than anything else the principles of the present Budget. For years I have been associated with men in this House who used to be—I am sorry to have to apply the word "used"—far more vigorous and far more courageous in their resistance than they are now to naval expenditure, and the expenditure on armaments. I have taken a good part in the past in resisting this expenditure, and I am still quite un- 761 repentant. I still hold the opinion that it has been unnecessary expenditure. It is a mad expenditure, because it inevitably incites other nations to strain themselves in the competition in this horrible race. It has been the result of panics deliberately engineered by interested parties, who first poison the minds of the people of this country by false reports, as they did in 1909, when we were told that the Germans were expediting their programme, and that mysterious ships were being built up livers in Germany that could not even float the canoe. I am still unrepentant in my convictions. Gentleman in those days got up and sang, "We want eight, and we cannot wait." I remember the Croydon election when the streets were paved with gold in order to maintain that panic. I say, deliberately, I still hold the view I then did. I say to my hon. Friends opposite who have been engaged in this campaign in the past, that the provisions of this Budget have for the first time brought home in a tangible and emphatic manner to the wealthy men of this country the fact that if they raise Navy panics and bring about increased expenditure on the Navy and upon armaments, they must expect to pay for it. I believe that in that respect the provisions of this Budget, in so far as the Super-Income Tax, and the increased Income Tax and Death Duties are concerned, are more weighty and more valuable in preventing—and I believe in prevention rather than in cure—future naval panics than all the speeches we have had delivered.
§ Mr. LOUGH
It has struck me while listening to the many speeches we have had upon this Budget, that hon. and right hon. Gentlemen opposite, with perhaps one exception, have been a little too indiscriminate in their denunciations of it. I do not think the right hon. Gentleman the Member for Wimbledon (Mr. Chaplin) showed himself sufficiently grateful to the Chancellor of the Exchequer for the relief he has promised to local rates. One hon. Gentleman behind him did, I am glad to say, take the opportunity to thank the Chancellor of the Exchequer for, and to congratulate him upon the step he was about to take.
§ Mr. C. BATHURST
I do not; want to interrupt the right hon. Gentleman, but I would Like to say that the report of any speech on that occasion in the Radical papers was wholly erroneous, as I hope to have an opportunity of explaining presently.
§ Mr. LOUGH
That comes from being dependent for information on the papers. At any rate, I only desired to compliment the hon. Gentleman. But I would like to suggest to hon. Members opposite that they would get on much better if they were more discriminating in their attacks, and when my right hon. Friend does something for them which they have always been asking should be done, and does it in a bold and deliberate manner, they might give some expression of gratitude along with their criticisms. There are two or three grounds for the congratulations which we might offer to the right hon. Gentleman in regard to his Budget before we criticise it. In the first place, it will help the local authorities in a way which has long been promised by both parties. It is a courageous attempt to fulfil that promise, and I hope that my right hon. Friend will be able to realise all his hopes and carry out all his views with regard to the matter, on the safe lines I am going to suggest presently. This Budget embodies another reform to which hon. Members on this side are pledged. It still further increases the tendency to place the burden of expenditure in this country on the back of the direct taxpayer and to relieve the indirect taxpayer. I will take two dates to show what has been done in this direction. In the year 1888 the proportion of direct taxation was 45.3, as compared with 54.7 on indirect taxation. Ever since there has been a tendency to increase the first percentage and to diminish the second, until now the proportion of direct taxation is 60 per cent., as against 40 per cent of indirect taxation. I do not say that those who have been relieved by the remission of indirect taxation might not be asked to make some contribution in direct taxation. I will say nothing about that. But I do urge that this is the most economical way in which to raise the necessary revenue for this country.
There is another ground, and perhaps the chief ground, for congratulation to my right hon. Friend. It has been mentioned by the hon. Member for East Mayo (Mr. Dillon). We must remember that the Chancellor of the Exchequer to-day has 763 distinctly promised that our naval expenditure shall be reduced next year. An hon. Member near me says they always promise that. But Governments do not always do it. They generally do it when we are getting near a General Election. Nearly always after a General Election there is great expenditure on armaments and in other unjustifiable directions. Just as it was with the Tory Government in 1904–5, when, knowing they were coming to the end of their tether, they made a great reduction in naval expenditure, so to-day my right hon. Friend makes a pledge—and I believe he will have the support of the House and the country in attempting to fulfil it—that this expenditure will be reduced next year. It wants reduction badly. I will take again the years I mentioned before. In 1888 the expenditure upon armaments was 16s. 8d. ped head of population. In 1913 it was 31s. 8d., and when I take into account the increased expenditure this year, I am quite sure I am within the mark in saying that our expenditure on armaments has doubled in these twenty-five years. We must also bear in mind the great increase there has been during the same time in the population, and I say, therefore, this is a most extraordinary figure which should give the House pause before it sanctions any more expenditure in that direction. There is one other point on which my right hon. Friend may be congratulated. The Budget is very cleverly designed. The Chancellor of the Exchequer will begin to get his money almost immediately, and if there is much obstruction to the Bill going through, though the relief may be delayed for a time, in any case the money will eventually come in. In that respect it is one of the best designed Budgets I have ever seen. All these are causes for congratulation so far as my right hon. Friend is concerned. My chief object in rising this afternoon is to warn my right hon. Friend against two or three speeches which have been made by hon. Gentlemen who sit behind his back on this side of the House, who have rather encouraged him to tread the path of extravagance The right hon. Gentleman the Member for East Worcestershire (Mr. Austen Chamberlain), in his speech last Wednesday, said that the opinions of the Liberal party had absolutely changed with regard to the questions of expenditure and economy. I entirely deny it. The 764 opinions of the Liberal party have not changed a bit.
§ Mr. AUSTEN CHAMBERLAIN
I speak subject to correction, but I think I was cautious enough to say its policy rather than its opinions.
§ Mr. LOUGH
I do not quarrel with the correction of the right hon. Gentleman, although, if he refers to his words, I think he will see that he used the word "opinions." I do not believe that either the opinions or the policy has changed. No temporary resort to expenditure, such as we have had from these benches in one or two respects during the last few years, will alter the general trend of opinion in the Liberal party. As regards naval expenditure, for instance, at the annual National Councils of the party resolutions were unanimously carried in favour of a great reduction. I do not believe it will be possible to permanently alter the strong belief of the Liberal party in economy, therefore I stand up to say a few words with regard to the two or three speeches made from this side of the Committee. One was made by my hon. Friend the Member for East Northamptonshire (Mr. Chiozza Money), another by my hon. Friend the Member for the Holmfirth Division (Mr. Sydney Arnold), and another by the hon. Member for Blackburn (Mr. Snowden), who is usually a good economist. All these hon. Gentlemen suggested,. "Let us not bother about the figures in this Budget. They are quite small figures in comparison with the income of the nation." They all based the matter on the income of the nation, as if that were an easily ascertained and certain point on which it were safe to base the expenditure of the country. My hon. Friend the Member for East Northamptonshire told us to take the test of luxurious expenditure. He did not take the test and did not suggest any figures that proved there was any luxurious expenditure going on at the present time among the bulk of the population. The only thing I heard him mention in order to support his argument was motor ears. He appears to be "dead" on motor cars, and will not allow anybody to have a motor car. His argument would appear to be this: that if the general mass of the people are spending money extravagantly, therefore the State ought to spend extravagantly. That is a very poor argument. Whether the general public are spending much or spending little, we in this House should set an example of economy.
765 My hon. Friend went on to say that it is generally forgotten how large the nation is, that we are a nation of 46,000,000 people, and that supposing the Chancellor of the Exchequer gave a shilling to each one of us it would come to £2,000,000. Why should he give a shilling to each one of us? If he gave a £5 note to each one of us it would represent £200,000,000. I do not think this should be done or suggested. It is very easy to levy money when you are the Chancellor of the Exchequer of a strong Government, but it is very hard to distribute benefits so that they shall reach the people you want to benefit. The taking of the money or the property of citizens is the next most important thing to taking their lives, and it should not be taken unless every regard is had to economy, and it should not be taken except for purposes of the most legitimate character. My three hon. Friends based their arguments on the national income. That question is one which I myself used to bring forward long ago in this House, although for very different purposes. I mentioned it then to check extravagance. Now, when I find my own pet child, is used to prop up ex-travagance and to encourage expenditure, I feel very great alarm. The worst offender was my hon. Friend the Member for the Holmfirth Division. He attenuated the amount of the expenditure so much that he brought it up to £283,000,000, and suggested that it was only 8.5 of the national income, which he said was £2,150,000,000. He made many mistakes in that calculation. If you make a comparison between the expenditure of the State and the national income you must include local expenditure.
§ Mr. SYDNEY ARNOLD
The estimate I gave was based on the views of Sir Robert Giffen and M. Leroy-Beaulieu, and these eminent authorities were dealing with national expenditure.
§ Mr. LOUGH
I am not carried away by the name of Sir Robert Giffen or anybody else. I only want to introduce here the rough-and-tumble argument that occurs to men of common sense in regard to this matter. I suggest that the expenditure out of rates must be included, the amount of which is something like £100,000,000. If you add that, the figures which my hon. Friend gave would be entirely upset. Another point is that you must not take account of the total national income without making what is called a living allow- 766 ance in regard to the expenditure of the people. I want to be quite fair, and must say that that was fully recognised by my hon. Friend for East Northamptonshire. He quoted Bentham and Mill in support of that, and he was quite right in doing so. He said we must excuse the very poor people from taxation. My hon. Friend for the Holmfirth Division did not excuse the very poor from taxation. Sir Robert Giffen, who appears to be an authority who appeals to him, put the amount that ought to be allowed at £12 per head of the population. If you take that £12 per head of the population from the £2,150,000,000 you get to a national income of about £1,500,000,000, compared with an expenditure of about £300,000,000 a year, or 20 per cent. more than the amount taken at present for national expenditure. That is a very serious figure and ought to give my hon. Friends pause before they support expenditure of this character. Both my hon. Friends brought in the German analogy in regard to these figures. They said it is all right for us to go on in this way because they do it in Germany and in France. But they only take that part of the German procedure which suits their argument and they leave out the most important point. What is the limit of exemption for incomes in Germany? £40 a year. Here we exempt everybody below £160 a year. A German friend of mine visited this House last Tuesday and said, "You get off very easy in England. So far as the lower grades of people in Germany are concerned, every servant girl has to pay Income Tax, and if she gets board and lodging which is valued at £30 a year and her salary is £2 a year, she has to pay Income Tax on £10." My hon. Friends must not ask us to follow too closely the analogy of Germany, because you soon get into difficulties you do not expect.
I would like to submit to any hon. Friends one further argument on the question of national income. You cannot deal with the figures properly without making a living allowance. Supposing you took the total national income at £350,000,000, without making allowance for the fact that people have to live, you will get into extraordinary difficulties over taxation. You must not do this sort of thing at all. Therefore, with great respect, I would' suggest to my hon. Friend, and, above all, I would suggest to the Chancellor of the Exchequer, that it would be well to put aside all these arguments. They have not 767 been properly thought out. People do not like taxation, and the lower we keep it and the lower our Budgets are, the more popular shall we be outside. I want the Liberals to keep on the Government side of the House, and we shall do far better it we fight for economy than if we support inflated expenditure. I would suggest to my hon. Friend—these new economists—thatA little learning is a dangerous thing.and that they shouldDrink deep, or taste not the Pierian spring.I should like to give one or two facts with regard to the objects to which the expenditure is to be devoted. The first point the Chancellor of the Exchequer made was as to expenditure on education. Some 3.9 millions of the sum that is to be raised is to be devoted to education. Education is almost as bad as the Navy. Just as the Navy is to hon. Gentlemen opposite, so is Education to us. You have only to mention education, and any amount of expenditure is at once justified. We ought to look very carefully to the manner in which this money is expended, and we should try to get some security for economy in the distribution of the money, or we may do more harm than good by giving this large sum to education. If we take the figures of expenditure on education in this country in 1902, as compared with 1914, we find that the Board of Education Estimates are £4,100,000 more than in 1902. The rates also have to be calculated. There is great difficulty in estimating the amount of rates in 1902, but so far as they can be calculated, the expenditure out of rates now is 6.8 millions more—that is to say, without this House opening its purse at all, without any new Budget, millions more are being expended on education than in 1902. We discussed the Education Act of 1902 from the religious point of view, but that was not the most important point of view. It was a great scheme for opening the purses of the ratepayers and taxpayers automatically, and pouring out an increased expenditure of £11,000,000, without the slightest check as to how it should be expended. Hon. Members may say that there is an increase in the number of children now in the schools. The increase in the number of children is only 14 per cent., whereas the increase in the rates and taxes in the twelve years is 75 per cent. That is the way we are going on 768 with regard to education. Now we get the Budget proposal to spend another £4,000,000 upon it. I grudge no expenditure that is necessary, but I want to get out of the minds of my hon. Friends on this side of the Committee the idea that they will secure in this or any other respect good results by mere expenditure. No, Sir, the money is wasted in a flood, and our system may be worse at the end of ten years, when you have spent these huge sums, than it was at the beginning.
The next largest item to which this outlay is attributable is the Poor Law. I have not furnished myself with figures, but I think I shall be within the recollection of the Committee when I say that something like £3,500,000 is to be devoted to assisting expenditure under the Poor Law. Why should we do this until the whole system of that expenditure is looked into in the light of the new facts? See what the Poor Law was twenty years ago. It then had a dozen functions. It gave the only relief which was given to those who now receive old age pensions. It did a great deal for children; it gave all sorts of relief which the State is doing in other ways now. Has the Poor Law establishment been reduced? Does anyone think of reducing it? Not a bit. And we are going to pour in £3,500,000 more on the already inflated expenditure which is going on in every part of the country. Take our position in London. We are tyrannised over by a whole bevy of bodies which seem to me to have little merit except as rating authorities. There are the London County Council, the Borough Council, the Metropolitan Asylums Board, the Water Board, and, of course, the rates for education. What merit have these bodies? They have none at all except that of levying huge rates on the taxpayers, especially the Poor Law authorities. If anyone will think, here is this small sum which is to be given for the feeding of school children. That relieves the cares of the Poor Law authorities. Old age pensions are a clean economy to them. Before another penny is given in this direction there should be a thorough reorganisation of the whole system, and the House should give nothing without securing that there will be economic administration of it, and that the object of it which my right hon. Friend has in view in giving the money should be actually secured.
This House has been creating new local authorities without any reference to the boards of guardians which existed before. 769 In 1902 they created new education authorities. What is wanted is business regulation. If the county council is not the proper body make it the proper body, and set under the county council all the other taxing authorities in the local areas wherever they may be. I believe by this means or by some means every effort should be made to secure an economic administration before the money is given, although I know the difficulty that would impose on my right hon. Friend, because he referred only to the Grants which were given for certain purposes. I suggest that an attempt should be made to see that there should be an economic administration here at the centre and in the various localities. I am sorry our old friends, the breakfast-table duties, have been entirely neglected. It may be said this is going quite contrary to the line of argument I presented to the Committee, but I do not think so. I think another means of getting the money, even if it were to grade the Income Tax a little lower, might have secured it. These breakfast-table duties are very uneconomic, and they lay a burden on the lowest class of people. The Tea Duty is in a very bad way. I should have been very glad if the right hon. Gentleman had seen his way to deal with that, although I admit the difficulty. There are great complaints about the height of the Tobacco Duty. It would be a very great relief if some consideration could be given to these questions. I hope that in the Revenue Bill, if there be a Revenue Bill, we shall have an opportunity of considering some of the aspects in which the Income Tax at present presses very severely—on married women, for instance—and there are one or two other anomalies. There are also one or two considerations in regard to the way the Income Tax was collected for the past three years which requires consideration. I ask my right hon. Friend to endeavour to secure, both for the good of the services themselves as well as the advantage of the State, that an economic system of expenditure is adopted in every Department before these large Grants are made.
§ Mr. SAMUEL SAMUEL
I sympathise with the right hon. Gentleman in his endeavours for economy. The Chancellor of the Exchequer claimed to have been correct in his Estimates for the last year, and that he had budgeted without excessive taxation. This country, like every other country in Europe, has been going through a period of prosperity which has 770 been unequalled in any preceding period, and naturally the revenue would derive the same benefit as we should do in a period of prosperity. He told us it was more difficult for him to accurately estimate what the course of events was likely to be, and he asks for an enormous sum, but without telling us exactly what he is going to do. I was not a Member of the, House last Session when the Budget was presented, but I had an idea that it was the function of the various Departments to make their Estimates and present them to the House after they had been examined by the Treasury, and that means were taken to ascertain whether the expenditure which they intended to make on the various Departments was justified and to ascertain where economies might be made. The Chancellor has put down an Estimate from the various Departments of no less than £205,000,000, and it gives a deficit upon the revenue which can be estimated on last year's basis at something like £5,500,000. Not satisfied with this enormous expenditure, I understand that the right hon. Gentleman is at present occupied in ascertaining by what means he can possibly increase expenditure. We are told that we must refrain from discussing the Estimates which are forecasted in the Bills which are to be presented, because those Bills rightly come under the heading, of the Estimates. We ought certainly to have had these Estimates before we went into Committee of Ways and Means. As a rule, you find that those who are responsible for conducting a business do not see how much they can spend before they ascertain the amount of money they have to spend. If they wish to be successful, they cut their cloth according to their measure, and in a country, if you wish to be successful, you must adopt the same principles.
We are told by the Chancellor of the Exchequer that during the period from 1909 to the end of last year, on the authority of Sir George Paish, there was an estimated increase of national savings of £1,750,000,000. I must take exception to that statement. I do not know that Sir George Paish is anything but a theorist. I absolutely deny that be has any data whatever as to what is the accumulation of the wealth of the country. I think it was the hon. Member (Mr. Chiozza Money) who stated that the accumulation of profits last year was £238,000,000. I have consulted financial authorities—bankers; brokers, and others in the City of London 771 —and there are no figures at all which would give any idea as to what the actual accumulation of wealth is in this country or any other. The assumption, therefore, that we are accumulating wealth at this rate no doubt induces the Chancellor of the Exchequer to see how he can dispose of it for us. He naturally thinks that the accumulation of wealth is one of the greatest crimes or misfortunes which can happen. The commerce and industry of this country have been built up, not by the fortunes which have been made by men of industry, but by the savings they have been able to make from the earnings of their businesses. I know from my own experience innumerable great industries in this country which have commenced with a small capital where the founders have been compelled from time to time to borrow money as the industry has grown, and at is by the economies they have made, by stinting themselves for many years of all sorts of luxuries, and by putting the money they have made into these industries, that they have been built up. Had it not been for the great sacrifices they have made, we should never have the prominent position that we have in the commerce of the world as the greatest industrial nation that there is on the face of the earth. The position, however, has changed. To-day the people who built up those great industries have adopted—I do not say it has anything to do with the taxation of the country—different methods, and we see that great industries now have been turned into limited liability companies, and if no encouragement is given to individuals to invest their savings in these great industries, it is very evident that the industries will not continue to prosper and increase as they have done in the past. The tendency of this Government especially to increase direct taxation must necessarily press heavily upon the small people.
I see that the Chancellor of the Exchequer has reduced the amount at which the Super-tax is to begin, so as to cover people with £3,000 a year That tax must press very heavily indeed on the man who has to provide for his family, and who has to save something every year. It is upon those people at the present time that the industries of this country rely to a great extent for the capital which is necessary to extend the businesses. The very rich people do not suffer anything like so much as the people with moderato incomes, be- 772 cause the very rich people have a very much wider sphere in which they can invest their money. I do not say it in any way as a threat, but I say there is a tendency at the present time on the part of people who are possessed of means to send these means away from this country for investment. You have seen in countries such as China, which we term uncivilised, that when people have acquired a certain amount of wealth the Governments have adopted different means to extract that wealth from them, and we find that these people have left the countries to a great extent, and have come to the British Colonies. In cases where the people have remained at home, they live in a style which will not in any way induce the cupidity of the governing classes to take from them what they have. The consequence is that those countries have not prospered, because of the Government methods which have been adopted. The Chancellor of the Exchequer has told us that he intends to issue a new form of declaration for people who are investing their money abroad. I do not know how that form may be worded, but I do think that it will not be possible for the right hon. Gentleman to attach any property which may be outside the jurisdiction of the Courts of this country. The position must necessarily be a very serious one for the Government if they take the step of trying to attach property of that description. You have living and carrying on business in this country a large number of foreigners. If you attempt to attach the property of those foreigners in their own countries, I am afraid you will be involved in political complications with the countries whose nationals they arc, and under those circumstances you will inflict a further burden upon the British subject who has to pay more than the foreigner who is carrying on his business here.
You have estimated, I think, that last year there was £238,000,000 of the revenue for the year as the net means for investment. I presume that calculation is made upon the basis of the companies which were brought out and floated and for which capital was asked during the year. We all know perfectly well that these; large sums which are presumed to be savings of the year—or, as the Chancellor of the Exchequer told us, £1,750,000,000 from 1909. These sums are supposed to be accumulations. I am afraid that the calculations are absolutely erroneous. You have to take into consideration—and, in 773 fact, the Chancellor of the Exchequer told us so himself—that the Government had paid off during their term of office a sum of no less than £100,000,000. That sum appears again in the investments which sire made by the public, and which you supposed to be further accumulations. In the City of London there are maturities of loans every day. These loans are maturing in different countries, and when they are paid off the money is reinvested. We know also that there is an enormous amount of foreign capital invested in this country in every loan almost that is issued. We know from the people who have their connections on the Continent and who do arbitrage business that when a loan is issued in this country they get their orders from the Continent. There is a tendency to increase direct taxation. It is proposed that the Income Tax should be 1s. 4d. in the £, and you will find that those foreigners who have been investing their money in those loans will abstain in future, and the London market which has been the centre of the commercial and financial business of the world will lose that pre-eminent position, and the consequence will be that the Chancellor of the Exchequer, instead of gaining in his revenue, will find a considerable falling off, because those loans will be issued in other countries. That is a factor which the Chancellor of the Exchequer must take into consideration.
As to the Bills which the Chancellor will have to introduce in connection with this Budget, to provide for all the purposes for which the money is to be raised, I understand that we must not discuss them too much. I understand also that the Bills are only to come into operation late this year, and that the actual benefit to be derived under them will be very small. I think we all approve of the intention of the Chancellor with respect to national health insurance and the physical development of the community. We on this side of the House deplore as much as anybody on the other side the destitution and the miserable conditions under which our poorer fellows live, and we are as anxious as they are to ameliorate these conditions. There is one suggestion I would like to make which, if carried out, would have enormous effect upon the well-being of the youth of this country, and that is that it would be money well spent if we could have universal training and service. That expenditure would be justified, and nobody on this side of the House would 774 resist it in any way. It would create for the poorer classes of this country a training, and it would put them at a period of their life when they are most likely to suffer deterioration in their physique and their morals in a position to have a period of healthy exercise with good food, which would build up their constitution, and do more for them than any amount of slum clearing that is proposed under these Bills.
So far as expenditure upon the Navy is concerned, I am sorry to hear from the. Chancellor of the Exchequer that he proposes next year to reduce the amount. We on this side of the House look upon that part of the Budget, together with the expenditure on the Army, as most justified. It is the part to which nobody would in anyway refuse to contribute. We look upon it from another point of view, because we consider that an efficient Army and an efficient Navy provide employment for many people who otherwise might be unemployed. If you maintain your programme of construction for the Navy, you are giving employment to the men for whom you have introduced the system of insurance against unemployment, and I consider—and I think the majority of Members on this side of the House consider—that it is better to pay men to do work than to pay men while unemployed. Therefore, the further you go in maintaining the shipbuilding programme, the further you can find employment for men, and the better it is for the country as a whole. So far as the various Bills are concerned, it is impossible for anybody to attempt to criticise them. We can only judge them by some of the past Acts of the Government. The National Insurance Act had to be amended, and we can only expect that the Bills to be introduced will be slip-shod performances, like most measures of the Government. It will be a case of act in haste and repent at leisure. I thank the House for the patient hearing they have given me.
§ Mr. LLOYD GEORGE
The speech of the hon. Gentleman (Mr. Samuel Samuel) is, I think, his maiden speech. I congratulate him on having made, the first frank and bold protest we have heard on behalf of men of great possessions, and especially great possessions abroad. He stated his case with courage and ability, and I congratulate him upon both those qualities, which are very essential in political life. I do not know that I can follow him into alt the points he has made. I do not know to 775 what extent I should be able to do so within the ruling of the Chair, and I shall have to test that by and by. The speech of the hon. Gentleman was full of very lurid expressions as to what had happened in regard to our primacy in the investing market, so far as investments abroad are concerned. He was not in the Parliament of 1909. Had he been he would have exhausted all those predictions then, and he would have had no fresh ones left for the present Budget. But he was perfectly right, since he did not use them all up then, in stating them here. He is one of the few men who are free to do so. All those predictions, every one of them, were uttered against all these taxes—Death Duties, Super-tax, Stamp Duties—because I increased some of the Stamp Duties as well—and I was told that the effect would be most disastrous against the position of this country, as the great investing market of the world. What has been the result? The result has been that this country has been in a better position than ever, as far as that is concerned, notably within the last four or five years. I would, therefore, suggest to the hon. Gentleman that he should use the ingenuity which he evidently possesses, to find out some fresh line of criticism of these particular facts. I shall come by and by to the speech of the right hon. Gentleman the Member for Wimbledon, but perhaps he will allow me now, at once, to congratulate him upon his speech, which delighted the House, and, although I was the poor victim of his vigorous onslaught, I can assure him that the pleasure which I derived from the performance was greater than any pain that I endured from the castigation. I congratulate him that he still possesses all the volcanic fires of youth, and I do hope, in spite of the menace which he held to my head, that, with his usual good nature, he will conquer the desire which he has to further flagellate me when the time comes.
I will come to the criticisms in detail later on, because they will fall rather within the category of two or three criticisms with which I hope to deal. The hon. Member for East Mayo (Mr. Dillon) has put forward two suggestions for the consideration of the Government. He does not wish to have an answer without my having an opportunity of further consultation with my right hon. Friend the Chief Secretary on the subject, but I will give him my first impression. With regard to 776 the Dublin Metropolitan police, I thought he made out what appeared to be a very plausible case, because the Dublin Metropolitan police are more or less in the same position as the police in this country. They are not maintained exclusively by the Imperial Exchequer. Therefore, I think that they have a claim for consideration. I was not so much impressed by the case which the hon. Member made for education, but at the same time I can promise him that I will look into the matter further.
With regard to the Debate generally, I have heard most of the speeches, and I think that I have read them all. There is one thing which struck me very much. In all these speeches hon. and right hon. Gentlemen on the other side sought high and low for some sort of criticism on the Budget proposals, but there is one most notable absence. There has not been a murmur about Tariff Reform as an alternative method of raising revenue. We are raising between £13,000,000 and £14,000,000. Every means which I have adopted for raising that money has been subjected more or less to censure, but there is not a word about this alternative, though the two great champions of Tariff Reform have spoken in this Debate. The Debate was led off by the right hon. Gentleman the Member for East Worcestershire. He spoke at some length, and he criticised the Budget in detail; but there was not even a hint that the right way to raise the money was by means of protective duties. Tariff Reform is still' chained in its lonely kennel. It is not even allowed to bark, and it is only the hon. Member for Bournemouth (Mr. Page-Croft) who goes there with a bone now and again to furnish it with a repast. At least I expected to hear a word about it from the right hon. Gentleman the Member for Wimbledon, but there was not a syllable. The duty on corn is gone, and all the duties on manufactured goods. There is no suggestion about them, and yet whatever may be said about this Budget, it is undoubtedly a great challenge of Free Trade to Protection, and I am delighted to note that that challenge at the moment has not been taken up by any hon. or right hon. Gentleman on the other side. Even the hon. Member for Hereford (Mr. Hewins) has not risen in the Debates up to the present. [HON. MEMBERS: "He has risen!"] I am so sorry that he did not rise before I got up. [HON. MEMBERS: "He did!"] I mean, that he did not speak. Protection has been 777 basely deserted by the right hon. Gentleman the Member for Wimbledon and by the right hon. Gentleman the Member for East Worcestershire.
§ Mr. LLOYD GEORGE
At any rate, there is one nurse who will stick to the perambulator. But this desertion of Tariff Reform is worth noting as an indication of the very great change in public opinion.
I come now to the general character of the criticisms that have been passed upon the Budget. When people dare not assign their real reasons for objecting to a course, their avowed reasons are always confused and contradictory, and that is what I have observed here. Let me give a specimen of the criticisms which have been directed, and not merely a specimen, but a summary. Even the very last speech was a compendium of all the criticisms. First of all, our expenditure is too high. It is too high in total, but it is not enough in detail. Is it too high on the Navy? No; we should spend more. Is the Army to be reduced? Not at all; we should spend more. A suggestion came from the hon. Gentleman that we should embark upon compulsory military service. Well, I cannot see much reduction of expenditure there. The Grants which are being given, the right hon. Gentleman says, are not nearly enough for the rural districts. The right hon. Gentleman the Member for East Worcestershire says that Birmingham is not getting enough. The right hon. Gentleman the Member for Fulham (Mr. Hayes Fisher) asks, What about London? And though I believe that London will get hundreds of thousands of pounds out of these Grants, a great Tory newspaper calls it a miserable pittance. Although the sum total is extravagant, the details are not nearly enough. We ought to spend more. That is the sort of criticism we have had about the expenditure. Now, when we come to taxation, we are told that indirect taxation is too high, and that, if anything, it ought to be reduced. Then, what about direct taxation? A tax on small incomes, I am told, is oppressive. Am I to tax large incomes? Oh, not at all! If I tax large incomes, I am crippling industry. So I must tax neither small incomes nor large incomes.
§ Mr. LLOYD GEORGE
I am glad the hon. Member recognises the fairness of the picture which I am drawing. Then 778 let us get on to the Death Duties. Settled land you must not touch, too. It is a breach of contract and an outrage. You must not got Death Duties, either, out of land which is not settled, because there you are taking money out of capital. Now what are you to do? You are to arrange your taxation in such a way that no one bears it and everybody benefits by it I do not believe that any Budget of modern times has ever been subjected to such muddle-headed criticism as the present Budget, and to such confused and contradictory criticism. Two or three hon. Members who have spoken here to-day have raised the cry that when you tax big incomes you are simply depriving people of employment. The hon. Member for Brentford (Mr. Joynson-Hicks) went to Grimsby and said—I take this as an illustration—that he had meant to buy a £900 motor car, but that the moment this Budget came in he cancelled his order, and merely spent £120 on repairing his old motor car. We are to look at all the people who would be employed in making this new motor car. But what the hon. Member does not recollect is this—that the money which is being raised is to be put into the hands of the local authorities for houses and that sort of thing. At the present moment the loss on houses is 20 per cent. of the total cost, so that on that basis his £900 motor car would, even on the present basis, have financed the building of at least twenty cottages. Surely that would employ much more labour than his £900 motor car!
The hon. Member for St. George's, Hanover Square (Sir A. Henderson), was very sad about the taxation of big incomes, but not because of the rich. He was thinking of his poor constituents. The right hon. Gentleman the Member for Wimbledon took the same point with regard to Death Duties. But when he was doing so I noticed that he claimed the Agricultural Rates Act as having been a great achievement, not merely for the benefit of landowners, but for the benefit of farmers. What he forgets is that the whole of that money came out of Death Duties, every penny of it, so that the hon. Gentleman is claiming as a triumph of finance for the benefit of farmers the great Act of Sir William Harcourt for raising the Death Duties. In this Budget I hope still further to benefit the farmer by the same method, and I venture just to quote a few sentences of the speech of the right hon. Gentleman the Member for 779 Fulham, and I shall do so for this reason: The right hon. Gentleman is the Member of this House who in three consecutive Sessions introduced a Motion, pressing upon the Government the urgency of doing this particular deed. He pressed us every successive year to make substantial Grants to local authorities; he was most anxious that we should do that, and he said that housing was at a standstill, that we could not clear out the slums, that the health of the people was suffering, and that it was all because of this burden of the rates, which paralysed and crippled the local authorities. He promised that if we only made these Grants he would treat the subject in a non-party spirit; he even went to the extent of indicating where we could find the money for these purposes. I will read his speech; he has forgotten it. He said:—There is an amount of national wealth in this country which is not taxed adequately, and which does not pay a sufficient or adequate contribution to national expenditure of that kind. There has been a great appreciation of the personal wealth of this country and that personal wealth has not contributed, in the way realty does, its fair share towards national services, and towards those forms of national expenditure, of which I, for one, should not complain—then why did he complain last week?—but which I wish to see if anything brought to that full fruition which is denied by the Chancellor of the Exchequer.That is the speech which he delivered a year or two ago. What was the speech he delivered last week, when we were doing exactly what he had urged upon us year after year. He starts by saying:—I am much more inclined to treat the mailer from a non-party point of view—but imagine my surprise on reading the next sentence. Instead of thanking the Government for carrying out his proposals, instead of promising his support, he said:—I want to ask, and I want the country to ask, whether we can or cannot afford this very large expenditure.It is the very large expenditure, but it is the very expenditure which he had been urging for years. He objects to Income Tax, to Death Duties, to indirect taxation, to raiding the Sinking Fund, and to spending all these Grants. If that is the case, why did he press these matters upon the Government for two or three Sessions? First of all, he poses as the ratepayers' friend, and underneath it all, I am sorry to say, he is a strong and irreconcilable partisan. There is no part of the country which will benefit more than London, and 780 I have not the slightest doubt that, if the rates are reduced in consequence of the Grants, he will be the first to claim it for the Moderates on the London County Council.
Now I come to the criticisms on the particular taxes. There has been the criticism upon the 1s. 4d. tax upon small unearned incomes. I should like, first of all, to point out to the House the difficulties of the Government with regard to that question. There has been an attempt to establish identity or similarity of income, whether earned or unearned. That we cannot accept. The right hon. Member for East Worcestershire (Mr. Austen Chamberlain) took the case of a person who has inherited an income of £701 a year. Take a man who is earning £701 a year. His income is precarious. It is dependent upon his health, upon his business, or the lack of business, or it may depend upon his having employment. It is exceedingly precarious, and once one of these things breaks down he is left with nothing.
Take the person who is receiving £701 unearned income. What does that mean? It means that he has an investment of between £15,000 and £17,000. That is a very different income from the income of the person who is earning his income, which depends upon his health, employment, and business. Therefore the Government cannot recognise that earned and unearned income are in the same category. But I should like to carry this a little further. I do not say that is an argument in favour of not making some differentiation in the case of very small unearned incomes. I will, first of all point out to the Committee the difficulties in which the Government are placed in regard to this matter. I can assure hon. Members that it was a matter of great anxiety to me and my colleagues before we introduced the Budget. I recognise the general justice of the demand which is made so far as the very small incomes are concerned. The difficulty is—and the right hon. Gentleman the Member for East Worcester put it very well—that the sheet-anchor of the British Income Tax is collection at the source. The moment that breaks down more than one-half of our Income Tax vanishes. The reason why the Income Tax of this country is more successful in the matter of collection than in any other country in the world where it has been tried is because of this collection at the source. As long as you 781 have collection at the source you cannot distinguish in the rate of collection. For instance, you cannot ask a banker, before he deducts Income Tax out of dividends, to find out the person's ability to pay—whether he has £300, £500, or £1,000, or £1,500 a year. That is impossible. It would completely smash the whole machinery of collection at the source. The only way to deal with it is after the amount has been deducted. There are two ways of doing that. One way we have already adopted. The case of the widow and children was put in the course of the Debate. I think that is the hardest case of all. If a widow has £300, or £400, or £500 a year, and has three or four small children to bring up, that is a very hard case indeed. We meet that case by doubling the allowance with respect to the children, so that, so far as the majority of that class are concerned—those under £500—they are better off now than they were before. There are still others who, I admit frankly, have a grievance which presses upon them hardly.
The only way of meeting it is by extending the rebates by allowing them to make claims for rebates. Let me point out what that means, and, once I have pointed it out, the responsibility rests with the Committee. There are a good many claims now for rebate, running into scores, and very nearly hundreds and thousands of cases, which involve the keeping up of a great stall to examine the claims, and, the moment you began to discriminate between the unearned incomes above a certain limit and the incomes below that limit, you would have to increase very considerably your staff. There would be the old charge of a "horde of officials." [An HON. MEMBER: "Hear, hear!"] There you are; it begins now. In this case a horde of officials would be established, it is true, not to collect, but to give rebates and exemptions. Having pointed out that, let me say what the Government are prepared to do. The Government are prepared to leave persons whose total unearned income is £500 and under exactly where they were before—at 1s. 2d. I think we can go further than that. Once we have established the principle, once we are prepared to set up this staff, it will not make very much difference, so far as the expense of scrutiny is concerned. Persons with £500 and under will pay exactly as before, and persons with £300 and under will pay 2d. less than before—that will be 1s. on £300 and under and 1s. 2d. on £500 782 and under. We cannot go beyond that, because it would be far too much for the Exchequer, and somebody would have to make up for the deficiency. The full cost will be £370,000 a year, but this year it will not cost half of that, because the examination of the claims takes a considerable time, and we shall take the amount out of the Exchequer Balances for this year.
§ Mr. CHAMBERLAIN
I do not follow the right hon. Gentleman as to the new staff or the necessity of delay of which he speaks. Must not all these people, with the limited incomes of which he has spoken already, have the right to claim abatement, and therefore have had to make a return of full income, which return has already, in past years, had to be examined by the existing staff, and why should there, be any delay or any further staff required to examine the same number of claims merely because they are entitled to claim a larger abatement?
§ Mr. LLOYD GEORGE
The right hon. Gentleman will not be surprised to hear that that was the first question I asked myself. The explanation is this: At the present moment it is not worth while for a good many people to put in their claims, because it is not a question of the two classes, after all. Those who have earned income may also have considerable unearned incomes, and very often the exemption comes from the earned part of the Income Tax. The deduction being from the earned part of the income, in many of those cases there would be no claim at all at the present moment. But the moment you make a reduction of the rate, then they all claim. Is that clear?
§ Mr. LLOYD GEORGE
You take the deduction of £160 from a man's income before you begin to make out what his Income Tax is. That deduction is made first from the earned part of a man's income, and, therefore, for the unearned there is no claim at all in respect of it. The moment, however, that you begin to make a deduction from the total, and to differentiate in the rates, then all will begin to put in their claims.
§ Mr. CHAMBERLAIN
Everybody who makes a claim has to make a return of the total income from all sources, and that has to be examined by the Inland Revenue authority before he is allowed the abatement of £160 or any other sum.
§ Mr. LLOYD GEORGE
That is a totally different claim. The man with an earned income, is taxed upon that basis. That is not a claim of rebate, and his is a claim of rebate which is a totally different thing. He has paid in the first instance and afterwards claims the money back. He pays in the first instance on the basis of deduction, and, therefore, he never makes a claim. The right hon. Gentleman will see that the claims will go up, by the figures which were given to me, to a prodigious extent, and that the figures would probably quadruple, if not quintruple, the total number of claims. That is their view. I am just hoping that they are taking rather a pessimistic view, but I am bound to take from the officials of one of the ablest Departments in this country the forecast which they make. I am not exaggerating the difficulty in order to find any reason for not doing it, but I am only pointing out the difficulty, in order to show the reason why we hesitated doing anything which would impair the efficiency of one of the best machines, and I think on the whole the fairest machine, for the extraction of revenue in this country.
I come now to the Settlement Estate Duty. The appeal with which I have some sympathy is the case where a man by will gives his property to his wife for life and afterwards to his children. There is a good deal to be said for that arrangement. He wants the enjoyment of the property to be given to the wife during her life. He may be an old man, and she may be old, and he does not like to take away from her the enjoyment of the income while she lives. That is a case which requires very special consideration, I admit, and I promise to give it full consideration, but I should like to make a little more inquiry, so as to draw a line clearly between that case and the other case. That is not the ordinary case of Settlement Estate Duty. The ordinary case of Settlement Estate Duty is the case where there is discrimination in favour of settled property. That, I think, is indefensible. The right hon. Gentleman himself did not defend it. He admits that on the merits, apart from the point of contract, which he put with great force, there is absolutely no case for discriminating in favour of settled land as against other property which has not been settled. The right hon. Gentleman said there is a contract. He suggested that we should recognise the case where there has been what he called 784 the basis of a contract, and that we should begin from to-day not to charge that 2 per cent. franking fee, and collecting our duty on settled land, just like on any other property. I would point out what that means. I should lose both ways by that. I should lose the whole of the franking fee of 2 per cent.; that would be gone, and I should not begin to get the benefit of it, nor would any other Chancellor of the Exchequer for nearly a generation. I should lose £1,000,000 straight away of income, and in addition to that eight or nine hundred thousand pounds of the new tax now proposed to put on. That means a loss of £2,000,000, and unless the financial genius of the right hon. Gentleman can suggest something better than that, I am afraid it is not very helpful to a Chancellor of the Exchequer in difficulties—with a deficiency.
I come to the question of contract. I cannot recognise that when a duty or tax is put on which specially favours a particular class, that a contract is established between the revenue and that class. That is an indefensible position, and once you begin to contend it, you will find the revene will be fettered at every turn. You have only got to have a Government in power which favours a particular class, and which makes an arrangement in favour of that class, and when the other Government comes in you cannot alter it, as it is a contract, and it would be a breach of faith to alter it. Will the right hon. Gentleman believe that that was exactly the argument that was used in the days of the abolition of the Corn Laws. Those who defended the Corn Laws said, "This is a contract, and on the basis of that contract we cut up our grass lands and converted them to wheat lands."
§ Mr. LLOYD GEORGE
And the kindly cheer of the hon. Member warns us what would happen. The same thing would apply to a duty on manufactures. The manufacturer would say, "I have laid down machinery on the strength of a bargain which I entered into with the State," and, as an hon. Friend reminds me, it was the argument that was advanced against the Wilson tariff in the United States of America. That is a most dangerous argument for any Chancellor of the Exchequer to admit. There is a much stronger case there with regard to Protection than there is with regard to settled 785 estate duty. There, undoubtedly, capital is invested not on the strength of a contract, but on the strength of the prospect which is opened out. There is no capital invested here beyond the 2 per cent. which is paid for franking. Let me carry it a little further. Some of this settled land will derive benefit from the very cash which we are raising to the extent at any rate of 15 per cent. of the charge upon it out of public rates. Suppose half the charges were taken off, as they were in 1896 by the right hon. Gentleman's Agricultural Eating Act, off agricultural land, does anyone mean to contend that in a transaction of that character, although half the charges were taken off at the expense of other people; that settled land could not be called on to contribute, and that the whole burden should fall on other people? That is an utterly indefensible proposition, and I cannot accept it. The first case to which I referred is on a totally different footing. But as far as Settlement Estate Duty is concerned, the Government must adhere to the position which they have taken up. Those are the two taxes to which I specially wanted to call attention. With regard to the other taxes, there has been really no criticism. The hon. Member for Wandsworth (Mr. S. Samuel) is the only one who up to the present has offered any criticism of any of the other taxes. He has criticised the Income Tax upon foreign investment, but as far as the rest of the Debate is concerned, we have had no criticism at all of the other taxes.
§ Mr. AUSTEN CHAMBERLAIN
Are you going to say anything about the new Income Tax on income reinvested abroad.
§ Mr. CHAMBERLAIN
The right hon. Gentleman will see the importance of that, because it means he has got money to play with, and he cannot defend all his other taxes on the ground that he cannot afford to give money.
§ Mr. LLOYD GEORGE
I should like to ask a question of the right hon. Gentleman. Suppose he had to meet a great deficiency, and let us assume now that all the expenditure is justifiable because it is necessary for the purpose of this argu- 786 ment, and that he had to face it, would he, standing at this Box, be prepared to risk his finance on the assumption that he would get very much more—I will not say ultimately, but this year or next year, out of that particular tax? I should be Very surprised if he would. I do not say that ultimately we will not get that. I think we shall—in fact, I have very little doubt about it. But that will be a matter of some time. What I have to do is to face an immediate deficiency for next year, or, at any rate, I have to contemplate a deficiency next year, and I do not think any Chancellor of the Exchequer would be justified in coming to the conclusion that immediately he would get anything like the whole revenue which he expects ultimately to get from that tax.
§ Mr. CHAMBERLAIN
I thought the Chancellor of the Exchequer mentioned the larger figure which he gave us as the ultimate figure. If lie meant it only as the figure for next year, I cannot conceive how he can stop at that.
§ Mr. LLOYD GEORGE
There, of course, I am acting on advice, arid that advice I have got from men of much more experience in estimating these things, and who, up to the present, have been extraordinarily accurate in the estimate they have, given—in fact, it is a marvel to me the almost scientific accuracy with which they are able to forecast revenues which are dependent on so many contingencies. That is the forecast they have given to me. I do not mind telling the light hon. Gentleman that I have known of very competent authorities taking the view he takes, and it cheers my heart to hear it. At any rate. I could not go in the face of my advisers and come to the conclusion and base my Budget on the assumption that we would get much more. I come to another point of criticism, the criticism that the sketch I gave of the Budget proposals involved legislation that would keep us here for a number of weary months. The right hon. Gentleman and I have had some experience of that with regard to Budgets, and I am perfectly certain neither he nor I want to repeat it. It took years off outlives, though I hope we have recovered them since. I therefore have a personal interest in not embarking upon any scheme which would involve the introduction of Bills which would occupy our time until the late autumn, and I do not think that it will be necessary. May I say here with regard to the scheme that it is very difficult within 787 the limits of a Budget speech to state the whole of the proposals. I could only state just enough to indicate what I wanted the money for, because, after all, the bulk of the legislation which will deal with this will be in the hands of my right hon. Friend the President of the Local Government Board, my right hon. Friend the President of the Board of Education, my right hon. Friend the Chief Secretary for Ireland, and the Secretary for Scotland. But this much I did indicate. I indicated two things, and I mean to repeat them now because it is necessary to do so in order to explain what legislation will be necessary. I indicated that in the opinion of the Government these Grants will not be distributed until one or two clearly defined conditions had a statutory recognition, and that we thought it would be positively mischievous to raise huge sums of money and distribute them without any conditions amongst local authorities in the form of doles. It would be the endowment of one class, and, what is still more, the rearrangement of local taxation, and especially the readjustment of local valuation, which every man who has had any experience of local work knows to be essential, would be put off for ever.
You cannot deal with these problems except there is money to be voted from the Exchequer, because it enables you to ease the process and to put it through without prejudicially affecting certain interests. Therefore, we thought it essential that there should be two or three conditions before the money is distributed. The first is, that we should insist, as part of the scheme of distribution, that there should be an equitable valuation of property, subject to local taxation, which should assess properties at their real value and differentiate between improvements and site value. In the second place, there should be statutory provisions inserted in a measure of this Session, before any money is distributed, that when that valuation is completed the relief shall be granted exclusively in respect of improvements and not of site. That is a guarantee that the site owner qua site owner will not get the benefit. If he gets it, it will be because he has improved the site. The landlord who spends a large sum of money in improving the site will benefit; when he has not done so, he will derive no benefit. The third point is, that there should be provisional arrangements for the distribution of the money in the meantime. Our 788 view is that the valuation will be sufficiently advanced to enable the money to be distributed on the basis of improvements and site for the second half of the financial year 1915. In the meantime provisional arrangements will be made for distribution. What does that involve in the way of legislation this year? It involves only the establishment of these two conditions: First of all, you must have provisions to adjust the present valuation to the purposes of local taxation—not a very big task, as I shall be able to point out. There was a Clause of that kind in the Revenue Bill of last year. My right hon. Friend the Attorney-General, in reintroducing the Revenue Bill, will embody further Clauses of a like character, enabling us to proceed immediately with a national valuation for local taxation purposes.
§ Mr. WALTER LONG
Do the Government propose in their new Bill to enact that all the assessments made by the various assessment committees and municipal authorities are no longer to stand, and that the Government assessment will supersede them all?
§ Mr. LLOYD GEORGE
The proposal will be more or less on the lines of the Bill introduced some years ago by the right hon. Gentleman himself—a Bill which I was very sorry at the time that he abandoned, and which proposed to set up a valuation that did supersede the existing system.
§ Mr. LONG
No; my Bill proposed to create a new local assessment authority on which representatives of the Government could sit, but there was no proposal in that Bill to supersede by a Government valuation the assessments already arrived at by the local assessment committees and the county councils.
§ Mr. LLOYD GEORGE
I am sorry to put my memory in opposition to that of the right hon. Gentleman about his own Bill, but I have been refreshing my memory quite recently, and I have no doubt at all that the proposal there was that there should be a fresh valuation.
§ Mr. LONG
Certainly. I am sorry to interrupt the right hon. Gentleman, but he will realise that it is a point of great importance. The question I am asking is not whether there is to be a new assessment; that is quite obvious; but whether the new assessment which is to be made by a Government Department is to supersede the assessment now made by law by the local authorities.
§ Mr. CROOKS
Does the right hon. Gentleman propose a new Department to overlook the local assessments to see that there are not too many sympathetic assessments?
§ Mr. LLOYD GEORGE
The right hon. Gentleman has asked me a question which he must see is completely outside my Department. I was only indicating generally what the legislation would be. I understand the right hon. Gentleman now to admit the point that I made first. He admits that the new assessment, by whomever made, must supersede the old?
§ Mr. LLOYD GEORGE
Then I misunderstood the point. But he has put a second point as to whether the local authorities would be interested in the process of making the assessment. Certainly, I understand the local authorities will be interested; at the same time, the general recommendations of the Kempe Committee will be followed to the extent that the present land valuation will be utilised for that purpose. The right hon. Gentleman is putting a question to me about a Bill which will not be introduced by me, but by a totally different Department.
§ Mr. LONG
I quite agree. But my question arose out of the right hon. Gentleman's original statement that the Government hoped that the new valuation would be sufficiently advanced to make it applicable in the second half of 1915, and that provisional arrangements were to be made for the meantime. What I want to know is, do the Government contemplate passing in this Session a Bill bringing a new system into operation by 1915, and therefore automatically putting an end to all existing assessments, which are made, as the right hon. Gentleman knows, not annually, but over a period of years?
§ Mr. LLOYD GEORGE
If the right hon. Gentleman asks whether it will automatically put an end at the present moment to existing valuations, of course 790 it will not. It will put an end to the existing valuations the moment the new valuation is ready to take its place. That is all. The assumption of the Government is that the new valuation will be sufficiently advanced in October, 1915, to enable us to rely upon it. But the light hon. Gentleman knows perfectly well that no new valuation comes into operation immediately, even under the present system. You do not really settle the whole of the valuation very often for years. I remember perfectly well when a new valuation was made in our Union it took three or four years to establish. Therefore I am simply referring to the provisional valuation upon which you have to operate until all the appeals have been settled. I hope I have made that point clear. If I have not, I shall be glad to reply to any questions that may be put.
§ Sir G. YOUNGER
Does the right hon. Gentleman propose to sweep away the whole of our Scottish system of valuation? Does he, as a matter of fact, tax on the capital valuation and not on the annual rent?
§ Mr. LLOYD GEORGE
I do not think the hon. Baronet is entitled to ask me questions on a Bating Bill with which I shall have nothing to do.
§ Mr. LLOYD GEORGE
It is not really It is part of my proposal to the extent that I have to give a general indication of the lines to be pursued; but that surely does not mean that every Bill to be introduced for the purpose of carrying out that proposal I have to prepare and have ready at the present moment. As a matter of fact, I should not be in order, and I thank you very much, Mr. Whitley, for allowing me to go so far.
§ Sir A. GRIFFITH-BOSCAWEN
Can the right hon. Gentleman state on what principle the money will be distributed this year, before the new valuations come in?
§ Mr. LLOYD GEORGE
That is a question which would certainty be ruled out of order. If I could go into the whole question of allocation of funds, I should have a good deal to say; but on that question I have taken the opinion of the Chair, and should be glad to take it now.
§ The CHAIRMAN
I have allowed the interjections to go on, because they illus- 791 trate so well exactly what I foresaw a few days ago, namely, that if we went too far into the nature of the other Bills that are to come after, we should spend all our time on them, and practically none on the taxes to be raised. I do not want to be overstrict with the Committee, but I think hon. Members will see that with regard to the details of those measures we must wait until the legislation is introduced.
§ Mr. BONAR LAW
We quite recognise your ruling, and I am sure all of us desire to abide by it, but surely it must be relevant that, in connection with the Budget statement, the Chancellor of the Exchequer should say in what way he proposes to spend the money which he is now raising. I am afraid he only made use of you, Sir, to avoid doing so.
§ The CHAIRMAN
I think the right hon. Gentleman may rest assured that I shall not allow myself to be made use of in that way. [HON. MEMBERS: "Withdraw."]
§ Sir A. GRIFFITH-BOSCAWEN
On a point of Order. Surely the question of the distribution this year is not a matter for a Bill not yet introduced, but a matter for the Finance Bill to be based upon these Resolutions?
§ Sir W. RYLAND ADKINS
Without making any imputation upon my right hon. Friend, if he could give us, in the words he has used, a "general indication" of the actual relief during the current year and its distribution, surely that would not be out of order in connection with the opinion we are to form as to the propriety of this taxation.
§ The CHAIRMAN
The hon. Member is quite right, and that is what I understood the Chancellor of the Exchequer to be doing—giving a general indication. Of course, we cannot discuss new Clauses which will be necessary in future Bills.
§ Mr. LLOYD GEORGE
I am very sorry to have to revert to what, I think, after all, was an observation rather unworthy of the right hon. Gentleman opposite. So far from my desiring not to do so, I was fully prepared to do it, and I consulted the Chair in advance as to whether I could. I meant to give the House of Commons the fullest particulars, and even to give cases which I have worked out showing how it would work. I consulted the Chair upon that, but I could not go into it for the 792 simple reason that it would open out a great general Debate.
§ Mr. BONAR LAW
In view of the explanation of the right hon. Gentleman, I am sorry that he considers that what I said was meant offensively to him. I did not mean it so. What I meant was that, in my opinion, the questions which he was asked came within the scope of the Bill now to be introduced, and that we ought to have a very clear indication of the way in which the money was to be used.
§ Mr. LLOYD GEORGE
That is the very next step I was going to take. I have already stated that I have obtained the ruling of the Chair upon the limits. I have that ruling, and I mean to confine myself strictly to it. The right hon. Gentleman the Member for Wimbledon (Mr. Chaplin) stated that he had not the least knowledge of the purposes for which the money is to be voted. That is really a remarkable statement, because, at any rate, I have given a general indication of how the money will be spent. First of all, I took the money for Poor Law purposes. I followed the Kempe Committee, which gave a most exhaustive account of what would be done. I stated how the money would be applied for Poor Law purposes, and I then came to the question of main roads. I stated the way in which the money for main roads would be arrived at—one-half for first-class roads, one-fourth for second-class roads, and nothing for district roads. So the right hon. Gentleman knows that about main roads. I even stated who would classify the roads. As to police, I stated that in future half the cost would be contributed out of Imperial taxation. The same with regard to criminal prosecutions. The whole of the cost with regard to cattle disease I said would be borne by the Exchequer. The right hon. Gentleman cannot possibly have read what I stated, otherwise he would not have maintained that he had not the least notion of how the money would be applied.
I then came to the question of education, and I there stated the general principles upon which the money would be distributed. They were stated at great length by my right hon. Friend the President of the Board of Education last year. I stated that the two principles were these: With regard to education, the bulk of the money would go for the relief of the poorer districts and the districts in which the expendi- 793 ture on education was the highest. I have stated since, in answer to questions, that the small schools Grants would also be renewed in accordance with the advice of the Kempe Committee, that being for the special benefit of the rural districts. The only Grant of which I did not give the basis of distribution was the Public Health Grant. That will have some reference to services, and also some reference to needs. I cannot go beyond that within the limits of the Chairman's ruling, but I think I can give a general indication, perhaps, of the principles by which we arrived at that basis. The first is that half the expenditure upon public health officers, like the medical officers of health, sanitary officers, veterinary officers, and others, will be borne by the Exchequer.
§ Mr. LLOYD GEORGE
Yes, I think that will cost about £300,000—I am speaking from memory. In regard to the balance there will be two elements to be brought into account. The element which the Kemp Committee recommended should be considered was the element of population. We think that will be unfair to the poorer districts, and we also think it would be unfair to the agricultural districts.
§ Mr. LLOYD GEORGE
I thought that would please the right hon. Gentleman. For that reason there is also an element which is to be brought in, and that is the element of the number of small houses under the £20 assessment for Inhabited House Duty. That will favour the rural districts to a very considerable extent, and it will favour also the poorer districts. I have been asked a question about various districts. The right hon. Gentleman opposite gave the House the case of the Holland Division of Lincolnshire. There is one thing which I would complain of in the right hon. Gentleman, and that is that in quoting that case he called it a typical case. He must know that it is an extreme case.
§ Mr. CHAPLIN
I said I took it as the case of a typical agricultural county—meaning by that that it was almost and entirely an agricultural county.
§ Mr. LLOYD GEORGE
With due respect to the right hon. Gentleman, I would, not challenge any statement he might make on agriculture, because he is the greatest authority in this House on the; subject. [Laughter.] I mean what I say. At the same time, I have had a recent opportunity, and my right hon. Friend beside me has had the opportunity, oil examining the figures for several typical, counties, and the Holland Division of Lincolnshire is a most exceptional case. It is a case where there is an unusual proportion, I think, of agricultural land of a rather high value. You have got small holdings there. The rates have not gone up very considerably. I have been examining that case, and it is not typical in any respect. We have examined the case of Wiltshire, Somersetshire, Oxfordshire, and Cambridgeshire. I think any Member of this House will admit that on the whole these are fairly typical English agricultural counties, taking them through and through. My right hon. Friend at my side tells me that he has also examined some others. I think, on the whole, that Somerset is the one which comes out worst, Somerset will receive something like a reduction of 3d. in the £. But let me warn, the Committee that, it is very difficult at the present time definitely to state what the amount will be, and for this reason: It depends upon the classification of the roads and the classification of the roads, of course, depends on what the Road Board will do. We have not got their opinion. Before these figures—to use a famous phrase, which I hope will not be considered provocative by the House—before we put these figures to the proof, I hope that the actual amounts will be arrived at. I have no inducement at the present moment either to exaggerate or underestimate, but rather to arrive at the exact figure, and I should like the figures to be verified.
I now come to Oxfordshire, which is also a case in point. In Oxfordshire a penny rate produces about £3,000. The net gain to this county under our proposals will be about £14,000, or the produce of something like a 4½d. rate. In Cambridgeshire, a penny rate produces £3,000, and this county under these proposals will get about £20,000, or the produce of a 6½d rate. In Wiltshire, a penny rate, I believe, produces £5,780. Wiltshire will have a net gain out of this Grant of something like £47,000. Wiltshire, which is a typical agricultural county, as the right hon. Gen- 795 tleman knows, will gain very considerably; but in Wiltshire, I think there is a very enterprising county council, and, of course, counties which have not spent money on public health or education cannot really come to Parliament and ask for Grants-in-Aid, and expect to get the same contribution as others who have spent money! The only thing that will be guaranteed by our scheme is this: that no county and no union in the county will be a penny the worse by the abolition of the Agricultural Eating Act, so' that even if the right hon. Gentleman establishes his case in the Holland Division of Lincolnshire, the Holland Division will not lose a penny. Of course, I do not know very much what money has been spent there on education, and upon public health. There may have been reasons, special or otherwise, apart from that, why they will not derive any profit or gain out of the money which is to be distributed. What I wish to say is this: that towns, at least some towns, will naturally get a higher Grant in proportion to the population, and why? Because they have spent more upon their services, and the counties that have done well and shown enterprise will naturally get the greatest relief, and for a very good reason.
§ Mr. LLOYD GEORGE
Because the rates are less. You cannot compare a county which is paying 4s. 6d. with a town. Here are the rates for the Division to which the right hon. Gentleman referred. In 1896 houses and land paid 2s. 8d. They are now paying 3s. 6d. for a house alone, while agricultural land is paying 1s. 9d. agricultural land is paying considerably less than it did in 1896, before the right hon. Gentleman made his Grant. The double rate has gone up. You cannot very well compare a district like that with districts which are rated at eight, nine and ten shillings in the pound, and come forward and demand that a district like that should get exactly the same measure of relief. There is no fairness in the demand at all. To my mind the right hon. Gentleman—
§ Mr. CHAPLIN
It is very difficult, indeed, impossible for me—to-day in particular, hearing worse than I usually do—really to follow the right hon. Gentleman in his replies. But he misunderstands me altogether. I asked the question to-day for the purpose of being able to make a 796 comparison between the Grants which are received now and those that are to be received. What I call a typical agricultural county is one in this sense: one which is almost purely agricultural, where agriculture is practically the main and chief industry in it. Now, perhaps, the right hon. Gentleman understands why I used that illustration. I asked another question for the purpose of comparison between what is received under the existing Grants, and what is the estimate under the proposals of the Departmental Committee for that particular place. I make no complaint about it, or about the amounts at present received. So far as I know they receive a very fair share at present. What I wanted to know was, how would the district fare under the new proposals when the present agricultural Grant is taken away? I understood from the answer given to me this afternoon that not even an approximate estimate of what it is going to receive can be made. It was of that I complained. We are asked to vote all these enormous sums without knowing how they are to be distributed.
§ Mr. LLOYD GEORGE
After that very effective interruption of the right hon. Gentleman I do not think I will pursue the matter any further—
§ Mr. LLOYD GEORGE
That is a very rude observation. I desire to verify the figures, and I thought I was treating the right hon. Gentleman with great courtesy. I was going to say I will not pursue the matter any further except to say this: That I am very glad to hear from the right hon. Gentleman that he did not mean to use the word "typical" in the sense of its being simply—
§ Mr. LLOYD GEORGE
That is all I want to know. I think it is a very important point. I am not prepared to challenge what the right hon. Gentleman said about it being a purely agricultural district, because he knows it so thoroughly. So long as he agrees with me that it is not a typical agricultural county in the financial sense then there is no quarrel between us.
§ Mr. CHAPLIN
I venture to confirm that. It is one of the very few counties where the rating of the land is actually in excess of the rateable value of all the other hereditaments. That is why I took it.
§ Mr. LLOYD GEORGE
Now I understand the point that the right hon. Gentleman wishes to establish. The only other case where a Bill may be necessary is a Bill—not a Bill of any magnitude—with regard to the insurance branch. Those are the only measures necessary to be carried this year—the Finance Bill, the Revenue and Valuation Bill, and perhaps an Insurance Bill for the purpose of incorporating some of the provisions which I have indicated.
§ Mr. LLOYD GEORGE
With regard to deduction, a Bill is not essential for the purpose of Grant. Whether or not there is to be an Education Bill for other purposes is a totally different matter. That is not for me to answer about.
7 0 PM.
I should like to say a word now if the Committee will give me their indulgence— [HON. MEMBERS: "Hear, hear."] I have been subjected to a process of cross-examination—of which I am not complaining—but which has prolonged my observations much longer than I intended—I should like to say a word about Debt. The night hon. Gentleman was extraordinarily severe about a suspension of any portion of the Sinking Fund. He rather talked about himself with the airs of an austere economist. You might have imagined that the experience of the right hon. Gentleman and the Government to which he belonged in the past had been that of paying off debts for years, and no one would have thought that the Government to which he belonged had added £100,000,000 to the National Debt, and that even during times of peace they had not liquidated half as much debt, on the average, in times of peace, as we are making provision for this year. So I do not think the right hon. Gentleman is quite in a position to criticise us upon that subject. There was one thing the right hon. Gentleman said that I should like to answer now. He said that the last year he was Chancellor of the Exchequer the fixed debt was very much higher than we propose it should be this year. Yes, the fixed debt charge as always high, but so were the new bonds. It is just like the case of a man who says, "Look at me paying off the mortgages of my estate." But he never tells anybody that he does so by means of increasing the overdraft at the bank. No amount of criticism or juggling or pedantry can get rid of this one fact: That during the years we 798 have been in Office we wiped out £104,000,000 of National Debt, and that the provisions we are now making will enable us to have wiped out nearly £115,000,000. That is the reserve for war which we have been piling up, although I do not see why we should always be contemplating the prospect of quarrelling with our neighbours.
With regard to the general charge of extravagance made against us, let the right hon. Gentleman think of the position we are in compared with our Continental neighbours. We have had two deficits in this country during the last five or six years. So had our great neighbours, but their deficits were entirely attributable to armaments. Two thirds of the money we have raised has gone to the work of social reconstruction. The whole of this extra money—almost certainly two or three millions—is going to the purpose of social reform, and some of this money is transferred from one service to another. It does not represent an increase at all in national indebtedness or taxation. During the whole of this time all our deficiencies were attributable to the work of social reform. We have been paying debt while they have been increasing it. There is another factor you have to take into consideration when you come to high expenditure. There is the question of retrenchment. Retrenchment is not a matter entirely of the amount which you spend, but of the objects on which you spend it. [An HON. MEMBER: "Oh!"] Certainly any business man—and the hon. Member claims to be a business man—knows perfectly well if his estimate shows that this year he is spending £10,000, whilst ten years ago he was only spending £500, he may be doing better. The first thing he has to ask himself is is that £10,000 reproductive, and is he not making more by the expenditure of the £10,000 than he made by the expenditure of £500? If he is, the additional expenditure is the best economy. In the course of these Debates expenditure upon armaments seems to be regarded as the only expenditure that is economic. You can be extravagant so long as it is on the old well worn ruts of extravagance. [A laugh.] I do not see why the hon. Member should laugh. I am trying to state the facts. He thinks it is amusing. It is suggested that so long as expenditure is along the old well worn ruts of extravagance then it is legitimate. No additional expenditure can possibly be 799 justified unless it is on armaments. That is all the criticism I heard in the course of these Debates.
§ Mr. LLOYD GEORGE
I am referring to hon. Members opposite. The hon. Member is not yet opposite, and I say that every criticism which I heard from every hon. Gentleman opposite was criticism which rather condemned the reduction of armaments. The right hon. Gentleman the Member for Fulham (Mr. Hayes Fisher) spoke of the greatest vice of the Budget. What was the greatest vice of the Budget? That I held out the prospect, OD the strength of Admiralty advice, that there might be reduction next year. He condemned that. I was told that the business of the Exchequer is to watch expenditure, to criticise it, to cut it down. [HON. MEMBERS: "Hear, hear."] Hon. Gentlemen opposite cheer that. I was supposed to be fighting against the Navat Estimates. I do not know where all this information about the Cabinet comes from, but I was supposed to be doing what is the duty of every Chancellor of the Exchequer in examining great estimates when there is an increase. There was not a Tory paper in the land which did not condemn me without knowing the ground. They knew nothing of the Estimates, or of the grounds of criticism, yet a Member of the late Government said, "Whatever expenditure the Admiralty asks for we will back up the Liberal Government." That is their view on this question of the Army and the Navy, and the right hon. Gentleman opposite says, "Yes, because it is necessary." Is not expenditure on the health of the people necessary? I am told I am indulging in high expenditure which is indefensible because I am spending money but not upon the Navy or the Army. I am encouraged to spend it on the Navy and the Army, and I am criticised if I exercise my light, and discharge my duty as Chancellor of the Exchequer—I am condemned, and I am called a Little Englander—but when it is a question of spending money on clearing out slums and on public health, then it is I am doing a thing that, forsooth, I ought never to have done. [HON. MEMBERS: "Who said so?"] What is the condemnation of the expenditure, then? This is expenditure upon improved education, upon public health, upon public roads—they are not criticised; on the contrary, the demand is that 800 the sum ought to be more. Very well. The criticism is, therefore, of the expenditure on the ground of public health and education. [HON. MEMBERS: "No."] If not, what is the criticism? The right hon. Gentleman opposite said something: about mixing finance with sentiment. What is the sentiment? Is building good; houses for the working classes sentiment? Is improved education sometime it? Is the stamping out of tuberculosis a matter of sentiment? All these are the most practical things for which any Minister could ever consider. That is not mixing finance with sentiment. It is mixing duty with the best business any Minister could undertake. The right hon. Gentleman opposite in his speech appealed to the best memories of the past, greater, as he said, than either himself or myself. Of course, I admit that. But has he ever read what some of these great men said about this problem? Does he remember a great Conservative leader promulgating a policy for his party in 1872? What did Mr. Disraeli say in his famous speech in Manchester in 1872? He said this:—In attempting to legislate upon social reform, the great object is to the practicable.[HON. MEMBERS: "Hear, hear.] I thought that would be cheered. Now listen to what practical legislation is:—To have before his some distinct aim and distinct means by which they can be accomplished. Gentlemen, I think public attention as regards these matters ought to be concentrated upon sanitary legislation. Gentlemen, I cannot impress upon you too strongly my conviction of the importance of legislature and society uniting together in favour of these important results. After all, the first consideration of a Minister should he the health of the people.It was not sentiment in those days; it was the business of the Minister, and' when a Minister stands here and proposes that four millions or five millions of money should be expended on the very purposes which Mr. Disraeli said was the the first business of a Minister, his degenerate successors, one after another, start up and protest against it. The right hon. Gentleman opposite seems to think there is a very great change at the Exchequer since the great days when he was there. There is a change, I admit. I admit, there is a great change, but it is not a change for which I am responsible. It is a change in the conditions of this country—a vital change, a fundamental change and a change which, every Minister is bound to take note of. The right hon. Gentleman thinks if he came back to the Exchequer to-morrow all he would have, to do. is to sit in this chair and work out, 801 how to find more money for the demands of the Army and Navy, how he is to readjust taxation—stripped tobacco, and things of that sort, and what he is to do with the Sinking Fund, and, if he was in u very bold and enterprising mood, I have no doubt at all he would introduce some sort of tariff. But if he thinks that is going to be his function when he comes there he is greatly mistaken. National finance is up against the world; a new world has to be developed. What is it? The right hon. Gentleman forgets that the Education Acts of the last forty years have effected an enormous change in the actions of the people towards the Government. In the old days the people lived in poor houses, overcrowded, in ill-health; they took all the risks of life without any help from the State; they suffered unemployment, sickness, old age; their children were starving, and they thought it was the dispensation of Providence and that they were bound to suffer. They are educated to-day as their masters were fifty years ago. They know so far from this being a Divine decree, it is on the contrary the mismanagement of men. They mean to demand a change, and they are coming to the House they command, which they realise for the first time their power over. The right hon. Gentleman and his friends think that the murmurs of insurrection can only be heard in Ulster. He is mistaken. There is a revolt surging up around him in this country amongst millions of men against their conditions, and unless the rich, the opulent people in this country are prepared in time to make sacrifices to lift their less favoured fellow citizens out of their wretchedness, a day will come, and it will come soon, when they will look back again with amazement and with regret to the days when they protested against paying 1s. 4d. extra insurance against revolution, when it came from the Government.
§ Mr. WORTHINGTON EVANS
As hon. Members know, speeches by the Chancellor of the Exchequer are by no means easy to follow. The right hon. Gentleman seems to claim a monopoly in the desire to improve the conditions of the people. He seems to have discovered to-day what for the last two or three years the Government have been refusing to realise, that the housing problem is urgent and pressing, and the only answers—excepting perorations such as we have listened to to-day from the Government Benches—have been taunts that the proposals to 802 provide good housing for the poor were proposals which were charity in bricks and mortar. Today, it has suited the right hon. Gentleman to give us the other mood in which he has shown himself desirous also of assisting in the better housing of the people. I will not pursue that point. I will deal, if I may, with another part of the statement which the right hon. Gentleman has made. The Chancellor of the Exchequer was chiding us just now for not having stated the truth and the whole truth about some of the complaints we have been making about him. The right hon. Gentleman stands up at that box and says, "Whatever you think of my tax, and the means by which I am proposing to raise the money, whatever you think of the expenditure which I am committing the nation to, do not forget that I hold the record in debt reduction and that my Government have paid off £104,000,000 of our total indebtedness." He forgets that £13,000,000 of that was money supplied by the last year of the Administration of the Unionist Government, when the right hon. Gentleman the Member for East Worcestershire (Mr. Austen Chamberlain) was responsible for the finances of this country. The real fact is that this Government has not paid off £104,000,000 of debt, but they have reduced the dead-weight debt by £92,000,000. The truer comparison really is the amount of reduction of the total capital liabilities, and that amounts not to £104,000,000, but to £82,000,000.
Let us pursue that point a little further. How has that debt been repaid? When the Liberal Government came into office they found that the Unionist Government had fixed the capital taxes, or Death Duties, at a rate which brought in about £13,000,000 a year. Since the Liberal Government has been in power they have increased the Death Duties, or capital taxes, by means of increases and the ordinary growth of their produce until the Liberal Government has received £73,000,000 of extra capital taxes beyond the capital taxes which were at the disposal of my right hon. Friend the Member for East Worcestershire. So that in regard to the £82,000,000 which is the principal figure redeemed by the Liberal Government, as to £73,000,000 of the capital taxes they have received that amount in excess of the capital taxes available to the previous Unionist Government. The right hon. Gentleman told us nothing about that. With regard to the balance, how has that been redeemed? Not by the 803 virtue of the right hon. Gentleman and the policy of the Liberal Government, but by the luck of having surpluses which went to the Old Sinking Fund. In the period the Liberal Government has been in power between £20,000,000 and £25,000,000 of surpluses have gone to the Old Sinking Fund, and this has enabled the right hon. Gentleman to redeem the rest of the capital liabilities of which he has been boasting. The right hon. Gentleman has done this by raiding the Old Sinking Fund. In 1908–9 he raided that Sinking Fund of about 40 per cent. of the amounts which ought to have been placed in it. In a subsequent year, 1911–12, he raided the Sinking Fund again to the extent of about 60 per cent. of the amount that ought to have been put into it. Last year he began to "jockey" with the Exchequer balances. There was £1,000,000 left over in the Exchequer balances, which ought to have gone to the Old Sinking Fund, and it was kept out, together with another £500,000, for a purpose to which it was not applied, and it remained in the Exchequer balances.
The right hon. Gentleman came clown to the House with a Budget that did not balance by about £815,000, and he used that £1,000,000 of Exchequer Balances in order to balance his Budget. He denied it at the time. He said he was not budgetting for a deficiency, that it was not within the expenditure of the year, and he was justified in using it. That is not what he said last Monday when he came down here, because he quite forgot that he had laid down that proposition last year, and he told the House that this year he was most fortunate, because last year he had to budget for a deficiency. The right hon. Gentleman will find that in the OFFICIAL REPORT. There was a deficit last year, which he could only make good by using the Exchequer Balances. I want the right hon. Gentleman to again consider the question of the Settled Estate Duty. I understand that the right hon. Gentleman says he is going to consider the case, which was a very usual one with professional men and the trading class, of a man giving his property to his wife for life and his children afterwards. That is the ordinary will of professional men and the trading class. In that case I understand the Chancellor of the Exchequer is going to consider the hardship which under his previous proposal would arise. I will take the case of a professional man or a mem- 804 ber of the trading class who has accumulated out of his own earning a small fortune of £20,000. The rate of Death Duty to-day is 6 per cent. and the Settled Estate Duty to be paid on the death of that man is 2 per cent. That amount will frank the estate, so that on the death of his wife no further Succession Duty is payable when the estate passes on to the children, although there is an additional 1 per cent. duty.
§ Mr. WORTHINGTON EVANS
Of course, if the right hon. Gentleman says he is sure on that point, I will accept his statement.
§ Mr. LLOYD GEORGE
In the ordinary case of a will of that kind there is no 2 per cent. paid, and it is not the Settled Estate Duty that I am dealing with.
§ Mr. CHAMBERLAIN
Does the right hon. Gentleman mean that no difference will be made when the children succeed to an estate? If he says so, he will relieve a good deal of anxiety.
§ Mr. LLOYD GEORGE
There never has been 2 per cent. taken in those cases. This is what is laid down in the Finance Act of 1894, Section 5, Sub-section (1):—
There never has been Estate Duty paid in those cases at all.
- (a) A further Estate Duty (called Settlement Estate Duty) on the principal value of the settled property shall be levied at the rate hereinafter specified, except where the only life interest in the property after the death of the deceased is that of a wife or husband of the deceased."
§ Mr. WORTHINGTON EVANS
I am much obliged to the right hon. Gentleman for his statement. Let me restate my case. I was assuming £20,000. There would be 6 per cent. Death Duties. There will be in addition 1 per cent. Legacy Duty, so that the total will be 7 per cent. Upon the death of the wife there would be another 6 per cent. duty assuming that the property had been given for life, and then it would pass to the children without further duty. I understand that is the proposal of the Chancellor of the Exchequer 805 That is a case which seems to me to be one of extreme hardship, because it amounts altogether to 13 per cent. upon an estate, because the man has to provide by an insurance in his lifetime on the capital value of the estate which will pass on to the children. That is 13 per cent. on a very small estate. Personally, I prefer to look at it in the light of Income Tax. Take the average man who cannot expect to gain any large fortune, and he can only expect by real saving to accumulate a small capital, which he desires to pass on at his death to his family intact. He calculates what duty will be payable upon his death, and now in the majority of cases, wherever he can he insures his life for such a sum as will pay the Death Duty and will pass on that small estate to his family. If that 13 per cent. is to stand it means that in order to retain that estate intact to-day that man has got to pay the equivalent of 3s. 3d. in the £ in Income Tax. I have taken this on the assumption that the man was forty-two years of age, and that he could get an exact 3 per cent. premium. The combined effect of the insurance premium and the tax which he has to pay amounts to an Income Tax of 3s. 3d. in the £.
I have gone a little further. If you take an estate of £150,000, you will find that the combined insurance of a man at the age of forty-two and the Income Tax amounts to very nearly 5s. in the £. This depends on the rate of interest you estimate. I have estimated it at 4 per cent., and an unearned income of £6,000 a year and the Income Tax on that will be about £400 a year. The insurance premium would be about £1,050, and that works out, reduced to terms of Income Tax, as an Income Tax upon the man's earnings of very nearly 4s. 1d. in the £. Then the Chancellor of the Exchequer says, "In those cases where the 2 per cent. Settlement Estate Duty has been paid, I still intend to vary the arrangement and to charge the full duty, notwithstanding that the 2 per cent. has been paid." He would not admit that there was any contract. He quoted what seemed to me to be quite a separate case, the case of a manufacturer who has laid down plant for a change in an Import Duty, and he seemed to treat that as an analogous case. That is not so at all. The manufacturer has had no direct relation with the Government. The Government has never consulted the manufacturer about what Tariff Duty is to be imposed, but in the case of these Settlement Duties 806 the Government is in direct contractual relationship, in that it has taken 2 per cent. from the individual in order to relieve that property from the tax. Now the Government are going back on the contract under which they have received cash in a direct relationship. It is a totally different thing from the Government altering a Tariff Duty. There it does not enter into a contract with the manufacturer or take money from the individual manufacturer. It has treated him as all other citizens, and it is entitled to alter the law. Here the Government have actually taken 2 per cent. in order—these were the Chancellor's own words—"to frank the estate." What does the Chancellor of the Exchequer mean by franking the estate if it is not accepting the 2 per cent. as a consideration for freeing the estate from the very duty which he now proposes to put upon it?
It seems to me that this is a gross breach of faith on the part of the Government with people from whom the Government have taken money. I feel this so strongly that I am going to suggest to the Chancellor of the Exchequer another way of getting the money rather than that he should commit this gross breach of faith. The Chancellor of the Exchequer said, "Yes, but see how inconvenient it is. If I only bring this duty into operation in the future, it will mean that I and succeeding Chancellors of the Exchequer for a generation will receive no income from the tax." Of course it is inconvenient, because he and previous Chancellors of the Exchequer has received the cash in advance; they have received 2 per cent. for franking the very estates which he is now trying to mulct over again. If he wants to alter this, and thinks that all estates ought to be put on the same basis, then he ought to increase the franking fee. He can easily make it 3 or 4 per cent., or some average amount which will cither not make it worth people franking their estate, or else make it worth their franking their estates, and so enable the Chancellor of the Exchequer to get immediate duty. If he fixes it cunningly about midway between, something which makes it just worth the taxpayer taking, some will do so and he will continue his present revenue, and some will not do so, and he will get a future revenue. Anyway, let him be reasonably honest in his dealings with those from whom he has taken money. His present proposal, to my mind, is absolutely dishonest. It is a pro- 807 posal which can conclusively be proved to be dishonest.
All through the Chancellor of the Exchequer has said, "Well, what is it that you object to? What item of expenditure do you object to?" It is not for us to say what item of expenditure we object to. When there is a Chancellor of the Exchequer about who is ready with his moneybags holding them out for everybody to to get a bit, naturally, every single section of the House joins in the scramble. That is not the duty of the Chancellor of the Exchequer. The duty of the Chancellor of the Exchequer is not to hold out golden sovereigns for everybody to rush after. His duty is to fix his expenditure according to the best interests of the nation, and then to divide that expenditure upon those subjects which most require to be dealt with. The large range of expenditure now prevailing has had this effect: that undoubtedly the cost of living has gone up. I am not going to argue how much taxation filters down, but I believe everybody, except the hon. Member for East Mayo (Mr. Dillon), does admit that taxation does filter down to the poorer classes, and what is happening, undoubtedly, is that lots of people of the poorer classes are saving out of their earnings and so providing for themselves and rendering it less necessary for the State to provide for them. The hon. Member for Blackburn (Mr. Snowden) made a most interesting speech the other day, one of those typical speeches of his which showed that he has not the slightest idea of the power of saving. He made an interesting little observation to the effect that if Adam had lived and had been a thrifty man ever since he was in the Garden of Eden, and had saved all he could, he would never have had an income of a millionaire. That is really typical of his point of view. He never has considered what the power of saving really is. I would like just to check his theory of what would have happened. Of course, I do not know exactly how Adam could have been employed, but supposing he had been employed, let us say, in digging weeds, and he had saved £1 in the process. Suppose, having saved £1, he had looked about for means of employing it. I do not quite know what the £1 would have been represented by in those days, but, supposing he had found he could lend it, he probably would have lent it.
§ Mr. WORTHINGTON EVANS
To buy dresses. Supposing that had taken place, and that £1 had continued to be invested in that form, do you know that Adam would have been a millionaire in about 283 years, and that at the present moment, far from being merely a person who did not pay Super-tax, he would have owned the world; he would have owned more than all the wealth in the world. If hon. Members would like to check the calculation, I will tell them the exact sum which at this moment. Assuming that the Garden of Eden existed 6,000 years ago, the figure would be £13,671, followed by 123 noughts, a sort of sum to gladden the heart of the greediest Chancellor of the Exchequer.
§ Mr. HEWINS
I congratulate the Chancellor of the Exchequer on his recent readings of Mr. Disraeli's speeches. He asked me in the course of his observations why we did not talk of Tariff Reform. I am going to meet his challenge. If the Chancellor of the Exchequer will only go on reading Mr. Disraeli's speeches, he will probably live to introduce a Tariff Reform Budget himself. Mr. Disraeli became the greatest exponent of the Tory tradition on Social Reform. I believe the Chancellor of the Exchequer thinks that he has discovered social reform. Let me tell him that it has been the Tory tradition ever since there has been a Tory party, and Mr. Disraeli was expressing that tradition in the speech which he made. The difference between the Chancellor of the Exchequer and Mr. Disraeli is this: If Mr. Disraeli had been returned to power in 1880, he would have done precisely what we Tariff Reformers intend to do when we are returned to power.
§ Mr. HEWINS
I said that if he had been returned to power in 1880. There is another little point which I want to bring to the attention of the Chancellor of the Exchequer. He speaks about the financial and commercial conditions of London in regard to other countries as though things remained unaltered, and as though his finance had done nothing to alter those 809 conditions. I believe, if he consults the economic authorities of the world at the present time, he will find that there is not one solitary economic authority anywhere who will not say that not only during the last generation, but for some years past, there has been a perfectly steady movement gradually altering the conditions of the financial world. The relative position of London and this country to other cities and other countries, is not what it was ten or fifteen or twenty years ago. My right hon. Friend the Member for the City of London (Mr. Balfour) pointed out, in one of his most luminous speeches some time ago, that you cannot adopt the differential methods of taxation which the Chancellor of the Exchequer has adopted without altering the conditions which prevail here as compared with those in foreign countries at a time just when those foreign countries are getting into a position of predominance, or at any rate of equality with ourselves.
There was one point in the poetic peroration of the Chancellor of the Exchequer which I particularly admired. He said that whoever became Chancellor of the Exchequer in the future would find himself up against new conditions, because conditions had fundamentally changed. I absolutely agree, and where I quarrel with the Chancellor of the Exchequer is in his extremely limited view of the manner and the area within which those conditions have changed. Take our expenditure and take our taxation since those palmy days of Mr. Gladstone. I may say at once that I am not an admirer of Mr. Gladstone or his finance. I dislike the economic Liberalism of Mr. Gladstone as much as I do of anybody else, and, in looking back to those days, do not, for heaven's sake, suppose that I want to return to the traditions of Mr. Gladstone! I certainly do not. I think the economic Liberalism of the Victorian era did much more harm to the social conditions of England than any other class of men who ever lived in this country. I have got a great mass of figures here, and I should be glad to give them to the Chancellor of the Exchequer. I have worked them all out in the greatest detail, but I do not want to trouble the Committee with them. If you compare the figures of our expenditure and of our taxation—in the gross, in detail, or however you like—since 1880, you will find that in every direction there has been a perfectly steady movement of increase except under one particular head, 810 and that is in the gross of the burden of indirect taxation. From 1880–1 to last year the burden of direct taxation increased something like 161 per cent., and the burden of indirect taxation not above 10 or 15 per cent. That is an enormous discrepancy. I am speaking entirely from memory, but if you take, as you must take, as the real measure of direct taxation the sum of the burden of the rates,—that is, the money raised by rates, and the money raised by taxation—you will find at the present time, if you make a calculation of the burden upon the adult population above twenty-five years of age, that it amounts to £15 per head. This is an enormous figure.
But you have to add to it other payments—not taxes and not rates, but payments which are absolutely compulsory and unavoidable in the different classes of society. Take the burden of the Insurance Act. I am not complaining of it, but it is in the nature of a tax. Take, too, the burdens placed on the employers of labour in their factories and workshops. They are compulsory, and can be reduced to a financial basis. There is no avoiding them. If you look at things in that way you will find there has been an absolutely fundamental and permanent alteration in the social structure and in the character of the demands made upon us. What has struck me in this Debate is the evidence afforded from the benches opposite of the absolute break with all economic tradition. There is none of it left. Take the system of local taxation Grants, which the Chancellor of the Exchequer is now reorganising. I suppose he has changed his mind about the way in which relief of the rates operates. I thought, according to him, it always went into the pockets of the landlord. I see there is a special provision in this case that it shall not, under the head of Improvements. But, really, if the Chancellor of the Exchequer will only read up the economic authorities, he will find that the word "improvements" is open to very many interpretations in the domain of economic speculation, and I would suggest to him, therefore, that he should beware of it. I think he will find, contrasting his speeches now with the speeches he made when he was opposing my right hon. Friend, that he has altogether modified his views on the question of the incidence of these rates. We have to add to that the yield of the Chancellor of the Exchequer's Land Taxes, which have smashed up another part of the economic Liberal 811 creed. I do not know whether the Chancellor of the Exchequer is really aware of the damage he has been doing the Free Trade system of economics. I have always had the feeling that he is really not at home amongst site values, and the decimal points of graduated scales. I attribute them to his advisers. He exploits those ideas, and tries to win votes by them, but I do not think he cares about the abstraction which forms the basis of the proposals. If you take these two things together, I think you will find that a very large slice has gone out of the whole of the old economic theory.
Then we have the speech of the hon. Member for Blackburn (Mr. Snowden) who calls himself a Socialist. But I have noticed very often in the speeches of representatives of that particular school of thought, a great deal of Socialistic sentiment, while their logic, argument, and assumptions so work out that their economic proposition becomes utterly ridiculous. In fact, they are simply the Manchester school in a state of repentance, and nothing else—the Manchester school tinged with emotion. Their ideas, doctrines, and economic theories have all come from the economists whom the Member for East Northants (Mr. Chiozza Money) denounces. The whole method and manner in which the hon. Member for Blackburn contrasts income and the estimated revenue from the Chancellor of the Exchequer's taxes simply proved that he does come even within the remotest distance of a social conception in its application to national finance. He is all sentiment. The economics of these Gentlemen are the orthodox Cobdenist theories of by gone days. If you want the genuine article, you must go to pure Tory traditions, as the Chancellor of the Exchequer has done, and in time you will get it. Of course, our increased expenditure is due to two great causes, social reforms and defence. I am not going to say anything about social reform, but I am going to talk about defence, because I believe naval expenditure is good for the country. I do not wish to suggest for a moment that we should not have the most rigid economy in regard to all expenditure, but I lay it down as a business proposition that a strong and supreme Navy is a perfectly sound investment. What are we to-day? The whole of our maritime and commercial supremacy has grown up around our naval policy.
812 Look at it at the present time—what, is it? It is practically a great bounty for the shipping interest. Look at shipbuilding. I say your naval policy is the greatest system of Protection the world has ever seen to that great industry, and it is so regarded by foreign countries. Foreign experts say, "You may abandon Protection in this or that direction, but in regard to the Navy you have kept it as much in force as in the days of the Navigation Laws." We give a bounty every year in the money we distribute to shipowners. We have a system of Admiralty contracts which acts as a system of Protection, and these advantages are shared by all the great shipbuilding firms. It does not matter how you give the advantage if it is given through the Navy. The battleship industry is one of our great industries, and it benefits the whole shipbuilding industry in the way it is spread out. Therefore it is a gigantic system of Protection. Personally, I am very much in favour if it, and yet the Chancellor of the Exchequer comes here and suggests he is going to cut down the Navy Estimates next year. How he is going to do it I do not know. I do not know whether he has examined the statistics of last year. I do not want to score a point against the Liberal Government, but I do not think they have behaved lightly as far as the Navy is concerned. I want to know on what he is going in anticipating a fall in naval expenditure?
I look at the position all round. I see the industrial and economic situation has absolutely changed. Indeed, the Chancellor of the Exchequer admits it. A few years ago, let us say twenty-five years, this country was in a position of absolute supremacy. We were one supreme country among other smaller countries. Now, this country is simply one of a group of great Powers, equally powerful in industry, equally well equipped, and whose figures of trade are equal to our own, and their expansion of naval powder is very largely a mere reflex of the expansion of their industrial and economic power. I remember just about the time of the General Election of 1900 talking to one of the greatest of the German naval experts. He is dead now. We were talking about the plans for the future of Germany, and he fell back, not upon our policy here in a Free Trade area, but on the great national policy which formed the real basis of our greatness in times gone by. He said Germany would do exactly as we had done, and he sketched out the 813 way in which the German Navy would expand as her industries expanded. The two things hung together, and he declared that, in course of time, they would get what has actually happened in the case of Germany. That state of things is not going to change.
Your expenditure upon social reform has gone up and is certain to increase. You may make all kinds of economies. I trust we shall. I think we could manage many things better than the Chancellor of the Exchequer. We may make many economies, but the expenditure itself will rise, and so will the expenditure upon defence, and so also will there be an automatic growth in the expenditure of various public Departments. The hon. Member for Blackburn talked of a Budget of £250,000,000 in, I forget, how many years. But I look round at the pledges given by both sides, and I reduce them to money terms. I can assure the Committee that if the pledges—and it is not the case of one party only—if the pledges which have been given are fulfilled, it is not a Budget of £250,000,000 that we shall have to face, but a Budget of £300,000,000, and that within a measurable distance of time. Take the various pledges the different parties are apparently agreed upon. Will not the Chancellor of the Exchequer admit that the expenditure of the, country is certain to go on increasing? Where is the money coining from? The Chancellor of the Exchequer says, "Take it out of the rich." I do not know if we have millionaires enough quite to go round—I do not think we have. At any rate, it is a very difficult thing to catch them, and while the Chancellor of the Exchequer no doubt tries to catch them, the people he really catches are just the ones we want to preserve in the country. We want to preserve the great middle class who live in the country on their estates. But the right hon. Gentleman is initiating a system of taxation which is certain to exterminate that class.
The right hon. Gentleman has asked me about Tariff Reform. I suggest that of all the people who during the last thirty or forty years have worked to advance Tariff Reform, the Chancellor of the Exchequer has done more than anybody else in that direction, because he has had the courage to break away from Liberal traditions. From one point of view he disapproves of Mr. Gladstone'e finance quite as much as I do from a different point of view. He has no sympathy whatever with the economic traditions of the 814 Liberal party. He has smashed them once and for all. He expects to be in office next year, and I ask him what is he going to do? The Liberal party will, unhappily—and I use the word "unhappily" because people like to have the credit for the things they propound—and we shall not be the people consequently to institute Tariff Reform, because this Government has already done it. Why has not the Chancellor of the Exchequer taken off the Sugar Duty? It has caused immense discontent on his side, and some people have been on the point of saying that they will vote against him. I do not think they will, but still they are very sore about the Sugar Duty, and the reason is a simple one. The Foreign Secretary committed a very high crime and mis-demeanour on the 24th May—Empire Day—in writing a dispatch to the Sugar Convention, in which he definitely refused to put on an excise corresponding to the duty, and he refused to do that on Protectionist grounds. If the Chancellor of the Exchequer will look at that dispatch it will open his eyes. The "Westminster Gazette," a faithful follower of the Liberal party, condemned the Liberal party for giving up the principle which they had been fighting for all these years. Sugar is a food, sugar is a raw material, sugar is far more complicated than corn so far as tariffs are concerned, yet the Chancellor of the Exchequer and his Government have actually made that new departure. The Chancellor of the Exchequer wants to know what we should do. The Government really know very much more about it, in a sense, than we do. We had the greatest difficulty at one time in working out a scheme of tariffs, but the Government have done it. They have got the Pert of London tariff, which would be a most admirable basis in many ways for the country as a whole, except that it puts duties on raw materials and on food. I might run through a great many experiments this Government have begun; and when the Chancellor of the Exchequer asks me what we should do about Tariff Reform I ask them what they are going to do and how much farther they are going to carry it before we come in? When we come in we shall certainly carry it further. The Chancellor of the Exchequer docs not expect me to say that I disagree with my right hon. Friend the Member for West; Birmingham (Mr. J. Chamberlain). That I certainly do not. I believe that the 815 whole country will come to his policy. What I want to know is how much farther the Government are going in breaking up the present fiscal system by their system of indirect and direct taxation. They are retaining at the moment the preposterous duties on food of which the Labour party complain. There is no justification for those duties, except that they bring in a lot of money. You could not get so much money out of the working classes by any other means. The Chancellor of the Exchequer knows that no working man would go deliberately day after day or week after week and pay 3½d. into the Chancellor of the Exchequer's pocket in regard to his tobacco. No housewife would deliberately pay over directly the money she now pays for tea, and so on all through. The duties are preposterous; they are higher than in any other country, and it is certain that they will have to be modified.
Then you have the new element introduced into the fiscal system by the Chancellor of the Exchequer. It is absolutely certain that if we do not come in and do it, hon. Gentlemen opposite, especially when they have studied and copied such excellent examples as the Chancellor of the Exchequer has been looking at, but not copying so far, they themselves will find that the pressure of economic forces will bring them to a complete and well-thought-out scheme of Tariff Reform. There is absolutely no other way. The principle of that is exactly what is absent from the Chancellor of the Exchequer's present scheme. Look at his Budget! What does it do for Ireland? It imposes upon Ireland a system still more unsuitable than the present one. What does it do for the Empire? Nothing. What does it do to bind classes together? Nothing. On the contrary, you will have to go around and say that your duty is to get money out of the rich. That is the new gospel the right hon. Gentleman has to preach; whereas the very beginning and basis of the policy for which we stand, and which we shall certainly carry out the moment we have the chance to do it, is a policy which begins with organising the economic forces we have in this country and in the Empire with a view to increasing production and increasing the fund out of which taxes come; therefore, it is not merely a question of the yield of particular duties that we may put on, but it is also a question of the increasing productivity of the country 816 and of the race. If it were in order and I had the time, nothing would please me more than to set forth at length the details of the proposals which we hope to see carried out. The Chancellor of the Exchequer wants to know what they are, and is very anxious to know what our first Budget will be. He can easily find out. If the right hon. Gentleman arranges to have his party handsomely beaten in the Lobby—that is very easy to arrange in the present state of discontent in the party opposite—I can promise him that in a short space of time he shall know the fullness of the Tariff Reform policy, which we are perfectly certain is going to be adopted.
§ Mr. J. M. HENDERSON
What the Prime Minister stated some little time ago about grading the Income Tax led us to hope that he would remove some of the very striking anomalies that exist in the administration of that tax. Unfortunately, although some grading has been done, there are still many anomalies remaining which many of us are anxious to see removed. Any criticisms which I offer on the Budget will be in the direction of appealing to the Chancellor of the Exchequer to remedy and remove those anomalies, because they create a feeling of injustice among the taxpayers. The first to which I will refer is the married women's tax. It is a very hard thing indeed that a woman should be treated under the Married Women's Property Act as an independent unit, but the moment she is married we get back to the old position of 1842 and the Income Tax Act—of her property belonging to her husband and of their both being one. The moment that either of them dies they become two again, and their estates are two for the purposes of taxation. That cannot be justified. Some time ago, when the married women went as a deputation to the-Chancellor of the Exchequer, they seemed to a large extent to prevail upon him, their case being absolutely unanswerable. I cannot see why the Treasury should insist and persist in treating the joint incomes of two married people as one. Take the simple instance of a girl who has a private income £150 a year. Being entitled to a rebate she pays nothing on it. She marries a man who has £700 a year, so that the joint income is £850, but she gets no abatement. We had the very troublesome case of the lady Dr. Wilks, whose husband was put in prison for not paying. The only answer the Chancellor of the Exchequer 817 gave them was that if he adopted the policy of treating a married woman's income as a separate entity from that of her husband it would cost £1,500,000. That is no justification.
Then there is the case of wasting securities, which is a case of the grossest injustice. The principle is that only income is taxable under the Income Tax, yet you get capital as well constantly taxed, both in respect of leaseholds and mining properties. The life of a mine is a very limited one, twenty or twenty-five years being the duration of life on the very best mines. When a dividend of 10 or 12 per cent. is received, every wise man treats 5 per cent. as income and the balance as capital, but he is charged Income Tax on the full amount, which is taxing his capital as well as his income. In the case of leaseholds I can give the Committee a very striking case which came under my notice a little time ago. A man bought for £8,000 a leasehold twenty-one years to run, which yields him a profit rental of £600 a year. He bought it for a 5 per cent. investment. That was £400 a year for income, and £200 a year goes to capital. He used that in buying a policy which expires at the end of the term of twenty-one years. The Income Tax authorities deduct Income Tax from the whole £600. That is not fair. The ordinary man in the street would call that cheating, and the mischief of it is that when a Government Department begins cheating people are thrown back upon the primeval method of beginning to cheat them. The consequence is that these big injustices—there are a great many of them—spread through the community and seem to justify people in doing all they can to defeat the Income Tax Commissioners at every place and opportunity and think nothing of it. It is a great misfortune and a, great pity. May I suggest to my hon. Friend that we should take a lesson in this matter from New Zealand, which has seen the injustice of it. I would refer him to the New Zealand Official Year Book, where he will find that mining companies are assessed on one-half the dividends paid annually to the shareholders, and the other half is exempted as being considered a return of the shareholder's capital. I ask the Chancellor of the Exchequer to adopt that principle.
There is also the case of machinery. Tradespeople and manufacturers nowadays have to keep their machinery up to standard. It very often happens that a 818 manufacturer, if he wants to keep alongside his competitor, must scrap certain machinery and put in new machinery. The Income Tax Commissioners allow nothing for the loss of the scrapped machinery. Here, again, the younger community sets us an example, for obsolete machinery is also allowed for when the machinery has been absolutely discarded and the loss definitely ascertained, the amount allowed being the loss less depreciation previously allowed. I would commend this to the attention of my right hon. Friend. As to the grading of the Estate Duties, I wish to refer to the Chancellor of the Exchequer's Budget speech for the purpose of asking whether the grading represented by the Chancellor of the Exchequer in that speech is what he meant or not. He said:—You charge 7d. on the next £1,000, 9d. on the next £1,000. 11d on the next £1,000, and 1s. 1d. on the next £1,000."—[OFFCIAL REPORT, 4th May, 1914, col. 88.]That is how I should like to see all the taxes graded, but I am afraid that is not what the Chancellor meant. I expect what he meant was really with the first £1,000, sevenpence, the next £1,000 plus the first £1,000, ninepence. I should like him to explain what he really means, and whether the grading only goes on by steps in that way, or whether the succeeding sum carries the first and all other sums with it still.
§ The FINANCIAL SECRETARY to the TREASURY (Mr. Montagu)
If my hon. Friend will look at the Order Paper to-day he will see the Super-tax Resolution set out in full, which I think clears up the point.
§ Mr. J. M. HENDERSON
That docs not deal with the question I had in view. What I complain of about the Estate Duties is the large jumps. If my hon. Friend works it out, he will find that where a man dies, leaving an estate of £19,900 and another man dies leaving an estate of £20,010, this absurd thing happens—the executors of the man who left the lesser sum have actually to deal with £100 more than the executors of the man who left the larger sum. When you get to £39,900 as against £40,010 the executors of the man who left the smaller sum have £300 more as a balance than the executors of the man who left the larger sum. When you come to £59,900 as against £60,010 the executors of the man who left the smaller sum get £599 more than the executors of the man who left the larger sum. When it comes to £99,900 as against £100,100 the executors get £810 more than for the 819 larger estate. That seems to me perfectly ridiculous. It is absurd that in these close sums the executors of a man who leaves the larger sum should get a smaller sum to deal with. In New Zealand, if the value of the succession to the wife or children does not exceed £20,000 no duty is payable, but if the value is in excess of that amount, a tax of 2 per cent. is levied on the total value. But the duty payable "shall not be greater than the amount by which the succession exceeds £20,000." The meaning of that is that under no circumstances shall the wife or children get less than the £20,000, and so on with regard to the succession itself. In regard to husbands and relatives, no duties shall be paid in respect of any succession the value of which does not exceed £200, and the duty payable on any succession in excess of that sum shall not be greater than the amount by which the succession exceeds £200. If you were to apply that to this case, it would mean that the excess duty caused by the rise to a larger sum shall not exceed that extra money, so that the man's estate will not be penalised by leaving a larger sum. If these words were introduced it would give a great deal of satisfaction. With regard to the duties themselves, I think they are far too high, and they will defeat their own object. They will be a good thing for the country at large, because they will make men distribute their fortunes during their lifetime. There is a point at which taxation begins to defeat itself, and I am quite sure that that point is very nearly, if not quite, reached in these Death Duties. I have heard of two cases in which large estates belonging to Noble Lords were divided up last summer, and I have known several cases where people have distributed their fortunes during their lifetime, who, but for the large duties in the 1910 Budget, would never have thought of doing it.
With regard to the relief which is proposed to the rates, the Chancellor of the Exchequer did not answer the right hon. Gentleman (Mr. Chaplin) after all, and what he wanted to know, and what most of us want to know is what is going to be done this year. The right hon. Gentleman wishes to introduce certain conditions. I am afraid on this side there is a morbid fear least any relief of the kind should be given to the landlord. That is a feeling which will perhaps die out. After all, the landlords provide houses for 80 per cent. of the people, who will not build them- 820 selves, and I do not think you can devise any form of relief which will not involve a relief to the rates on these houses, but if you are going to throw upon the Local Government Board, or any other Board you like to create, the invidious duty of discriminating between this local authority and the next local authority as to how you are going to give that relief, you are laying up trouble for yourselves in the future. Of the Budget generally, I am sorry to say I do not think these enormous Budgets are going to do any good to the Liberal party. The charge which is laid against us by our opponents is that we have forgotten altogether the promises that we made for retrenchment. The answer we can make to a great extent is true. A great deal of the money that has been spent is being spent on social amelioration, but there are other items in armaments and in general expenditure. Some general expenditure, I am sorry to say, I consider to be very extravagant. During the first year after the 1906 election we saved money. We knocked something off the Tea Duty and we knocked something off the Sugar Duty, but since then there is no hope of anything of the kind, and any relief of taxation seems to me to be relegated to the very far distant future. The Chancellor of the Exchequer claims, properly, that the Government have redeemed £100,000,000 of the National Debt. Do not let them forget that they did that out of taxation to a large extent, and, further than that, they had the facility of redeeming debt at something like 20 per cent. to 28 per cent. discount, so that there is nothing very great to take credit for in that. But since 1908 there has been no systematic, definite, or continued effort at retrenchment in any of the public services, and, so far as Liberals are concerned, we are still for peace and we are still for reform. But I think we shall have to strike retrenchment off our standard altogether.
§ Sir A. GRIFFITH-BOSCAWEN
I quite agree with the hon. Member (Mr. J. M. Henderson) that the Liberal party had better strike "retrenchment" off their standard altogether. I well remember the promises which were made of retrenchment at the election of 1906, and I think nothing contributed more to the loss of the seat I then held than the statement that the party to which I belong had been very extravagant. We were promised retrenchment, but we certainly have not got it. The hon. Member said we must re- 821 member that the money raised has been largely spent in social ameliorations, but I would point out that only a small portion comparatively has been spent in social amelioration. How much has the impost been increased while the present Government has been in office? Roughly speaking, including insurance taxes, about £60,000,000 a year. I think the hon. Gentleman who represents the Government put it at £40,000,000, but it should be remembered that if you include the contributions by employers and employed, it is about £60,000,000. What have we got for that sum? On old age pensions we spend about £12,000,000 a year, and we are spending an undefined sum for the purposes of the Insurance Act. We spend £16,000,000 a year extra for the Navy. But there is a large sum beyond that to be accounted for. There is a very general impression in the country, which I think is based on a right foundation, that a great deal of the money is muddled away on Government officials, and in various ways for which the country gets no benefit at all. That is the question which the Liberal party will have to answer at the next election, and although I am not concerned in the Liberal party, I think from a national point of view it is a very serious matter.
The speech of the Chancellor of the Exchequer to-day was one of the most extraordinary I have ever heard in this House. The right hon. Gentleman is raising a very large additional revenue, amounting to at least £10,000,000 a year, but he utterly refuses to state how it is going to be spent this year. The hon. Member opposite (Mr. J. M. Henderson) has confirmed that. [An HON. MEMBER: "How is the money being frittered away?"] I can give the hon. Member two items. The Valuation Department consists of 4,641 people, and their salaries cost £750,000 a year. I regard that as frittered away. The other way is by payment of Members which was brought about without any legislative sanction whatever. I was dealing with the point which was made by the hon. Member opposite as to the extraordinary position we are in to-day. An extra £10,000,000 is being raised this year, and the Chancellor of the Exchequer does not tell us how he is going to spend it this year. He told us what will happen next year. He said that a Valuation Bill will have passed, that a new valuation will be made for rating purposes in the second half of next year, and that then the Grants will be made to the local authorities in accord- 822 ance with the terms of that valuation. I put a question to the right hon. Gentleman and he said he would answer it, but he did not. I asked how is the money going to be spent this year? He admits that the new valuation will be ready this year. I imagine that somebody is going to speak later on for the Government, and we demand an answer to the question: How is the money going to be spent this year? That is a question we have a right to have answered, for the distribution will depend upon the Finance Bill founded upon the Resolutions we are taking this evening.
We have a right to know whether the amount to be given to the local authorities will be distributed subject to new conditions, or whether it is to be given in the form of more doles. We wish to know also whether it is to be given in return for additional money raised locally, or in return for some new system of rating which has not yet been devised. I think the Committee has art absolute right, before voting this very large sum, to know the manner in which it is going to be distributed to the local authorities. The Chancellor of the Exchequer, in a very characteristic speech—and I am bound to say I think a most unfair speech—attacked us all along the line on the ground, or, rather, the suggestion, for it was only a suggestion, that we were making objections to the raising of money which was to go for purposes of social reform, and especially purposes of public health. I say that is a most unjust accusation. Not a single Member on this side, and so far as I know not a single Member on the other side, has suggested anything of the kind. All we ask is how the money is to be distributed, and when the Chancellor of the Exchequer talks about clearing out slums, building houses, and the necessity of giving more money for these purposes, does he forget the fact that Members on this side of the House have proposed that very thing for the last three years, and that we have had nothing but obstruction and opposition from the Chancellor of the Exchequer and hon. Members on his own side. The hon. Member who now represents the Government on the Front Bench (Mr. Montagu) knows that perfectly well. He knows that I, myself, and others, have proposed, year after year, a Treasury Grant of £1,000,000 for the purpose of dealing with housing conditions both in town and country. What were we told? We were told by the late President of the Local 823 Government Board, who is now President of the Board of Trade, that such a Grant would be vicious in principle. The Chancellor of the Exchequer now proposes a Grant of £4,000,000 for purposes of public health. Everybody knows that the question of housing is one of the most important, and at the present moment one of the most expensive items in public health charges. A Grant of £4,000,000, as compared with the modest £1,000,000 we asked for! It is to be withheld in the case of local authorities who do not properly carry out their duties. That is exactly what we asked for, and it was called vicious in principle. The Chancellor of the Exchequer comes down to the House and practically steals the whole of our policy. We do not complain of that so long as he carries it out, but it is not fair to accuse us of having made a proposal which is vicious in principle. A more unjust position was never taken up in this House.
It was rather interesting to notice the example which the Chancellor of the Exchequer cited of the necessity for what you you may call a policy towards assisting the better health of the people. He quoted a speech which Mr. Disraeli made, I think, in Edinburgh, in 1872. In order to get a constructive policy he had to go to a Tory leader, but he did not quote the criticisms of that speech which were made by the Radicals of the day. That speech, which urged greater measures with respect to public health and housing, was jeered at and laughed at as a policy of sewage. After all, a policy of sewage has come to be recognised as a policy absolutely necessary for the health and well-being of the people, and just as Mr. Disraeli was the originator of that policy so we can claim that we have tried to carry it out ever since, in spite of the obstruction of the Radical party. I entirely approve of a policy of assisting local authorities. My position in the matter is perfectly clear. When my right hon. Friend the Member for Fulham moved a Resolution in this House three and a half years ago in favour of more State aid for the local ratepayers I had the honour of seconding that Resolution. That Resolution had the effect of causing the appointment of the Kemp Committee. I understand that the proposals of the Chancellor of the Exchequer are based mainly upon the suggestions of the Kemp Committee. I think that the Chancellor of the Exchequer and the Government are largely misleading the public. 824 They are certainly misleading the local authorities and the ratepayers by talking about so much in the pound relief. The Chancellor of the Exchequer talks about an average of 9d. in the £ relief. He told us this afternoon of certain counties who get 4d. in the £ relief, while other counties might get 6d. and others 11d., and so on. The inevitable result of talk of this sort is that local authorities and ratepayers think that they are going to have their rates reduced by that amount. Nothing of the kind will happen. It is only right that a warning should be issued at once.
What will happen will be this. The relief will be granted in respect of additional work that will have to be carried out. The new Grants-in-Aid will cause the raising of additional sums by the ratepayers. It is quite true that we shall get more work done, and I shall not complain of that. But let not anybody suppose that the ratepayer is going to be saved anything like 9d. in the £. Nothing of the kind will occur. In fact, I should not be surprised if a few years hence, as a net result of this Grant-in-Aid, the rates will be very much higher than they are now. Let us make the matter perfectly clear. Let the Government when they talk about their policy in the country state what is strictly true. They are by this expenditure enabling local authorities to do more. But let them not suggest that they are going to save the ratepayer 9d. in the £, or any other figure. While I entirely approve of the general principle of aiding the local authorities, we want to know how the money is going to be spent, and to know that the Chancellor of the Exchequer is not raising more money than is necessary for his immediate purposes. We object very strongly, and local authorities object, to this proposal for taking the valuation for rating purposes entirely out of their hands and placing it in the hands of a central authority. That is a most outrageous and pernicious proposal. I have not the slightest notion why it is done, unless it be to keep in office and in salaries that expensive Valuation Department to which I have already alluded, and which to my mind would be the very worst body possible to which the valuation for local rates could be entrusted. What do they know about if? What local knowledge have they got? Yet, according to the Kempe Committee, whose view the-Chancellor of the Exchequer apparently adopts, they are to be the authority to fix the rating assessment all over the 825 country, subject only to an appeal to some new assessment authority. The assessment authority are not to be a final court of appeal, but there is to be a further appeal to a final tribunal. The Chancellor of the Exchequer practically told the Kemp Committee to make this proposal. On the 13th November, 1912, he wrote them a letter, which is printed in the Report, indicating that this proposal would be made that they should make use of the central Valuation Department for the purposes of local rating. I think that the central Valuation Department is the most expensive luxury of the present day.
For the purposes for which it was started it has proved to be thoroughly inefficient. I can give an example. I was engaged some little while ago in connection with the London County Council in buying up slum property for a clearance scheme in South London. It was a question of what compensation we should pay the owner, I suggested to the London County Council officials that they should take the Government valuation as a guide of what we ought to pay. They said that it would be no good doing that, as if we took that valuation we should probably pay a great deal more than we should by private treaty. It so turned out. On every single occasion we were able to get slum property at a considerably lower figure than the Government valuation. What on earth is the good of a valuation like that? It is absolutely useless. Now you are going to use it for the purpose of local rating, which involves very difficult questions as to which these people have had no experience and no local knowledge. And we are at enormous expense to entrust to them this very difficult job, which would be infinitely better and more cheaply done by the local authority. The Chancellor of the Exchequer tried this afternoon to make out that my right hon. Friend the Member for the Strand had introduced a Valuation Bill on the same date. I remember that Bill perfectly well. It was nothing of the sort. There was no question of central valuation. It simply was that there were to be new local valuation authorities with the representative of the central authority put upon them. But the decision of this difficult question was left to local authorities with local knowledge. I am very much afraid that all the Chancellor of the Exchequer is content to do is to keep alive this Department, and to impose upon it work for which it is thoroughly incompetent—how incompetent 826 can be shown by the interesting question which was put by one member of the Kempe Committee on this very point. A witness had said that the central authority would not be a fit body for the local valuation, whereupon the Members of the Committee said:—But surely these young men"—I believe that most of the members of this Valuation Department are young men—if employed to make valuations for rating would soon begin to acquire the necessary knowledgeIn other words, at the expense of the nation this central body is to learn its job by making every sort of muddle from the point of view of local taxation. To recapitulate, we want and must have an answer to the question how the Grants are going to be distributed this year. That is an absolutely necessary preliminary to the money being voted. None of us are opposed to Grants-in-Aid of local authorities. It is an overdue reform which should have been carried long ago. Lastly, we say that we must have further explanations before we agree to the functions of the local assessment committees being taken away, and the work being undertaken by a central body. We want a great deal more information on all these points before we vote the money which is contemplated by the resolutions.
§ Mr. MORRELL
No one can have listened to this Debate without feeling how far we have advanced since the great struggle which took place in 1909. Here we have a Budget which proposes to raise £10,000,000 this year, and about £15,000,000 in a full year, and to raise it almost entirely out of large estates either by Death Duties or by means of a Super-tax. We have had speeches of much interest about this Budget, which in its way, is quite as important as the Budget of 1909, so bitterly opposed by the party opposite. We have had speeches from hon. Gentlemen opposite in which they have asked for further information, in which they remarked that we have forgotten out principles of retrenchment, but we have heard nothing whatever against the great principle of this new scheme, that is to say, the principle of calling upon persons of large incomes and upon great estates to contribute far more than they do at present to the expenditure of the country. For my part, I most sincerely join in the congratulations to the Chancellor of the Exchequer from all Liberals in the House, and all Liberals in the country. We think that this is a great 827 Budget. We think it is going to be a great principle of social reconstruction, and I am indeed delighted that the right hon. Gentleman has called upon persons who are well able to do so, to contribute much more than they do at present to the objects of housing, the public health and education, which are so badly in need of a larger expenditure than they at present get.
But while saying all that, I am bound to express—and I admit that it is chiefly for this purpose I have risen—my disappointment, a disappointment that is shared by a good many people outside this House, that the Chancellor this year, while making this great new scheme, has not found it possible to do anything to deal with some of those taxes which fall principally upon the poor, and especially, of course, the Sugar Tax. I believe that tax stands altogether by itself. It is a tax for the repeal of which we can make a claim as we can with regard to no other tax. It is a tax, bad not only in degree, but it is bad in kind. Considering the whole history of this tax, considering the way in which it was denounced by the Liberal party when in Opposition and when it was imposed by the party opposite, and, considering the promises which we have had since from responsible Ministers, I think we are entitled to express our disappointment that the Chancellor of the Exchequer has not yet seen his way to repeal it. In saying that, I want to state at once that in my opinion this is not a question of penalising one class in order to relieve another; we are too apt to regard legislation from that point of view. I agree with what has been said by hon. Gentlemen opposite, and I agree with what Lord Esher has said in a letter to the "Times" to-day that all taxation does, no doubt, filter through the community to the poorer classes. Even the Super-tax will filter down to the working classes. I agree with that absolutely. I would suggest, however, that, in the first place, the question is whether the tax is a good or a bad one.
Although I agree that taxation filters down through all classes of the community, yet I submit that a tax which, in the first place, like the Super-tax, falls upon luxuries, tends to reduce the expenditure on luxuries; on the other hand, a tax like the Sugar Tax, which falls, in the first place, either upon the very poor, or upon very large industries, upon the raw 828 material of those large industries, is in itself a vicious tax which, for that reason, we ought not to continue. That has already been admitted by a great many speakers, and I am sure it would be admitted by my right hon. Friend on the Treasury Bench (Mr. Montagu). It is a part of the principles of the Liberal party; but I must say, and I say it with regret, that when, year after year, we make this appeal, and it is disregarded, we begin to have doubts whether, after all, there is not some intention on the part of the Government to keep this tax as a part of the permanent system of taxation of the country. I regret very much that in the two speeches we have had from the Chancellor of the Exchequer, the very eloquent speech which he made on introducing the. Budget and the very forcible speech which we have had from him to-day, we did not have any word, as regards the Sugar Tax, to indicate that he stood by the old pledges, given over and over again, that at the first possible opportunity these Sugar Duties are to be repealed. I may recall what was said by the Prime Minister on the subject. The quotations have been made before, but some of them, I think, are worthy of repetition, for it is so important that we should, if possible, hear some pronouncement from the Government on the subject. The Prime Minister, in 1907, said:—It is a bad tax, a tax which ought to be got rid of at the earliest possible moment. It is vicious in principle, is burdensome in its incidence, and unequal in operation between different classes of the community.Then he added:—It is a tax which ought not to form part of the permanent fiscal machinery of the country.The Chancellor spoke at various times on this subject. When he was in Opposition, in 1904, he said that in his opinion these taxes, like the Sugar Tax and the Tea Tax, that involved the food of the people, should be treated as a special reserve. He added:—I do not think the Government ought to continue a tax of that character"—that is to say, the Sugar Tax—as a permanent burden upon the people of the country.Only two years ago he said in this House of Commons:—Whenever there is a possibility of our dealing with this matter we consider ourselves pledged to deal with it. We do not consider our obligation is discharged by a reduction of £3,000,000 a year.9.0 P.M.
These pledges are precise and very clear, and I hope—indeed, I have no doubt—that the Chancellor of the Exchequer will stand by them. But I must say that it is astonishing to me—I do not want to speak in 829 any hostile spirit of the Government, because I admire the work the Chancellor of the Exchequer has been doing, and I thoroughly support the grand scheme of this Budget—that he should have thought it necessary to prefer so many of the objects which he has preferred to the repeal of this Sugar Tax. Let me take some of the objects to which the money is to be devoted. The relief of local authorities in respect of criminal prosecution—that, after all, is not a very important matter; the relief in respect of police; the relief in respect of the maintenance of main roads, which is a matter that might very well be met by some extra taxation on motors. Those are, no doubt, all excellent and worthy objects, but the pledges we have given in regard to them are as nothing compared to the pledges that we would oppose taxes on food and reduce them at the earliest possible opportunity. Therefore, I say, I regret that in a Budget which is raising so much extra money it was not found possible to provide the three and a quarter millions necessary, to get rid of what is admittedly the most objectionable of all existing taxes, and which is not only a tax on food, but on raw material. Two courses were open to the right hon. Gentleman. He might either have raised more money while he was about it, and three and a quarter millions would not have made much difference. I am perfectly certain there are many of the possessing classes who would be very glad to pay more money in taxation if they be sure that this tax on the very poorest of the poor would be got rid of. On the other hand—and this would, I think, have been the simpler plan—he might have divided the relief he was giving in this Budget between the rates or local taxation, and the repeal of the Sugar Tax. I understand that in a full year these new taxes are estimated to yield something like £15,000,000. Even if we assume that £5,000,000 is to come off for the Navy and £3,250,000 more for the repeal of the Sugar Tax there would still be some £9,000,000 left for the relief of the local authorities. I do hope before this Debate closes we may have some indication that the pledges which have been so repeatedly given on behalf of the Government still hold good, and that the produce from these taxes will be used in order to redeem the promise so often given, and which is, I believe, an obligation so binding upon the conscience of the party.
§ Sir HENRY CRAIK
The hon. Member (Mr. Morrell) at the opening of his speech congratulated the Chancellor of the Exchequer on the fact that the Budget had been greeted with almost universal praise, but even in doing so, like the right hon. Gentleman the Member for Islington (Mr. Lough) and the hon. Member for West Ham, the hon. Member devoted very much more than half his speech to condemning very severely the lapses of the Chancellor of the Exchequer in that very Budget. Not only had he to do so, but he himself struck at the very crucial point in which, in the opinion of many of us, this Budget fails, and that is that this over-taxation and this arbitrary taxation ultimately, as he agrees, filters down to the poorest class. That is what many of us feel. Curtailed in time, I shall only touch upon one-point and one single feature of the Budget, which, to my mind, is the central point, and that is that the basis of taxation, instead of being a scheme of taxation, is an instrument of arbitrary confiscation, and a lever for working a change in our social economy. Hon. Members below the Gangway opposite are very often accustomed to accuse Members on this side of speaking in their selfish interests, and of taking no interest in the affairs of the poor, and of not being in sympathy with them. I wonder how true in their hearts they believe that statement to be? We have many rich men on both sides of the House, and it is to the honour of the House, and one of which we are proud, that we have not found on either side rich men rising here to defend their own interests and to refuse to take the burden which properly lies upon them. There is another aspect of the matter. I am speaking not for any Party but solely for myself and for my Constituency of 12,000 of the middle and professional classes. Are they speaking only in their own interests if they throw doubt upon your modern fiscal system? I take myself with all humility as a typical specimen. The Super-tax does not touch me; I never paid a penny for any Death Duties, and those who come after me will not find their withers wrung by any such taxation. The speech of the President of the Local Government Board has failed to rouse my ambition up to the point of paying Super-tax, and his benevolent intentions in that regard have fallen far short of their end.
There is a large class who, looking not to their own interests, do think they see in these proposals a danger to the future of this country. It is the danger involved 831 to the country and to the poorer classes that arouses me; and do not let hon. Members below the Gangway opposite think that they have a monopoly of knowledge of the poorer classes. Some on this side have known what it is to be poor and live on the very scantiest means. But let me ask, are we measuring the advance that we are making towards that socialism which was put forward by the hon. Member for Blackburn (Mr. Snowden) in a speech whose sincerity, whole-heartedness, clearness, and eloquence I for one admired? Is the House prepared for, and does it know how far, it has advanced in the direction of that socialism preached by the hon. Member for Blackburn? What did we read on Tuesday last in our most solid and most substantial and most moderate newspaper? I refer to the "Times," which approved of a differential taxation as a powerful instrument for redressing the inequality of wealth. Great inequalities of wealth I am at one with any Member of this House in deploring. If we can prevent it, let us do so by giving means to those of the poorer classes to improve their position. But when you say that you are to use taxes as a means of levelling all property and all fortune—and that is absolutely what is included in the plain sense of the words of the "Times"—how very narrow is the gulf which separates us from the socialism of the hon. Member for Blackburn. I am not surprised that the hon. Member for East Northants (Mr. Chiozza Money), when he quoted these words of the "Times," hesitated whether he himself was prepared to subscribe to such a sweeping doctrine. I agree as to the scandalous evil of heaping up enormous wealth for purposes of luxury side by side with our slum dwellings, and the crushing poverty that exists; but if you attempt by artificial means and taxation to level these differences, I am not sure that you will not work a greater evil still. I had the good or bad fortune in 1909 to be almost alone in moving against the Super-tax, which was then a perfectly new element in our taxation, and one to which Mr. Gladstone never even remotely gave his consent.
I remember at that time having a talk with the hon. Member for Blackburn, which I hope he will not mind my recalling. He said to me, "Of course I differ entirely from your view, but I agree 832 with you as to the Super-tax; that is to be our instrument in future." Is it certain that the hon. Member for Blackburn was not right in his prophecy? He indulged in prophecy the other day, when he told us that in ten years our national expenditure would have grown, I think he said, to £250,000,000. I thought he was very moderate. I expected him to put it much higher. I will indulge in prophecy on my own account. I said in 1909 that this would be a dangerous instrument, and one that would tell not only upon the rich, but also upon the poor. That instrument has increased in four years by 160 per cent.—not a bad advance in such a short time. The prophecy that I make is that if we advance on the same course of fiscal tendency which we are now pursuing, within 20 years it will be nearer 10s. than the sum at which it now stands. What does this involve? I think it involves the substitution for that sense of responsibility, that high sense of traditional duty, which has rested upon property, of a mere toll which, in the long run, will absolutely abolish all responsibility. This sense of responsibility, after all, has not been a bad thing. It is the people who have grown up to that tradition, who are bringing a kindly influence to boar upon those amongst whom they are placed, who have a high sense of duty—it is these who will be chiefly hit by the new taxes. It will not be the wealthy financiers.
I have been struck, almost more than by any other in the Debate, by the speech from the hon. Member for St. George's, Hanover Square, who is well acquainted with the affairs of finance. He told us what is evidently true, that the Super-tax and heavy duties of that sort will not fall upon the financier. Finance is a very volatile ether; to change the metaphor, money finds its level like water. You have the value of money, and the interest you have to pay for the use of money is not determined by the rules, laws, or Statutes passed in any one kingdom. It is determined by what is going on all the world over. If you pass laws, or make some arbitrary regulation putting a burden on money in one country, the financier will have to recoup himself by asking there a higher price for the use of his capital. Trade will be crippled, wages will go down, food prices will rise. The financier is the last man who will suffer. The man who will suffer is the small landowner, who is striving to do his duty, and who is far from having a large margin for 833 luxuries. I am the last man in this House who would wish to be sparing in taxing the luxuries of the rich. I would put taxes, and very severe taxes, upon the rich in times of great emergency. There are times when the needs of the country may make it necessary to lay a hand upon the possessions of the wealthy and to say, "Before anything is spent, your country has need of a large proportion of your property." You may have to stop not only moderate luxuries, but even charities, in a great national need. But that must be only in great emergencies, and we must keep it for emergencies. There is another way that I would tax the rich, and that is on their luxuries. There are an immense number of people who have what are nominally fairly good incomes, or what appear to hon. Members to be good incomes. But I would ask the hon. Member for Blackburn if he really wants us to take his word seriously when he says that we might perfectly safely tax a man with £10,000 a year to the extent of half his income, and yet leave him in abundance? Is he not perfectly aware that many men with £5,000 a year have not more to spend on their own private affairs than he or I have? Does he, as a reasonable man, think it possible to judge of the abundance of a man's means, and his power of purchasing luxuries, merely by taking the amount of his income, without taking account of the obligations under which that man may be placed, of those dependent upon him, and of the calls of every sort upon the income? The hon. Member is far too just-minded not to know that the mere measure of the number of pounds is a very poor criterion of the financial power of a man.
It is far better to lay your tax on what French financiers are accustomed to call the "signs of luxury." I am glad to see public luxuries, and do not grudge lavish expenditure on such things as our gardens at Kew and Hampton Court, which are enjoyed by everybody; but I hate the excesses of private luxury. Surely we have had many disgusting signs of that in some of the Transatlantic vulgarity which invades our shores. Upon these people lay your hands. They would be only the better pleased if they had to pay more. A great part of the charm of their luxuries to these over-bloated capitalists is the price they have to pay for them. I would have no mercy on such people. There are only two limits that I 834 would impose on the taxation of luxuries, and they are where the tax is so high that it ceases to be productive because people cease to use the luxury, or where it places an unjust embargo upon a legitimate home trade. Instead of this you will try to destroy the class against whom you have a grudge, and for which I have no right and no brief to speak but against which you have a grievance. I never owned an acre, and no one connected with me ever owned an acre of land. I have never belonged to that class, but I am glad to count many of ray best friends as belonging to it, and I know of their willingness to take their part in citizenship, and I know of their good work an England. But perhaps the onlooker sometimes sees most of the game, and I am going to ask the Committee to allow me to read the best translation I can give of a few words that I read in a Paris paper of last Friday. It is an article written on this present Budget, and the writer says:—The salient fact, is the persistent attack of the Chancellor of the Exchequer on the territorial class; that social class which has made England, which has given her her soldiers, her politicians, her local administrators, in one word, has made her social and political physiognomy.The French writer, at least, is not prejudiced. I think that will be allowed, and that hon. Members below the Gangway will admit that he has no party end to serve?Anyone who has spent even a little time in the English country is bound to admire those little rural societies in which service is exchanged in a spirit of real goodwill and benevolence. In these landed classes a great fortune is the exception and a moderate fortune is the ordinary rule. These classes have more and more trouble with diminishing means in fulfilling the social and traditional duties which rest upon them. It is there that one meets the true England, the most profoundly civilised and the most sturdy part of her race.That is the class against which you are aiming. Yon are endeavouring to crush them out. Perhaps you will deprive England of a great feature; because it is these people that you can get into the clutches of the tax gatherer more than the wealthy, luxurious financier, who cares not for your taxes, and who will pay them as a toll and then will snap his fingers at all your traditions of duty and responsibility. You will crush down the classes of England to one level. Then there will be an equally fierce competition in thrift, saving, and in the gaining of money. During this time the sense of property will grow into the bone, and out of that level a few men will rise who will possess a little more property than the others, and who will defend it with fierce tenacity. 835 The cycle will come round again, and you will again have differences of rank, differences of wealth, differences of possession; but before you arrive at that time you will have passed through a long course of trouble, social and economic disaster, and illusion.
§ Mr. BLACK
The hon. Gentleman who has just sat down has told us that when the Budget of 1909 was introduced he was an opponent of the Super-tax. He seems now to have become converted to that excellent idea of the Chancellor of the Exchequer, and is willing, further, to add to the burdens that are placed upon the wealthy and well-to-do. It is very nice to find—and I agree with my hon. Friend—that in these Debates there have been no rich men on cither side who have made any protest against the proposals of the Chancellor of the Exchequer for placing the present heavy burdens of taxation upon the shoulders of those best able to bear them. That such is the case is a matter, I think, on which the House may congratulate itself. Though the Chancellor of the Exchequer makes no promises and gives no pledges as to any future action, yet I am sanguine enough to believe that the proposals now before the House, in future years—I hope even next year—will provide sufficient funds for freeing the breakfast table altogether from taxes, including the tax upon sugar which many of us had hoped to sec removed long before this. I commend to the most earnest consideration of the right hon. Gentleman that in any surplus that he may have for next year that one of the first things he will consider will be the relief of sugar, tea, and the other breakfast table taxes.
In regard to the Grants that are to be given in relief of the rates, I welcome them very heartily. I agree with the hon. Member for Dudley that it is premature for local authorities and for the ratepayers in the localities to anticipate that they are going to get all the relief that these Grants will afford. I have had some experience of the working of local authorities, and I know perfectly well that the tendency on every hand is to spend more and more, so that while the relief will come to local authorities in the way of these increased Grants, yet the tendency, I believe, will be that the money will be gobbled up in increased services. Of course so long as the projects are good and wise, and the money is carefully expended by the 836 local authority, the local authority will derive benefit from the Grants. The right hon. Gentleman the Member for East Worcestershire, in his speech the other day deplored the fact that the present cast-iron system of pensions, insurance, and other social legislation destroyed the old spirit of friendliness, helpfulness, and charity of former days. I doubt myself if there is any less friendliness among the various classes of the community because of this social legislation. My experience leads me to think that nothing of the kind has happened. It is true that there is more independence. I know something from personal experience of the spirit of independence which has been given to old folk who are now enjoying these old age pensions. I had an opportunity a few days ago of talking to an old lady now in receipt of 5s. a week, who in her earlier married days had to keep house and bring up a family on 7s. or 8s. or 9s. a week, and she said, "I now get 5s. a week," and she added. "It is beautiful living now." These were her own words, and that is the spirit of independence which is given from every point of view. I welcome the proposal of the Chancellor of the Exchequer as outlined in his Budget. With regard to the Sinking Fund I have only this word to say: I should have been glad if the Chancellor of the Exchequer made the provision he is now making without touching the Sinking Fund in any way whatever, and I am sanguine enough to believe that the proposals he is now asking the House to approve will provide such funds as will make any raid upon the Sinking Fund' either this year or in the coming years altogether unnecessary.
§ Mr. EVELYN CECIL
There is one matter upon which, at any rate, I can congratulate the Chancellor of the Exchequer, and that is that he has been able throughout the whole of his Budget speech to avoid mentioning a duke. It seems an advance that he was so induced to restrain his usual methods of exciting class hatred, which I think is the most deplorable aspect of his career. The Budget as a whole certainly does not carry out the watchwords of the Liberal party "Retrenchment and Reform." I hardly think speakers on the other side could venture to state that it does. I do not want to refer to the old sayings that fell from hon. Members opposite in various times before 1906, but I cannot but recall the Debate at which I was present in the 837 year 1905, when Mr. Buchanan, who afterwards became Under-Secretary for India, moved an Amendment to the Address to the effect—That the increase in our national expenditure has been excessive, and has imposed heavy burdens upon the people, relief of which is urgently necessary, and that at the earliest moment the expenditure of the State should be revised and decreased.And among those who voted for that Amendment to the Address were the pre sent Prime Minister, the present Chancellor of the Exchequer, the present Foreign Secretary, Lord Morley, the Lord Chancellor, the present Attorney-General, the present Home Secretary, and many other Members of the Ministry. We have advanced very far since those days. When we remember on this side of the House how much was made of the great cry of retrenchment in the 1906 elections, I cannot but think it must be some difficulty to some hon. Members opposite to eat their words, even to the extent they are doing now. One of the great difficulties and objections always is that every successive Government and every Member on the side opposite who is elected to this House has generally some particular fancy which he wants to press forward, and which demands more expenditure. The Chancellor of the Exchequer of the present day has lost that power of resistance and control which is essential to national economy, and to national finance and which seems to be entirely a matter of the history of the past. The Treasury is now ready to accept almost any proposal which will win votes for the existing Government. The Chancellor of the Exchequer accepts the most promising cry for electioneering purposes, and is indisposed indeed to deny hon. Members anything. I know much expenditure is necessary. I am not behind hand in urging expenditure for social reform, but what we have to try and establish, what we have got to remember in Budget Debates, and what has got to be remembered above all things by the Chancellor of the Exchequer is that he ought not to be an incentive to spending right and left without adequate consideration, and that he ought to be the watchdog of national finance.
What I complain of is that the whole of our expenditure has been increasing in a much greater ratio than our income. That is not a good sign, and it is one that should be specially noted and observed by the Chancellor of the Exchequer. I do not think he has noted it. If it were a matter of a private individual's business, 838 I presume any wise business man would watch these matters most carefully and try and restrain and reduce expenditure. He would not at once dash into fresh expenditure without fully counting and estimating the cost, and when hon. Members opposite ask how are you to reduce expenditure, which is their constant suggestion, I answer that the real difficulty is that you have increased expenditure to the extent you have. That is the initial mistake. Personally, I am frankly proud I was one of those in this House who voted in connection with old age pensions against their being non-contributory. I always maintained that that was wrong, and that the great expenditure that was incurred was unnecessary. I think equally so as regards insurance, and that you should have begun by an experimental system seeing how it would work, and seeing what the real cost was at the time. Both in the case of old age pensions and national insurance the Government started upon expenditure without sitting down first and carefully estimating the costs. Hon. Members will remember that as regards old age pensions the present Prime Minister when Chancellor of the Exchequer, in the Debate on the 7th of May, 1908, when old age pensions were being proposed, said:—The maximum cost is not likely to exceed and will probably fall short of £6,000,000 sterling a year.Everybody knows the expenditure on Old Age Pensions is £12,500,000 or £13,000,000. It is more than double the estimate, and that estimate was made in spite of the fact that where a similar policy had been tried in New Zealand it had gone up from £127,000 in the year 1899—the first year it was introduced—to £326,000 in 1907, eight years afterwards. These figures were available, and I should have thought if any business man sat down to estimate for the proposals made he would have made a better estimate than the Government did as to what the amount would be. That is the answer I make when I am asked what I would reduce. I say, You should never have incurred the expenditure in this form, and that you should have been much more careful in a matter of ordinary business than the present Government has been. The whole of their policy has been bad finance, and the cost has been greatly under-estimated.
I should like to say a word or two upon taxation and representation. It is essential that taxation and representation should go together, a proposal that prob- 839 ably dated, historically, so far back as the time of Edward I., when the knights and barons and burgesses and clergy could not be taxed without their consent. From that time representation and taxation went together, and in the main that maxim has been maintained, not as perfectly as I could wish, but more or less up to 1909. And I believe it to be a right and proper maxim. It seems only proper that he who pays the piper, as the old adage says, has the right to call the tune. Now things have changed, and it is much more true probably to say that one class pays the piper and another calls the tune. Even in such a democratic country as Belgium, a member of Parliament there was telling me that they recognised the difference of having a property vote in certain cases, and also an educational vote. All those things would go to improve and give more effect to taxation and representation, and, though I admit that it is probably a difficult task to go back now and do it, if one was starting a democratic constitution afresh I should like to give some representation for causes and reasons such as those. With regard to the increase in the Income Tax, I am afraid that foreigners are very much less likely to invest their money in this country when there is a high Income Tax, and when they know that a great deal will be subtracted from their investments I do not believe they will invest, and to that extent our industries will be crippled.
I am glad that to-day the Chancellor of the Exchequer gave in on the subject of incomes between £300 and £500, where he was charging a 1s. 4d. Income Tax on what he was pleased to call unearned income. That, in many cases, is a great misnomer, because it is ludicrous to say that if a man earns so much one year, spends two-thirds of it and puts by one-third, that that one-third is merely a matter of unearned income. The division between the two is not a proper one. With regard to the Death Duties, the chief comment I should like to make is that we are again revising the Death Duties; after only four years. Sir William Harcourt said that the Death Duties were a kind of deferred Income Tax. People arrange their insurances to fit in with the duties as imposed four years ago, and now you are upsetting that arrangement and creating a real hardship in many cases, and one which I think is very uncalled for. I should also like to comment on the per- 840 petual hostility which the Treasury show to man and wife. As regards the Death Duties they are always doing this. They make a man and his wife two separate people if it is a legacy falling from one to the other, but the Treasury turns them into one person in order to charge a high Income Tax. They are always trying to load the dice against the man and the wife, and now they are trying to do the same thing in regard to the Settlement Duty. I do not know how far the Chancellor of the Exchequer means to go in what he has said to-day but if there is to be an increased duty where a man leaves his estate to his wife and then to his children, and there is to be a charge both on the roan's death and upon the death of the wife as well, then it is a hard and cruel case which ought to be avoided. If this is to be done on past settlements in general, as well as future settlements, I feel strongly that we are creating an extremely bad precedent. If it were a matter of a private individual throwing over a contract for which, in legal language, "valuable consideration" has been received, you would say he was dishonourable, and you could bring an action against him in the Law Courts and force him to carry out the contract. But here because it is the State which has contracted with the maker of the settlement, the maker having paid so much for the privilege of making the settlement in that way, I do not think that the State has any right to come forward and say, "We are going to throw over this contract. We choose to withdraw the privilege, and you shall not enjoy what you have actually paid for." It may not be so unjust to do this in the future, but it is certainly unjust to do it in relation to past contracts.
The Treasury is really becoming the national enemy of the enterprising and successful citizen. There are many noble, unobtrusive men, with high standards and high characters, successful as the world might call it, who, by their own energy and skill have made a fortune, and who have cherished the ideal of assisting some philanthropic work, some hospital or charity, perhaps, in the evening of life, or as a crowning point to their life's work. Such men are probably actuated by the feeling that they consider that to do something of this kind is a duty they owe to their Creator, who has entrusted them with the ability and the wealth which they possess, and they feel that they are responsible to Him for its proper use. The 841 person they are not responsible to is the Chancellor of the Exchequer, who sits on the Treasury Bench. Many such men are the salt of the earth, and they ought to be encouraged in every way. My quarrel with the principle of such Budgets as this is that it discourages such men and discourages enterprise; it crushes the citizen into a sort of automaton or puppet, who is expected to accept without question the ordinances of the Chancellor of the Exchequer. It causes much resentment and fetters and curtails individual liberty; and if taxes are made so heavy that a man treats them as though they were his charities, you will necessarily cripple and destroy that sense of duty, that keenness to help public objects, that desire to be personally and individually a benefactor to scientific research or art, and that personal initiative in philanthropy, all of which have done so much in the past to increase our national greatness.
§ Mr. LEES SMITH
I have risen mainly because I want to ask for some information on a point which is at present very obscure. It is about the Exchequer Balances. First of all, however, there are one or two arguments that have been used to-day which seem to me so unfair that I do not think I can pass them by. The hon. Member for Colchester (Mr. Worthington Evans) and a good many other speakers have attempted to belittle the achievements of the Government in the reduction of debt. Their argument has been that the Government should stand or fall by the New Sinking Fund alone. You cannot, in this way, separate the New and the Old Sinking Funds. No Government which is going to survey the reduction of debt with any coherence or any foresight can decide what it shall do with one Sinking Fund without taking into account what it has done through the other. If the Government is to be attacked, us it is being attacked, for keeping the one Sinking Fund, then it ought to be given fair credit for keeping up the other, instead of diverting its surpluses away from the National Debt. The true view on this subject was stated more than a century ago by someone whose name I am afraid I do not know, but it is the view which has been ever since accepted. The only true Sinking Fund is the excess of your revenue over your expenditure. If a Government uses that excess for the reduction of debt, whether through one Sinking Fund or through another Sinking Fund, 842 or whether it uses it in order to pay out of its income for an expenditure which its predecessor prodigally paid for by putting it on the National Debt, however it uses it, if only it uses it for the reduction of debt, it is justified in receiving fair credit for the achievement.
Last year £1,000,000 was left in the Exchequer Balances. The Chancellor of the Exchequer calculated, adding that sum to the estimated revenue of the year, that he would obtain a surplus of £185,000. This year he calculates that he will obtain a surplus of £250,000, but it seems to me clear that he will obtain a surplus far larger than that. There is £1,500,000 in the Exchequer Balances. Adding that, as we must, and as we did last year, to the estimated revenue for the year, it brings his surplus out, not at £250,000, but at £1,750,000. Both I and many other hon. Members will have suggestions to make, most of them having the effect of reducing the estimated revenue, and I am relieved to find that there is a source from which that reduction can be met, and, as a matter of fact, if it is met through that source, the size of the Exchequer Balances will be unnecessary and dangerous. The rule that you should not budget for so large a surplus as this has always been accepted, and is a very good rule, because budgeting for so large a surplus, apart from any other effect, is a standing invitation to extravagance and Supplementary Estimates.
The Chancellor of the Exchequer, in his Budget speech, stated that he was going to use this £1,500,000 in order to strengthen the balances, but strengthening the balances has always meant that money was added to them permanently. It often happens, as the Committee is aware, that after a year of deficiency the balances are low, and the Treasury therefore has to incur expenses by issuing increased Treasury Bills. Under those circumstances Chancellors of the Exchequer have from time to time added money for the purpose of strengthening the balances, so as to put them back at their previous level. I asked the Chancellor of the Exchequer a question on this point on Budget night, and he explained that he proposed that this money should only be in the balances for a time, and should wait there until he wanted it for some purpose or other. This raises a technical point, but I think it is one of importance, because it concerns the financial control of this House. It is an old rule that, if the surplus of the year is diverted from its 843 primary purpose of the Old Sinking Fund, then the purpose for which it is intended shall be stated, and it shall immediately be appropriated for that purpose. Last year the £1,000,000 that was left in the Exchequer Balances was appropriated to the general expenditure of the year, but this year the. £1,750,000 is lying in the balances unappropriated to any purpose whatever. That is undoubtedly a new precedent, and I do not think that it is a good precedent, because if you lay it down that a Chancellor of the Exchequer shall be allowed to leave the money in the Exchequer Balances, waiting to be spent, the money undoubtedly will be spent, and this precedent, if it is allowed to go unchallenged, will create a fresh incentive to extravagance and Supplementary Estimates. It is on that point I want information.
There is one other point I desire to deal with. The right hon. Gentleman the Member for Wimbledon (Mr. Chaplin), at the beginning of his speech this afternoon, expressed great alarm and anxiety because we were, as he said, in times of peace drawing upon resources which we ought to reserve for times of emergency. Where I cannot agree with him is this: Our resources in times of emergency do not depend upon this or that particular tax, but they depend upon our total stock of wealth at the time the emergency comes upon us, and if the wealth is there, then there are many more ways than one by which a Chancellor of the Exchequer faced with an emergency will be able to draw upon it. It, therefore, seems to me there is quite a simple test by which you can measure whether or not your reserve strength for time of war is being accumulated or exhausted. Our reserve strength in time of war, as far as I can see, would consist of that part of the income of the nation which is not already taken in taxation. I have got out some figures since the right hon. Gentleman spoke, and I find that in the last complete year of the last Unionist Government, 1904–5, the national expenditure was £153,000,000, and in that year the income of the country, as deduced from the census production, was £'1,900,000,000, so that the proportion of income not taken in taxation—that is to say, our war reserve—was £1,747,000,000, or 41s. 2d. per head. This year our national expenditure is £210,000,000, the income as deduced from the figures of the Registrar-General is £2,230,000,000, and the 844 proportion of it not taken in taxation is £2,020,000,000 as compared with £1,747,000,000, or 43s. 10d. per head as against 41s. 2d. per head in the year 1904–5. I, therefore, think the anxiety of the right hon. Gentleman was very misplaced, and, so far as our having a taxable capacity to meet emergencies is concerned, we are in a stronger position to-day than when Gentlemen opposite controlled the Government, and in a stronger position than we have ever been at any period during which there are figures available.
§ 10.0 P.M.
§ Mr. LONG
The Chancellor of the Exchequer, in the speech which he delivered earlier in the evening, complained, as he too often does, that the whole case against him and his Budget had not been delivered, and consequently the inference he drew was that those who desired to criticise and attack him preferred to make their criticisms and attacks after he had spoken. The Chancellor of the Exchequer really ought to abandon this form of attack, because there is no foundation for it. Our Debates are conducted under circumstances quite different from what they were when I first became a Member of this House. I do not suppose that these rules and circumstances commend themselves to any Members of the House except those who, for the moment, irrespective of party, occupy the Treasury Bench, and who are able to force through Parliament their own measures and secure the fulfilment of their own objects in a minimum of time, and, with, I am bound to add, a minimum of defence in the shape of speech or argument. The Chancellor of the Exchequer, following other distinguished Members of the Front Bench on both sides, now invariably rises before dinner. In olden days the Minister in charge of the special subject under debate invariably postponed his rising until the last possible, moment in the period of time allotted for the Debate. I am not blaming the Chancellor of the Exchequer for doing this. Both sides do it, and we know the reason is that the Minister who speaks earlier in the evening gets a better report of his speech in the newspapers the next day than those who speak later. Realising as we do, that our proceedings are of interest and, I hope, of importance to people outside this House, we have no right to complain of this new practice. On the other hand, Ministers cannot have it both ways. If they are to secure the advantage 845 of a full report in the newspapers, they must not attack the Opposition because the whole case is not presented I heard ray hon. Friend the Member for the City of London (Sir F. Banbury) ask, "Where is the Chancellor of the Exchequer? Here again the Chancellor of the Exchequer is only following a practice which has been created in Parliament, not by both Front Benches, but in this particular instance by his own Front Bench. It is invariably the practice of Ministers to attend as little as they can, to come in just before they have to make speeches—very often, as the Chancellor of the Exchequer did to-night, to make most unfair and controversial speeches—and then to absent themselves when they think there is likely to be a reply. I do not suggest that that is the case with the Chancellor of the Exchequer. At all events, he is not afraid of listening to the reply, and, however much I may disagree with him, however much I may be opposed to his views and to his finance, nobody who is fair-minded will deny that he has the courage of his opinions, that he is a brave politician, and that he is never afraid of facing any difficulty, whether he be in opposition or in office. I only refer to it because he is following a practice which others have now made universal, and therefore he will not, I am sure, complain if I deal in his absence with his speech as I would have preferred to do in his presence.
The Chancellor of the Exchequer's speech was sharply divided into two quite different parts. The first part professed to be explanatory of his Budget, and to answer questions which had been addressed to him, notably by my right hon. Friend the Member for East Worcester (Mr. Chamberlain) in one of the most closely argued and reasoned speeches I have listened to in this House. He also professed to explain to the House generally the nature of his proposals. The fact that these questions ought to be answered and that explanation was needed has been abundantly proved, not by the action of hon. Friends behind me or beside me on this Bench, but by the speeches of hon. Gentlemen opposite, and by many communications which have appeared in the newspapers from men who have no association whatever with the party with which I am associated. That part of the speech of the Chancellor of the Exchequer was studiously moderate in its tone. I thought he did his best to be fair 846 to us who interrogated him, but as an explanation of his Budget proposals it was the most barren performance to which I have ever listened. It threw no light upon a very dark position; it explained nothing; but it did one thing: it committed the Government, in one respect at all events, to a very definite programme for the future, and I shall have a word to say about it presently. The one thing that was clear from the first part of the Chancellor's speech was his pledge to the country that under his local taxation proposals in this Budget no ratepayer is to have less relief than he gets now, and that, in the vast majority of cases, if not in all, they are to get more relief than they are getting to-day. That is the position in which the Chancellor of the Exchequer left that branch of the question, and I will come to it later.
But the latter part of the Chancellor's speech was different, if I may venture to say so quite plainly, in quality, in tone, and indeed in its whole matter. He derided us and attacked us because, he said, we thought little of sentiment. I should have thought that everybody now, to whatever party they may belong, has some regard for sentiment in its proper place, quite irrespective of being a Liberal or Conservative. The Chancellor went on to make an attack upon us, based upon the most flagrant misrepresentation of the views of political opponents to which I have ever listened in this House. He claimed for hon. Gentlemen opposite and his Government that they were doing one of the greatest works to which a Government and a political party can devote themselves, namely, providing for the health of the community. He said, "This is our work; this is what we are doing, and you deride us for it." Having during the last thirty years been closely connected with this branch of public work, I waited with interest to hear how the Chancellor was going to finish his indictment. What was the first thing he did? Remember all the great names that have illumined the history of the bench opposite and of Liberal Governments! They are all at his disposal. Search "Hansard" for a hundred years, with all the great Ministers, with the Gladstones, Lows, Russells, and how many more shall I name! Surely among all this galaxy of talent on the Whig and Liberal side he could have found somebody from whom to get the text for his sermon. Not at all! In order to 847 prove the truth of the maxim he was laying down he had to go to a Tory ex-Prime Minister to justify his policy. Having got out of that difficulty, I thought he would have proceeded to point out to us that it is to the Tory party that the foundations of this great work are due. But he was silent on that branch of the subject, and wisely silent. Public health, Poor Law, housing, unemployment—which party laid the foundations? Which party carried the greater part of the legislation? And to which party belongs to-day the greater credit for the consequences which have followed the improvement in the health and general conditions of our people? I leave the answer to hon. Gentlemen opposite, who are well able to supply it, conversant as they are with the facts of the case. I would suggest that the Chancellor of the Exchequer is reduced to a somewhat low ebb in defending his Budget when he has to fall back upon arguments and statements so wholly unsuitable as these were. Not content with defending his own policy by the aid of Tory quotations, what was the next thing he did? He proceeded—I am sorry to say this in his absence, but I am bound to say it—[HON. MEMBERS: "Where is he?"]—
§ Mr. LONG
He proceeded then to most grossly and scandalously misrepresent the attitude of the party to which I belong. He said, "You, the Unionist party, think expenditure of public funds is right so long as the money is spent on armaments, but when it comes to expenditure in the interests of the people—the improvement of their health, of their dwellings, etc.—then you are opposed to it." It would be an insult to the intelligence of the Chancellor of the Exchequer to suggest that he believed one word of that. He knew that the statements he was making were false. Ho knew that there is not a shadow of foundation for them, and he knew that he was grossly misrepresenting the attitude of the Opposition. [An HON. MEMBER: "That is why he is not here now!"] He enumerated the criticisms made from this side of the Committee. Why did he not go on to say, what is the truth, that nobody has found fault with the expenditure of public money upon either housing or sanitation and, within certain limits, upon education, or upon any other object, such, for instance, as the Insurance Act, which is contemplated by this mea- 848 sure. What is the basis of the Chancellor of the Exchequer and the Government's attack? It is that we are opposed to your form of taxation. Are we justified in the view we take? What is that view? It is false to say that we object to taxation being imposed for the improvement of the conditions under which the people of this country live. It is false—to put it plainly and straightly—and those who make the charge know that it is false. What we say and what my hon. Friends behind me have argued throughout this Debate is this: In the first place, we say that since the present Chancellor of the Exchequer saw fit to combine two impossible duties, namely, the administration of a public Department for social reform with the administration of the Exchequer there has been great, wilful and avoidable extravagance. We say it is very difficult to prove by fact or figure, because your Estimates are so marvellously prepared that it is very difficult to tell exactly what is the proportion of new expenditure due to what you are pleased to call social reform, and what is the natural increase in your Civil Service Estimates due to the ordinary addition of work and the ordinary increases of salary—we say that you are budgeting for a surplus next year, that you are asking for more money than you really want to meet the actual expenditure of the country, if that expenditure were subjected to a close and rigorous form of economy.
It is odd, indeed, that these doctrines should be preached from this side of the House, for, during the first twenty-five years that I was in the House of Commons, they were the invariable speeches, which we in office heard made from this side, and which, even when your party came into office, were preached from the opposite side in answer to increased demands for taxation. The one theory then held as sacred was that the guardian of the public purse should not be the head of a spending Department. We complain, first of all, that your expenditure is excessive, and consequently you are asking for more money from the taxpayer than you are entitled to ask for if you base your argument on what this country actually needs for its legitimate annual expenses. We go further, and we say that you are providing this money by a system of taxation which is bound to break down. You are finding it in two ways—by your Income Tax and by your Death Duties. I hope to show that these 849 two methods are not reliable, that you have already got very nearly as far as you can go, and that you are rapidly approaching the time, if you have not reached it now, when this method of taxation raised as you have raised it, will prove to be the greatest disaster with which this country, as a whole, has ever yet been confronted, because it will mean that you have brought her to the end of her development. I am familiar with the argument that the wealth of this country is very great. Hon. Members are fond of talking about billions. I am happy to say I have never been anything but an optimist. I have never preached the policy of ruin. I believe this country is enormously rich. I believe her power of bearing expenditure, if necessary and legitimate, is almost unlimited and unequalled by that of any other country in the world. But if this power is not going to be squandered you must avoid the pitfall into which you have fallen now of making your taxation unjust and inequitable, and therefore giving to anyone not only an inducement but an actual invitation to evade taxation if they possibly can. You are getting your money by a large extension of your Income Tax. You are carrying this principle too far. Do we stand alone in this view? Will the Attorney-General tell us why to-day that Front Bench holds different views from those which the Prime Minister, when Chancellor of the Exchequer, held in 1906. He then used these words:—In regard to the Income Tax. I do not hesitate to associate myself with the declaration of more than one of my predecessors, that Income Tax at a unified rate of 1s. in the £ at a time of peace is impossible to justify. It is a burden on trade of the country which in the long run affects not only profits but wages.Again, in his Budget speech on 8th April, 1907, he said:—The Income Tax is really a twofold tax. It is a tax on property and a tax on earnings.What becomes of the criticism of hon. Gentlemen opposite and of the Chancellor of the Exchequer in answer to our attack when they tell us that we are opposing this Budget because it is a tax on the rich in the interests of the poor. The language which, the Prime Minister held in 1906 and 1907 is precisely the language which we have been using on this side of the House to-day, and if the arguments that he used were good enough for him they are good enough for us now.
So much for our attack upon basing yourself solely upon Income Tax. I come back for a moment to the question of ex- 850 travagance. The Chancellor of the Exchequer to-night made a very interesting, admission. He was dealing with the tax on foreign investments. My right hon. Friend (Mr. Chamberlain) indicated that he thought the right hon. Gentleman had largely underestimated the produce. What was the right hon. Gentleman's reply? He paid a well deserved tribute to the wonderful ability and foresight of the officials of the Treasury. I have known them personally, and by name for thirty years. I have never ceased to wonder at their remarkable sagacity in making forecasts. The right hon. Gentleman said that "this forecast was given to me by men who are experts at the work. I hope it may turn out to be inaccurate, and that it will produce more." Yes, any Chancellor of the Exchequer is justified in taking the advice of his experts, and if the eggs which they say are silver turn out to be golden, so much the better for him. But I should have liked to hear the opinion of some of the experts as to the need of the Chancellor of the Exchequer for all the money he is demanding.
I should have liked to hear the opinion of these experts upon the question of control of subordinate Departments in regard to the expenditure, and upon the framing of certain measures under which, as we heard just now, £20,000,000 of expenditure is necessary, where only a few millions, about half a dozen, were contemplated originally as the cost to the country. That remark of the Chancellor of the Exchequer was ominous. We believe that there has been tremendous extravagance in connection with Acts of Parliament. We believe, therefore, that you are asking more money than you require, and asking for it, as I have pointed out, on unsound grounds. We base our opinion on the opinion of the Prime Minister when he was Chancellor of the Exchequer. I have never had the honour of serving at the Treasury, but I have served in many other public Departments, and I can speak of the action of the Treasury in controlling expenditure from the point of view of one who has suffered under the harrow. I know what it means. When this House was dealing with the Insurance Act, and Old Age Pensions Act, I ventured, as an old President of the Local Government Board, to point out that both of these measures ought to have been introduced by the Local Government Board. They are both measures closely connected with local government. I said, also, that they ought to be administered by that 851 Department. What has happened? You have had the man who has to find the money controlling the expenditure. Anybody who has been at the head of a public Department knows perfectly well from experience that when you have to pass a Bill through Parliament and want a Grant of money, you naturally estimate that Grant at a sum which you think would be regarded as a generous contribution and which would make the thing work. You go to the Treasury and state the amount you want, and the Treasury says, "You must do with so much less." When it comes to administration, you make constant demands for more money, and the Treasury says, "You must do with so much less." Why? Because the Treasury is the guardian of the public purse, or it has been hitherto. It is the duty of the Treasury to exercise constant supervision in the public interest over their colleagues and over Ministers. Where is that supervision gone now? It is impossible. I defy any Minister to say that that supervision and control now remains. It is absurd to suggest that it does.
§ Mr. LONG
What docs the hon. Gentleman mean? He asks us to believe seriously that the Chancellor of the Exchequer, who happens to be for the moment the right hon. David Lloyd George, is in this position: He, as Chancellor of the Exchequer, controls the expenditure. He as head of the Treasury is responsible for the administration of the Old Age Pensions Act and the Insurance Act. He, as Minister responsible for these Acts, thinks that certain expenditure is necessary. Then he goes to the right hon. David Lloyd George, across the Lobby, and asks him to approve of that expenditure. Is that the same thing as a distinct Minister responsible for his Department going to the Chancellor, who has nothing to think of but the safeguarding of the public purse.
§ Mr. ACLAND
The right hon. Gentleman is suggesting that the Treasury does not now control the expenditure of public Departments. But the Treasury does control—[HON. MEMBERS: "Order!"]
§ Mr. LONG
It is absolutely ludicrous for the hon. Gentleman to say that it does. In the days to which I refer, the Chancellor of the Exchequer was the controlling official over every Department, and in the case of these particular measures, I will undertake to say that, under the system to which I have referred, the expenditure would have been materially reduced, and the same benefits would have been received because we would have had the check of the Exchequer over the spending Department. It is absurd for the Government to pretend that the same controlling authority exists to-day as when the Exchequer was a separate controlling Department over the spending Departments. The result is that we have got the extravagance of which we complain. The Chancellor of the Exchequer went on to attack those of us who have pointed out that the policy of the Government in regard to Income Tax is unjust and dangerous, so long as you retain your present system of arriving at the income of the individual. Take the case of income derived from land. I believe that the Chancellor, if he were here, would be amenable to argument on the subject, because he has shown in his Budget a certain indication of a desire to deal with agricultural properties in a fair manner. But you are putting a very heavy additional tax upon the income of the individual. There are hundreds and hundreds of cases in this country of the smaller properties where there is practically no margin, where the income has got to be paid. And how it is going to be paid. I do not care what accounts you take I am perfectly certain that there is no landowner, small or great, who would object to show his accounts to-morrow to any Member of the Front Bench, or any official whom they would like to send down. They would find that far the greater part of that income—and I speak with some practical knowledge—that in nearly all cases practically the whole income goes on keeping the estate going.
What does it go on? Out of every £100 where does the Committee think the £80 goes? It goes on wages to labourers and workmen in the district. You are going by your Super-tax and your Income Tax to put a burden upon those landowners who have not got incomes from other extraneous sources, and they can only pay, as pay they must, by making reductions in labour. The Chancellor made an astounding statement to-day. He said that since 853 these taxes had been introduced everything had prospered abundantly. Where does he get his information from. Is it from the Board of Trade figures? Will he find them tell him that in any country village? One of the saddest things I know in our country villages to-day, in this time of national prosperity, is that the very best of the men are leaving them for our Colonies. Why? Because the old source of employment has been cut off. Let the Committee remember that in many cases, owing to other Acts of Parliament of which I do not complain, if labour is reduced it will not be the young men who will be cut off, but the older men who are no longer able to give a full return for their wages. Therefore, the Prime Minister, the then Chancellor of the Exchequer spoke with absolute knowledge and in an unanswerable form when he said that to carry the Income Tax beyond a certain level would be to hit at, not the rich, but the poor; not the employers, but labour. Those are the Prime Minister's words, which are as true to-day as then. I say, therefore, that by making this tax unduly burdensome you are hitting a blow at working men, you are reducing employment, you are aiding "migration. Personally, I think there is a great deal to be said for emigration. I am one of those who have visited several of the Colonies, and I believe the conditions and opportunities there are far better for the average workman than they are here. But I am not thinking now of the individual, I am thinking of my own country.
It is a very bad thing, I submit, to make as the standard of your financial system one which has already done such harm in many of our country districts, and which, I believe, in consequence of the changes you are making, will do still greater harm in future. One word with regard to what the Chancellor of the Exchequer said in regard to settled and unsettled property. He proposes to abolish the distinction between settled and unsettled property, to the disadvantage of the owner of settled property, and I agree with every "word the Member for Colchester (Mr. Worthington Evans) said on the point, for I believe, in doing that, the right hon. Gentleman is committing a breach of faith. I want to look at it from another point of view. Before he was a great Statesman, the Chancellor of the Exchequer was a distinguished Member of the legal profession, and he knows the 854 difference between settled and unsettled property far better than I do. I venture to put this to him, and to the Attorney-General: The difference comes to this, that with unsettled property the owner for the time being can do practically what he likes. He can sell his land and use the money to provide for the younger children or to start them in business, or he can seek profitable investments in other parts of the world. With settled property, the owner cannot deal with it in that way. He has to go to the trustees, who are bound by the law. As trustees they cannot allow the money to be used in those various ways. Yet you are going to put the owners of these two classes of property on the same level for the purposes of taxation. I submit that the least you can do—and we should welcome it, because it would be only fair if you are going to deprive the tenant for life of settled property of the small advantage which he has hitherto enjoyed and for which he has paid—is to repeal the Settled Land Act, and say that everything which now binds the unfortunate tenants for life to these particular properties is void, because you deprive them of the advantage which they had hitherto enjoyed. If you are going to do one thing, at least you should be prepared to do the other, too, and put the two classes of property on the same footing.
I regard as one of the worst features of the Chancellor of the Exchequer's proposals the Death Duties. I am not complaining of the Death Duties, because they will break up landed estates. In certain cases of smaller estates, there can be no doubt that the result will be to break many of them up. That may be the effect of the Chancellor of the Exchequer; I do not know whether it is, but for my purpose it does not matter. The Chancellor of the Exchequer himself practically admitted that would be the case. In an interesting passage of his speech, he told us that owing to the fact that real estate is frequently of a non-fluid character, it cannot be realised quickly, but he had in contemplation a new system under which the Death Duties should be mortgaged at Government rates. I welcome the suggestion, and I think it may be useful, but I am bound to say I do not really care for any Government proposal which contemplates an eternal system of mortgage, and I do not think it is one which ought to find any general acceptance. The right hon. Gentleman knows that those properties cannot be realised, and that in many cases the money could only 855 be found by loan on mortgage. Does he seriously ask this Committee and the country to take it from him, as the head of finance, that he believes a system to be sound and just which necessitates a universal system of mortgage? I welcome the admission because it shows he appreciates to some degree the special difficulties of agricultural realties. I implore him, if he thinks because of that that any tax is just, before a final vote is given on this question of Death Duties, to look at it from the point of view of common justice. Sir William Harcourt brought in his great Budget in 1894, and I remember discussing with him here the question of the provision for the Death Duties. His answer was, and he gave us many figures on the subject, that persons could make provision by life insurance. We then argued with him that in that case that amount for life insurance so earmarked ought not to be aggregated in the gross for the payment of Death Duties swelling the amount. He pointed out that the Death Duties were, as he considered, moderate in their character, and could be secured by life insurance. Now mark the action of the Government. To-day they are increasing those Death Duties to an enormous extent. Take the case of two owners of property of the same value and conditions as near as you can and one aged twenty-five and the other aged sixty. The twenty-five has the prospect of, say, forty years' enjoyment of his property, and in addition he can insure against the Death Duties at a moderate sum, which he can well afford to pay. How about the man who is fifty-five or sixty, or sixty-five. He is absolutely prohibited, and there is no margin to meet the enormous demand made in order to insure his life; and yet you are asking us to believe not only that this immense increase is a just tax, but also to believe that it is fair as between man and man. I venture to say it is absolutely unfair, and so unfair that I cannot help thinking that the Chancellor of the Exchequer, when he considers it, will realise that he is taking a step which he cannot justify, however great his need for raising extra money.
I am left no time in which to say anything about one branch of the Chancellor's speech, namely, his reference to local taxation. The Chancellor told us to-day that the Attorney-General will be responsible for the Bill which is going to effect the 856 change. I am sure it was my own stupidity and not the want of any clearness on the part of the Chancellor of the Exchequer, but the explanation which he gave of this matter made it quite impossible for me to appreciate what is to be the effect of the change. We gathered from his original Budget speech that this Grant of money is to be dependant upon the enactment of certain conditions. To-night he told us that one of these conditions is the adoption of a new system of valuation, and that, while there will be a temporary arrangement, until the new system is adopted there will be no permanent benefit derivable from this relief. Then he gave us a very interesting account of the relief which is to be derived by different counties. Having given us five counties I hope the Chancellor of the Exchequer will give us a return, with as little delay as possible, showing what the actual relief is, according to the Government estimate, in all the counties of Great Britain. Apart from that, I hope the Attorney-General will tell us now exactly what he is going to propose in the Revenue Bill to do with valuation and assessments. The Chancellor of the Exchequer, in his Budget speech, made a very remarkable statement. He said: "We want a new system of valuation. There are many houses which, although they cost thousands of pounds, are rated at a mere nothing." The Chancellor of the Exchequer is, as I have said, a distinguished member of the legal profession. Surely he knows that the cost of a house, farm, or shop, has no more to do with the assessment for rating than with the kingdom of the moon. He surely knows that it ought not to have any such relation. [An HON. MEMBER: "Oh!"] An hon. Member dissents. What is the principle that he wishes to lay down? That any man, who may shortly find a lodging in Bedlam, may squander a fortune on building an enormous house which can never find a tenant, and in which nobody will live, even for nothing, and that that house is to be rated on the amount it cost to build, and not on the amount at which it will let. Really, this is to talk of a system which could never be followed.
You have now a double system of valuation. There are other valuations, but for the purpose of my argment I will take two—the valuation by the county councils and county boroughs, and the valuation for purely local purposes by the municipal authorities. There is an assessment com- 857 mittee, locally appointed, with local knowledge. How are you going to deal with that? What is to be your future system? Are you, by two or three Clauses, going to supersede the work of the assessment committee and establish instead thereof a centralised body which, acting under the instructions of the Government, is to value property as they think it ought to be valued? I will not discuss the matter now; this is not the time. But the country ought to know in advance what is the principle—I ask to know more—of the system you are going to adopt. You ought to warn the local authorities to-day—because in a few weeks' time you are going to ask for their approval or disapproval—of what is the principle of the change you are going to make. You ought to let them know exactly what you propose. Do you propose to supersede the existing authorities? Do you propose to supersede their assessments. If so, what is to be your area? "Who is to be your valuing authority?
These are not details or matters of small importance which you have not thought out. If you have made up your minds to this change and the conditions upon which the receipt of your Grants is to be dependent, it is clear that you must know the main principles upon which your reform is to proceed, and you ought to be ready and willing to tell us them to-day. The Chancellor of the Exchequer made a reference at the end of his speech to our being unwilling to support sanitation, housing reform, etc. The Chancellor of the Exchequer was hard driven for a peroration when he fell back upon such a broken reed. What was the language used by a spokesman of the Front Bench on this very question of housing only a few years ago, by the Minister who told us that he spoke with the assent of his colleagues, and who received the approval of the Prime Minister at that box for what he had said? He was, too, defended by the Prime Minister in one, if not two, deputatations. At that moment the Chancellor of the Exchequer was silent. What was the language? Our housing proposals asked for what? A Grant of money out of the Exchequer of one million, while now we are told it is to be four millions. The hon. Member for Dudley on behalf of his colleagues put forward practicable proposals before this House. How were they described by the right hon. Gentleman who was then President of the Local Government Board (Mr. Burns)? They 858 were described as containing a vicious principle which the Government opposed.
The Government are apt pupils. They have very soon abandoned their old views of a couple of years ago, and have put forward to-day the views that we have seen as the foundation stone of the whole of what they call their social reform policy. We, both in Opposition and in Office, have shown by our speeches and practical work, our desire to see this and every other branch of social reform adopted by the country, and I say that the Chancellor of the Exchequer is driven very hard when he thinks it necessary to make charges of that kind against us and finds it convenient to forget the language used by his own colleague, speaking in his name, during the present Parliament, and within the last two years. I have only to apologise to the Committee for having taken up so much time, but the subject is an extremely difficult one, and there is a very wide field for discussion. I have passed very rapidly over some branches of it. At the same time, I feel I have made an undue demand upon the patience of the Committee. I only want to say, in conclusion, that the Chancellor of the Exchequer—and I say in his presence, because I have said it in his absence—has grossly and scandalously misrepresented us, our policy, and our speeches, when he says that we are opposed to that social reform which is the greater part of his Budget. What we contend is that under his regime he has allowed an avoidable increase of extravagance in public expenditure, and that consequently he is faced with a greater demand for money than he ought properly to be faced with. We say that he is budgetting for a surplus next year, in order that he may have money to distribute amongst the people, in the hope that the people will distribute other things between himself and his followers. We say that it would have been possible to confer all these benefits upon the people with much lower expenditure, and we say that you are levying your taxes in an unjust and burdensome fashion, that you are offering to the people of this country actual inducements to evade and avoid the taxation, which is the worst thing any Government can do, not only in the interests of present-day finance, but in the interests of that stability and permanency of our financial institution, which ought to be the first wish of our country, and the first desire of every Government to protect.
§ The ATTORNEY-GENERAL (Sir John Simon)
The right hon. Gentleman began by pointing out that in recent years our practice in these Debates had tended to change, and that at such a late hour as this it would not be the Minister primarily responsible, but one of his colleagues who replied at the end of the Debate. That is so, and inasmuch as my right hon. Friend had spoken earlier in the Debate, it falls on me to say at once on his behalf that he greatly regrets that he was compelled to be absent in the earlier part of the speech of the right hon. Gentleman, but that he was absent on urgent Treasury business which had to be settled to-night, and he wishes me to express his personal regret that he was not able to be present. The right hon. Gentleman, in the course of his interesting speech, has dealt in sub stance with two matters. He attacks the total figure of the Budget for the year, and he attacks it primarily by alleging, without giving any specific details, that it is due to extravagance and lax administration; and, in the second place, he suggests that the methods which we propose for raising this great sum of money, for it is an enormous sum of money, are methods that could be improved upon. As regards the first comment, I am relieved when I remember that he accompanied it by asserting that my right hon. Friend is obviously budgeting for a surplus, and that it is quite certain that the Estimates he put forward are in that respect too low. It is only twelve months ago that a comment was made upon my right hon. Friend from the benches opposite of an exactly contrary kind. Twelve months ago he was told in almost pontifical language by no less an authority than the right hon. Gentleman the Member for East Worcestershire (Mr. Austen Chamberlain) that it was obvious really that somewhere or other—he was not, of course, prepared to put his finger upon the precise place—his Estimate was in the opposite direction. I see the right hon. Gentleman, for example, said, on the Second Reading of the Finance Bill of last year, that my right hon. Friendhad framed his Estimates and Budget in a condition of hopefulness such as becomes recklessness in a man with the responsibilities which he carries.Twelve months having passed, it turns out that that criticism was wholly without foundation, and indeed my right hon. Friend's estimate, if it erred at all erred on the other side, and in these circum- 860 stances we must bear with such composure as we can the equally confident assertion now made that he is budgeting obviously with an eye to a surplus. As to that time will show, and it is not possible by a course of argument to prove one thing or the other.
I should like to say one or two words on the size of this figure itself. This year will certainly be remarkable in the history of our national finance because the Budget for the year does, unfortunately, pass beyond the two hundred million limit. Here we have a Budget of £209,000,000, and if one could confine oneself simply to a comparison of figures, and does not submit those figures to a certain examination in order that we may really get them in a condition to compare them, the contrast is certainly very remarkable. The Committee will allow me to give two or three figures, probably already familiar. In 1880 the expenditure of the year was only £83,000,000. In the year of Mr. Gladstone's death, 1898, the Budget was £102,000,000, and to that must be added the local taxation account. In the first year of this Liberal administration the Budget was in round figures £150,000,000, and therefore at first sight there is force in the criticism that here in the course of eight years you have arrived at the stupendous figure of more than £200,000,000. In order that a comparison may be made, two large considerations must be borne in mind. One of them was most admirably put in this Debate by my hon. Friend the Member for Holmfirth (Mr. Sydney Arnold), in a speech he made the other day. He compared the figures of ten years ago with the figures of to-day, and he pointed out that if you took ten years ago, the last completed Conservative year, and deducted the expenses of running the Post Office, that same rate of taxation, if it had not been altered in the direction of a higher rate or subsequent exemption, the same system of taxation which then produced £136,000,000 would this year have produced about £156,000,000. The real comparison, therefore, is between £156,000,000 which our machinery of ten years ago would have produced, and that much of our present figure as remains after deducting the expense of running the Post Office and the like.
The two figures compared are £156,000,000 on the one hand and £183,000,000 on the other hand. That shows a difference of £27,000,000 and it is right that we should ask ourselves how is that to be be justified? But in the inter- 861 val the financial provision of the year, instead of dealing merely, as it used to do, with national defence, central administration, and with a limited sum for one or two other matters, such as education, has brought within its ambit a whole series of national burdens which ten years ago were quite outside the national balance-sheet. It would be the greatest mistake to say that bringing these national burdens within the national account was adding some new burdens upon the shoulders of our countrymen. The burden was always there, and it is a burden which our countrymen have always had to bear of impoverished old age, destitution, sickness among persons of small wage, and unemployment. That burden has always been there. The real thing which has happened in the interval is not that the Chancellor of the Exchequer has thrown new burdens upon the community, but that he has brought these new subjects of social and beneficial services inside the account of the year, and has provided an organised treatment of them under the control of those who represent the constituencies in this House instead of leaving them to unorganised and sporadic efforts. If I have that £27,000,000 to account for as the real difference between ten years ago and to-day, it is a striking circumstance that if you take old age pensions, the state contribution to the two parts of the National Insurance Act, Labour Exchanges, and £1,500,000 for roads, which after all involves the giving of further employment, and certain new additional services, you will get almost that £27,000,000 which is the only thing to be justified if one compares today with ten years ago. Now I come to the question of how that money is to be raised. The right hon. Gentleman indicated that he did not approve of our way of raising it. He quoted the Prime Minister—I thought I caught the quotation, but he will correct me if I am wrong—as expressing the view in 1906 that a uniform Income Tax of 1s. in the £ was too high to be justified in time of peace.
§ Sir J. SIMON
The whole point of he quotation is in the word "uniform." [HON. MEMBERS: "Oh, oh!"] I see nothing in our present proposals which in the least conflicts with that.
§ Sir J. SIMON
It may be. Let me have it. [Extract handed to the right hon. Gentleman.] I notice that the right hon. Gentleman is providing me with a quotation of a quotation. It is a letter—
§ Sir J. SIMON
Does the hon. Gentleman suggest that I should criticise it before I borrow it? I notice, I say, that it is a quotation of a quotation. The right hon. Gentleman, in fact, quoted from a letter written to the "Sunday Times," which gives an expression from the Prime Minister's Budget speech of 1906. The quotation is:—In regard to the Income Tax, I do not hesitate to associate myself with the declarations of more than one of my predecessors, that an Income Tax of a uniform rate of 1s. at a time of peace is impossible to justify"—
§ Sir J. SIMON
I am reading it again. And the 1007 quotation which is supposed to cancel the word "uniform"—
§ Sir J. SIMON
Let me read it exactly. I did not intend to omit anything material.It is a burden on the trade of the country which, in the long run, affects not only profits but wages.[Hear, hear.]. I will read the other quotation in a moment, but allow me to observe, if it indeed be, as in the absence of proof to the contrary, I presume it is, a fair extract, it must, obviously, to every body mean that a uniform 1s. Income Tax interferes with the trade of the country, and, therefore, if there be such an Income Tax, that it ought not to be uniform on earned and unearned income.
§ Mr. CHAMBERLAIN
Does the right hon. Gentleman suggest that if the high Income Tax is not uniform it has no effect upon wages, while if it is uniform it does?
§ Sir J. SIMON
I hope that the right hon. Gentleman will allow me to make my point. I have done my best to do what he asked me to do. I say again that the 863 Prime Minister there, in 1906, is emphasizing the fact that a uniform Income Tax of 1s. is a thing which he regards as open to criticism. It was following upon that that the very same right hon. Gentleman the Leader of the House introduced in a subsequent year the distinction between earned and unearned income. The right hon. Gentleman the Member for the Strand Division says: "Read the second quotation and that will show you." Well, here it is:—The Income Tax is really a twofold tax: it is a tax on property and a tax on earnings.I hope I have done full justice to the right hon. Gentleman's quotation.
§ Mr. LONG
In thus reading the quotation the right hon. Gentleman has done considerable injustice to me. He has addressed himself to a supposed presentment of mine of this quotation as dealing simply with Income Tax. But I was dealing with the charge made by his Friends that this is a tax upon the rich in favour of the poor, and that we so resented it I quoted this to show that in the opinion of the; Prime Minister the Income Tax was a charge both on capital and on labour.
§ Sir J. SIMON
I am afraid we must agree to differ whether the word "uniform" had anything to do with the issue. Those who have followed the Prime Minister's speeches in this House well know that, unlike most Members, he does not use epithets without some meaning. May I just point out how the proposal to raise this money by Income Tax strikes some of us. There is a very remarkable, a very striking, resemblance between the sum of money which has been raised in times past by Income Tax and the sum of money which has been spent from year to year on the Navy. The contrast between the two figures is very remarkable. If you go back to Mr. Goschen's Budget you will find the sum raised by Income Tax was between thirteen and fourteen millions, and an almost exactly corresponding amount was then spent on the Navy. In 1906–7 the Navy cost £31,400,000, and the sum raised by Income Tax was £32,000,000. In the next year the Navy cost £32,000,000, and the Income Tax realised £33,000,000. In 1912–13 the Navy cost £44,300,000, and the Income Tax and Super-tax produced £44,700,000. Last year the Navy cost £46,000,000, and the Income Tax and Super-tax produced £47,000,000. The extra sum we have to raise this year is admittedly very largely due 864 to the fact that in view of the Government there is a demand for an increased expenditure on the Navy, and that demand has been supported very largely by the very people who, represented by the right hon. Gentleman, are criticising the amount we are raising in Income Tax. I have no doubt the hon. Baronet the Member for the City of London (Sir F. Banbury) was present at a meeting last February, when this resolution was carried:—That this meeting of citizens of London begs an assure the Prime Minister and His Majesty's Government of the support of the commercial community in any measures, financial or other, that may be necessary to ensure the continued supremacy of the Navy and the adequate protection of the trade of the country.I do not in the least complain of the resolution. The Government take the view that money should be spent on the Navy. But what I do complain of is when we again endeavour to adjust the Income Tax and the Super-tax in order to produce the sum needed primarily for the purpose of an increase in the Navy Estimates of £4,000,000 or £5,000,000, the same hon. Gentlemen are now coming down and saying, "If you attempt to raise money; in the way you seek to raise it, then you are carrying through a policy which we stoutly resist." The truth is that, broadly speaking, just as the Income Tax from time to time has been found sufficient to meet these enormous demands for naval defence, so, in the same way, the sum that has been found from the Death Duties is roughly proportionate to the sum that is needed for the services of the debt and for the New Sinking Fund. Four years ago we raised £21,000,000 from the Death Duties, and £21,000,000 was the sum required to meet the Consolidated Fund Services which were wanted to pay interest on debt and pay off capital under the New Sinking Fund. To-day we are raising £25,000,000 on the one hand, and are spending £25,000,000 on the other. When we are told that the Death Duties are exactions on the capital of individuals, and that they have to be provided for by savings of income or by insurance, we are entitled to point out, in answer to that, that while that may be, within certain limits, true, yet that sum closely corresponds with the sum that year by year is used in order to reduce the capital liabilities of the nation, just as the Income Tax is a contribution levied on property which more or less corresponds with the amount which we are spending in order to defend more particularly the 865 propertied interests of this country. [Hon. MEMBERS: "No!"] Therefore it is true that the Death Duties may, not unfairly, be regarded as an attempt to secure from time to time sufficient sums to reduce the capital liabilities of the nation.
In the next place the right hon. Gentleman had something to say as to the purposes to which this money was to be devoted. I did not understand him to say that he objects to any of those purposes in themselves—I desire to be entirely fair, and to state the case without any reservation—I believe the right hon. Gentleman and his friends are honestly anxious to promote the objects for which this money is intended. He asked me a question or two about the relief of rates. Certainly the right hon. Gentleman will be the last man in this Committee to deny the immense urgency and importance of securing relief from Imperial resources in respect of rates. Only two years ago, in this House, he was laying that down in language quite as strong as any which the Chancellor of the Exchequer used. I notice that he said, with that frankness which we know is part of his character, that—These are Matters which call for immediate decision by Parliament. I know what this means. It means, obviously, some increase in taxation. Everybody dislikes that. The difficulty is undoubtedly a very great one, and I do not wonder that any Chancellor of the Exchequer hesitates before undertaking the burden.The time has come, and more than come, in which that urgent matter should be dealt with. Then the right hon. Gentle-referred to the fact that in a Bill we shall introduce this year we desire to accelerate valuation. Let me say this: I do not at all take the view that the valuation that has already been made under the Finance Act, 1909, is of no value for the purposes which we are now considering—on the contrary it is of the greatest value. I believe it will be found possible, with very slight adjustments, and with, of course, provisions for bringing it up to date, and keeping it up to date, to provide, thanks to the work that has been done by the Valuation Department, and to provide promptly for the ascertainment of the real values which are necessary for the purposes of a proper rating system. It is for that reason that the Bill we shall introduce this year will not merely be a Revenue Bill. It will be a Valuation and Revenue Bill, and will contain within its Clauses not merely those concessions which the right hon. Gentleman will remember were part of the Revenue Bill of last year, but also provisions which will bring forward, and that at the earliest 866 possible moment, the valuation which is essential if we are really going to effect improvements in the rating system.
§ Sir J. SIMON
The right hon. Gentleman will not expect me to go into minute details, but it appears to me that even if the valuation itself were completed it would be possible to use that valuation on the distinct understanding that there would be a right to challenge appeals before the actual appeals themselves had in all cases been settled, and in that respect that is the practice which already obtains. I present this to the Committee, that this Budget is, after all, the lineal descendant of the Budget of 1909. It possibly explains the criticism which some hon. Gentlemen opposite make of it. I willingly admit that its parentage is similar, and that its lineaments are the same. It is intended to represent, and to apply, the same set of principles. It is directed to the same kind of objects, and we are not surprised that it meets with a somewhat similar kind of criticism, but the criticism that it meets with, so far as we can tell yet, is by no means so full-blooded as the criticism of the 1909 Budget. A good deal has happened in the interval. For one thing, I believe many opponents of the Budget of 1909 have come to realise that the language they used about it, the prophecies of ruin which they were so ready to put forward, the assurances which they then gave, was that this meant the definite destruction of many interests—[HON. MEMBERS: "So it has!"] I may be wrong, but I did believe, until they contradicted me now, that they thought their language then was exaggerated. Then they still think it? In the second place, I honestly believe that in this interval of five years there has been a great change in the view of those who criticised the Budget of 1909 as to the real value of these new social and beneficial services which that object was partly designed to promote. I do not in the least join in any suggestion which may be made that hon. Members opposite are not sincerely devoted to the causes to which that Budget was primarily devoted, but that does not exhaust the explanation. The real explanation of this diminuation of violent criticism depends on two things. It depends, first of all, on this point, that now in 1914, we are in a position that did not exist in 1909. The Budget of the year is determined finally in the House of Commons. It 867 depends, in the second place, on this. Five years ago there were many hon. Members opposite who were fervently convinced that they knew a better alternative than ours. Those were the days when the Budget of the year was to be provided by putting taxes on bread and meat. That programme not being indeed abandoned, because hon. Members do not abandon things until they change their opinions, but postponed, the real truth is that there is no alternative to the method which we now propose, and if it be true that the objects which we have in view are objects which the right hon. Gentleman and his Friends wish to serve, if he and they are unable to point to any item in this expenditure, the object of which they challenge, if it be true that there be no other way of raising this money, the Budget is justified as a result of this Debate.
§ Mr. ROWLAND HUNT
The Chancellor of the Exchequer asked "What is the criticism on what we have spent?" The criticism is that the Government have increased the nation's taxation by £60,000,000 a year and, added to that, what the people have to pay individually under the Insurance Act. The result is that the condition of the greatmass of our working people is admittedly worse than when the Government camein. In a long peroration the Chancellor of the Exchequer threatened us with revolution. Let me venture to suggest to him that if we have a revolution the first men that the people will hang will be the Ministers of the present Government. [Interruption.] I am, of course, sorry to keep hon. Gentlemen up, but at the same time I may fairly point out that the Prime Minister did away with the Eleven o'clock Rule, and that this is the only chance we have. We were directly challenged by the Chancellor of the Exchequer, and therefore as we all get £400 a year I think we ought to bear up for another half-hour. The Chancellor of the Exchequer stated that the trade of the country last year reached a higher point than it had ever done before, and that unemployment was less than it had ever been. He forgot to add that the number of our best and strongest people who had fled from our fool trade system as if it were a pestilence was also the largest on record. In the same speech he told us that an immense number of men and women were engaged in a prolonged struggle against 868 debility and disease, much of it due, to low wages, and that hundreds and thousands of children went daily to school in a state of semi-starvation. Surely in a year of unprecedented prosperity in trade this is a very bad record. [Cheers.]
I fail to see what hon. Gentlemen on the other side are cheering. Surely there must be something very wrong in a system of taxation which drives 300,000 of our best and strongest people out of the country in one year and starves millions of those who remain. The unemployment statistics apply only to a very limited number of people. The Chancellor told us about eighteen months ago that there were millions of our people who did not earn enough to give them sufficient strength to do their daily task. In 1904 he told us that you could not feed the hungry with statistics of commercial prosperity or stop the pangs of hunger by telling a man of the enormous number of cheques that had passed through the clearing house. Surely that is exactly what hon. Gentlemen opposite do when they are continually telling us of the enormous prosperity which we have under what they call the Free Trade system. The Chancellor of Exchequer's way of raising money is to put the whole of the import taxation on tobacco and the kinds of food which we cannot produce ourselves, on which, therefore, we have to pay the whole of the import taxation because there is no competition with any supply produced in this country. This adds considerably to the cost of living and does nothing to provide our people with either employment or wages.
All the other great nations of the world and our self-governing colonies are raising large revenue and at the same time encouraging their own industries by putting duties on foods which do compete with their own industries, and they thus supply their own people with work and wages. These countries moreover raise a large amount of revenue by import duties on luxuries and articles which the working people and the poor do not buy, so that therefore the working people are not affected at all, while on the other hand we in this country, just because we are tied down to what hon. Gentlemen are pleased to call a Free Trade system, put the whole of our import duties on food, drink and tobacco, and the working people and the poor have to pay the greater part of these duties. The hon. Member for Blackburn (Mr. Snowden) was perfectly right when he said the other day that of 869 the £75,000,000 which are to be raised this year in import and excise duties, £60,000,000 would be paid by people below the Income Tax limit—in other words by the working people and the poor. The hon. Member for Blackburn expressed himself as very anxious to tax rich people in this country almost to any extent. The curious thing about his policy is that, like the right hon. Gentleman opposite, he absolutely refuses to allow any duty to be put on imported luxuries which our working people can produce, even if sent in by rich capitalists abroad. [Interruption.] Hon. Gentlemen opposite may get very impatient, but they are wasting their time. I have got something to say and I will say it, and the more they interrupt me the longer I shall be.
May I point out to the hon. Member foils Blackburn that by putting import duties on imported competing luxuries, not only would those duties not hurt the workpeople and the poor at all, but they would increase the demand for labour in this country, and therefore would help to raise wages, and at the same time provide revenue. The Chancellor of the Exchequer is not wooden-headed and old fashioned, and he knows this perfectly well, but he is tied down by a Free Trade Government and cannot help himself. Take £1,000,000's worth of luxuries: if you put an import duty of 20 per cent.—[Interruption]—that might very well cause the manufacture of £2,000,000's worth of these luxuries in this country, and provide the workpeople here £1,000,000 in wages, formerly paid to people abroad. You would get the taxation on £2,000,000 of these luxuries produced at home, and which, if only reckoned at 12 per cent., would amount to £240,000, and you would have the duties on £2,000,000 of imported luxuries, amounting to £400,000, making £640,000 altogether, besides paying in this country at least £1,000,000 in wages to our own people instead of to people abroad. This is the system adopted by all other great nations and by our own self-governing Dominions. It is very difficult to understand why Labour Members, is they really want to help those they are supposed to represent, continually vote for the free, and in reality to subsidised, importation of the luxuries of the rich, and also continually vote for the heavy taxation on the imported necessaries and simple luxuries of the poor. That is the extraordinary part about it.
870 May I quote the hon. Member for Blackburn? He tells us the reason why they vote in this extraordinary manner, and writes in the "Christian Commonwealth" that the Labour Members sit in Parliament because in four-fifths of the cases some understanding or arrangement has been made with the Liberals, and that it was ridiculous to expect the Labour Members to quarrel seriously with a party by whose goodwill they held their seats. That is not, I think, a very creditable reason for a party which by its title claims to be independent. I really can hardly be surprised at Mr. Blatchford writing in the "Clarion" and describing them as the Labour Flunkeys of the Liberal party. The Prime Minister has been already quoted as to the Income Tax being a tax on wages. If there is no other way of raising the money I certainly should not oppose it, but surely there is an alternative, because the Prime Minister himself has said that the Tariff was an alternative. It does seem to me that the proposed taxation for this year of 30 millions from Estate Duties and Land Taxes as well as 56½ millions from Income Tax must be a very heavy burden on industry and must necessarily reduce employment and keep down wages. I really do not see how it can be otherwise.
If you put very heavy taxation on a man he has to reduce his expenditure somehow. He cannot help it and there is no way he can get out of it. I do think that as this money is required for the upkeep of our country and our markets outsiders ought to pay their fair share of it, when they use our markets for the sale of their competing goods. I should very much like to know if the hon. Member for Blackburn has any objection to that. It costs us 300 millions per year for Imperial and local taxation for the defence and upkeep of our markets and it appears to me a very bad way of raising our taxation by putting the whole burden of it on to our producers and not charging competing foreign goods anything towards the upkeep of our markets which they use. We are giving them a present of markets which cost us 300 millions. Surely the result of it is that we have very severely to tax additionally our own people in order that foreigners may not pay anything at all. There cannot be any doubt that local and Imperial taxation does come out of production. [HON. MEMBERS: "'Vide,' Vide."] I am going on. [An HON. MEMBER: "Stop reading."] I am going to read a quotation.
§ Sir WILLIAM BYLES
rose in his place and claimed to move, "That the Question be now put," but the Chairman withheld his assent, and declined then to put the question. Debate resumed
§ Mr. HUNT
As a proof that our taxation comes out of production, the Prime Minister, to whom I was about to refer, said that:—he fully recognised that the taxation of the country in which commodities are produced was an important element in the cost of production.We know it also from eminent Free Trade authorities, because they have admitted that on competing imported goods the foreigner pays part of the duty. Does anybody dispute that? HON. MEMBERS: "No."] Very well; as nobody disputes it I will not read the admissions of free traders. The consequence of our present system of taxation is that our own producers have to pay about £13 to £15 in local and Imperial taxation on everything that they produce in this country. [Laughter.] I do not know what hon. Members are laughing at.
§ The CHAIRMAN
I have been listening to the hon. Member, and his speech seems to be one for a Wednesday evening rather than for Committee of Ways and Means. He seems to me to be travelling a little wide of the subject.
§ Mr. HUNT
I am very sorry. I did not intend at all to get out of order. But the way to raise taxation does come in the Budget. Surely hon. Members will admit that we have to pay rates and taxes, and that they come out of production. The manufacturer or the farmer pays them out of profits, the working man out of wages earned by production. If the United Kingdom was dipped under the sea there would be no free market costing £300,000,000 a year for the foreigner to use; We really, under our present system of taxation, are penalising our people to the extent of £13 to £15 out of every £100 on everything we; produce. Why? Because we tax our own people and allow foreigners to send in all sorts of competing goods into our markets, and do not make them pay anything. That is neither a Free Trade system of taxation, nor is it a fair trade system of taxation! It is really protecting the foreigner against our own people. It is a most extraordinary thing that hon. Members opposite, who think they know so much about taxation, cannot manage to find that out. What is the result of it? 872 The Prime Minister—[HON. MEMBERS: "Where is he?" and an HON. MEMBER: "He is out with Bonar Law."] He could not be in better company!
The Prime Minister asked the House to remember:—that the home market was five or six times more valuable to our working people than all the markets of the rest of the world.Yet what do we do? We give to outsiders free access to this market. We give them very unfair advantages at the expense of our own workpeople. We say to the rest of the world: "Come along! Use our extensive home markets as much as you like for your surplus and bounty-fed goods, and we will extra-tax our people in order that you may have nothing to pay: we will do this whether the imported goods are luxuries made by high-paid Americans or whether they are pigs produced in China where men work for a few pence per day. Moreover, we promise you this: we won't make any effective protest however much you may charge us before we are allowed to use your market, because we feel sure in our infinite wisdom, that your system of taxing our competing, goods will do you a great deal more harm than it will do us." Hon. Members on the opposite side talk of Free Trade legislation that favours the workpeople. The Prime Minister said that with the exception of bread that it could hardly be said that there is one of the necessaries or simple luxuries of life which did not pay its share towards the national revenue. He forgot that all the bread we eat in this country, from the wheat grown here, is taxed. That is because of our system. We tax so heavily the necessities and simple luxuries of the poor, and we let off altogether, with the exception of alcohol and tobacco, the luxuries of the rich. Hon. Members who are here in the interest of labour back up that system. Look at the result.
Take taxation on tea. You tax the tea of the poor woman from £75 to £100 on every £100 worth, whilst on the imported £100 dress of the rich woman there is no taxation at all, and the poorer she is and the cheaper the tea, the more you tax her. That is the result of your present system of taxation, and hon. Members seem to like it. I hope they will go to their Constituents and say so. Take tobacco. On £1,000 worth of working man's tobacco the tax is about £6,000. That is your system of Free Trade taxation. On £1,000 motor car, devil a halfpenny of 873 import taxation is charged. That is your system, and the result surely has been very bad for the working people. It is a system in favour of the monied and against the working people of this country. The people who backup the present system of taxation are the rich people having great interests abroad. There are also the big general merchants who buy abroad cheaply the surplus goods of the white nations or the goods made by the cheap labour of the East. They buy abroad and sell these goods in our country and make more money by that system than if they employed our people at home. If the working people properly understood this system there would not be many hon. Members opposite returned to this House. You know the result of sixty years of this system means unparalleled misery in our big towns and centres of industry. I gave one remarkable quotation. I could give plenty of others. You know it is true and you know or you ought to know that the system of taxation now advocated by the present Chancellor of the Exchequer has the effect of preventing our own people from getting a fair chance of regular employment and good wages in their own country. That surely is their birthright and the present system of taxation deprives them of that birthright, and until you alter that system by State intervention for British workers against some of the rich and very rich, in other words, by a tariff imposed for agriculture as well as manufactures our workers cannot have real prosperity in their own country.
§ Mr. HUNT
Let me remind hon. Members who are so pleased because I advocate a tariff on agricultural produce that we ought in this country to employ nearly half of our people in agriculture as they do in other countries. If agriculture had fair play we could do so and we could grow an enormous amount of food for ourselves which is now grown in other countries. Hon. Members shout when I say that there must be a fair tariff on competing agricultural produce from abroad. Let me remind you that the taxation on the agricultural produce that we grow in this country is very heavy, and it is getting heavier every year. We are growing less than we used to. We keep on growing less and food keeps on getting dearer, because there is less competition with our home supply. If you Liberals really want to 874 bring prosperity to our people, and more especially to our working people, you must give our own people in their own country fair play, and you must by preferential tariffs link up the Empire for commerce and defence.
§ Sir F. BANBURY
The Attorney-General casts some doubt upon the correctness of the quotation which my right hon. Friend handed to him. I have therefore looked it up in Hansard, and I propose to read exactly what occurred from the pages of Hansard. It is on page 299 of 30th April, 1906:—In regard to the Income tax, I do not hesitate to associate myself with the declarations of more than one of my predecessors that an Income-tax of a uniform rate of 1s. in the £ at time of peace is impossible to justify. It is a burden on the trade of tile country, which in the long run affects not only profits hut wages, ft presses with excessive and peculiar severity on that large class of the community with incomes between £700 and £2,000 who pay in addition their full share of the taxation on articles of consumption, and, from the point of view of the nation, is open to the same objection as the continuance at an abnormal figure of the floating debt, namely, that it tends to destroy or at any rate to contract a most readily available resource on which the State can draw in a sudden and unforseen emergency.Next came the reasons why he did not reduce the Income Tax:—A reduction of the Income-tax by 1d. means in these days the sacrifice of £2,600,000, which is more than this year I can afford. Although I am not able to give any immediate relief to the Income-tax payer, I propose to take a step which will at any rate clear the ground for future operations.Then he goes on to say that he proposes to set up a Commission to consider the matter.
§ Mr. CROFT
The extract which has just been read, when quoted by my right hon. Friend (Mr. Walter Long), did not altogether give satisfaction to the Attorney-General. I should like to be allowed to support the view with a quotation from another critic of the Unionist Chancellor of the Exchequer. The critic made use of the following words:—A shilling Income-tax in times of peace! Why it was a War-tax in times of peace.That was the present Chancellor of the Exchequer. Perhaps I may read a little further in the same speech, because it is one of predominant value to this country at the present time. The right hon. Gentleman continued:Surely the right hon. Gentleman ought to see that this sort of thing was not continued. They have gone on year after year piling up expenditure and nobody seemed to think that it was his duty to stop it, to use his influence, to risk his personal position in order to stop it. They had had three or four Chancellors of the Exchequer each of whom had expressed pions opinions about expenditure, but they did nothing. They had constant professions calling attention to the danger, and yet the 875 peril was increasing, and no Chancellor of the Exchequer attempted anything. He did not know why the Chancellor of the Exchequer had not been able to reduce the expenditure this year. He himself must realise that they were reaching a point it was difficult for the public to tolerate. They were spending money which was their reserve and which would be useful in case of war.These are words which the House would do well to think over before the Second Reading of the Bill, when I shall hope to have an opportunity of expressing my views more fully on this subject. The right hon. Gentleman has challenged us for not bringing forward our alternative Budget.
§ But he spoke for three hours on the first day and ninety minutes to-day so that we have not been allowed much opportunity. On general grounds I agree with the courageous speech of my hon. Friend. He was not treated in the best manner by hon. Gentlemen opposite, but, when they read that speech to-morrow morning, they will find a great deal in it worthy of consideration.
§ Question put.
§ The Committee divided: Ayes, 269; Noes, 188.879
|Division No. 94.]||AYES.||[12.6 a.m.|
|Abraham, William (Dublin, Harbour)||Dillon, John||King, Joseph|
|Acland, Francis Dyke||Donelan, Captain A.||Lambert, Rt. Hon. G. (Devon S. Molton)|
|Addison, Dr. Christopher||Doris, William||Lambert, Richard (Wilts, Cricklade)|
|Adkins, Sir W. Ryland D.||Duffy, William J.||Lardner, James C. R.|
|Agar-Robartes, Hon. T. C. R.||Duncan, J. Hastings (Yorks, Otley)||Law, Hugh A. (Donegal, West)|
|Ainsworth, John Stirling||Edwards, Clement, Glamorgan, E.)||Lawson, Sir W. (Cumb'rld, Cockermith)|
|Allen, Arthur A. (Dumbartonshire)||Edwards, Sir Francis (Radnor)||Leach, Charles|
|Allen, Rt. Hon. Charles P. (Stroud)||Edwards, John Hugh (Glamorgan, Mid)||Levy, Sir Maurice|
|Arnold, Sydney||Esmonde. Dr. John (Tipperary, N.)||Lewis, Rt. Hon. John Herbert|
|Asquith, Rt. Hon. Herbert Henry||Esmonde, Sir Thomas (Wexford, N.)||Lough, Rt. Hon. Thomas|
|Baker, Harold T. (Accrington)||Essex, Sir Richard Walter||Low, Sir Frederick (Norwich)|
|Baker, Joseph Allen (Finsbury, E.)||Esslemont, George Birnie||Lundon, Thomas|
|Balfour, Sir Robert (Lanark)||Falconer, James||Lyell, Charles Henry|
|Baring, Sir Godfrey (Barnstaple)||Farrell, James Patrick||Lynch, Arthur Alfred|
|Barran, Sir John N. (Hawick Burghs)||Fenwick, Rt. Hon. Charles||Macdonald, J. M. (Falkirk Burghs)|
|Barran, Rowland Hurst (Leeds, N.)||Ffrench, Peter||Macnamara, Rt. Hon. Dr. T. J.|
|Barton, William||Field, William||Macpherson, James Ian|
|Beale, Sir William Phipson||Fiennes, Hon. Eustace Edward||MacVeagh, Jeremiah|
|Beauchamp, Sir Edward||Flavin, Michael Joseph||M'Callum, Sir John M.|
|Beck, Arthur Cecil||Furness, Sir Stephen Wilson||M'Curdy, Charles Albert|
|Benn, W. W. (T. Hamlets, St. George)||Gelder, Sir William Alfred||McKenna, Rt. Hon. Reginald|
|Bethell, Sir John Henry||George, Rt. Hon. D. Lloyd||M'Laren, Hon. F. W. S. (Lincs., Spalding)|
|Birrell, Rt. Hon. Augustine||Gladstone, W. G. C.||M'Laren, Hon. H. D. (Leics.)|
|Black, Arthur W||Glanville, Harold James||M'Micking, Major Gilbert|
|Boland, John Pius||Greenwood, Hamar (Sunderland)||Marks, Sir George Croydon|
|Booth, Frederick Handel||Greig, Colonel J. W.||Marshall, Arthur Harold|
|Boyle, Daniel (Mayo, North)||Grey, Rt. Hon. Sir Edward||Meehan, Francis E. (Leitrim, N.)|
|Brady, Patrick Joseph||Griffith, Ellis Jones||Meehan, Patrick J. (Queen's Co., Leix)|
|Brocklehurst, William B.||Guest, Major Hon. C. H. C. (Pembroke)||Middlebrook, William|
|Brunner, John F. L.||Gwynn, Stephen Lucius (Galway)||Millar, James Duncan|
|Bryce, J. Annan||Hackett, John||Molloy, Michael|
|Buckmaster, Sir Stanley O.||Hall, Frederick (Yorks, Normanton)||Money, L. G. Chiozza|
|Burns, Rt. Hon. John||Harcourt, Robert V. (Montrose)||Montagu, Hon. E. S.|
|Burt, Rt. Hon. Thomas||Harmsworth, Cecil (Luton, Beds)||Mooney, John J.|
|Byles, Sir William Pollard||Harvey, A. G. C. (Rochdale)||Morgan, George Hay|
|Carr-Gomm, H. W.||Harvey, T. E. (Leeds, West)||Morison, Hector|
|Cawley, Sir Frederick (Prestwich)||Haslam, Lewis (Monmouth)||Morrell, Philip|
|Cawley, Harold T. (Lancs., Heywood)||Havelock-Allan, Sir Henry||Morton, Alpheus Cleophas|
|Chancellor, Henry George||Hayden, John Patrick||Muldoon, John|
|Chapple, Dr. William Allen||Hayward, Evan||Munro, Rt. Hon. Robert|
|Churchill, Rt. Hon. Winston S.||Hazleton, Richard||Murphy, Martin J.|
|Clancy, John Joseph||Hemmerde, Edward George||Murray, Captain Hon. Arthur C.|
|Clough, William||Henry, Sir Charles||Nannetti, Joseph P.|
|Collins, Godfrey P. (Greenock)||Herbert, General Sir Ivor (Mon., S.)||Nicholson, Sir Charles N. (Doncaster)|
|Collins, Sir Stephen (Lambeth)||Higham, John Sharp||Nolan, Joseph|
|Compton-Rickett, Rt. Hon. Sir J.||Hogge, James Myles||Nugent, Sir Walter Richard|
|Condon, Thomas Joseph||Holmes, Daniel Turner||O'Brien, Patrick (Kilkenny)|
|Cornwall, Sir Edwin A.||Holt, Richard Burning||O'Connor, John (Kildare, N.)|
|Cotton, William Francis||Hope, John Deans (Haddington)||O'Conner, T. P. (Liverpool)|
|Cowan, W. H.||Hughes, Spencer Leigh||O'Doherty, Philip|
|Craig, Herbert J. (Tynemouth)||Illingworth, Percy H.||O'Donnell, Thomas|
|Crumley, Patrick||John, Edward Thomas||O'Dowd, John|
|Cullinan, John||Johnson, W.||O'Kelly, Edward P. (Wicklow, W.)|
|Dalziel, Rt. Hon. Sir J. H. (Kirkcaldy)||Jones, Edgar (Merthyr Tydvil)||O'Kelly, James (Roscommon, N.)|
|Davies, David (Montgomery Co.)||Jones, Henry Haydn (Merioneth)||O'Malley, William|
|Davies, Timothy (Lines. Louth)||Jones, J. Towyn (Carmarthen, East)||O'Neill, Dr. Charles (Armagh, S.)|
|Davies, Sir W. Howell (Bristol, S.)||Jones, Leif (Notts, Rushcliffe)||O'Shaughnessy, P. J.|
|Dawes, James Arthur||Jones, William S. Glyn- (Stepney)||O'Shee, James John|
|De Forest, Baron||Joyce, Michael||O'Sullivan, Timothy|
|Delany, William||Kelly, Edward||Outhwaite, R. L.|
|Denman, Hon. Richard Douglas||Kennedy, Vincent Paul||Palmer, Godfrey Mark|
|Devlin, Joseph||Kenyon, Barnet||Parry, Thomas H.|
|Dickinson, Rt. Hon. Willoughby H.||Kilbride, Denis||Pearce, Robert (Staffs, Leek)|
|Pearce, William (Limehouse)||Roe, Sir Thomas||Ward, W. Dudley (Southampton)|
|Pearson, Hon. Weetman H. M.||Rowlands, James||Warner, Sir Thomas Courtenay|
|Philipps, Colonel Ivor (Southampton)||Runciman, Rt. Hon. Walter||Wason, Rt. Hon. E. (Clackmannan)|
|Phillips, John (Longford, S.)||Russell, Rt. Hon. Thomas W.||Wason, John Cathcart (Orkney)|
|Pollard, Sir George H.||Scanlan, Thomas||Watt, Henry Anderson|
|Ponsonby, Arthur A. W. H.||Seely, Rt. Hon. Colonel J. E. B.||Webb, H.|
|Pratt, J. W.||Sheehy, David||Wedgwood, Josiah C.|
|Price, Sir Robert J. (Norfolk, E.)||Sherwell, Arthur James||White, J. Dundas (Glasgow, Tradeston)|
|Priestley, Sir Arthur (Grantham)||Shortt, Edward||White, Sir Luke (Yorks, E. R.)|
|Priestley, Sir W. E. B. (Bradford, E.)||Simon, Rt. Hon. Sir John Allsebrook||White, Patrick (Meath, North)|
|Primrose, Hon. Neil James||Smith, Albert (Lancs., Clitheroe)||Whitehouse, John Howard|
|Radford, George Heynes||Smith, H. B. Lees (Northampton)||Whyte, Alexander F. (Perth)|
|Raffan, Peter Wilson||Smyth, Thomas F. (Leitrim, S.)||Wiles, Thomas|
|Rea, Rt. Hon. Russell (South Shields)||Soames, Arthur Wellesley||Williams, Aneurin (Durham, N. W.)|
|Rea, Walter Russell (Scarborough)||Spicer, Rt. Hon. Sir Albert||Williams, Llewelyn (Carmarthen)|
|Reddy, Michael||Strauss, Edward A. (Southwark, West)||Williams, Penry (Middlesbrough)|
|Redmond, John E. (Waterford)||Sutherland John E.||Williamson, Sir Archibald|
|Redmond, William (Clare, E.)||Taylor, John W. (Durham)||Wilson, Hon. G. G. (Hull, W.)|
|Redmond, William Archer (Tyrone, E.)||Taylor, Theodore C. (Radcliffe)||Wilson, John (Durham, Mid)|
|Rendall, Athelstan||Taylor, Thomas (Bolton)||Wilson, Rt. Hon. J. W. (Worcs., N.)|
|Richardson, Albion (Peckham)||Tennant, Harold John||Wilson, W T. (Westhoughton)|
|Roberts, Charles H. (Lincoln)||Thorne, G. R. (Wolverhampton)||Yeo, Alfred William|
|Roberts, Sir J. H. (Denbighs)||Thorne, William (West Ham)||Young, Wiliam (Perth, East)|
|Robertson, Sir G. Scott (Bradford)||Toulmin, Sir George||Yoxall, Sir James Henry|
|Robertson, John M. (Tyneside)||Trevelyan, Charles Philips|
|Robinson, Sidney||Verney, Sir Harry||TELLERS FOR THE AYES—Mr.|
|Roch, Walter F. (Pembroke)||Walters, Sir John Tudor||Gulland and Mr. William Jones.|
|Roche, Augustine (Louth)||Walton, Sir Joseph|
|Agg-Gardner, James Tynte||Dickson, Rt. Hon. C. Scott||Larmor, Sir Joseph|
|Amery, L. C. M. S.||Dixon, Charles Harvey||Lawson, Hon. H. (T. H'mts, Mile End)|
|Anson, Rt. Hon. Sir William R.||Du Cres, Arthur Philip||Lee, Arthur Hamilton|
|Anstruther-Gray, Major William||Duke, Henry Edward||Lewisham, Viscount|
|Archer-Shee, Major Martin||Duncannon, Viscount||Lloyd, George Ambrose (Stafford, W.)|
|Ashley, Wilfrid W.||Eyres, Monsell, Bolton M.||Lloyd, George Butler (Shrewsbury)|
|Astor, Waldort||Faber, George Denison (Clapham)||Locker-Lampson, G. (Salisbury)|
|Baird, John Lawrence||Falle, Bertram Godfray||Locker-Lampson, O. (Ramsey)|
|Baker, Sir Randolf L. (Dorset, N.)||Fell, Arthur||Lockwood, Rt. Hon. Lt.-Colonel A. R.|
|Baldwin, Stanley||Fisher, Rt. Hon. W. Hayes||Long, Rt. Hon. Walter|
|Banner, Sir John S. Harmood-||Fitzroy, Hon. Edward A.||Lowe, Sir F. W. (Birm., Edgbaston)|
|Barlow, Montague (Salford, South)||Foster, Philip Staveley||Lyttelton, Hon. J. C.|
|Barnston, Harry||Gastrell, Major W. Houghton||MacCaw, Wm. J. MacGeagh|
|Bathurst, Hon. Allen B. (Glouc., E.)||Gibbs, George Abraham||Mackinder Halford J.|
|Bathurst, Charles (Wilts, Wilton)||Gilmour, Captain John||Macmaster, Donald|
|Benn, Arthur Shirley (Plymouth)||Goldman, Charles Sydney||Magnus, Sir Philip|
|Benn, Ion Hamilton (Greenwich)||Gordon, Hon. John Edward (Brighton)||Malcolm, Ian|
|Bennett-Goldney, Francis||Grant, James Augustus||Mason, James F. (Windsor)|
|Bentinck, Lord H. Cavendish.||Gretton, John||Meysey-Thompson E.|
|Bird, Alfred||Guinness, Hon. Rupert (Essex, S. E.)||Mills, Hon. Charles Thomas|
|Blair, Reginald||Guinness, Hon. W. E. (Bury S. Edmunds)||Morrison-Bell, Major A. C. (Honiton)|
|Boles, Lieut.-Colonel Dennis Fortescue||Haddock, George Bahr||Mount, William Arthur|
|Boscawen, Sir Arthur S. T. Griffith-||Hall, D. B. (Isle of Wight)||Newdegate, F. A.|
|Boyton, James||Hall, Frederick (Dulwich)||Newman, John R. P.|
|Brassey, H. Leonard Campbell||Hambro, Angus Valdemar||Newton, Harry Kottingham|
|Bridgeman, William Clive||Hardy, Rt. Hon. Laurence||Nicholson, William (Petersfield)|
|Bull, Sir William James||Harris, Henry Percy||Orde-Powlett, Hon. W. G. A.|
|Burdett-Coutts, William||Harrison-Broadley, H. B.||Ormsby-Gore, Hon. William|
|Burn, Colonel C. R.||Helmsley, Viscount||Paget, Almeric Hugh|
|Butcher, John George||Henderson, Sir A. (St. Geo., Han. Sq.)||Parker, Sir Gilbert (Gravesend)|
|Campbell, Captain Duncan (Ayr, N.)||Henderson, Major H. (Berks, Abingdon)||Parkes, Ebenezer|
|Carlile, Sir Edward Hildred||Herbert, Hon. A. (Somerset, S.)||Pease, Herbert Pike (Darlington)|
|Carson, Rt. Hon. Sir Edward H.||Hewins, William Albert Samuel||Peel, Lieut.-Colonel R. F.|
|Cassel, Felix||Hibbert, Sir Henry F.||Pole-Carew, Sir R.|
|Cator, John||Hills, John Waller||Pollock, Ernest Murray|
|Cautley, Henry Strother||Hoare, S. J. G.||Pryce-Jones, Colonel E.|
|Cave, George||Hohler Gerald Fitzroy||Quilter, Sir William Eley C.|
|Cecil, Evelyn (Aston Manor)||Hope, Harry (Bute)||Randles, Sir John S.|
|Cecil, Lord Hugh (Oxford University)||Hope, James Fitzalan (Sheffield)||Rawson, Colonel Richard H.|
|Cecil, Lord R. (Herts, Hitchin)||Hope, Major J. A. (Midlothian)||Roberts, S. (Sheffield, Ecclesall)|
|Chaloner, Colonel R. G. W.||Horne, Edgar (Surrey, Guildford)||Ronaldshay, Earl of|
|Chaplin, Rt. Hon. Henry||Horner, Andrew Long||Royds, Edmund|
|Clay, Captain H. H. Spender||Houston, Robert Paterson||Rutherford, Watson (L'pool, W. Derby)|
|Clive, Captain Percy Archer||Hume-Williams, William Ellis||Samuel, Samuel (Wandsworth)|
|Coates, Major Sir Edward Feetham||Hunt, Rowland||Sanders, Robert Arthur|
|Cooper, Sir Richard Ashmole||Hunter, Sir Charles Rodk.||Sanderson, Lancelot|
|Courthope, George Loyd||Ingleby, Holcombe||Sandys, G. J.|
|Craig, Ernest (Cheshire, Crewe)||Jessel, Captain Herbert M.||Sassoon, Sir Philip|
|Craig, Norman (Kent, Thanet)||Joynson-Hicks, William||Scott, Sir S. (Marylebone, W.)|
|Crichton-Stuart, Lord Ninlan||Kerr-Smiley, Peter Kerr||Smith, Harold (Warrington)|
|Dalrymple, Viscount||Keswick, Henry||Stanier, Beville|
|Dalziel, Davison (Brixton)||Kinloch-Cooke, Sir Clement||Stanley, Hon. Arthur (Ormskirk)|
|Denison-Pender, J. C.||Lane-Fox, G. R.||Stanley, Hon. G. F. (Preston)|
|Staveley-Hill, Henry||Walrond, Hon. Lionel||Wilson, Maj. Sir M. (Bethnal Green, S. W.)|
|Stewart, Gershoin||Warde, Colonel C. E. (Kent, Mid)||Winterton, Earl|
|Swift, Rigby||Watson, Hon. W.||Wood, John (Stalybridge)|
|Sykes, Alan John (Ches., Knutsford)||Weston, Colonel J. W.||Worthington-Evans, L.|
|Talbot, Lord Edmund||Wheler, Granville C. H.||Wortley, Rt. Hon. C. B. Stuart|
|Thomson, W. Mitchell. (Down, N.)||White, Major G. D. (Lancs., Southport)||Yate, Colonel C. E.|
|Touche, George Alexander||Williams, Colonel R. (Dorset, W.)||Younger, Sir George|
|Tryon, Captain George Clement||Willoughby, Major Hon. Claud|
|Tullibardine, Marquess, of||Wills, Sir Gilbert||TELLERS FOR THE NOES.—Mr.|
|Valentia, Viscount||Wilson, A. Stanley (Yorks, E. R.)||Croft and Mr. Rupert Gwynne.|
|Walker, Colonel William Hall||Wilson, Captain Leslie O. (Reading)|